The price of justice

An Ombudsman's ruling might have gone against Mr Coombes back then - who knows - but he would have been able to get on with his life. Unfortunately, apart from South Australia, where a bill allowing for a franchising Ombudsman is before Parliament, there is no sign of any action nationally.
August 11, 2010

The price of justice
Chalpat Sonti


Every so often, a story comes along that can drive even the most hardened observers of the nation's systematic flaws to despair.

So it is with the tragic tale of Perth man Dave Coombes and his almost unbelievable battle with the government, one of its watchdogs, the law, and his business associates.

Mr Coombes has lost everything after a 12-year fight he shouldn't have been dragged into in the first place.

A franchisee of motor vehicle repairer Auto Masters, he was served with breach notices by the company, on grounds that were patently ridiculous.

As our leaders love to point out, they've got matters like this covered. They're protecting us.

Simply visit your friendly Australian Competition and Consumer Commission – they are there to police this kind of unscrupulous behaviour.

But, as many franchisees before and since, Mr Coombes found out the hard way that this isn't necessarily the case.

There is a lot more to this story than I'm going to get into - you can read about it here and here - but the upshot was a more powerful business took a less powerful franchisee to court.

This kind of legal threat is enough usually to scare the weak into capitulating beforehand, but Mr Coombes knew he hadn't done anything wrong.

He wasn't going to sit back and watch everything he'd worked for disappear for no good reason.

So he not only defended himself, he counterclaimed, alleging unconscionable conduct on the part of Auto Masters - and in a rare victory for an individual, he won on both counts.

But the damages and costs award - successfully defended on appeal - has been the last of his victories.

A dispute over his legal fees with his lawyers meant no bill of costs was ever submitted to the court.

The war of legal attrition eventually ended up costing the businessman everything.

A lawyer appointed to look into the dispute ended up putting Mr Coombes into bankruptcy over his by-now own unpaid fees.

Just when you thought it couldn't get any worse, the business was placed into liquidation and sold - to you guessed it, Auto Masters - for a fraction of its worth.

Mr Coombes is pursuing the federal government for compensation of at least $1.8 million, arguing the ACCC was defective in its duty and that he applied the Trade Practices Act assiduously, and won, but went broke in the process.

Both shades of government have turned him down, the former Coalition government even telling him - callously and incorrectly - that his woes were a result of his own private actions.

Remember, these are the people you'll be voting for in a couple of weeks. The ones that promise the world. But once in power, back their own flawed systems every time.

What was Mr Coombes supposed to do? Give in to bullying, and give up everything he worked for? Is this what we are all about?

As a result he has won the most pyrrhic of victories. The Castle without the happy ending - yet.

Sadly his case is all too familiar these days. I'm working through dozens of similar stories.

Many haven't, or won't, get to court. They've decided to cut their losses.

Almost without exception, they've all approached the ACCC. And almost without exception, their claims have been rejected.

I've said it before, and I'll say it again, there's no hiding from a poor business decision. The ACCC obviously cannot pursue every case that comes to it and there are good franchisors out there.

But many of these cases are more than the result of poor business decisions. Many involve many franchisees from one system making similar complaints.

The ones who have come to me, when they come from different systems, the complaints run along remarkably similar lines.

The ACCC could point out that it has successfully pursued franchisors. But it won't point out that they are small targets, often little better off than their franchisees.

It hasn't yet pursued a big gun, where the majority of complaints are aimed.

Those big guns hold a mighty imbalance of power. All the words from the ACCC about ensuring franchisees due their due diligence, while wise, hold little relevance to the complaints.

Small Business Minister Craig Emerson made much of the government's tinkering with franchising laws recently, trotting out the same old line that we've all heard before about greater powers for the ACCC.

But the results are likely to be the same.

Unless there is more funding for test cases - something the government needs to step up to the plate on - or better still, a more affordable dispute resolution service, Dave Coombes' story isn't likely to be the last we hear.

After all, the whole thing could have been nipped in the bud had an Ombudsman-like figure specialising in franchising stepped in early and made a definitive ruling.

Not the nonsensical mediation process that existed then, and still does now, where the larger party couldn't be forced to attend a so-called "mandatory" event.

An Ombudsman's ruling might have gone against Mr Coombes back then - who knows - but he would have been able to get on with his life.

Unfortunately, apart from South Australia, where a bill allowing for a franchising Ombudsman is before Parliament, there is no sign of any action nationally.

That's despite franchising being one of our largest industries, and one where the parties are mismatched financially every time.

As a lawyer said to me last week - "The only people who can afford justice in this country are the very rich and the very poor. The rest have got no show."

Sad, but true, and that's a shame.

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1. Unfortunately, the government / bureaucracy is appallingly bad at helping the little guy in these circumstances and the ACCC seems more interested in pursuing minor infraction to churn the number of cases it can deal with - KPI box ticking- without pursuing the most egregious of errors. Unfortunately the whole government is also into misusing the court system such as when the ATO drops a court case a day before the hearing leaving the "defendant" to cover massive legal bills they can't afford an no chance to recover costs….
- WinstonSmith | AirstripOne - August 11, 2010, 10:42AM

2. Funny, isn't it. Governments of either stripe love to say they want to help small business (Howard was particularly egregious in this area) but the only time they do that is when it takes the form of victimising people with even less power - small businesses' employees. When it comes to helping a small business against a larger one, it isn't going to happen. The bigger the organisation, the more help it has in retaining power.
- hmm - August 11, 2010, 12:36PM

3. Chalpat again another excellent article.I briefly "met" Dave after the WA inquiry into Franchising.Dave was in the car park at Curtin showing a group of us his detailed records of what the poor bugger had been through.It dawned on me at that very moment that our cause was going to be for nought.Dave had had a "victory" and yet was still broke.The bigger worry is that I can give you right now 20 different names of people who have experienced the VERY SAME ISSUES with the accc and sweet stuff all has been done.May be it is time that Samuel was replaced.
- Big fella | Perth - August 11, 2010, 1:50PM

4. Australia's economy is not a liberal, free-market economy.

It is run by large corporations, for large corporations.

FYI, the Security Code to post this comment is SHAFED. Only the 'T' is missing.
- David_FTA | Queensland - August 11, 2010, 5:03PM

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