Courts Legislation (Amendment) Bill

The Hon. J. P. HANNAFORD (Attorney General, Minister for Justice, and Vice President of the Executive Council) [8.15]: I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

This bill seeks to make a series of amendments to various Acts affecting the powers and procedures of some of our courts. Most of it deals with civil jurisdictions. If it could be summed up it would be as a bill to remove several fairly minor hindrances to the more efficient operation of the courts. Most of its provisions have been sought by the courts themselves.

I will deal with the provisions generally in the order in which they appear in the schedules to the bill.

Schedule 1 amends the Local Courts (Civil Claims) Act 1970.

The local courts have a general civil jurisdiction up to $40,000, and it is important to the efficient functioning of the civil courts system that actions within the jurisdiction of the local courts be litigated there.

One problem has been the inability of the local courts to order the return of goods wrongly detained. In an action in detinue in a local court a judgment for the plaintiff can only be for payment of money, and when the defendant pays the value of the goods they become his or hers; the defendant can be given the option of returning the goods, but cannot be compelled to return them. Amendment (1) gives the local courts jurisdiction to hear a claim for specific return; it then goes on to tidy up the drafting by recasting section 12, which is the major statement of the courts' jurisdictional limits. Amendment (3) then gives the local courts the powers of the District Court to make orders for specific return, and allows the court rules to provide for enforcement.

Another problem in keeping actions in the local courts has been the unavailability of a defence under the Contracts Review Act 1980. Section 7(1)(a) of that Act enables the Supreme Court and the District Court to refuse to enforce a provision of a contract if the court finds that the provision - which is enforceable under the general law - is unjust in the circumstances. The Act does not apply to the local courts, and a defendant who wants to rely on section 7(1)(a) in a local court action has to apply to the District Court to transfer the action there. Quite a few applications are being made on this basis, and it is suspected that at least some of them are spuriously made as a delaying tactic. Amendment (2) gives the local courts the powers of the Supreme Court to grant relief under section 7(1)(a), but is careful not to extend any other provision of the Contracts Review Act to the local courts. Most of those other provisions involve equitable relief.

The Local Courts (Civil Claims) Act is far too specific in detailing the procedures relating to the financial examination of a judgment debtor. Because of the way the Act is worded, registrars are being compelled to conduct examinations in circumstances where it would be quite reasonable to insist on the creditors doing the work themselves. Registrars are very busy people, and it is inappropriate that the taxpayer should foot the bill for saving the creditor from having to attend the court where the creditor could quite easily do so. The District Court has a much more reasonable system, which is achieved by leaving it to the court to make rules about when a creditor may or may not require the registrar to conduct an examination. Amendments (5) and (7) bring the position in the local courts into line with that in the District Court.

Where a judgment debtor fails to attend a local court as required by an examination summons duly served, the registrar is required by the Act to report the failure in writing to the court. The magistrate can then direct adjournment of the proceedings or the issue of a warrant for the apprehension of the judgment debtor. This warrant requires the sheriff to arrest the debtor and bring him or her before the nearest registrar for examination; it does not authorise imprisonment of the debtor except in the very rare case where an arrest is made at a time when no registrar is available. Almost invariably the magistrate authorises the warrant to issue, and makes this decision without any knowledge of the matter other than the registrar's report.

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There is no point in taking up the time of the court with what can only be treated as a routine matter, or in accepting the delay the process causes in some remote areas. Amendment (6) enables the registrar to exercise the functions of the court to adjourn the examination or issue the warrant or apprehension.

Section 61 of the Local Courts (Civil Claims) Act prohibits the seizure of property under a local court writ of execution between 8.00 p.m. and 7.00 a.m. No other court has anything remotely resembling such a restriction on its process. The origins of the provision have been traced as far back as the Small Debts Recovery Act of 1846, but there is nothing to indicate why it is needed in 1993 in a court with a jurisdiction up to 440,000. Sheriff's officers do not execute a large number of writs at night, but there are occasions when a levy simply cannot be made except at night. Amendment (8) repeals section 61.

Amendments (9) and (10) deal with transitional matters.

Schedule 2 amends the District Court Act 1973.

Amendment (1) makes the same provision for issue by the registrar of a warrant of apprehension as is made in schedule 1 in respect of the local courts.

Amendment (2) deals with a problem concerning orders for costs made in the District Court. In a recent decision the Court of Appeal held, by majority, that the District Court has no power to order costs to be taxed on an indemnity basis. The reason for this decision was that the definition of "costs" in the District Court Act was interpreted as restricting the court's powers to dealing with costs to be taxed on a party-and-party basis, and amendment (2) seeks to lift that restriction.

