Disputes Tribunals Amendment Bill

Hon SIMON POWER (Minister of Justice) Link to this

I move, That the Disputes Tribunals Amendment Bill be now read a second time. I thank the Justice and Electoral Committee and its chairman, Chester Borrows, for its careful consideration of the bill, particularly in such a tight time frame. This pace was set by the Prime Minister’s announcement of a small business relief package on 4 February this year, of which this bill was a part, to respond promptly to the global financial crisis. Expanding the jurisdiction of the tribunals also fulfils National’s election promise to increase the jurisdiction of the disputes tribunals to reduce pressure on District Courts. This bill will increase the maximum claim levels of the disputes tribunals, thereby improving access to justice for individuals and small businesses through the simpler, faster, and cheaper processes of the tribunal.

Since the first small claims tribunals were established in 1977 there has been a forum for resolving small civil claims, culminating in the disputes tribunals from 1989. These forums have proven to be effective in resolving disputes in an efficient and low-cost manner. They have been, and will continue to be, an important pathway for New Zealanders to access justice.

The increase to the maximum claim levels proposed by this bill is the first increase in over 10 years. The current maximum levels are $7,500, or $12,000 where both parties agree. This bill will increase these levels to $15,000, or $20,000 where both parties agree. This will improve access to the disputes tribunal for individuals and small businesses, thereby reducing costs for up to 3,600 additional cases annually.

I am advised that the Justice and Electoral Committee received 10 written submissions on the bill, and three submitters appeared before the committee. Submitters were broadly in favour of an increase to the maximum claim levels of a disputes tribunal as proposed by this bill. In fact, a number of submitters considered that a further increase could be made to the maximum claim levels than that proposed by the bill. I have some sympathy for that view, but ultimately the committee was right to conclude that a further increase could not be justified within the current framework of the disputes tribunals.

The disputes tribunal provides a unique and important justice service in that it limits a number of the normal protections found in the court system in order to provide simple, fast, and cheap access to justice. For example, disputes tribunal proceedings are held in private, parties are not entitled to legal representation, referees are not required to be legally qualified, and the grounds for appeal are limited. An increase to the threshold beyond that proposed in this bill would require the strengthening of a number of the disputes tribunals’ protections because there would be more at stake. This bill strikes a balance between increasing the maximum claim levels of the disputes tribunals while maintaining the tribunals’ integrity. I want to make it clear that I will not rule out further changes to the threshold as long as the character of the tribunals can be maintained.

Submitters suggested a number of other changes to disputes tribunals that could be considered, including changes to the appeal rights of a tribunal, the requirements for the appointment of referees, the publication of tribunal decisions, and the mechanism for adjusting the maximum claim levels. These ideas have merit, and I am willing to consider them once the impact of the current change has been assessed.

It is important that the increase proposed by this bill is progressed as quickly as possible in order to assist small businesses and individuals to resolve their disputes more simply and faster. Many of these cases would currently be dealt with in the District Court, with its higher associated costs, including the cost of legal representation. The lack of change in the maximum level claims for the disputes tribunal over 10 years has created a gap between cases that can be taken to the disputes tribunal and those that are financially viable to be taken to the District Court. This bill will improve access to justice for individuals and businesses pursuing cases that would otherwise fall through the cracks. That, in turn, will free up valuable time and money for small and medium sized businesses so that they can get on with the business of producing goods and services.

Again, I thank the Justice and Electoral Committee for the expeditious consideration of the bill. I thank all of those who made submissions on the bill for their interest in the work of the tribunal. I commend the bill to the House.

Hon LIANNE DALZIEL (Labour—Christchurch East) Link to this

I rise to support the further passage of the Disputes Tribunals Amendment Bill, which has been reported back from the Justice and Electoral Committee. I am very pleased with the consideration the bill has obviously gone through at the select committee, but was somewhat interested to learn that only 10 submissions had been received and that only three of those submitters wanted to be heard. That raises a question about having to amend the principal Act every time we want to review the adequacy of the thresholds. I know that this issue was raised at the select committee, and the select committee quite rightly referred to it in its report back to the House. The select committee stated that a recommendation came through the submissions to allow the maximum claim levels to be amended by Order in Council.

