When the Metcash chief executive, Andrew Reitzer, was nailing down the final details of his acquisition of Franklins Supermarkets last year, he had one special request to make as part of the transaction: sack Peter Bunn.
And so it was that Franklins’s South African parent, Pick ‘n Pay, agreed to an exclusion clause in the indemnities to the effect that Metcash would endeavour to find employment for all staff at Franklins, except Peter Bunn.
Who was this Peter Bunn? And why had he annoyed the big grocery wholesaler so much as to deserve his very own termination clause?
Bunn was the owner of some grocery stores in Canberra who had refused to shut up when Metcash reneged on its grocery supplies contract. This is Bunn’s claim, at least. Metcash disputes it. It took him to court – not to hear the merits of his claim but rather to stop him telling his story.
This is a David and Goliath tale, though David didn’t slay the giant, but merely defeat him in a tortuous legal fight. For 4½ years Bunn,
the battler, had defended himself against a $3 billion company and
its silky array of $10,000-a-day barristers.
In terms of broader significance, though, this is a story about silencing dissent, about a large corporation using its vast resources to stop a small businessman having his say in public, whether right or wrong. Peter Bunn’s claim – which would have been a simple suit for breach of contract – was never heard.
And that was despite millions of dollars spent, more than 60 separate hearings in the Federal Court, more than 130 affidavits filed and 20 notices of motion.
The simple facts behind the case are that Bunn went broke after falling out with his grocery wholesaler, Metcash. He nagged Metcash tirelessly about breaching his contract. Metcash denies a breach. The company ignored his petitions, so Bunn went public by setting up websites to tell his story and accuse the wholesaler of foul play, especially its chief executive, Reitzer.
Reitzer, a hard-nosed businessman from Johannesburg, declined to speak with BusinessDay for this article. Through a spokesman, the company said its legal action was about ”defending our position against completely inaccurate and defamatory claims, which is our right”.
”Despite being told to go away by the courts, he [Bunn] persisted with his claims. We deny these claims outright as they are being made via you as part of a misguided personal vendetta. We trust you do not wish to also publish defamatory and inaccurate claims.”
Reitzer led the counterattack against the rebel retailer. Metcash’s corporate strategy was, and is, to control as many independent supermarkets as possible. While other retailers have been reluctant to air their grievances in public – there is no other wholesaler to turn to: just Woolworths, Coles and Metcash, and the first two don’t service the independents – Bunn was a loud, buzzing fly in the ointment.
Reitzer wanted Bunn out of the public eye, and he wanted Bunn’s websites shut down. So the Metcash action began, originally via an interim injunction in the Federal Court to stop him publishing.
Metcash claimed Bunn had made false statements about his supply agreement, although when push came to shove it did not pursue this part of its claim. It later withdrew it.
Indeed, in the final consent orders of the court four years, three months and 26 days later after the proceedings began, the big wholesaler agreed that ”nothing in these orders prevents the First Respondent from publishing or discussing his opinion about the demise of [Bunn’s company] Chadmar Enterprises Pty Ltd [in liquidation]”.
If the cost of all this litigation to Metcash, which deployed some 20 different legal representatives, was $2 million, the cost to taxpayers in court time and tax deductible expenses – yes, litigation is deemed to be part of doing business and therefore a legitimate tax deduction for Metcash – must be in the same ballpark.
”This case makes World War II look like a skirmish,” observed the Federal Court judge Bruce Lander at one point during proceedings last year.
Finally, on the eve of the trial last June, Metcash backed down. Bunn had prevailed. But it was by default, a pyrrhic victory, as Metcash, urged by the judge, effectively withdrew its claim and agreed to mediation and consent orders.
”I confess I didn’t want to go to mediation,” Bunn says, ”due to the fact that after nearly 4½ years I had got Metcash to the point of having to justify its actions and conduct
Bunn has written a book, Baked Beans, Beer & Bull$#*!, which chronicles the whole affair and in which he concludes, despite the dark hours, the bankruptcy and personal devastation, it was all worth it.
