Greater threshold, more at risk, but the same machine: why the Disputes Tribunal’s $60,000 threshold needs more legislative reform

Nick Kearney

Earlier this year, the Disputes Tribunal’s monetary jurisdiction doubled overnight, from $30,000 to $60,000.  The Ministry of Justice’s reasoning is straightforward: it is “generally uneconomic to take civil claims between $30,000 and $60,000 to the District Court.”

This, ministry says, leads people either to abandon the amount of their claim over $30,000 to stay inside the tribunal’s jurisdiction, or to abandon the claim altogether.  There is genuine commentary that this creates the aptly-named, “justice gap”.

There is also a belief the increased threshold is a welcome win for access to justice.  But it isn’t a win.

What changed was a claim amount.  A number.  What didn’t change was the machinery that number now has to carry: the appeal and rehearing framework in ss 49-53 of the Disputes Tribunal Act 1988; the evidential rules in s 40 and the referee appointment criteria in s 7.

Each of those provisions has been left untouched through successive threshold rises, on the assumption that the tribunal deals in modest, largely undefended consumer disputes of low complexity.  That assumption was already strained at $30,000.  At $60,000 it breaks.

This isn’t an argument against the increase; rather, it’s a case that the increase is only half of the necessary reform and that the missing half is the half that actually delivers access to justice, rather than merely access to a forum.

Three gaps matter most: the appeal framework, the evidence rules and the calibre of the people making the decisions.  Left unaddressed, my fear is that the tribunal doesn’t just fail to close the justice gap at the top end of its new jurisdiction: it makes the overall quality of the tribunal worse for everyone, including the claimants it is meant to assist.

Appeals

We can start with what happens when a party thinks the tribunal got the decision wrong.

A rehearing before the tribunal itself is still available only in the very narrow circumstances set out in s 49(2).

Rights of appeal to the District Court under s 50 are even narrower.  The sole ground is that the referee conducted the proceeding “in a manner that was unfair to the appellant and prejudicially affected the result”.  Under s 53, the District Court judge decides the appeal on the papers and considers only the grounds of appeal and the referee’s own report.  There is, in substance, no right of appeal against a wrong decision.  There is only a right of appeal against an unfair process.

The fix here does not need to be a general right of appeal, which would reintroduce the cost and delay the tribunal exists to avoid.  There could be a threshold-scaled model.  For example, a right of appeal on a question of law, with leave, for claims above, say, $30,000.

This would let genuinely mistaken decisions at the new higher tier be corrected without opening the floodgates for every disappointed claimant who is upset their flash consumer item doesn’t work properly.

Evidence

Currently, s 40 frees the tribunal from the rules of evidence that bind a court, and that is defensible for the reason it has always been defensible: referees are managing high volumes of low-value, often unrepresented disputes where formal proof would be disproportionate and would simply price ordinary people out of a remedy.

The difficulty with that is that s 40, including the liberty created under s 40(4) was calibrated for that level, or those levels, of dispute.

It was not established for the disputes that a $60,000 ceiling now invites in: building and construction claims with competing expert evidence, commercial contract disputes turning on a chain of correspondence, disputes with genuinely contested causation or quantum, or warranty claims under an agreement for sale and purchase of real estate.

Submitters raised the same concern during the reform process: that higher-value claims “may involve more complexity and require legal or technical expertise” that the tribunal’s informal evidential approach was never built to test.

Put bluntly: the more valuable the claim, the less rigorously the evidence behind it is now tested, which I argue is the opposite of what should happen as stakes rise, and the opposite of what happens everywhere else in the civil justice system.

This doesn’t require the tribunal to become a smaller version of the District Court.  It only requires Parliament to accept that a $60,000 forum needs, at minimum, a clearer evidential floor for higher-value or more complex claims.

That could take the shape of a power to direct that certain categories of evidence be tested more formally, or a value-or complexity-based route out of the tribunal and into the District Court before a hearing, rather than only after one that is “unfair” to the losing party.

