New District Courts Rules: A New Style Of Debt Recovery

The new Rules (which came into force on 1 November 2009) completely overhaul the District Court process.

Under the new Rules, proceedings are commenced by the plaintiff filing a notice of claim and serving a copy on the defendant. If the defendant does not serve a notice of response on the plaintiff within 30 working days, the plaintiff may seek default judgment or judgment by way of formal proof.

The forms to be used will now be filled out online via the Ministry of Justice website, but must be printed off and filed in paper form as the Ministry does not yet have a system established for e-filing.

Unlike the previous procedure where the defendant had to file its statement of defence and serve it on the plaintiff, the defendant now only has to serve the defendant's response on the plaintiff and does not file it in the Court.

The plaintiff then has 30 working days to serve a set of documents called an "information capsule" on the defendant.

The plaintiff's information capsule contains all the information the plaintiff wishes to rely on at trial and a summary of what the plaintiff believes the plaintiff's witnesses will say at trial. The plaintiff also has to include any settlement offers that have been made.

If the defendant does not reply to this information capsule with its own information capsule within 30 working days, the plaintiff can file for judgment by default or formal proof. If the defendant does serve its information capsule, which contains similar information to the plaintiff's information capsule, the plaintiff has 90 working days to file in the Court all documents served in the proceedings so far, along with a notice of pursuit of claim. If the plaintiff does not do this then the proceedings will be treated as having been discontinued.

The long gap between the service of the defendant's information capsule and the filing of the notice of pursuit of claim is aimed at the parties holding settlement negotiations themselves.

One of the major changes is that all notices and information capsules must have a declaration on oath by the party serving it, stating that that party believes that the facts of the notice or information capsule are true and correct to the best of that party's knowledge and belief.

Following the filing and serving of the notice of pursuit of claim, the claim is allocated to either a short trial or a judicial settlement conference. Initially Judges will carry out this allocation, but Registrars will ultimately be the ones making this decision once the process is established. Parties can write to the Court to inform the Registrar of the party's preferred course.

The short trial is used when the dispute is relatively "simple" and can be dealt with in set periods of time. For example, 40 minutes in total is allocated for examination in chief per witness. This type of trial is not likely to exceed a day and will be more likely to be used for trials where smaller amounts are at stake.

The other alternative is for the matter to go to a judicial settlement conference. This is held soon after 30 working days from the decision not to allocate a short trial. The default time for a judicial settlement conference is only 90 minutes long, but the Judge has discretion to extend that time if needed. If settlement is not obtained at the conference, it will immediately become a directions conference where a mode of trial is allocated. There are three types of trial:

• simplified trial, which has time limits similar to the short trial
• summary judgment; or
• a full trial, which is governed by the High Court Rules.

At the stage where a trial is allocated, all records of without prejudice settlement offers are removed from the information capsules. This is also the case if a short trial is allocated.

There is still the option for parties to apply for leave for the proceeding to be carried out in the traditional manner with a statement of claim and statement of defence filed. This would be normally granted for test cases where the law is not clear or for extremely complex factual disputes. In that case the procedure would follow the High Court Rules.

Discovery will no longer be carried out via the traditional process of filing and serving a list of documents and inspecting the other party's documents. Instead, when the parties serve an information capsule, any documents that party wants to rely on to support the party's case must be included. There will no longer be an obligation to discover documents that are not in support of that party's case but there is the opportunity for a party to apply for certain identified documents to be discovered by the other party.

A further change to the Rules is that summary judgment will no longer be used for the purpose that it is commonly used for; that is, debt collection. Instead it will not be available until after the completion of the judicial settlement conference.