A business owner is taking on Bunnings in court to stop the retailer opening a store next door, and has won the first legal hurdle.
David Woodman, whose family has been in the hardware business for 90 years, is the owner of two stores operated under licence from Mitre 10 Australia.
He claims that by opening a warehouse adjacent to his own in Jimboomba, an outer-Brisbane suburb, Bunnings could put him out of business.
Bunnings purchased the large site next to Mr Woodman’s hardware store a year after he acquired the business. Approval was later granted for a warehouse up to eight times larger than his store, despite several Bunnings outlets operating in the area.
Mr Woodman launched legal action under the Competition and Consumer Act, alleging anti-competitive conduct, and is seeking damages for losses as well as an injunction preventing Bunnings from opening the store.
In the latest step of his legal battle, Mr Woodman secured a No Adverse Costs Order (NACO) that would protect him from being made to pay Bunnings’ legal costs if he lost his case.
According to Federal Court documents, his lawyer Michael Daniel claimed Bunnings’ costs, if Mr Woodman’s case failed, could exceed $6 million.
‘Having regard to the financial positions of Wesfarmers and Bunnings, David Woodman considers that Bunnings has the capacity to significantly outspend (Woodman) in the proceeding,’ Mr Daniel told the court.
David Woodman has taken legal action seeking to stop Bunnings from opening a store next to his hardware business
Mr Woodman claims that the megastore could put him out of business
Mr Daniel told the court that, over the past five financial years, Mitre 10 Jimboomba had generated a net profit of between less than $500,000 and less than $900,000.
He said it doesn’t make sense to ‘expose’ Mr Woodman to the substantial costs which could be invested elsewhere.
‘And if Bunnings succeeded in the proceeding, David considers there will be no Mitre 10 Jimboomba business left to protect reasonably shortly after the Bunnings store opens in Jimboomba,’ the lawyer added.
During the Federal Court hearing, Bunnings argued that Mr Woodman has resources more than sufficient to meet his costs and any recoverable costs arising from an adverse order.
Representatives for Bunnings highlighted Mr Woodman’s finances, including sales, after-tax profit, net assets, rental arrangements and the financial position of parent company Garnet, as evidence.
But in his decision, published on August 27, Justice Robert Bromwich found ‘much of Bunnings’ argument can be rejected because it so radically departs from the terms of the consideration set by parliament’.
‘The issue is not whether Woodman could, if forced to do so, pay an adverse costs order. It is whether it might be deterred from pursuing the proceeding because of that risk,’ he said.
Justice Bromwich ultimately ruled in favour of Mr Woodman.
Bunnings plans to open a store on the vacant site next to Mr Woodman’s business, which could be up to eight times the size of his building
Mr Woodman has won an initial legal battle, with the Federal Court protecting him from Bunnings’ legal costs if he loses the case
‘The discretion to make the NACO is appropriate in all the circumstances… That does not entail underestimating the challenges that Woodman faces in bringing this proceeding.
‘But in my view, a case such as this is precisely what the NACO regime was intended to facilitate.’
Mr Daniel said the ruling was crucial to keeping the case alive.
‘I am delighted for the client. If we didn’t get this order, the chances are that David wouldn’t be able to pursue the case,’ he told ABC News.
‘This decision improves that risk and increases access to justice.
‘Bunnings has the resources to fight at every point and do so with very expensive experts and lawyers. I expect them to keep going, quite frankly.’
Bunnings, owned by retail, mining and industrial conglomerate Wesfarmers, brought in high-profile barrister Garry Rich SC for Mr Woodman’s case.
The retailer has said opening a store in Jimboomba would ‘bring more choice and competition to the local community’, as well as ‘providing local employment opportunities’.
In a previous interview with ABC’s The Business, Wesfarmers boss Rob Scott also said Bunnings ‘is still very interested in growing its network’.
When contacted for comment on the Federal Court ruling, Wesfarmers acknowledged Justice Bromwich’s decision in a statement.
‘We note the Court’s decision on costs and will continue to respond to the proceedings through the appropriate legal process,’ it said.
