District Court jurisdiction in doubt

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It has long been thought that the jurisdiction of the District Court extended to matters arising out of commercial transactions.

A number of recent cases have thrown this view into doubt, raising practical, legal and logistic concerns.

The jurisdiction of the District Court is limited by value and subject matter.  The general grant of power is by statute.

Section 44 of the District Court Act 1973 (NSW) says that the Court has jurisdiction to hear and dispose of: ‘any action of a kind…which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court.’

Section 44 was introduced in this form with effect from 2 February 1998. The question of how particular actions were allocated was considered by His HonourJustice Parker in The NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194.

His Honour concluded that the question was ‘to be answered by reference to the provisions governing assignment in force at the time the claim was made’ [42].

As at 2 February 1998, the assignment of the Court’s business into divisions was regulated by the SupremeCourt Act 1970 and included Common Law, Equity and CommercialDivisions.    Where proceedings arose out of ‘commercial transactions’ or which involved an issue ‘in trade and commerce’ they were to be assigned to the Commercial Division.

The NTF Group concerned a contractual claim in debt.

Parker J said: at [45]:

“it appears to me that the proceedings would not have been assigned to the common Law Division. The principal claim … is between two corporate entities and on the face of it, the goods in question were leased for business purposes. Accordingly…the proceedings fall within the   description of proceedings “arising out of commercial transactions” and would have been assigned to the Commercial Division.”

[46]: “Accordingly, the District Court would not have had jurisdiction.  This is…a surprising and unwelcome result”.

The result has been described by judges of the Supreme Court as both “surprising” and “unwelcome” and by His Honour Justice Rein in Nova 96.9 Pty Ltd v Nativa Pty Ltd [2018] NSWSC 1288.

It is understood that this issue has been raised with the A-G with a view to reforms being made in the area.  The timing for these reforms is as yet unknown.

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Clare Peacock is an experienced construction lawyer working on Sydney’s Northern Beaches. Clare provides practical, cost-effective building approval advice to property owners, builders and strata managers. Services include residential building disputesbody corporate issues and strata building problems.

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