Increase in District Court Financial Limits Makes Perfect Sense

It is welcome news that, effective from 3 December 2018, the District Court (“DC”) and Small Claims Tribunal (“SCT”) are able to hear cases of higher monetary value. It means fewer cases will be commenced in the Court of First Instance (“CFI”), where litigation costs are significantly greater.

The Judiciary has implemented a raft of changes:

  • The general financial limit of the civil jurisdiction of the DC has increased from HK$1 million to HK$3 million.
  • The SCT limit has gone up from HK$50,000 to HK$75,000.
  • The financial limit for land matters in the DC has increased from HK$240,000 to HK$320,000 in terms of the annual rent or the rateable or annual value of the land.
  • The limit for the equity jurisdiction of the DC where the proceedings do not involve or relate to land has risen from HK$1 million to HK$3 million.
  • The limit for the equity jurisdiction of the DC where the proceedings wholly involve or relate to land has increased from HK$3 million to HK$7 million.

The last adjustment to the general financial limit of the civil jurisdiction of the DC was in 2003, when it was increased from HK$600,000 to HK$1 million. Before that, in the year 2000, it went up from HK$120,000 to HK$600,000.

Caseload Statistics

According to figures presented by the Judiciary to the Legislative Council, the total caseload of the CFI and the DC taken together has largely been stable in recent years – 39,800 cases in 2010 and 41,300 cases in 2016, representing a moderate increase of about 4 percent over six years. However, the statistics also show that in the CFI, the number of civil cases filed from 2011 to 2016 shot up 22 percent. In the same period, there was a 2 percent drop in the total number of civil cases filed in the DC.

The increase in the CFI caseload was particularly significant in respect of mortgage claims, personal injuries (“PI”) cases and other civil actions. These cases rose by 70 percent from 2011 to 2016 and, by the latter year, represented 29 percent of the CFI’s total caseload. Therefore, increasing the DC’s jurisdictional limits not only eases pressure on the CFI, it allows the higher court to concentrate on handling civil cases of greater claim amounts which, as well, are often more complex.

Meanwhile, the DC’s capacity to cope with an increased workload and more complicated cases has improved since the last review more than 15 years ago. The DC has built up experience in handling more substantive civil litigations, case handling has been streamlined, civil procedure rules have been revamped to be largely comparable with those of the CFI, and the Judiciary has made on-going efforts to enhance the judicial skills and knowledge of judges and judicial officers.

Effects of the Changes

The Judiciary believes the effects of these changes will be significant. In the CFI, it predicts decreases of 8 percent in the number of civil cases, 10 percent in paper applications processed, 13 percent in interlocutory hearings and 20 percent in the number of trials. These decreases are expected to be more pronounced in PI and mortgage claims.

Correspondingly, all these categories will increase in the DC – civil cases by 8 percent, paper applications processed by 12 percent, interlocutory hearings by 33 percent and trials by 27 percent. Again, PI and mortgage claims will be to the fore. The Judiciary is confident the DC can handle the increased workload. It points out that PI cases are usually dealt with on well-established legal principles while the mortgage claims offloaded by the CFI should be similar in nature and complexity to those already handled by the DC.

Summary

Costs are often a concern for parties involved in legal action, particularly if a case is complicated and time-consuming. Not only does the increase in the DC’s civil jurisdictional limits allow more litigants to file their claims thanks to the DC’s lower litigation costs, the move also addresses disproportionality between the amount of a claim and the related costs. In short, these sensible and logical changes implemented by the Judiciary enhance access to our legal system.

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Partner, Boase Cohen & Collins

Alex Liu's key areas of practice include commercial and corporate litigation, investigations by governmental bodies such as the Securities and Futures Commission, Independent Commission Against Corruption and Commercial Crime Bureau, and insolvency and debt restructuring. Among his many appointments, he is a member of the Market Misconduct Tribunal.