12.3The District Court is granted by section 34(1)(a) of the District Courts Act 1947 “the same equitable jurisdiction as the High Court”, so long as “the amount claimed or the value of the property claimed or in issue” is no more than $200,000. Specific qualifications are imposed on the District Court’ equitable jurisdiction by section 34(2). Where an Act (other than section 16 of the Judicature Act 1908 – the provision conferring general jurisdiction on the High Court) has conferred equitable jurisdiction on the High Court (or any other court) over a proceeding or class of proceeding then the District Court has no jurisdiction over such proceeding.
12.4The Trustee Act 1956 is one of the Acts that confers exclusive jurisdiction on the High Court.
12.5The District Court has jurisdiction to determine breach of trust claims within their monetary limits but they cannot exercise any powers under the Trustee Act. Some inconvenience and difficulty is caused by this restriction. It might even be argued that the District Court’s jurisdiction in respect of trusts is rendered ineffective because it is not able to make orders under the Act. For example, the District Court does not have jurisdiction to appoint new trustees, remove or replace trustees, hear applications for variations to the terms of a trust, or grant relief to a trustee under section 73.
12.9There are also issues in respect of access to justice. The District Court has become the primary court of first instance in many areas of law. They are intended to be the “people’s courts”; to be local, readily accessible, and able to provide justice speedily with a minimum of formality and expense. Yet at present beneficiaries who are dissatisfied with the performance of a trustee’s duties must take their proceedings in the High Court if they wish to enforce the trust. Where trustees seek noncontroversial administrative changes to the terms of a trust or directions on some matter they must also take proceedings in the High Court. The question here is whether the District Court might provide a less costly and more accessible option for beneficiaries and trustees in some situations.
12.10Whether the District Court should have jurisdiction under new legislation replacing the Trustee Act is a significant issue for this review.
12.13If the District Court is given concurrent jurisdiction, as proposed by option (b), similar limits could be applied to proceeding under a new trust Act. The District Court could have jurisdiction, concurrent with the High Court, to make orders under the new Act where the amount claimed or the value of the property claimed or at issue was under a specified limit. In addition, applications under the new Act not involving money and property claims might also be made in the District Court for any relevant order or directions. For example, an application seeking the appointment of a new trustee, or an application seeking an order directing a trustee to supply information could then be brought in the District Court rather than the High Court under option (b).
12.14Submitters were almost evenly split with half favouring preserving the status quo and the other half supported the District Court having concurrent jurisdiction within its monetary limits.
12.15Most submitters who argued in favour of the status quo favour greater judicial specialisation. It was generally argued that trust law should be approached as a specialism involving issues of both legal and factual complexity. Consequently they argued that considerable expertise at both the judicial and representational level is required and that this is more readily available in the High Court. Concentrating trust cases in the one court improves both the quality of decision-making and case management. Judges with greater familiarity and expertise with the subject matter comprehend the evidence and issues more readily. Ultimately this leads to better case management and decision-making which reduces court time and cost. The New Zealand Law Society (NZLS) took the position that greater judicial specialisation in New Zealand would be desirable and that giving the District Court jurisdiction in trust matters would not achieve that end. It did not elaborate on why it considered specialisation was not an option within the District Court.
12.16A further argument that is put forward is that the case management systems and processes in the High Court are better suited to dealing with complex trust matters. Some practitioners have argued that the High Court’s originating application process is suitable for much trust work and makes the High Court relatively cost-effective. Although the fee structure is higher in the High Court than the District Court, the difference in the cost of legal representation may not be significant. These practitioners considered that the District Court’s processes are unsuitable for trust litigation. The NZLS reported that there is widespread dissatisfaction among its members with the District Court’s processes under the new District Courts Rules.
12.17Most submitters who argued in favour of the District Court having concurrent jurisdiction did so on the basis that this would improve access to the courts, particularly for lower value disputes. The District Court is now the primary court of first instance.