One of the things that in considering such a matter I would like the Government and also Parliament itself to seriously think about is whether there has to be such a close correlation between the amount at which one can require that the matter be determined at the disputes tribunal and the amount that is able to be agreed between the parties. I am just thinking about whether the new thresholds that are introduced with this legislation—lifting them to $15,000, or $20,000 with the consent of both parties—are too low. Is that $20,000 too low when it is by consent? If parties to a particular transaction have a dispute that relates to $22,000, they will have to knock off $2,000 in order to reach an agreement for $20,000, or have to knock off $7,000 in order to have it heard as a matter of right by the disputes tribunal. That is an area where a degree of consideration could be given to separating the two thresholds and thinking about them as two quite separate issues—the issue of where the threshold is to be determined. I actually wonder whether a gradual inflation indexing approach might solve the problem, which is the alternative to the proposal that came up in the submissions to allow the maximum claim levels to be amended by Order in Council.

There are issues around whether this is the type of amendment that requires the consideration of the House. I still think that the Order in Council process is a pretty robust regulatory process and requires a degree of consideration and consultation for it to meet its regulatory impact analysis provisions. It is also subject to the review of the Regulations Review Committee, so it is not as though Parliament is completely distanced from the process. But when a bill is brought into the House, goes to a select committee, gets only 10 submissions, and only three of them ask to be heard, one has to really argue that perhaps this is not the best way to alter what is essentially an access to justice issue.

I heard the Minister say he was willing to look again at the thresholds, but I actually wonder whether he would look at the substance of the issue that has been raised in the submissions and also raised by the lack of submissions, in terms of the public interest in this matter. I wonder whether there is a better way of determining the amounts against which the thresholds would be measured. Again, I think that separating the mandatory amount and the agreed amount would be a way to do that.

Obviously, from time to time we hear of people who are not happy with the results of disputes tribunal hearings, but in the main we do not get that feedback. In fact, the overwhelming response to the disputes tribunals process that we have in place—originally the small claims tribunal—is a very positive reaction from those people who would find it completely impossible to negotiate both the cost and the access to the District Court. The disputes tribunal has been a mechanism for resolving disputes of a very minor nature and enabling people access to justice, which is so important. I personally have used the small claims tribunal, as it was known in the olden days. I had taken a leather jacket into a dry-cleaners. Those members who have studied law will know exactly the scenario that I would have confronted when the dry-cleaners lost my beautiful blue leather jacket.

CHESTER BORROWS (National—Whanganui) Link to this

I rise as the chair of the Justice and Electoral Committee, which considered the Disputes Tribunals Amendment Bill, and I can agree with a number of the comments that have been made so far. The fact is that the disputes tribunal is a facility where laypeople can access justice very cheaply and in a timely way in a local court. Where I live, a disputes tribunal hearing can be obtained within about 2 months of making application. As a member of Parliament, I find that it is not uncommon for me to assist constituents to fill out a statement of claim on the forms provided by the court, and to give them a bit of a start on how they can head down the track to access justice. The disputes tribunal enables people who are working in small businesses to be able to resolve disputes in a fair way, because it is not rigidly bound by the black letter of the law. It is able to take into account what is fair in a situation, and that is something that encourages confidence within our legal system.

It is true to say that a number of submitters wanted the threshold to go up, because they felt that access to justice through the District Court was a very expensive business. To have thresholds of $15,000 and $20,000 for the disputes tribunal seemed to be quite low when people were trying to pursue a matter through the District Court at a level, say, of $22,000 or up to $25,000. It could cost nearly half of that to get the matter before the court and to get it argued, depending on its complexity. I think that the point made earlier by the Hon Lianne Dalziel is quite valid, in that we need to look at the mechanism by which we can increase the threshold, but I think it is also fair to say that before Parliament does that, it needs to have its ducks in a row.

