David vs Bunnings: Mitre 10 franchisee wins crucial legal costs case

Retail Industry

David Woodman's family has been in the hardware business for 90 years. (ABC Four Corners: Ryan Sheridan)

A Mitre 10 franchisee has won a crucial legal costs fight against Bunnings, allowing him to take on a high-stakes case to try to stop the hardware giant from opening up next door to his Queensland store.

David Woodman's story was detailed by the ABC's Four Corners program last year, with the family-owned retailer airing concerns about competition in the hardware sector.

Mr Woodman is trying to use the Competition and Consumer Act to stop Bunnings from opening a site in the town of Jimboomba, which he argues would put him out of business.

He had applied to the Federal Court to be protected from paying Bunnings' legal costs if he lost, under laws designed to help smaller businesses take on corporate titans.

Justice Robert Bronwich has now ruled in Mr Woodman's favour.

"I am delighted for the client," his lawyer Michael Daniel told the ABC.

Mr Daniel estimates Bunnings could easily spend $6 million fighting the case, a sum Mr Woodman could not risk paying.

"If we didn't get this order, the chances are that David wouldn't be able to pursue the case," Mr Daniel said.

What is a no adverse costs order?

Typically, when a civil action is brought, the entity lodging the case faces the prospect of paying the legal fees of the party they lodged against, known as an adverse costs order, if they end up losing.

The laws Mr Woodman used — known as a no adverse costs order (NACO) — were introduced for business owners in 2019.

Mr Daniel thinks today's ruling is the first time NACO has been granted for an anti-competitive conduct case.

"I was hoping we'd get the result, but I was apprehensive we'd get it," he said.

Bunnings is owned by Wesfarmers, with more than 300 stores. (ABC News: Madigan Landry )

Bunnings, which is owned by the giant retail, mining and industrial conglomerate Wesfarmers, had already brought in a high-profile barrister, Garry Rich SC, to argue against the NACO application.

The barrister recently won a bombshell case against another high-profile retailer, Coles, on behalf of the competition regulator, the Australian Competition and Consumer Commission (ACCC).

Only today, Wesfarmers posted its annual results, showing a statutory net profit after tax of $2.87 billion, up 8.3 per cent from the previous year.

"Bunnings has the resources to fight at every point and do so with very expensive experts and lawyers," Mr Daniel argued.

"I expect them to keep going, quite frankly."

What does Bunnings say?

Mr Woodman's family has been in the hardware business for 90 years.

He bought the store in Jimboomba with his brother and father in 2018 under a franchise agreement with Metcash, the second-largest hardware retailer in Australia after Bunnings.

The large site next to David Woodman's hardware store where a Bunnings Warehouse will be built. (ABC Four Corners: Ryan Sheridan)

Bunnings purchased the vacant lot next door a year later, in 2019, and was later approved for a warehouse eight times larger than Mitre 10 Jimboomba.

Mr Woodman's case argues this will put him out of business, saying:

As a result of Bunnings's conduct, Woodman abandoned plans to expand the size and product range of Mitre 10 Jimboomba, because once Bunnings Warehouse opens at the Jimboomba site, it is commercially likely that Mitre 10 Jimboomba will become non-viable within the short to medium term and therefore would have to close.

Mr Woodman is seeking damages for losses and is ultimately seeking an injunction to stop Bunnings from opening its store.

There are already several Bunnings stores in the surrounding region. However, Bunnings argues the Jimboomba site is needed and will enhance choice and jobs for locals.

"We note the Court's decision on costs and will continue to respond to the proceedings through the appropriate legal process," the company said in a statement.

"We believe opening a Bunnings store in Jimboomba will bring more choice and competition to the local community, while providing local employment opportunities."

David Woodman's barrister told the court Bunnings "has a substantial degree of market power". (ABC News: Madigan Landry )

In an interview with ABC's The Business, Wesfarmers boss Rob Scott reiterated that "competition is great".

"It offers better choice and value for consumers," he said.

"So we will compete very competitively against all competitors, and ultimately customers are the ones that decide.

"Bunnings is still very interested in growing its network."

In his ruling, Justice Bronwich noted the still significant challenge ahead for Mr Woodman to win his case against Bunnings.

"The case brought by Woodman is novel, as it freely acknowledges," he noted.

"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.

Mr Woodman's lawyer said he thinks the case could drag on for years.

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