ACAT’s Missing Powers; Episode 5 – The Counterclaim Strikes Back

In one of the prequels I updated y’all on ACAT recently having its civil jurisdiction updated from $10,000 to $25,000. Like all prequels  the updated ACAT powers neglected key elements that are fundamental to helping ACAT perform coherently with the other elements of the wider system. (with the exceptions of Batman Begins, Casino Royale and Temple of Doom; Rise of Planets of the Apes did not work and I won’t hear differently).

kali-ma

The ACAT’s civil jurisdiction limit means that any case commenced in the ACAT must be for a claim of less than $25,000. Various requirements exist for the calculation of that amount such as no interest to be included unless under contract, though this is arguable once again due to limited wording. As a claim for interest under a contract or agreed rate is really a contractual debt and not strictly interest on an unpaid amount, but maybe i’ll cover this later (The Interest Awakens, Rogue Interest…leave it with me).

Totally Not A Recent Case

So let’s say Joe Alow starts a matter for $10,001 against Joe Blow in ACAT for building work defects. Joe Alow has no choice because his amount is within the new ACAT jurisdiction. Joe Blow as the builder is owed $25,001 under the final contract payment.

Joe Blow would have normally been allowed to commence his claim in the Magistrates Court and would therefore have been allowed legal costs for his troubles. Even if Joe Blow agreed that there was about $10,001 in set-offs, he still could have commenced in the Magistrates Court and have been allowed costs because, giving each party full credit, should still result in a payment of $15,000 in his favour. So Joe Blow would get his costs, which for a matter such as this could be anywhere between $8,000 to $18,000, if not lots more or a little less, depending on the law firm and depending on the litigation philosophy of each lawyer.

What’s the Problem?

Well, because Joe Alow commenced first in the ACAT,  Joe Blow is required to bring all claims in the same action that are related to the same material facts thanks to a genuinely great principle called Anshun Estoppel. Anshun Estoppel is a principle cemented in the case Port of Melbourne Authority v Anshun Pty Ltd. The principle essentially states that, to save the parties, the courts and the public, time and money, litigation should be conducted as efficiently as possible with similar matters being dealt with concurrently. Which means that if you have matters and arguments against the same parties relating to the same material facts or matters, then those should all be brought up in the same case. If you fail to bring it up, you may be estopped (stopped) from raising it later.

This is a great principle brought about by good intentions, but then the legislature accidentally gets in the way.

So What Happens to Joe Blow?

Joe Blow is required to present his counter-claim in the ACAT action but has now brought a counter-claim that exceeds the ACAT jurisdiction. Which means that ACAT is not jurisdictionally competent to hear the claim.

Joe Blow’s claim could be transferred to the Supreme Court under s83 of the ACAT act, however this requires the parties to jointly apply to ACAT to transfer that matter. No other power of ACAT exists to transfer matters between jurisdictions. BY CONSENT ONLY.

Alternatively, the ACAT Act allows parties to drop any portion of a claim, without surrendering the right, that is over the jurisdictional limit under s21 of the ACAT act, however once again, this requires that party’s consent. So if a party refuses, there is no mechanism for resolution.

There are additional inherent powers of the Supreme Court to accept an application to transfer the matter to the Supreme Court, but nothing on the books. But even if this were to occur, the Supreme Court has the exclusive jurisdiction of $250,001 and above for civil claims, so Joe Blow may face an adverse costs order for wasting the Supreme Courts time with a claim that essentially zeros out at $15,000.

Further, s266A of the Magistrates Court Act specifically prohibits bringing claims that should be commenced in the ACAT due to the limit of $25,000.

So within the world of this legislative maze, withholding consent can be the nuclear option in litigation. How lame.

indiana-jones-fridge-o

Fabian ACAT tactics

So if you are Joe Alow, and know that you will go down on the claim of $25,001 because it’s a legitimate claim, you could start a smaller claim first on a questionable basis and refuse to consent to any transfer. The matter is then permanently trapped in ACAT which has no power to adjudicate on it or transfer it to a higher court, or even award costs if it eventually goes ahead and you are unsuccessful. Joe Blow would have to drop any portion of his claim over $25,000. There are ways for the ACAT to award costs in very limited circumstances, but you could totally avoid the stage that this is even accessible by refusing to consent.

Alternatively if you are Joe Blow and doubt the veracity of your $25,001 claim then you could do the converse and refuse to consent and let Joe Alow rack up costs chasing you.

Tactically, this is the perfect time to order your lawyers to turn the dial to all-stop and allow the other side to rack up maximum costs, in a no-costs jurisdiction, until a subtle “walk-away” offer becomes amicable to both sides.

will-you-give-us-a-chance-to-live

Fixes

This is insane. Both Joes are bound by law to bring their claims in their jurisdictions. Both Joes are bound by law to keep their claims in ACAT and both Joes are bound by law to never have their claims resolved if the other never concedes. Like a weird Byzantine, Schopenhauer, Kafka hybrid system. Scary stuff.

A simple legislative amendment would fix this and it could be as simple as: “new s21A: all claims or counter-claims that exceed the jurisdiction of the ACAT can be transferred to any court or tribunal the ACAT considers appropriate on either the application of either party or on the ACAT’s own initiative.”  Now I’m typing off the cuff here, but on the face of it, this would probably work. Ironically, any misapplication of a rule like this would result in an application to ACAT, but let’s start with small steps.

I’ve drafted legislation previously, so I sympathise with the position that a well-meaning, well-written law can lead to distorted outcomes. But given that matters have been filed that gave rise to this issue previously, it seems unacceptable that this wouldn’t have been fixed sooner.

One thought on “ACAT’s Missing Powers; Episode 5 – The Counterclaim Strikes Back

  1. Pingback: ACAT’s Missing Powers; Episode 1: The Phantom Jurisdiction | Commercial Lore

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