Supreme Court New South Wales Medium Neutral Citation: Commonwealth Bank of Australia v QBE Insurance (Australia) Ltd [2018] NSWSC 1440 Hearing dates: 19 September 2018 Decision date: 19 September 2018 Jurisdiction: Common Law Before: N Adams J Decision: (1) Pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW), the proceedings in case number 2017/282824 in the District Court of New South Wales are transferred to this Court. (2) The costs of this summons be costs in the cause. (3) The matter is stood over before the Registrar on 19 October 2018 for directions. Catchwords: CIVIL PROCEDURE – Jurisdiction – Transfer to and from other courts – Whether certain proceedings of a commercial nature commenced in the District Court should be transferred to this Court for want of jurisdiction Legislation Cited: Civil Procedure Act 2005 (NSW), ss 56, 140 District Court Act 1973 (NSW), s 44 Supreme Court Rules 1970 (NSW), Pt 14, r 2 Cases Cited: Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531; [2007] HCA 8 Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd (2017) 324 FLR 261; [2017] NSWSC 1194 Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWSC 1366 Category: Procedural and other rulings Parties: Commonwealth Bank of Australia (Plaintiff) QBE Insurance (Australia) Ltd (Defendant) Representation: Counsel: M Newton (Plaintiff) SMC Koyuncu (Defendant) Solicitors: HWL Ebsworth Lawyers (Plaintiff) File Number(s): 2018/284379 Publication restriction: Nil Judgment (revised from ex tempore) 1. On Monday, 17 September 2018, the Commonwealth Bank of Australia, by its counsel, Mr Newton, sought leave before me in my Capacity as Duty Judge to file in Court a summons and supporting affidavit in addition to seeking an order for short service of that summons. The ultimate relief sought in the summons was that, pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW), the proceedings in the District Court with case number 2017/00282824 be transferred to this Court. I granted the plaintiff leave to file the documents in Court and abridge the time for service of the summons and stood the matter over until today. Today, Mr Newton again appears for the CBA and Mr Koyuncu appears for the defendant, QBE Insurance Australia Limited. 2. I have been provided with short minutes of order. The defendant consents to the order being made. Despite the fact that no issue is taken with the proposed order, in circumstances where it pertains to the question of whether the District Court has the requisite jurisdiction to hear the substantive matter, it seems to me that I need to be independently satisfied that it is appropriate to grant the relief sought. 3. The proceedings in the District Court, which were commenced by statement of claim on 18 September 2017, concern the construction of an exclusion clause from an insurance contract and a dispute as to whether the defendant should have paid out under an insurance policy in favour of a person with whom the plaintiff had entered a loan agreement. It is unnecessary for me to state the background to that matter in any further detail for the purposes of these reasons. That matter was listed for hearing in the District Court on 26 September 2018 for a two day trial. 4. On 7 September 2017, Parker J delivered the decision of NTF Group Pty Ltd v PA Putney Finance Australia Pty Ltd (2017) 324 FLR 261; [2017] NSWSC 1194 ("NTF Group") in which his Honour considered the question of to what extent the District Court has jurisdiction to hear matters arising out of "commercial transactions" under Pt 14, r 2 of the then Supreme Court Rules 1970 (NSW). That decision raised considerable doubt as to whether the District Court has jurisdiction to hear matters such as this matter currently in the District Court. 5. On 11 September 2018, the solicitor for the defendant wrote to the solicitor for the plaintiff drawing its attention to the decision of Parker J and noting that the District Court proceedings could be considered to be a "commercial claim". Acting as model litigant, the defendant noted that it may well be that the District Court does not have jurisdiction to hear this matter. 6. There have been other more recent decisions of this Court that have followed the decision of Parker J. I will simply refer to the decision of Harrison J in Sapphire Suite Pty Ltd v Bellini Lounge Pty Ltd [2018] NSWSC 1366 ("Sapphire Suite"). In that decision, his Honour sets out the jurisdictional issue succinctly at [6]-[9]. In short, in the High Court decision of Forsyth v Deputy Commissioner of Taxation (2007) 231 CLR 531; [2007] HCA 8, the Court held that s 44(1)(a)(i) of the District Court Act 1973 (NSW) should be construed according to the assignment provisions in the Supreme Court as they applied as at 2 February 1998. In other words, s 44(1)(a)(i) should not be given an ambulatory construction. Rather, it is to be construed as referring to actions which would have been assigned to the Common Law Division of the Supreme Court as at the time when the provision was enacted. Section 44(1) relevantly provides: "(1) Subject to this Act, the Court has jurisdiction to hear and dispose of the following actions: (a) any action of a kind: (i) which, if brought in the Supreme Court, would be assigned to the Common Law Division of that Court, and (ii) in which the amount (if any) claimed does not exceed the Court's jurisdictional limit, whether on a balance of account or after an admitted set-off or otherwise, other than an action referred to in paragraph (d) or (e), … (d) any motor accident claim, irrespective of the amount claimed, … (e) any proceedings transferred to the Court under section 146 (1) of the Civil Procedure Act 2005 , irrespective of the amount (if any) claimed in those proceedings." 