Small Claims

[40-000] Introduction

The Small Claims Division in the Local Court is for civil matters up to $20,000: s 29(1)(b) Local Court Act 2007. The intent of the scheme is to provide for proceedings to be conducted with as little formality and technicality as the proper consideration of the matter permits: s 35(2) Local Court Act. The rules of evidence do not apply (s 35(3) and (5) Local Court Act), and there is a presumption against the cross-examination of witnesses: s 35(4) Local Court Act.

The overriding purpose of s 56 Civil Procedure Act 2005 applies and is to resolve the real issues in a just, quick and cheap manner.

[40-020] Pre-trial management

Once a defence is filed, the registrar lists the matter for pre-trial review: r 2.4 Local Court Rules 2009 and Local Court Practice Note Civ 1. Each party must be present or represented at the pre-trial review by a person who has authority to negotiate a settlement of the proceedings.

At the pre-trial review, the court (magistrate, assessor or registrar) must attempt to:

  • identify the issues is dispute

  • settle the matter

  • propose the parties seek mediation at a community justice centre

  • give directions in accordance with Local Court Practice Note Civ 1, including the production of witnesses statements

  • give directions as to the cross-examination of witnesses only where there is a real issue as to credibility or a significant conflict in the evidence.

The court may refuse to list the matter for trial if it is satisfied that the parties have not made reasonable attempts to settle the matter.

Subpoenas may not be issued without leave of the court: r 7.3(3) Uniform Civil Procedure Rules 2005 (UCPR).

The standard case management order requires the parties to simultaneously exchange and file a copy of statements and other written material intended to be relied upon at the hearing at least 14 days prior to the hearing.

There is a most helpful flow chart outlining the procedure in small claims in Ritchie’s Uniform Civil Procedure, LexisNexis Butterworths, Australia, 2006 at [22,025].

[40-040] Motions

Unless the court orders otherwise, applications are to be made orally before the court, except for the following applications which are to be made by motion in accordance with Pt 18 UCPR (r 2.10 Local Court Rules 2009):

Motions to .

  • transfer of proceedings to the General Division

  • order for change of venue under Pt 8 UCPR

  • order for the inspection of property: cf r 23.8 UCPR

  • in relation to proceedings made after the court has given judgment in the proceedings (such as an application for a writ of execution), or

  • set aside a judgment or order of the court: Gorczynski v Holden [2008] NSWSC 334.

Part 18 UCPR 2005 (Motions) is expressed not to apply in the Small Claims Division except in relation to the following applications (rr 1.5 and 1.6, and Sch 1, column 4, UCPR):

  • inspection of property r 23.8

  • general power to set aside judgment or order on sufficient cause if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith: r 36.15

  • further power to set aside or vary judgment or order if notice of motion is filed before entry of the judgment or order, or after it has been entered in certain other circumstances: r 36.16, or

  • dealing with interpleader motions: r 43.6

Unless the rules otherwise provide, or leave is granted by the court, interlocutory applications are to be made orally at the pre-trial review: cl 21 PN Civ 1 of 2011.

[40-060] Compulsory settlement attempts

The court is not to give judgment or make a final order unless the magistrate or assessor has “used his or her best endeavours to bring, the parties to the proceedings to a settlement acceptable to the parties”: s 36(1) Local Court Act 2007.

[40-080] Witnesses and hearings

Section 35(4) Local Court Act 2007 provides:

Witnesses may not be cross-examined except in circumstances which, and to the extent to which, the cross-examination of witnesses is authorised by a practice note.

The magistrate or assessor would ordinarily read the statements, and hear submissions on that material from each party prior to making his or her judgment. In the absence of a direction at the pre-trial review, cross-examination of witnesses would not take place.

In any proceedings, the magistrate or assessor may allow a person to appear or give evidence by telephone, audio-visual link or any other means of electronic communication if those facilities are available: r 2.8 Local Court Rules 2009.

The leading case on the principles to be applied in small claim’s hearing matters is Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd [2000] NSWSC 1153.

  • The requirements of natural justice do not mandate an oral hearing in every case.

  • Similarly, the requirements of natural justice may not confer on a party the right to cross-examine in a given case.

  • “There may, however, be cases in which the denial of an oral hearing or of the right to cross-examine may constitute a denial of natural justice. In determining whether that is or is not so in a given case, it is necessary to consider the whole of the circumstances including the legislation, the general practice as understood by the parties and any agreement as to the way in which the proceedings are to be conducted. It is for the relevant tribunal, in this case the Small Claims Division, to determine this in the light of its obligations to act fairly”: Kojima Australia Pty Ltd v Australian Chinese Newspapers Pty Ltd at [32].

