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26/02/19

No Adverse Costs Orders in Restrictive Trade Practices Claims

On 18 February 2019, the Commonwealth parliament passed amendments to the Competition and Consumer Act 2010 (Cth) (CCA) intended to facilitate individuals, small businesses and family enterprises bringing claims against better-resourced respondents for damages for conduct that allegedly contravenes Part IV of the CCA. 

The amendments (awaiting royal assent) are likely to make it easier for smaller entities to bring claims for loss allegedly suffered as a result of conduct such as exclusive dealing, misuse of market power or cartel conduct which previously might have been cost prohibitive.

No Adverse Costs Orders

Section 82 of the CCA allows a person who suffers loss or damage by the conduct of another person that was done in contravention of the competition law provisions in the CCA to make a claim for damages against the persons involved.

The amendments allow an applicant (making a claim under section 82 in respect of an alleged contravention of Part IV) to seek an order from the court that they are not liable for the respondent’s legal costs regardless of the outcome of the proceedings. This is commonly referred to as a ‘no adverse costs’ order.

Such an order may only be made where the Court is satisfied that:

  • the action raises a reasonable issue for trial; 
  • the issue may also be significant for other persons or groups of persons; and 
  • the disparity between the financial position of the applicant and the respondent is such that the possibility of a costs order that does not favour the applicant might deter the applicant from pursuing the action.

It is proposed that a ‘no adverse costs’ order may be sought at any time during the proceedings, for actions brought on or after 1 July 2019.

The practical impact of the amendments is likely to be dictated by the Court’s willingness to grant applications for ‘no adverse costs’ orders, the circumstances in which it is willing to do so and the standard of evidence it requires in support of such applications. 

Ombudsman Assistance for Small Businesses

The amendments also extend the powers of the Australian Small Business and Family Enterprise Ombudsman to assisting applicants to apply for no adverse costs orders, including by advising applicants as to the arguments which might be made and the evidence which might be adduced in support of such an application.

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