Accept or Decline - How Commercial Transactions have tapped their way into Jurisdictional Uncertainty
In the past year there has been ambiguity around whether proceedings arising out of commercial transactions can be litigated in the District Court or Supreme Court of NSW.
Since the judgment in NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd (2017) NSWSC 1194, there have been a number of judgments of the Supreme Court of NSW which have held that a proper reading of section 44 of the District Court Act 1973 (NSW) and the legislative provisions governing the assignment of cases in the Supreme Court, meant that the District Court did not have jurisdiction to determine proceedings arising out of commercial transactions, as they were previously assigned to the Commercial Division of the Supreme Court.
While this statutory construction is strictly correct, it had the unwelcome result of preventing the District Court from determining issues which fell within its monetary jurisdiction and further, raised concerns about the validity of previous judgments which may have been made ultra vires.
To address the issue, the NSW Government introduced the Justice Legislation Amendment Bill (No 3) 2018 which passed Parliament on 21 November 2018 and was assented to on 28 November 2018 which has amended the jurisdiction of the District Court.
The amendments arising from the Bill (and subsequent enabling Act) are as follows:
- The insertion of Section 44(1)(c1)into the District Court Act 1973 (NSW) which extends the District Court’s jurisdiction to any action arising out of a commercial transaction in which the amount claimed does not exceed the District Court’s jurisdiction ($750,000).
- The enabling legislation confirms that the new section has retrospective application is if it had been in force as at 2 February 1998.
Impact of Amendments
The amendment provides clarity in confirming that the District Court has jurisdiction to determine actions arising out of a commercial transaction in which the amount do not exceed the court’s jurisdictional limit. Further, the retrospective application gives certainty with respect to the validity of any judgments that the court delivered with respect to commercial transaction actions. The amendments will hopefully mean that there are less challenges to the jurisdiction of the District Court with respect to commercial transactions.
However, the amendments do still leave certain issues extant with respect to the District Court’ jurisdiction as the new section:
- is still subject to section 44(1)(c) of the District Court Act; and
- does not provide a definition of what constitutes a “commercial transaction”.
Lastly, it remains to be seen how the new jurisdiction to hear claims arising from commercial transactions is interpreted in light of the Miscellaneous Jurisdiction of the District Court arising in Division 8 of the District Court Act which places limits on the District Court’s equitable jurisdiction and other specific actions such as specific performance, possession of land, etc. No doubt, such actions, at times, could also be considered as arising from commercial transactions.
 Commonwealth Bank of Australia v QBE Insurance (Australia) Pty Ltd  NSWSC 1440; Sapphire Suite Pty Ltd v Bellini Lounge  NSWSC 1366.
 Passed as the Justice Legislation Amendment Act (No 3) 2018 (NSW): see https://www.legislation.nsw.gov.au/#/view/act/2018/87/full
 Which provides a jurisdictional limit of $20,000 on the recovery of the whole or part of the unliquidated balance of a partnership account, or the amount or part of the amount of the distributive share under an intestacy or of a legacy under a will.
 An issue that may still vex the court in determining its jurisdiction – see for example Ace Electrical Wholesalers Pty Ltd v Bitar  NSWDC 360.