Below is a selection of case studies that the Office of the South Australian Small Business Commissioner has been able to assist.
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Retail and commercial leasing
The Office of South Australian Small Business Commissioner (SASBC) was contacted by a landlord of a commercial tenancy who was in dispute with his tenant. Both parties had been trying to resolve the dispute through their lawyers, unsuccessfully.
The landlord advised the SASBC case officer that the dispute related to the tenant of the commercial tenancy terminating the lease and vacating the premises, well before the lease expiry date, as a result the landlord sought payment from the tenant for the amount of $29,166 until the end of the term of the lease, which was rejected by the tenant.
Through pre-meditation negotiations the landlord reduced the amount to $16,000 to resolve all matters, which was also rejected by the tenant who counteroffered with the amount of $1000 which the landlord rejected.
As an agreement could not be made, both parties were invited to mediate the dispute under the Retail and Commercial Leasing Act 1995 which they agreed to do.
The mediation resulted in a successful resolution being reached whereby the tenant would pay the landlord a sum of $4,000 and allow the landlord to retain some of the commercial cooking equipment in full and final settlement of the matter.
Sally signed a new lease at a commercial premises when she was starting her new business. When she moved in, Sally realised that the air-conditioning was not in working order and after a failed attempt to contact the agent managing the property Sally contacted the Office of South Australian Small Business Commissioner (SASCBC) to lodge a dispute.
The SASBC case worker listened to Sally’s dispute and made contact with the agent managing the property to have an impartial discussion about the air-conditioner.
Upon speaking with the agent it was confirmed that the air-conditioner was indeed faulty, but Sally had also stopped paying rent as required by the signed lease.
Discussions with Sally confirmed that she was not prepared to pay rent until the air-conditioner was repaired or replaced. Advice from the SASBC to Sally stated that taking this path may be deemed as a breach of her lease and could result in being locked-out of premises.
After speaking with both parties and impartially negotiating it was agreed that once Sally paid the rent that was in arrears, the landlord would install a new air-conditioner.
In this case both the lessee and lessor where both assisted by the SASBC, although it was Sally who initially lodged the dispute.
Names have been changed
The Office of South Australian Small Business Commissioner (SASBC) was contacted by the proprietor of a car detailing business (Cliff) who in 2020 commenced leasing a commercial premises for a period of three (3) years.
The business was not COVID-19 affected, but was not operating profitably, and Cliff saw no prospect of that occurring. In ordinary course, Cliff and his business was obliged to pay rent for the whole three-year term or at least until the landlord was able to find another tenant. Cliff contacted the SASBC to discuss his options.
A case officer was assigned to Cliff, and they contacted the landlord to discuss the situation. Through pre-mediation communication, the SASBC was able to achieve an early release from the lease for Cliff’s business so that it didn’t incur ongoing rental expenses.
As part of the arrangement, Cliff was required to return the premises to the same condition (make good) as at the commencement of the lease. Unfortunately, that was not done to the satisfaction of the landlord and a further dispute developed because of this ‘make good’ requirement.
The SASBC case worker communicated with both the tenant and the landlord to determine what was reasonable under the circumstances, and this was ultimately attended to by Cliff.
Through careful negotiation, the SASBC was able to relieve Cliff of their obligations under the lease and satisfy the landlord’s requirements as to the condition of the premises without either matter having to go to court.
Names have been changed
Before a small business signed their lease their landlord provided them with an estimate of outgoings for the property. The estimate was $6,000 for outgoings per annum.
Within the next year the tenant realised that they were paying substantially more than the estimate provided before the lease was signed.
The tenant contacted the SASBC to discuss their options. The assigned case officer contacted the landlord who agreed they had underestimated the outgoings of the property and were passing on the actual costs.
Through negotiating with both parties, the SASBC that landlord and the tenant agreed to cap the outgoings at $6,000 per annum.
Building and construction
The SASBC was approached by a small business owner, Jeff. Jeff had engaged a contractor to do building work on its premises. Jeff raised a number of issues in relation to the quality of workmanship and the fact that the work had only been partly completed. Jeff had attempted to resolve the matter directly with the contractor without success.
The SASBC contacted the contractor, who initially responded. However, communications deteriorated over time to the point that the contractor was no longer engaging. The Small Business Commissioner (SBC) elected to activate one of the six Industry Codes under the Fair Trading Act 1987 – in this case, the Building and Construction Industry Dispute Resolution Code. Under that Code, the SBC was able to mandate that the parties attend a formal mediation in an attempt to resolve the outstanding issues.