Those complicating factors that led the committee not to recommend that the bill go a lot further at this stage took into account, for instance, that the higher one gets in terms of the threshold, the more precise the decisions need to be. At the moment there is no requirement for adjudicators to be legally trained, yet there is provision for an appeal through to the District Court. So we want to have legally robust decisions coming out of the disputes tribunal, but at the same time we want a level of fairness metered in there so that people are not tied to the black letter of the law. If we extended that threshold further, people would feel the need for, or feel some safety or comfort in, actually being legally represented, and of course the beauty of this process is that people go into the room without lawyers and without having to make long and protracted legal arguments after having swotted all the law books. People seeking redress through the disputes tribunal go in there as laypeople up against laypeople, who are wanting to make an argument that is based on where the law is as they understand it, and as members of the public understand it, but that is also based on fairness as it applies in that particular case, and on recognising that they cannot go to the disputes tribunal just to get a bill paid. There needs to be a dispute.

I am pleased also to hear the Minister say he is willing to look at a future mechanism for changing it. There will be a timely way of doing that, and I am sure that it can be done simply. We have given some indication that that can happen when, as I say, we have other ducks in a row.

I endorse the bill. I commend it to the House, and I look forward to its wide support. I thank members of the Justice and Electoral Committee for their contributions. I thank the public for their submissions, and I thank those most involved with the disputes tribunal process. Thank you.

CARMEL SEPULONI (Labour) Link to this

I stand to talk on the Disputes Tribunals Amendment Bill. Labour supports the bill. I will refer to something the Hon Lianne Dalziel talked about before, which is that this issue is essentially one of access to justice. What Lianne was saying was that, unfortunately, only 10 submissions were made to the select committee, so perhaps there is another way in which this issue can be looked at. She pointed out the fact that we need to look at the substance of the issues raised in the submissions and also at the lack of submissions. So I thought I would start by talking about that.

The aim of this bill is to amend the Disputes Tribunals Act 1988 to increase the maximum claim levels of the disputes tribunal from $7,500, or $12,000 with the consent of all the parties, to $15,000, or $20,000 with the consent of all the parties. Lianne also mentioned that an important issue to consider is the separation of the mandatory amount and the agreed amount. So that is something that maybe needs to be taken into consideration by the select committee in the future.

The disputes tribunals were established by the responsible Minister as divisions of particular District Courts. The jurisdiction of disputes tribunals is exercised by referees who are appointed under warrants by the Governor-General for terms of 3 years, and the referees may be reappointed. In performing their statutory duties, referees have the same status as justices of the peace acting in their criminal jurisdiction. In general, tribunal decisions are enforced as District Court decisions.

The increase to the maximum claim levels will enable an increased number of New Zealanders to resolve their civil disputes in a simple, cheap, fast, and less formal forum. The tribunal will continue to operate on its current basis, balancing the required protections for parties against the need to provide simple, cheap, and fast access to justice.

I reiterate that the main provisions of the bill are that the maximum amount for claims will increase from $7,500, or $12,000 with the consent of all the parties, to $15,000, or $20,000 with the consent of all the parties. The bill makes consequential amendments to the Consumer Guarantees Act 1993, the Credit Contracts and Consumer Finance Act 2003, the Fair Trading Act 1986, the Fencing Act 1978, the Minors’ Contracts Act 1969, and the Retirement Villages Act 2003. Labour supports this amendment bill. Thank you.

PAUL QUINN (National) Link to this

It gives me pleasure to stand and support the Disputes Tribunals Amendment Bill. Once again, we have here a National bill that was laid out in the manifesto—

CHARLES CHAUVEL (Labour) Link to this

In my first reading speech on this Disputes Tribunals Amendment Bill, I recounted some of the history of the disputes tribunals, and their predecessors, the small claims courts, in New Zealand. I was very proud to note that the small claims tribunals were introduced by the third Labour Government, and Martyn Finlay was the architect of that legislation. The disputes tribunals were introduced in amending legislation introduced by the Attorney-General in the fourth Labour Government, who was Geoffrey Palmer. So it is appropriate, because each of those changes involved changes in the jurisdiction and monetary limits of the tribunals, to continue to update that jurisdiction.