Very broadly, the distinction between the two types of costs order is that party-and-party costs are limited to the costs necessarily incurred in establishing the successful party's case, and further limited by prescribed scales; indemnity costs include all the costs actually incurred by the successful party other than those unreasonably incurred or unreasonable in amount, and any doubt about the reasonableness is to be resolved in favour of the successful party. The difference in amount can be quite substantial. An indemnity cots order is punitive in nature, and is made only where a party's unreasonable conduct of the proceedings has prolonged them or otherwise added to their costs. Such orders are not infrequently made in the Supreme Court, and the Court of Appeal in its judgment thought it highly desirable that they should be able to be validly made in the District Court.

The particular concern in the District Court has been with plaintiff's offers under the offer of compromise system. That system has been of great assistance in promoting early settlement. Where a plaintiff makes an offer to accept a specified amount in satisfaction of his claim; the defendant rejects the offer; the proceedings continue to judgment; and the plaintiff recovers the amount of his offer or more, it is usually clear that the defendant's rejection has unnecessarily prolonged the proceedings. The plaintiff in such a case would seek and be granted an order that his costs incurred after the date of the offer be paid on the indemnity basis, and the District Court rules provide for this.

Quite a number of orders for indemnity costs have been made in the District Court, and they are of no effect following on the Court of Appeal decision. They were orders made on the merits of the case and in accordance with the rules of the court and the court's understanding of its powers, and the parties who were granted those orders should be protected. Amendment (2) seeks to validate those orders by providing that the court has had power to make them since 28th April, 1989, which is the date of commencement of the offer of compromise system. As is usual in such circumstances, the validation does not affect the particular matter that was before the Court of Appeal.

When the Legal Profession Reform Bill 1993 becomes law, it new approach to costs will supplant the present system, and there will be no doubt about the court's power to award indemnity costs. The provisions of that bill and the bill now before this House cannot stand together, and so the latter provisions are expressed to be repealed on commencement of the former. It is not practicable to leave the present problem to be solved by the Legal Profession Reform Bill, because there will necessarily be a good deal of delay between assent to that bill and commencement of the relevant provisions.

The definition of "costs" which provoked the proceedings in the Court of Appeal is repeated in the Compensation Court Act 1984 and the Local Courts (Civil Claims) Act 1970, and it is necessary to make the same amendments to those Acts as to the District Court Act. The bill attends to those matters in schedule 4 and amendment (4) of schedule 1.

The District Court Act makes extensive provision for the court to make orders for inspection of property in proceedings in the civil jurisdiction, but there is no such provision at all in respect of the criminal jurisdiction. Serious doubt exists as to whether the court can order, say, a view by a jury in criminal proceedings. The Supreme Court relies on its inherent powers in this area, and amendment (3) of schedule 2 will allow the District Court to make rules conferring those powers on the District Court, but limited to orders for a view of real property. For caution, any such rules are included among those criminal procedure rules which need approval of the Attorney General before they can have effect.

Schedule 3 amends the Contracts Review Act 1980 to include the local courts in the definition of "court" but only for the purposes of section 7(1)(a) of the Act. It complements amendment (2) of schedule 1.

Schedule 4, as I have mentioned, clarifies the power of the compensation court to order indemnity costs.

Schedule 5 applies the Supreme Court (Fees and Percentages) Regulations to the Dust Diseases Tribunal. That tribunal was established in 1989 to take exclusive jurisdiction over the proceedings for damages for dust-related injuries which were then brought mostly in the Supreme Court. The Dust Diseases Tribunal Act 1989 provided for regulations to be made as to fees in the tribunal, but none were made. The tribunal has been charging the same fees as charged in the Supreme Court, which was always the intention, but it now becomes necessary to validate those charges. The amendment will continue the application of the Supreme Court charges until regulations are in fact made under the Dust Diseases Tribunal Act.

The various amendments to be made by this bill will assist the courts in their endeavours to provide an efficient dispute resolution service to the citizens of this State. The Government again congratulates the courts on the very impressive progress they are making, and is glad to bring forward legislation sought by the courts to remove a few barriers to that progress.

I commend the bill.

The Hon. J. W. SHAW [8.15]: This bill deals usefully with a number of technical and procedural changes affecting both the Local Court and the District Court. The changes have emanated, as I understand, from views within the court system. Obvious expertise within the court system suggested these changes and they ought to be viewed sympathetically by this House. I shall list what the Opposition apprehends to be the essential features of the changes effected by the legislation. First, an option will be provided to order the return of detained goods instead of payment of their value and damages.
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Second, courts will be able to refuse to enforce an unjust contract. Third, the examination of judgment debtors will be dealt with in the Local Court. The proposed amendment would place a local court on the same basis as the District Court. Fourth, the registrar will be able, without first obtaining the authority of the local court, to issue a warrant or to adjourn the proceedings and order the debtor to appear to answer an examination summons. Fifth, the time within which execution of goods may be levied will be extended.