A mediation was conducted, and both parties attended in good faith. During the mediation, the parties discussed the matter in depth and were able to reach a settlement agreement at mediation.
The contractor agreed to pay compensation for the quality of work, that would repaired by an alternative company, due to the contractor not being able to complete it themselves.
Names have been changed
Farm debt mediation
Peter and his wife Penny own a farm in the mid-north of South Australia. In mid 2020, Peter, Penny and their bank entered into a Deed of Compromise and Release requiring the farmers to repay their facilities in early 2021. Peter and Penny did not meet these terms.
Also in 2021, Peter and Penny decide to divorce. It was agreed that Peter would ‘buy out’ his wife’s share of the farm, which has debts in excess of $300,000. The bank loans were secured by a farming property in the mid-north.
As required under the Farm Debt Mediation Act 2018, the bank sought Farm Debt Mediation through the Office of the South Australian Small Business Commissioner (SASBC) prior to taking enforcement action.
A SASBC case officer was assigned to the case, as well as in independent mediator assigned by the Commissioner. All summary papers were read from both sides before an in-person mediation was held with Peter and a bank representative.
An agreement was reached between both parties, with the assistance of the mediator and the outcomes included:
- the bank capping Peter’s debt at a significantly reduced amount
- the reduced debt to be fully repaid by an agreed set date
- no obligation for Peter to repay the debt before that set date
- subject to the debt being paid by the set date, no interest would accrue on the reduced sum.
If however, the debt was not fully repaid by the Peter on the set date, his debt would revert to the much higher current debt - with interest having accrued.
This arrangement was captured in a further Deed of Compromise and Release with the bank and bound all parties.
Having undertaken the Farm Debt Mediation, Peter now had the opportunity to finalise the pay-out to his former wife Penny and sell the property, or other assets in an orderly manner and against a significantly reduced debt.
The bank also had its debt secured.
Names have been changed
Small business issues
A small business purchased a fleet of four, 4-wheel drive utility vehicles for work related business (a farmer). All the vehicles were purchased with a 3 year or 100,000km warranty period. Within this timeframe two of the vehicles developed cracks in the chassis area near the engine compartment, a third looked like it may also be experiencing issues.
The business owner solicited warranty claims to the vehicle manufacturer prior to the warranty expiring, but these were rejected, citing ‘abnormal usage’.
The business owner was adamant that the vehicles were only used for work related driving, which included some farm and rural work and driving on gravel roads. On some occasions the vehicles were needed in 4-wheel drive mode. The business owner rejected that the vehicles were used in ‘abnormal use’ and were never used in any sort of ‘stunt driving’ or ‘rally manoeuvres’ that the manufacturer regularly showed in its TV advertisements.
All four vehicles had been serviced by a manufacturer service agent and by the manufacturer’s schedule. Further, an independent assessment by an RAA approved repairer indicated that the cracking was caused by fatigue.
The business owner wanted the manufacturer to honour their warranty by either replacing or repairing the damaged vehicles. The manufacture advised that their position was final and would not be swayed into making any offer to the small business owner.
The SASBC invited both parties to mediate before having to move on to a lengthy and expensive court battle to see if an understanding could be reached.
The mediation was held at the Office of the South Australian Small Business Commissioner, with an experienced independent mediator. The small business owner and two representatives from the vehicle manufacture (one online via Melbourne) as well as the mediator negotiated at length and a resolution was reached under which three of the four vehicles being inspected at a dealership nominated by the manufacturer, and the resulting costs of repairs to any of the vehicles being shared by the small business owner and the manufacturer.
Having the chance to negotiate with an experienced independent mediator allowed both parties to listen and understand the situation firsthand which in this instance softened their position and offered to share the costs of the repairs. The manufacturer noted on more than one occasion that it could see and hear that the small business was genuine and that they believed him regarding the use that the vehicles had been put to.
A small retail shop in regional South Australia found itself in quite substantial debt to one of its major suppliers, which was part of a large multi-national company that usually adopted a quite strict approach to late payment and outstanding debts.
The shop owner worked long hours and the running of the business was unsophisticated – particularly in relation to computers and emails. It ran on very tight margins, even before the discovery of the debt.