As far as this reform goes, it is not bad. If one looks at the monetary limits overseas one can see that in New South Wales the limit is $10,000, and the same in the Australian Capital Territory. The limit is only $5,000 in Tasmania; it is $7,500 in Queensland, and it is back up to $10,000 in Victoria. We are going further than some of the comparable Australian jurisdictions with the proposed amendment, but not as far as some of the Canadian ones. In Alberta the limit is $25,000, as it is in Nova Scotia and British Colombia. In Saskatchewan the limit is $20,000. The American comparable courts and tribunals have much smaller limits.

I do think that my colleague and friend Lianne Dalziel made a good point when she said in her speech that there was an element of time-wasting in legislating for these limits. The fact that there were only 10 submissions to the select committee, and three of those submitters who wanted to be heard orally, on this increase does lend force to the suggestion in the select committee report that maximum limits in future should be able to be dealt with by Order-in-Council laid on the Table of the House, then disallowed by the House if it feels that the regulations have gone too far or not done enough. It would seem to a be a more efficient way to deal with the question of continuing to update the jurisdiction of these sorts of tribunals in future, rather than taking up the time of the House by way of substantive legislative amendment.

The changes are all about access to justice. Obviously it is a good thing to keep informal justice within the reach of ordinary people and ordinary businesses, and that is the whole nature of the thinking behind the disputes tribunals themselves. But when we think about the questions of whether New Zealanders have access to justice, we do need to think more widely. There is the problem of the community law centres and their ongoing uncertainty about funding. There is the cut to civil legal aid rates, which was introduced recently by this Government after a substantial rise in those rates last year under the outgoing Labour Government. Those are issues that go to the ability of ordinary people to access justice. They are issues of which this House should be mindful.

It is also interesting to note that the legislation amends the Consumer Guarantees Act and the consumer finance legislation. Those are two pieces of legislation in respect of which I have proposed a member’s bill that would introduce amendments to put caps on payday lenders, and introduce some responsible lending criteria in this country. Those are two reforms that I think are necessary to ensure access to justice, in the wider sense, for some of the most vulnerable consumers in our society.

Another criticism of the disputes tribunals has been that one actually has to have a dispute about a question of law before one can access their jurisdiction. There is no simple “non-lawyerised”, “non-judicialised” process by which ordinary people and small businesses can prove a monetary claim and get enforcement of that claim. Again, this is a real access-to-justice issue that I think members in this House should be mindful of. In summary, the Labour Opposition will continue to support this reform, as it did at the first reading and at the select committee. But it is a timid reform; many more things could be done to guarantee better access to justice for ordinary people in this country. It would be good to see those more thorough reforms enacted, rather than these sorts of piecemeal extensions to jurisdiction in the disputes tribunals from time to time.

Hon NATHAN GUY (Associate Minister of Justice) Link to this

It is a great opportunity to take a call on the Disputes Tribunals Amendment Bill, which has just come from the Justice and Electoral Committee. We heard from the previous speaker, Charles Chauvel, that 10 submissions were gained through the select committee process and that three of those submitters chose to be heard orally. It looks to me as though the bill has a great deal of support across the whole of Parliament this evening.

The objective of the disputes tribunals is to provide cheap, simple, and fast access to justice, and a forum that avoids the legality and formality of the courtroom, which is extremely appropriate. Filing fees are significantly lower and no lawyers are allowed. Therefore, the costs of taking a claim in the tribunal are significantly lower than in the court process.

It is significant that National is delivering on its election promises, as it has done in its first 6 or 7 months in Government, here increasing the jurisdiction of the disputes tribunals, to reduce pressure on District Courts. This is the first step in that process. This bill will also help the cash flow and make enforcement of debt easier for small and medium sized businesses and individuals who are feeling the strain placed on them in the current economic climate. That is also a very significant point.

The bill will make some amendments to quite a large number of other Acts. If members turn to the schedule, they will see that this bill affects the Consumer Guarantees Act 1993, the Credit Contracts and Consumer Finance Act 2003, the Fair Trading Act 1986, the Fencing Act 1978, and the Minors’ Contracts Act 1969. So this legislation is very far reaching.

