Why are small claims getting bigger in NSW?

March 24, 2019
andrew morris

smallclaim_web

On 28 February 2019 new law came into effect to increase the jurisdictional limit of the Small Claims Division of the Local Court of NSW from $10K to $20K.

The Small Claims Division of the Local Court of NSW is designed to enable the just, quick and cheap resolution of disputes.  The increase in the jurisdictional limit of the Small Claims Division should improve access to the Local Court and increase the number of matters that can be determined via the less formal and more streamlined processes of the Small Claims Division.

In the Small Claims Division:

  • Proceedings are usually heard before a Small Claims Assessor rather than a Magistrate;
  • Proceedings are conducted with as little formality and technicality as possible considering the individual matter in question;
  • The rules of evidence do not apply to proceedings;
  • Generally witnesses do not give oral evidence and witnesses are not able to be cross-examined;
  • Proceedings are heard and determined on the basis of written statements and documents filed and served in accordance with case management orders and submissions made by the parties on the material filed;
  • Parties must seek Leave from the Court to issue a Subpoena or obtain an order for discovery of production of documents;
  • There are limited rights of appeal against decisions of a Small Claims Assessor; and
  • The maximum amount of costs that may be awarded to a party is currently:
    • $364.80 for claims up to $1K;
    • $547.20 for claims between $1K and $5K; and
    • $729.60 for claims between $5K and $20K.

Implications

Parties with claims up to $20K will be able to access the Small Claims Division of the Local Court to have their matters heard and finalised with the aim of achieving a quick and cheap resolution of their disputes.

However, successful parties will be limited to recovering costs in the amounts set out above.

Commercially parties will need to be aware of the limited costs that can be recouped and factor that into any negotiations and/or decision to commence proceedings to recover a debt.  Defendants may also be more likely proceed to a Small Claims Assessment hearing as their potential costs exposure is limited.

The new jurisdictional limits apply for all matters commenced on or after 28 February 2019.

If you have any questions or concerns regarding the change to the Small Claims Division please contact one of our team at Southern Waters Legal.