Just 14 days after his win however, the world-weary Bunn was working at Franklins when he got the news that the chain’s South African parent company, Pick ‘n Pay, had sold Franklins Supermarkets to Metcash.
He knew at once what that meant: he’d be out of a job once again. ”I just laughed,” Bunn wrote.
Bunn’s account is good reading for any small business type tempted to fight a big company in the courts. Or anybody tempted to fight a big company full stop, for that matter.
Metcash was embroiled in a legal stoush with Franklins too. But the takeover would extinguish the lawsuit, and Bunn’s job in the process.
At the time Franklins was alleging breach of contract against Metcash but unlike the perennial defendant Bunn, Franklins was the plaintiff in its case.
Incidentally, the competition regulator later sought to block the acquisition of Franklins on grounds that Metcash was getting too powerful: tightening its stranglehold on the independent grocery sector in Australia, the corner stores, the small family-owned supermarkets dotted across the country which it supplied with fresh food and packaged groceries. After 14 months, a decision in that case is still pending.
Besides Bunn’s personal story, his case raises vital public policy issues: on how big companies use the courts for commercial advantage and on freedom of speech.
Bunn writes: ”Justice Lander also stated, during Metcash’s further submissions, that: ‘Look, Mr Roberts, I will be frank. This looks like your client [Metcash is] trying to stop Mr Bunn telling people that you [Metcash] stopped him communicating with them.
” ‘I must say, Mr Roberts, this does look very, very heavy handed … Your client [Metcash] is entitled to pursue Mr Bunn and it has pursued Mr Bunn relentlessly and vigorously, but your client [Metcash] is not in a position, in my opinion, to suppress freedom of speech.’ ”
Indeed, providing his reasons for judgment, the judge observed: ”This [Metcash] application would, if granted, have the effect of suppressing free speech.”
Clearly Metcash had had its swing at putting its legal sock in Bunn’s mouth. Thankfully, the court had denied it. Big companies have ample public relations and advertising resources to stand up for themselves, to contact media and put their side of the story.
Bunn also argues in his book
that Metcash was engaging in
”strategic litigation” – that is, exploiting the law for strategic, commercial purposes.
This is something Metcash also rejects. Strategic litigation is illegal, after all – even though a cynic would say that it’s a multi-million dollar industry and a commercial game played by many big corporations.
Yet even the judge in the Bunn matter pointed the bone at Metcash for its vexatious antics, addressing its counsel: ”These are proceedings which seem to be out of proportion to the relief sought.”
Then, Justice Lander remarked in the next breath – and pointedly, in respect of Metcash’s case against Bunn – ”Isn’t the rest a sideshow?”
A ”sideshow”, even on a layman’s view of legal practice, suggests improper use of the court. And that would seem to be Justice Lander’s intended meaning.
Metcash sued Bunn on a host of claims. It threatened defamation, malice, misleading and deceptive conduct. It even attempted to get a subpoena against Franklins for malice because, its counsel claimed, Franklins executives had been seen with Peter Bunn and Bunn had got a job with Franklins after going bankrupt. Justice Lander slammed this as a ”fishing expedition”.
In the week leading up to the trial, Metcash served Bunn with some 5000 pages of documents, including two archive boxes containing a single affidavit.
This deluge of documents – a regular tactic in litigation – earned Metcash and its bar table another reprimand.
”There is still a big question needing to be asked, and answered, in the public domain,” Bunn writes.
”Why Metcash – a major company, listed on the Australian Stock Exchange – was able to initiate such a punitive action, and to also wage a campaign of humiliation against me for more than five years, without having to prove – or justify to the court – the basis of its action against me.
”And when faced with the prospect of being ‘outed’ in a public trial, the company simply consents to orders to ‘finalise’ the matter without having to pay for the costs that were run up by the Federal Court in handling Metcash’s action against me.
”A number of people have stated to me that Metcash’s action in the Federal Court would have cost the Australian taxpayer at least $1.5 million. This, of course, has been underwritten by the Australian taxpayer and not, as it should have been, by Metcash’s shareholders.”
Naturally enough, Metcash believes it was pursuing its rights fully and fairly under the laws of the Commonwealth.