12.18Since the Trustee Act came into force in 1956 the jurisdiction of the District Court has expanded, in equity, as well as in other areas. As the monetary jurisdiction of the District Court has increased, amendments have also broadened the scope of its jurisdiction under section 34. Subsection (2A) was, for example, inserted in 1996 giving the District Court the power to make orders under section 49 of the Administration Act 1969. The current section 34 replaced a list of specific matters that previously defined the Court’s equitable jurisdiction in 1992. Given the general expansion of the Court’s equitable jurisdiction during the years since the Trustee Act was enacted, it is argued that it is an anomaly that the District Court cannot exercise statutory powers in respect of trusts.
12.19The District Court, like the High Court, is now a court of general jurisdiction. It has a broad civil and equitable jurisdiction. New Zealand’s general civil jurisdiction is divided between the High Court and District Court primarily on the basis of the monetary value of the matter in dispute, rather than principles around different functions. A strong argument can therefore be made in favour of extending the District Court’s jurisdiction based on the current division of functions between the courts. Although, in other areas of law, for example company law, statutes do reserve exclusive jurisdiction to the High Court.
12.20It was also argued that the case for specialisation and the complexity of trust law has been overstated. Many matters that need to go to court under the Trustee Act (such as approving the replacement of a retiring trustee or issuing a vesting order) are straightforward in nature and are unlikely to involve difficult questions of law. It is not necessary to reserve such powers to the High Court. Another flaw in the specialisation argument is that the District Court is already involved with trust law. Actions for breach of trust can be taken in the District Court under its general equitable jurisdiction provided the amount in dispute falls within the specified monetary limits set by section 34(1)(a). The logical extension of the argument for specialisation and a single court dealing with trust law would be to remove the District Court’s existing jurisdiction as it relates to trusts. One submitter also made the point that there could be a panel of specific judges with trust law experience assigned to hear trust cases in the District Court. It should not be assumed that the District Court means generalist judges.
12.23The cost of legal representation between the two courts would seem to differ less. We have not found any useful statistical information on the comparative costs here. In any event comparing average costs may not be very helpful. It has been suggested to the Commission by a number of practitioners that the cost of representation will be similar regardless of whether cases are heard in the High Court or District Court. This is because, as already noted, some proceedings can be undertaken using the less costly originating application process. This process is not available in the District Court so overall the cost of representation may remain similar, even where practitioners’ charging rates are lower in the District Court.
12.25Finally, the point was made by a few submitters that the current upper jurisdictional limit for the amount claimed or the value of the property at issue of $200,000 should be raised as many claims in respect of trust would exceed this.
12.26After weighing the competing arguments our preferred approach is for the District Court to have concurrent jurisdiction under new trusts legislation (option (b)). We acknowledge that our proposal differs somewhat from the position taken by the Commission in 2004 when it recommended that the High Court retain its predominant jurisdiction in relation to trusts. There are a number of important reasons for now favouring a greater concurrent jurisdiction in respect of trusts.
12.27The District Court has a broad civil and equitable jurisdiction. The current jurisdictional division between the High and District Courts is based generally on the monetary value of the matters in dispute. As a result the equitable jurisdiction of the District Court is of a general nature and it does seem to be an anomaly that the District Court cannot exercise statutory powers in respect of trusts. Our proposal for concurrent jurisdiction is consistent with the District Court’s jurisdiction in other areas and their overall development as the primary court of first instance.
12.28We consider that the case for specialisation based on the complexity of trust law can be overstated. Many matters that need to go to court, such as approving the replacement of a retiring trustee or issuing a vesting order, are straightforward in nature. They are unlikely to involve difficult questions of law and it is just not necessary to reserve such powers to the High Court. The District Court already has a general equitable jurisdiction. Our proposal will give them the necessary tools to exercise their jurisdiction more effectively.
12.30Whether trust work within the District Court is best allocated to specific judges or whether it is dealt with more generally does need some thought. The development of civil judges within the District Court is likely to continue and there is no reason why specific judges could not be assigned to hear trust cases within that court.
