Further Thoughts on the District Court’s power to determine “Commercial” Matters

Key Points: 

• In Southern Classic Group Pty Ltd t/as Southern Classic Cars v Arch Underwriting at Lloyd’s Ltd on behalf of Syndicate 2012 (No 2) [2018] NSWSC 1530 (11 October 2018) Stevenson J came to a similar view as Rein J, Harrison J and N Adams J that the District Court does not have power to determine “Commercial” matters.

• The judge deals with the issue in some detail in order to bring it to the attention of the legislature and the profession. 

• It would appear that, until the legislature acts to remedy the problem, r 45.12 of the UCPR has no work to do.

There has been a further Supreme Court decision regarding the legislative anomaly which has created great uncertainty over the power of the District Court to determine “Commercial” matters.

In our blog of 28 September 2018 on this subject we discussed the problem which has come to light with the jurisdiction of the District Court in “Commercial” matters because of the way that s 44 of the District Court Act 1973 must be interpreted in the context of Section 53 of the Supreme Court Act 1970 and Rule 14.2 of the Supreme Court Rules as they were in 1998.
 
Justice Stevenson in Southern Classic Group Pty Ltd t/as Southern Classic Cars v Arch Underwriting at Lloyd’s Ltd on behalf of Syndicate 2012 (No 2) [2018] NSWSC 1530 has reached a similar conclusion to Rein J, Harrison J and N Adams J that the District Court does not have power to determine “Commercial” matters, in a case involving a claim for indemnity under a Management Liability policy of Insurance.
 
He provided the following summary of the issue, based on the judgement of Rein J in Nova 96.9 v Natvia [2018] NSWSC 1288:

1. the District Court only has jurisdiction which is conferred on it expressly or by necessary implication by the District Court Act 1973 (NSW) or by other State or Commonwealth legislation: Pelechowski v Registrar, Court of Appeal (NSW) (1999) 198 CLR 435; [1999] HCA 19 and Jago v District Court of New South Wales (1989) 168 CLR 23; [1989] HCA 46;
2. s 44 of the District Court Act confers jurisdiction on that Court to hear, relevantly, proceedings which, had they been commenced in the Supreme Court, would have been assigned to the Common Law Division;
3. the relevant date for determining whether or not a matter would have been assigned to the Common Law Division is 2 February 1998; the provisions having been held by the High Court not be “ambulatory”: Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531; [2007] HCA 8; and
4. the effect of s 53 of Supreme Court Act 1970 (NSW), when read with Supreme Court Rules 1970 (NSW) r 14.2(1) (as it was on 2 February 1998) is that proceedings arising out of a commercial transaction or in which there is an issue that has importance in trade or commerce were assigned to the (then) Commercial Division; and thus not to the Common Law Division.

The judge dealt with the jurisdictional question in some detail in order, as he said “…to draw this matter to the attention of the legislature and the profession. The restriction these provisions place on the District Court is extraordinary and entirely unsatisfactory. Within its monetary jurisdiction, the District Court would otherwise be well equipped to deal with commercial transactions or matters in which an issue arises that has importance in trade or commerce”.
 
It would therefore appear that r 45.12 of the UCPR, which deals with the Commercial List in the District Court and which, somewhat ironically, reflects the language of  r 14.2 of the Supreme Court Rules, will have nothing to do until this problem has been rectified by the legislature.

Post by Dr Tim Channon