The supplier had allowed the debt to accumulate over more than two years without having pursued payment. That changed when the credit-controller demanded the shop pay around $100,000 within a week.
In the first instance, the SASBC wrote urgently to the CEO of the supplier and asked it to place a hold on its debt recovery while the office undertook initial investigations.
Those investigations revealed that the shop had two accounts with the supplier. It made payments on one account as required but was unaware of the other as the invoices were going into a “spam” folder of a second email address.
Further investigations revealed that the supplier’s representatives were not particularly proactive in communications with the shop. Put simply, the supplier could have done more to prevent the debts mounting up.
The SASBC made a direct appeal to the CEO for some leniency to be exercised in the circumstances.
To the supplier’s credit, it recognised that both parties could have done better and offered the trader a long-term payment regime. The shop remains in business and is steadily repaying the debt.
The SASBC was contacted by a small business that had engaged a specialist company to repair a roller door at its premises.
It reported that the cost for the work was substantially higher than it had been told prior to the work being undertaken, and that the repairs had not resolved the problems.
The SASBC facilitated good-faith negotiations between the parties and was able to help fashion an agreement that included a substantial reduction in the roller-door company’s invoice.
SASBCs intervention, as well as the parties’ desire to reach a resolution, resulted in the parties being able to move on in their business dealings by way of a successful resolution.
A small business owner had received a substantial quote from a vehicle dealer to address recurring issues with his work vehicle’s turbocharger, as well as oil leaks from the main seal. As the vehicle’s warranty period had only recently lapsed, the complainant was seeking to have the costs waived.
Discussions with the dealer confirmed that the warranty had lapsed and that negotiations between the parties had stalled. Through the SASBCs intervention, negotiations recommenced with both the dealer and the vehicle manufacturer.
The SASBC highlighted sections of Australian Consumer Law relating to a product being fit for purpose past the warranty date. The manufacturer subsequently agreed to repair the main seal leak for free, to pay 50% of the labour costs and to provide a 75% discount for parts for repair of the turbocharger.
Kelly owns a small business in the suburbs of Adelaide, where she was trading from two different sites. Kelly decided that she would sell one site and consolidate her business to trade from one site only. Kelly believed that the ICT (information and communications technology) accounts for each site were completely separate and organised the cancellation of the ICT at the second site.
However, Kelly’s ICT company, had internally within their own system, combined her accounts for both sites, meaning when she cancelled the second sites account, it also disconnect the phone and internet at her remaining business site.
This resulted in Kelly’s small business not being able to take bookings over the phone, or transact on-line, in turn causing mounting losses over a period of time.
Relations between Kelly and the ICT company quickly became strained. The ‘porting’ of the ICT services to another provider was also caught up in the confusion, and accounts continued to accrue to the original ICT provider by way of its contract, which Kelly was not paying.
Kelly could not get a resolution with the ICT company so sought the assistance of South Australian Small Business Commissioner (SASBC).
After speaking with Kelly and hearing her side of the issue, a case officer from the SASBC reached out to the ICT supplier and sought their engagement to resolve the issue. The ICT supplier willingly engaged in good faith.
The case officer oversaw an exchanges of information, which clarified the perceptions and expectations of both Kelly and the ICT company – in turn identifying the ‘account-coupling’ issues described above. In a relatively short time, offers to resolve the matter were made and considered by each business.
The ICT company and Kelly agreed to amicably dissolve their relationship, with the ICT provider collecting their hardware from Kelly’s business at an agreed time. Kelly has now entered into an agreement with a separate ICT company. Further, the ICT provider applied a significant reduction to the outstanding sum owed by Kelly, as well as allowing her to make payments in instalments.
The case officer captured the agreement made between the parties in a brief, but legally binding deed, which the parties adopted and can rely upon into the future.
This complex case was resolved without the need to undertake costly litigation through the courts, or damaging Kelly and her business credit rating.
Names have been changed
The SASBC was contacted by a small business that was trying to deal with a subscription roll over company and where an account debt was raised by the subscription company.
The small business had already tried to make contact with the subscription company and they could not come to an agreement.
The SASBC contacted the subscription company to start dispute resolution processes via email under the Small Business Commissioner Act 2011.
Whilst the small businesses contract was still valid until October 2022, with the involvement of the SASBC making contact with the other party we were able to cancel the contract that was in place and clear all outstanding debts without further escalation.