12.31We consider that expanding the District Court’s jurisdiction in the way we have proposed may improve access to justice because it gives potential parties a greater range of litigation options. For appropriate cases the District Court could provide a lower level dispute resolution option. There are significant differences between the civil process used in the District and High Courts. Our proposal for concurrent jurisdiction allows advantage to be taken of both of these. It does not preclude a litigant from filing their claim in the High Court if they consider that the better option, even if the amount in dispute is below the upper monetary limit for the District Court. As discussed further below, our proposed approach will include a degree of transfer to the High Court as of right where a party objects to the matter being determined in the District Court.
12.32As has been already discussed, the amount claimed or the value of the property at issue in any breach of trust claim or filed in the District Court cannot currently exceed $200,000. Where proceedings do not involve a claim or dispute over money or property the District Court has been given by section 34(1)(a) the same equitable jurisdiction as the High Court.
12.33If the District Court is to have jurisdiction under new trusts legislation, as we are proposing, then consideration needs to be given to the question of what limits should be placed on that jurisdiction. The most logical and consistent approach would be to broadly replicate the position already taken in section 34(1)(a) of the District Courts Act in respect of the District Court’s equitable jurisdiction. Taking this approach, the upper limit for money claims would be capped at the threshold set in that Act, which is currently $200,000, but there would otherwise be no restrictions on the District Court’s jurisdiction to grant any other orders or make any other directions under the new Act.
12.34Another approach which we have also considered is whether to limit the District Court’s jurisdiction under new legislation in some way by reference to the value of assets held under the terms of the trust. This type of approach is taken by section 31 of the District Courts Act to proceedings for the recovery of land. Under that provision the court has jurisdiction where the value of the land in question does not exceed $500,000. Similarly, section 34(1)(b) of the District Courts Act also determines the District Court’s jurisdiction to dissolve or wind up partnerships by reference to the total value of the partnership assets. However, unlike these examples, there is not the close nexus between the value of the assets of the trust and the court’s function. In the case of trusts the value of assets in the trust will not always be relevant to the matter before the court in the way it must always be in the case of a dispute over the ownership of land.
12.35There are many applications that could come before the courts under a new Act, which are relatively straight forward or are not contested. Two good examples are (a) approving the replacement of a retiring trustee; (b) issuing vesting orders transferring property from a retiring trustee to another trustee. Irrespective of the overall value of the assets in trust, the District Court could readily exercise such functions. It could also readily determine many other routine matters.
12.37Instead of taking either of these approaches we have opted for the District Court having jurisdiction, concurrent with the High Court, to hear and determine proceedings and make any order under new trusts legislation where the amount claimed or the value of the property claimed or in issue does not exceed a specified upper threshold. The District Court would also have jurisdiction, concurrent with the High Court, to determine any proceedings (such as those to appoint or remove a trustee) that do not involve any claim for money or any claim or issue over property. This means that irrespective of the value of the assets in the trust, that court could determine any proceeding or application under the new Act that does not involve any claim for money or property.
12.38Where proceedings are commenced in the District Court and do not involve any claim for money or property we propose that any party to those proceedings should be able to give notice objecting to the proceeding being determined in that court. The proceedings should then as of right be transferred to the High Court. Under section 47 of the District Courts Act 1947 a defendant has the right to have a proceeding transferred to the High Court if the sum sought, or the value of the property or relief claimed, exceeds $50,000. Where the amount involved in the claim is less than $50,000 the defendant may object but the transfer will be at the discretion of the Court. The Court may only order that such proceedings be transferred if it is satisfied that some important question of law or fact is likely to arise. In our view, concurrent jurisdiction and providing the parties with rights of objection and transfer are sufficient to address any concern that proceedings raising complex issues of trust law will be inappropriately determined in the District Court.
12.40The Law Commission is currently considering whether the upper limit of the District Court’s civil jurisdiction should be raised as part of its reference to review the Judicature Act 1908 and consolidate courts legislation. Although that report has not yet been released, the Commission intends to recommend that the upper limit be increased significantly from $200,000. The reasons for those increases will be fully canvassed in that report when released. However, in anticipation of that recommendation we have proposed here that the upper limit for proceedings brought under new trusts legislation should be capped at $500,000.