To most, the increase to the monetary-jurisdictional limit of the Small Claims Division passed inconspicuously into law late February 2019, expanding from $10,000.00 to $20,000.00.
Claims between $10,000.00 and $20,000.00, previously commenced in the General Division, are now to be brought in the more informal Small Claims Division; matters once exclusively heard before a Magistrate, are now to be heard at a Small Claims Assessment Hearing, before a Small Claims Magistrate, or an aptly named “Assessor”.
The catalyst for the increase was a declaration by the Governor of New South Wales under Schedule 1 of the Justice Legislation Amendment Act (No3) 2018 (NSW), amending s.29(1)(b) of the Local Court Act. Such a reform had been forthcoming for many years prior, and bolsters the push for continued efficiency and utility, so desired within the Local Court.
The effects of the increase broaden the scope of the Small Claims Division’s procedure and case management principles within the Local Court, which include the following:
- emphasis on increased efficiency in the management of civil proceedings, so as to achieve the just, quick and cheap resolution to the real issues in dispute; prioritising s 56 of the Civil Procedure Act (2005) (NSW);
- a cap placed on recoverable costs available to successful parties (provided they are legally represented);
- proceedings wherein parties rely on written statements and documentary evidence solely, without the need for oral evidence and cross examination;
- Small Claims Hearings conducted without the strict rules of evidence applying;
- a requirement for parties to seek the Court’s permission prior to issuing subpoenas and conducting discovery; and
- a relatively narrow scope for unsuccessful parties to appeal an Assessor’s or Magistrate’s decision - being Judgments whereby a party is denied procedural fairness, or where the Assessor or Magistrate has acted outside their jurisdiction.
Pros & Cons
Leaving aside the basic practical details, creditors and recurrent litigators are faced with a number of considerations arising in light of the increase, chiefly as follows:
- Firstly, and most importantly, lower costs.
- Witnesses on behalf of creditors will not be subject to cross-examination, or required to appear, as evidence is to be dealt with via written witness statements only.
- Parties are not required to comply with numerous pre-trial orders (such as completion of Case Summaries, List of Facts and Issues and Civil Listing Advices).
- The Small Claims process, with its emphasis on efficiency and due despatch, greatly benefits organised, strategic and represented parties.
- The Courts accentuation on s 56 of the Civil Procedure Act, ensures the quick provision of justice for parties, and reduces delayed and drawn-out proceedings.
- A cap on costs means less costs recoveries for successful parties.
- The decreased costs ramifications for a losing party at a hearing presents the likelihood that parties are less inclined to settle prior to Hearing.
- Parties with solid grounds of appeal are restricted in doing so (excepting the aforementioned reasons).
- Increased informality at Hearing allows disorganised parties greater leniency to produce unsighted and unfiled evidence.
The change, though small on its face, revamps the approach that creditors and (especially) recurrent litigators should take to claims that fall into the $10,000.00 to $20,000.00 range. Prudent parties will realize the benefits of the streamlined and cost effective approach offered by the Small Claims Division, which rewards transparency, efficiency and agility. In our view, Creditors with a precise formula to debt recovery, and defined commercial parameters, have much to gain out of the Small Claims increase.