Sixth, the District Court will have power to inspect property in criminal proceedings, and seventh, the District Court will be authorised to make orders for indemnity costs. In a recent Court of Appeal case it was discovered that the District Court lacked the salutary and useful power to order indemnity costs as distinct from party and party costs. It is appropriate that this Parliament should fill that hiatus because obviously the Supreme Court and other superior courts of record do have conventional power to award indemnity costs. It is a matter of surprise and anomaly that the District Court lacks that power. The final aspect of the legislation is particularly welcome. It will enable a District Court to deal with cases of procedural misconduct or the unwarranted prolongation of proceedings which warrants the payment of full costs on the part of the unsuccessful party. The Opposition supports this appropriate piece of legislation.

The Hon. JENNIFER GARDINER [8.18]: I speak briefly in support of the Courts Legislation (Amendment) Bill, which makes a series of amendments to various Acts, affecting the powers and procedures of some New South Wales courts. Most of the amendments deal with civil jurisdictions, basically removing a number of minor hindrances to the more efficient operation of courts. Most of the provisions were asked of the Government by the courts themselves. As the Hon. J. W. Shaw said, these amendments affect various minor operations of the court, some of them dating back to archaic provisions such as abandoning the enforcement of a local court writ being issued at night. There are a number of other minor technical amendments to the Acts. I have pleasure in supporting the bill.

The Hon. ELISABETH KIRKBY [8.19]: The Courts Legislation (Amendment) Bill will make amendments to the jurisdiction of the District Court and the jurisdiction of local courts under the Local Courts (Civil Claims) Act 1970. The Court of Appeal in Milosevic held that the District Court had no jurisdiction to award indemnity costs. I am informed that the New South Wales Law Society had urged the Attorney General to introduce amending legislation to circumvent this decision, and this has now been done with retrospective effect, excluding the parties to the Milosevic case. Similar provisions are also being introduced to give local courts and the compensation court jurisdiction to order indemnity costs from the date of the enactment of the legislation.

Another provision of the bill is to give local courts a limited jurisdiction to deal with small cases under the Contracts Review Act. Small cases falling within the ambit of the Contracts Review Act are still being adjudicated by the District Court in spite of the expansion of the monetary jurisdiction of local courts to $40,000 from mid-1991. This has led to additional costs. This bill will give local courts the powers of the Supreme Court to grant relief under section 7(1)(a) of the Contracts Review Act, which enables the Supreme Court to refuse to enforce the provision of a contract if the court finds that this provision is unjust. Item (3) of schedule 1 deals with the fact that local courts did not have the power to order the return of detained goods, unlike the District Court and the Supreme Court. With the increase in the monetary jurisdiction, it is necessary to grant local courts such powers. The final significant provision of the bill will be to give the District Court power similar to the Supreme Court in relation to criminal proceedings to make rules for the inspection of personal property. These rules would need the consent of the Attorney General, who will ensure that the common law rules which require the rights of third parties to be taken into account will not be affected. The Australian Democrats support the bill.

The Hon. J. P. HANNAFORD (Attorney General, Minister for Justice, and Vice President of the Executive Council) [8.21], in reply: I thank honourable members for their support of this important piece of legislation. During debate in another Chamber certain matters of concern were raised which I should comment on and clarify. The first issue was "the imprisonment of a judgment debtor arrested under a warrant of apprehension". I assure the House that there is no need for members to be concerned about this issue. The imprisonment justified by the warrant is no more than the Sheriff keeping the debtor in safe custody until he can be brought before a registrar. I emphasise that it does not include the lodging of that person in a gaol. It is a requirement imposed on the Sheriff by the common law, not by any provision in the Act under which the warrant is issued. The warrant does not authorise the keeper of a gaol to take custody of the debtor, nor could it without statutory support.

The Sheriff is required by the common law to do what he must reasonably do to fulfil his obligation to bring the debtor before a registrar. If no registrar is available, the Sheriff has to make interim custodial arrangements, which might, for example, consist of insisting that the debtor remain with him in the court house while the registrar is brought from his home. The Crown Solicitor formally advised the Sheriff in 1977 as to the common law obligations attendant upon a warrant of apprehension. The Sheriff then formally advised all his officers that if an arrest is to be made under a warrant, and there is any reason to doubt the availability of the registrar, that availability is to be checked before the arrest is made. If no registrar can be found, the arrest is not to be made, except in the most extraordinary circumstances.

No such circumstances have arisen since 1977 and no debtor has lost his or her liberty other than in being brought before a registrar. I also emphasise what was said in the other place: that the liability of a judgment debtor to arrest for failure to comply with
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an examination summons has always existed; it is not being created by this bill. The bill looks only to the procedure for the issue of the warrant and simplifies that. It is also worth noting that the bill will not interfere with the requirement that the debtor be given 14 days notice of the decision to issue the warrant - 14 days in which the debtor can completely avoid the consequences of having disobeyed the examination summons simply by attending upon the registrar. There is not the slightest basis for any concern in relation to this issue. I thank honourable members for their support of the bill.

Motion agreed to.

Bill read a second time and passed through remaining stages.