1. As Harrison J noted in Sapphire Suite at [6], as at February 1998, the Supreme Court had seven divisions in addition to the Court of Appeal. Those divisions were the Admiralty Division, the Family Law Division, the Administrative Law Division, the Criminal Division, the Commercial Division, the Equity Division and the Common Law Division. It is to be observed that the Supreme Court presently has only two divisions aside from the Court of Appeal. 2. As at 2 February 1998, Part 14, r 2 of the Supreme Court Rules 1970 (NSW) relevantly provided that there shall be assigned to the Commercial Division proceedings arising out of "commercial transactions". The term "commercial transactions" was not defined in the rules but it seems to me that it is of broad definition and would encompass any transaction made in commerce or which could be described as "mercantile" in nature. It was not suggested that the present proceedings were otherwise than arising out of a commercial transaction. 3. I agree with the observations made by Harrison J at [13] of Sapphire Suite (approving the conclusion of Parker J in NTF Group) that it is a "surprising and unwelcome result" that the District Court would not have jurisdiction to hear a matter such as the present matter. However, as both of their Honours have observed, as a simple matter of statutory construction, it seems to be the only course to take. Justice Parker did express some concern about this, as did Harrison J. I echo the comments made by Rein J in Nova 96.9 Pty Ltd v Natvia Pty Ltd [2018] NSWSC 1288 ("Nova 96.9 Pty Ltd"), that Parliament may well need to give consideration as to whether there is a legitimate intention that the District Court not have jurisdiction in matters of this nature. The circumstances are, anecdotally at least, that such matters have been conducted in the District Court from time to time until now. 4. For the abovementioned reasons, I am satisfied that it is appropriate to make an order transferring to the proceedings to the Supreme Court. 5. The only outstanding issue as between the parties concerns the appropriate costs order. On behalf of the plaintiff it was submitted that the appropriate order was that costs be in the cause. That was the order made by Harrison J in Sapphire Suite. Although Rein J made a different order in Nova 96.9 Pty Ltd, I have had regard to [39] of that judgment and I am satisfied that the only reason his Honour did not make an order that costs be in the cause was that the plaintiff had opposed part of the orders sought which required the parties to come to Court and have the matter argued in some detail. 6. On behalf of the defendant it is submitted that the reasons militating against an order that costs be in the cause and in favour of a costs order in favour of the defendant was the delay. It was noted that the matter is listed for final hearing in the District Court next week and that hearing date will have to be vacated as a result of the proceedings being transferred to this Court. 7. It was accepted on behalf of the defendant that it was not until at least the decision of Parker J on 7 September 2017 that there has been any judicial consideration of this matter. However, it was submitted that it is always the decision of legal representatives as to which jurisdiction proceedings are commenced. That is, just because the decisions of this Court have been recent, it does not follow that the plaintiff should not have given due consideration to the jurisdictional matter prior to commencing proceedings. 8. Although I can understand why the defendant may take that view, the fact remains, as I have already indicated, that a number of Justices of this Court have commented that the construction that they have arrived at on this issue is both surprising and an unwelcome result. As I have already indicated, I join in that conclusion. To that extent, I am not satisfied that any undue criticism can be levelled at the plaintiff for commencing these proceedings in the District Court, particularly having regard to the amount claimed in the dispute. 9. It was also submitted that the defendant has acted quite properly in bringing the recent decisions to the attention of the plaintiff who it is accepted was not previously aware of this recent line of authority. 10. As I indicated to counsel for the defendant during the hearing of this application, the defendant has acted as a model litigant in that regard. However, despite the prospect of delay caused by the hearing date being vacated, I am not otherwise satisfied that any prejudice has been caused to the defendant by the application being made at this stage. It is to be noted that, in the decision in Sapphire Suite, it was the Judge in the District Court hearing who questioned the jurisdiction of the Court. That was at a time prior to the decisions of Harrison, Rein and Parker JJ to which I have referred. It could be anticipated that, had the defendant not notified the plaintiff of these decisions, the question may have arisen for the first time during the hearing which would have caused the hearing to come to a halt and to be transferred to this Court in any event. 11. I have had regard to all of those matters and I am satisfied that the appropriate order is that costs be in the cause. ORDERS 1. Accordingly I make the following orders: 1. Pursuant to s 140(1) of the Civil Procedure Act 2005 (NSW), the proceedings in case number 2017/282824 in the District Court of New South Wales are transferred to this Court. 2. The costs of this summons be costs in the cause. 3. The matter is stood over before the Registrar on 19 October 2018 for directions. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 September 2018