It will increase the maximum claim level in the disputes tribunals to $15,000, or $20,000 where both parties agree, which is an important point. The current maximum claim level in the disputes tribunals is $7,500, or $12,000 with the consent of both parties. So the bill represents a significant increase in the monetary threshold. The maximum claim levels were not adjusted under the whole of the previous Government’s 9 years. There has not been any adjustment since National was last in power in 1998, which is a very important point for the House to realise. National has certainly got on with the business here during the first 7 months that we have been in Government.

Due to inflation and the increase in costs associated with litigation in the District Court, the disputes tribunals were losing some of their usefulness to individuals and small businesses with relatively simple disputes, and the proposed increase in maximum claim levels improves access to justice. This is a significant point.

This is an important bill, which is progressing through its second reading this evening. It looks to me as though it has a great deal of support right across the whole of Parliament. It is great that the Government and the other political parties in this Parliament support it. I commend the second reading of the bill to the House.

AMY ADAMS (National—Selwyn) Link to this

Like my colleague and friend Nathan Guy, who spoke before me, I am very pleased to speak in support of the Disputes Tribunals Amendment Bill.

Before I came into this House, I was a lawyer, and I can tell members that one of the most discouraging situations lawyers face is to have in front of them clients who have very genuine claims that deserve redress and deserve to be followed up on, for amounts of $10,000 to $15,000, and up to the $20,000 band. That is a lot of money to the people involved. It may not be big money for some of the large corporates, but for a lot of people I would see, that was a considerable amount of money for them to have been done out of. When one had to tell those clients that they had a valid claim and a reasonable prospect of success, but that it was simply not worth their while to take it to court, it was really heartbreaking. That is not what our justice system is supposed to be about. That is not the sort of advice one should have to give clients. That was incredibly discouraging in respect of the band of claims that fell within that unspoken cost level where it was too big to go to the disputes tribunal and too small to make the claim justifiable to take to the District Court, where claimants would have run up considerable costs. Even if a claimant won a case there, he or she would not get the costs back, and the chances of success were not absolute, no matter how strong the lawyer felt the case was.

We are able now to expand the jurisdiction of the disputes tribunal up to $15,000 as of right, which is double the amount that parties can take to that forum under the existing legislation, and beyond that there is the ability to go to the tribunal for claims up to $20,000 where the parties agree. I think that is a very significant step and one that we should not downplay simply because we are not talking about millions of dollars. It is an access to justice issue. As a person who has seen people turned away from justice because that additional jurisdiction is not there, I see this legislation as being a real and meaningful step now being taken.

As well as providing that access to justice, this legislation will have a measurable and important benefit for businesses, in terms of their cash flow, in terms of their time, and in terms of their ability to enforce debts and collect debts in a quick manner. I think everybody knows, particularly in difficult times, that cash-flow management is all-important. This bill makes the process easier and quicker for businesses—often small, one-man-band businesses, or mum and dad enterprises—to recover money owing to them without having to involve lawyers, without having to spend years, often, in the court process, and without having to throw more good money into the pot in order to have the prospect of success. Quite apart from the access to justice issue, that is a very important step as part of this Government’s plan to help small business in these difficult times, to get the economy moving, and to look after cash flow. Although it may not make any headlines around this Government’s work to support small and medium enterprises, I do not think the effect of it should go unnoticed. For those people who are in the category that can now access the tribunal, the effect will be measurable and real.

It is good to see general support in the House for the reforms. I think, equally, that the Justice and Electoral Committee should be commended for doing a very good job of consideration here, because there are important issues at stake around justice and the entitlement of people to have the full protection of the law. There are important considerations where the rights of appeal are limited, and where claimants do not have lawyers. It might seem strange for a lawyer to be endorsing a situation that precludes lawyers from getting involved in more cases, but, then again, that might be reason enough in itself to support the bill in some people’s minds. But I think that the balance here is right for the current times, between the informality and low cost that the disputes tribunal system gives us and the right to have the more full and complete protection of our system of law where the monetary amounts creep up above the levels that we now have.

I turn now to the matter of how long it has been since the issues addressed in this bill were last raised. I think the bill should be supported, and I commend it to the House. Thank you.