‘Relevant training’ is not a qualification

Section 7(2)(a) allows the Governor-General to appoint as a referee anyone who appears to have “relevant training” for the role.

That phrase does not require a law degree.  It does not require any legal qualification at all.

Commentary on the referee role confirms as much in practice: referees are, in the profession’s own description, “chosen from the community, primarily for their maturity and life experience,” and while many happen to hold law degrees or have dispute-resolution training, “neither is necessary to secure a role as a referee”.

At $30,000, and particularly at the tribunal’s lower ceilings before that, that made a bit of sense.

But, at $60,000, the tribunal will be asked to resolve disputes that turn on contractual interpretation, measure of damages, contributory conduct and competing expert opinion.  These are all questions that are squarely legal, not factual, and that an experienced litigator would recognise on sight and which a referee without legal training may not.

My proposition, and I accept it is the most contestable of the three, is this: referees hearing claims above the tribunal’s former $30,000 ceiling should be required to be lawyers, and lawyers with not less than seven years’ experience in private practice – a threshold Parliament already uses elsewhere in New Zealand statute as the marker of genuine seniority in legal practice.

That isn’t gatekeeping for its own sake.  Rather, it’s matching the seniority of the decision-maker to the seriousness of what they’re now deciding.

A community-selected, non-legally-trained referee is entitled to decide a $1,000 dispute about a wedding photographer with real authority.  A referee deciding whether $59,000 changes hands over a building contract, or a warranty breach, is doing something closer to what a District Court judge does, but without a District Court judge’s training and without a District Court’s evidential safeguards or appeal rights to catch the result if it’s wrong.  There are literally no checks and balances on a $59,000 decision being wrong.

This is not a hypothetical worry dreamed up for the purposes of this article.  It was already surfacing when submitters warned, during the bill’s passage, that the tribunal risked becoming “overburdened by more complex cases,” and specialist commentary on the reform has already singled out construction and commercial disputes as categories where referee expertise is now mismatched to claim complexity.

The uncomfortable and outside-the-box possibility

Here is the point I think deserves more attention than it has had: raising the ceiling without raising the safeguards doesn’t just risk bad individual outcomes – it perversely makes the access-to-justice principle worse.

A forum with a $60,000 limit, with evidence rules built for informality and an appeal right that is triggered only by “unfairness” is, for a well-advised applicant (an insurer, a landlord, a franchisor, a developer) a genuinely attractive place to sue, compared with the District Court.

There is lower cost, less formality and a decision that is very hard to disturb, even if it’s wrong.  It would not be surprising to see sophisticated parties start structuring disputes, settlements and even contract terms with an eye to keeping matters at or under $60,000, specifically to capture that combination.

If that happens, the tribunal will have done the opposite of closing the justice gap.  It will have created a lower-rigour track for higher-value disputes that sophisticated parties can steer towards and unrepresented parties cannot meaningfully resist.

The tribunal doesn’t improve; instead it declines for the very users (the unrepresented, low-value, often vulnerable parties) that raising the threshold was supposed to help.

Where this leaves practitioners

None of what I have written is an argument for reversing the increase.

The justice gap between $30,000 and $60,000 was real and the Ministry of Justice was right to identify it.  However, a threshold change is legislatively easy and institutionally cheap; it is also, on its own, merely cosmetic.

Real access to justice at $60,000 requires Parliament to revisit three things it left untouched: a right of appeal that scales with what’s at stake, an evidential floor that matches the complexity the new ceiling invites in and a referee-qualification standard that matches the seniority of the decisions now being made in the tribunal’s name.

Until these happen, practitioners advising clients with claims in the new $30,000 to $60,000 band should treat the tribunal for what it currently is: a forum offering real money at rough-justice risk, with almost no way back if the referee gets it wrong.

That is not a criticism of the referees doing their best within a framework Parliament built for a much smaller tribunal.  Rather, it is a criticism of a Parliament that changed the stakes and left the safety net exactly where it was.

Nick Kearney

Nick Kearney is the director of Shore Legal and a member of The Law Association’s Public & Administrative Law Committee