  • It is a denial of natural justice to refuse a party the opportunity to address the court on the written material tendered: Murray v Hay [2000] NSWSC 190.

  • There is no problem with the court reading the written material, hearing them speak to it, and then giving judgment later, if the parties agree to this course. In Cohen v Blair [2000] NSWSC 1076 Hidden J said at [6]:

    No doubt, it is a practical approach to cases of this kind and is consistent with the injunction in s 23B(1) of the Local Courts (Civil Claims) Act 1970 that proceedings in the Small Claims Division “be conducted with as little formality and technicality as the proper consideration of the matter permits”.

[40-100] Transfer of proceedings

Proceedings may be transferred from the Small Claims to the General Division if:

  • there is a cross-claim for greater than $10,000: s 2.2 Local Court Rules 2009

  • the court is of the opinion, at any time before judgment, that the matters are so complex, difficult or of such importance that they ought to be transferred: s 2.3(1) Local Court Rules 2009.

An application to transfer must be made by a party at least 28 days prior to the hearing date: s 2.3(3) Local Court Rules 2009.

The mere fact that there is an allegation of criminality in a case does not render it unsuitable for the Small Claims Division: Wende v Finney t/as CBD Law [2005] NSWSC 927.

A matter may also be transferred from the General Division back to the Small Claims Division at the discretion of the court: s 2.3(2) Local Court Rules 2009.

[40-120] Costs and expenses

Except as provided by the rules, the court sitting in its Small Claims Division has no power to award costs: s 37 Local Court Act 2007.

The court may only make orders for costs in the following circumstances [Local Court Rules 2009 r 2.9(2)]:

(a) 

if proceedings are discontinued or dismissed, or a defence is struck out, at a pre-trial review or at a hearing,

(b) 

if proceedings are adjourned as a consequence of a party’s default or neglect, including a party’s failure to comply with a direction of the court,

(c) 

if proceedings on a motion are heard by the court,

(d) 

if judgment is given after a trial of proceedings.

Where circumstances fall within r 2.9(2)(a)–(c), costs are limited to the amount allowable (plus GST) on entry of default judgment for a liquidated claim: Local Court Rules, r 2.9(3)(a), Legal Profession Uniform Law Application Regulation 2015, Sch 1, Pt 3, Nos 2 and 4:

Amount at issue in the proceedings Maximum costs (excl GST)
does not exceed $1,000 $364.80
$1000–$5000 $547.20
$5,000–$20,000 $729.60

If judgment is given after a trial of proceedings (r 2.9(2)(d)), costs are limited to the amount of costs that would be allowable (plus GST) on entry of default judgment for an unliquidated claim in the proceedings: Local Court Rules, r 2.9(3)(b), Legal Profession Uniform Law Application Regulation 2015, Sch 1, Pt 3, Nos 3 and 4:

Amount at issue in the proceedings Maximum costs (excl GST)
does not exceed $1,000 $629.60
$1000–$5000 $944.40
$5,000–$20,000 $1,259.20

However, where judgment is given after a trial of proceedings (r 2.9(2)(d)), the maximum that may be awarded is increased by 25% if the court considers:

(a) 

the party made a genuine offer to compromise on the claim that was not accepted by the other party, and

(b) 

it was unreasonable for the other party not to have accepted the offer: r 2.9(3A).

Costs include fees, disbursements, expenses and remuneration: r 2.9(1). The court may also allow costs for the following under r 2.9(4):

(a) 

matters for which costs are fixed by a fixed costs legislative provision within the meaning of the Legal Profession Uniform Law (NSW),

(b) 

court and service fees,

(c) 

fees for expert opinion reports (limited to a maximum of $350 for each report),

(d) 

search fees,

(e) 

costs in relation to, or arising out of, the issue of a subpoena.

For further information about scales of professional costs, see Ritchie’s Uniform Civil Procedure NSW, LexisNexis at [29,010].

[40-140] Appeals

An appeal from a judgment or order in a small claims matter lies to the District Court, but only on the grounds of a lack of jurisdiction or denial of natural justice: s 39(2) Local Court Act 2007.

A denial of natural justice includes failure to give sufficient reasons for judgment, and also making a finding of fact where there is no evidence to support such a finding, but does not include an error of law: see Stojanovski v Parevski [2004] NSWSC 1144.