I have a claim, but which Court do I go to?

You have a legal claim against another party and want to start Court proceedings. If Court proceedings are started in the incorrect Court you could get a large legal bill and be left with no claim against the other party.

In addition to the various Commonwealth Courts (the High Court of Australia, the Federal Court of Australia, the Family Court of Australia, and the Federal Circuit Court of Australia), each State or Territory has its own Courts and Tribunals. In New South Wales we have the Supreme Court, the Land and Environment Court, the District Court, the Local Court, and the Civil and Administrative Tribunal.

The Local Court has a monetary jurisdiction limit up to $100,000. The District Court has a monetary jurisdiction limit of $750,000 (although this can be exceeded in certain circumstances).

If you started proceedings in the Supreme Court and the amount awarded to you was less than $500,000 then you are not entitled to an order for costs unless the Supreme Court is satisfied that starting the proceedings in the Supreme Court was proper (unless the proceedings were defamation proceedings).

So should you commence proceedings for a claim between $100,000 and $750,000 in the District Court? Not always.

The District Court derives its jurisdiction from legislation. The District Court Act says the District Court has jurisdiction to hear any matter which, if brought in the Supreme Court, would be assigned to the Common Law Division. At the time that law was drafted, the Supreme Court had 9 different divisions.

In the recent case of New South Wales Land and Housing Corporation v Quinn [2016] NSWCA 338 the Court of Appeal considered the District Court's dismissal of a claim for occupation fees in the amount of $221,062.10. The District Court judge held that the District Court did not have jurisdiction to hear the matter because it would have been assigned to the Administrative Division of the Supreme Court. The Court of Appeal disagreed and sent the matter back to the District Court for hearing. Both parties were out of pocket for the costs of the appeal.

Recently, there have been a number of decisions that have resulted in "a surprising and unwelcome result" according to Justice Parker in NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd [2017] NSWSC 1194.

In Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 the radio station sued Natvia for unpaid fees for commercials aired by the radio station. The argument was that the dispute related to a commercial transaction, and would have been allocated to the Commercial Division of the Supreme Court. Justice Rein agreed, and held the District Court did not have jurisdiction to hear the matter.

In Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWSC 1366 a landlord sued the guarantors for payment of $190,703.26 under a lease in the District Court. The issue to be decided was whether the claim arose from a commercial transaction, and if so, did the District Court have jurisdiction to hear the matter. Justice Harrison held that the District Court did not have jurisdiction and ordered the proceedings to be transferred to the Supreme Court.

These decisions have led to many claims that could properly be heard by the District Court being started in the Supreme Court, at a substantial cost. Justice Stevenson summarised the position as follows in Southern Classic Group Pty Ltd t/as Southern Classic Cars v Arch Underwting at Lloyds Ltd on behalf of Syndicate 2012 (No 2) [2018] NSWSC 1530:

"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."

Until the law is changed, you need to take care that you start proceedings in the correct Court.