Change the rules and you change the value – for better or worse.

main-middle-litigationQueen City Law have published a new Dispute Resolution article to the Law Library by Ross Dillon.

The author Ross has been a partner and litigator in a leading mid-sized Auckland firm for almost a quarter century. In this article Ross explains how the changes to the District Court Rules, how they differ from the High Court Rules and how it will affect you.

Read Ross’s full article as a tablet and print friendly PDF here.QCL-MEDIA-FINAL_4804-ross

It can be hard to recognise when the rules in a deal start to change, it is best practice to take preemptive action rather than have outcomes forced upon you by a changing situation. If you have a dispute in progress and the rules are changing, please don’t hesitate to contact our team and get our team on your case. Contact Us. To read more articles by Ross click here.

Sophisticated investors know that the rules applying to an asset are reflected in the value of the asset.  Change the rules and you change the value, for better or worse. Tax, banks loan-to-value ratios, stock exchange listing rules all impact on value. The same applies to the rules governing Court proceedings.  However, the value that changes is something difficult to put a dollar figure on, but is perhaps our most valuable cultural resource – access to justice, which underpins the rule of law itself.

This rather philosophical introduction is to a topic dear to the heart of litigation lawyers, and largely unknown and ignored by most members of the public – namely, changes to the District Court Rules and its jurisdiction. It is difficult to work up any passion over something seemingly prosaic. But consider this.  In 1992, the rules where changed to increase the jurisdiction of the District Court to the then heady sum of $200,000.00.  If your claim was for a greater sum, you had to go to the High Court.

Torres-Red-CardIn 1992, the median house price in New Zealand was about $120,000.00, so a dispute over the average house could be heard in the District Court.   In 2014 the median house price in New Zealand is $415,000.00, and in Auckland it was $637,000.00 in March this year.  There is a proposal to increase the jurisdiction of the District Court to $350,000.00, but in fact, to keep pace with house price inflation, the figure should be about double that ($700,000.00)

Why is this important?  Because the cost of a defended hearing in the District Court is less than the same dispute heard in the High Court.   Which means that more people can afford to have their claim determined, which means they are less likely to seek alternative forms of dispute resolution – and by alternatives I do not mean mediation, I mean baseball bats (and the end of the rule of law).   There are enough countries suffering just such a breakdown in their civil society to show this is no fanciful concern.  If the District Court is meant to be the peoples court, where the bulk of civil claims can be resolved, it is important to ensure that the jurisdiction provided to the Court is sufficient for that task.

While the jurisdiction limits have not yet been changed (and we currently are stuck with the 1992 limit of $200,000.00), the Rules themselves have.  I am indebted to Matthew King of the Auckland District Law Society Civil Litigation Committee for recently publishing a summary of the changes, which I adopt in full, for your consideration, and which can be viewed at:

District Court Rules 2014 – Quick guide to key changes of procedure

Key changes – the highlights

Some of the highlights of the new Rules can be summarised as follows:

  • Notices of proceeding, statements of claim and defence, counterclaim and replies are back. Notice of claim/response forms are gone.
  • A plaintiff can apply for summary judgment straight away. A defendant is able to apply for summary judgment at the same time as serving the statement of defence.
  • Information capsules are gone but an initial list of documents must be provided when serving the pleading (similar to initial disclosure in the High Court).
  • The notice of pursuit of claim is gone.
  • Case management is different to the High Court (see below). The key difference is that discovery orders are not intended to be made until the second case management conference.
  • Short, simplified and full trials remain. There are now set criteria for allocating a simplified trial.
  • Mandatory judicial settlement conferences (JSCs) remain (subject to some exceptions) for cases not initially allocated to a short trial.
  • Discovery requirements are now more consistent with the High Court Rules. The explicit presumption against standard discovery for short trials and simplified trials in the 2009 Rules is not replicated in the 2014 Rules. Exactly how the Court will deal with discovery orders for short trials (at least post-JSC) and simplified trials remains to be seen.

If you are concerned these changes could affect you please contact the QCL team to explore your options. If you are interested in learning more a national road show on the Rules is to be held in Auckland, Hamilton, Wellington, Christchurch and Dunedin in August 2014. This road show will explain the new Rules, their operation, and how they differ from the High Court Rules.