Australia: Warning to Defendants District Court: Jurisdictional Limit can be Extended to $1,125,000 in Some Cases Unless Defendant Objects More Than Three Months Before Trial

Judgment date: 10 May 2010

Richards v Cornford [2010] NSWCA 99

NSW Court of Appeal¹

In Brief

• When a Statement of Claim or Statement of Particulars unambiguously claims more than the jurisdictional limit of $750,000, then, if no objection is raised in accordance with s 51(2) of the District Court Act 1973 (Act) the court has extended jurisdiction in accordance with s 51(4).
• A plaintiff must provide sufficiently clear particulars that the claim for damages is in excess of the $750,000 limit. In determining whether the particulars are clear enough, the Court will consider this question of fact through the eyes of the defendants, or their insurers or legal advisors, depending on the circumstances.
• Provided those particulars have been given to the defendant more than three months before the trial commences, the District Court may award judgment of up to 50% above the jurisdictional limit, being $1,125,000 pursuant to s 51(4) of the Act unless the defendant objects prior to that time.

Background

On 2 August 2004, Danielle Richards (plaintiff), sustained injury to her right knee whilst performing a "work trial" with Taringha House Pty Limited. At the time, she was unloading a pallet while operating a tailgate loader of a truck and was startled by a direction given by the driver, Mr Cornford, which caused her to fall over one metre from the end of the tailgate loader to the ground below. At trial, damages were assessed by Murrell DCJ at $959,670, thereby exceeding the District Court's jurisdictional limit of $750,000. Section 51 of the Act provides:

".... (2) The Court has, and may exercise, jurisdiction to hear and dispose of an action or cross claim to which the section applies:

(4) The maximum amount for which judgment may be given in relation to an action or cross claim that is dealt with pursuant to sub-section (2)(b) is an amount equivalent to 50 per cent above the jurisdictional limit of the Court as at the time the action was commenced. .... "

District Court Decision

Regarding the trial judge's assessment of damages, the plaintiff argued that the amount claimed in the Statement of Claim exceeded $750,000 and, as the defendants did not object three months prior to the trial, they were deemed to have given consent to extend the Court's jurisdiction to $1,125,000. An Amended Statement of Particulars was filed over nine months before the trial although it did not divide the claim for economic loss into past and future. However, Murrell DCJ held that the amount claimed in the Statement of Claim and Amended Statement of Particulars was "ambiguous". Accordingly, as notice had not been given to the defendants, judgment was given in the sum of $772,818, being the jurisdictional limit plus interest.

NSW Court of Appeal Decision

Basten JA delivered the unanimous judgment of the NSW Court of Appeal. The question raised on appeal was whether judgment should have been given for the full amount of damages assessed, on the basis that the jurisdictional limit of the District Court had been extended, in consideration of:

1. The necessary or permissible mechanisms by which the defendant can be put on notice that a claim has exceeded the jurisdictional limit; and
2. That notice occurred at the relevant time.

It was common ground between the parties that, before a plaintiff could place reliance upon a lack of objection by a defendant, it would be necessary for the information supplied to the defendant, at least three months prior to the commencement of the trial, to reveal that the claim was above the jurisdictional limit, so that if the plaintiff were successful the jurisdictional limit might be exceeded.

The Court of Appeal noted the District Court of NSW had a civil jurisdiction limited by subject matter, geographical area and amount claimed but that the jurisdictional limit was not absolute but could be waived by the parties: Woodward Pty Limited v Kelleher ². The civil jurisdiction of the Court as defined in s 44 of the Act was limited to $750,000, pursuant to the definition in s 4(1).

However, the Court of Appeal noted the effect of other legislation. This included that pursuant to part 14 of the Uniform Civil Procedure Rules 2005 (UCPR), the District Court could hear matters in respect of both liquidated and unliquidated claims and different kinds of pleadings. Further, s 23 of the Civil Procedure Act 2005 (NSW) allowed a plaintiff to abandon any claim for damages in excess of the jurisdictional limit of the District Court. Finally, s 51 of the Act was found to provide a waiver of the jurisdictional limit by means of a memorandum of consent signed by the relevant parties.

In considering the effect of s 51 of the Act, the Court of Appeal determined there was no doubt the District Court had the authority to give a judgment in an amount in excess of the jurisdictional limit in some circumstances. It also found that it would be surprising if the jurisdiction of the Court was based on an amount specified in the Statement of Claim and depended upon whether the claim, as originally formulated, was "overblown, underestimated or reasonably accurate". The legislation was therefore not considered by the Court of Appeal to lend itself to a "literal and inflexible construction".

In considering the mechanism for disclosure of the amount claimed to the defendants, the Court of Appeal rejected the decision by Murrell DCJ that this could only be by way of the Statement of Claim. This was based on the consideration that it was no longer permissible in the District Court to plead an amount on account of unliquidated damages, the possibility of amendment, the fact that the period of objection in s 51 of the Act was referable to the commencement of trial, not the commencement of proceedings and the practice of providing a separate Statement of Particulars in personal injury claims, as per the UCPR. Accordingly, the Court of Appeal held that the plaintiff was entitled to rely upon the Statement of Particulars in having the Court determine the amount claimed for comparison with the jurisdictional limit.

Basten JA also considered the situation where after the commencement of proceedings, but well before trial, the plaintiff discovered that his or her damages were greater than originally claimed. His Honour found if the pleadings were amended so as to claim damages in excess of the jurisdictional limit, from a defendant's perspective, such an amendment would need to be made a reasonable time in advance of the commencement of the three months pre-trial period, so as to allow time to consider exercising a statutory right of objection to an extension of the court's jurisdiction.

As discussed above, Murrell DCJ concluded that the amount claimed by the plaintiff did not exceed the jurisdictional limit "unambiguously". This was decided by reference to the fact that some heads of damage were not explicitly quantified in the Amended Statement of Particulars. For example, past economic loss was claimed at "$800 to $900 net per week ...and continuing" and future economic loss was claimed at "the plaintiff's pre-accident rate of pay until the age 65 years".

Although the precise sum of damages claimed was not included, the Court of Appeal held that a rough calculation could readily have been made by any person familiar with assessing personal injury claims. The Court of Appeal held that whether, in a particular case, an adequate identification of the amount claimed has been made is a question of fact to be determined by reading the statement through the eyes of the defendants, or their insurers or legal advisors, depending on the circumstances. In this particular case, the Court of Appeal held that the defendants' advisors would have known of the jurisdictional limit, would have been able to calculate readily the upper limit of the claim for economic loss and would have reached a figure in excess of $750,000.

The Amended Statement of Particulars was therefore held to be sufficiently precise to the defendants, being in receipt of advice from professionals exercising reasonable care, to have understood that the total amount of damages sought by the plaintiff was well in excess of the District Court's jurisdictional limit.

Based on the above, the Court of Appeal held that the defendants had been given sufficient notice of the plaintiff's claim being in excess of the jurisdictional limit through the Amended Statement of Particulars. In the absence of any express objection by the defendants more than three months before the date of trial, the jurisdictional limit of the District Court was extended to 50% above $750,000. Accordingly, the plaintiff was entitled to a full judgment in the sum of $959,670.

Implications

This decision has serious implications for defendants in personal injury claims commenced in the District Court and is a timely reminder that s 51(2) of the District Court Act 1973 remains in force by virtue of s 23 of the Civil Procedure Act (2005). It is surprising that plaintiffs' legal representatives have not sought to take advantage of the provisions before now. It is also a wake up call for defendants' lawyers that they need to be alive to the consequences should they fail to object to unlimited jurisdiction at least three months before trial once the pleadings or particulars establish the likelihood of the jurisdictional limit being exceeded.

Importantly, the pleadings do not need to specify the total sum claimed as the Court will presume defendant insurers and their legal advisors will utilise actuarial tables and reasonable care and skill to determine an approximate calculation of damages. It is therefore important for insurers to calculate the damages claimed by the plaintiff on a worse case scenario based on information contained within the Statement of Claim and particulars, and any other documentations served on them, and where appropriate, make an objection to the extended jurisdictional limit of the District Court, at least three months before the trial date.

Considering hearing dates in the District Court are often allocated within three months of a status conference or directions hearing, where there is potential for a plaintiff's claim to exceed $750,000, it may be prudent for defendants to plead an objection to any extension of the jurisdictional limit in their defences in the first instance.

¹ Allsop ACJ; McColl JA and Basten JA
² [1989] NSWCA 62.

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