Changes to Chancery cases in the county court
The increase in the equity jurisdiction of the county court will widen its scope but could trip up unsuspecting practitioners, says District Judge Graeme Smith
April sees a number of significant changes to the county courts. The most widely publicised is the creation of a single county court. Less well publicised is the huge increase in the equity jurisdiction of the county court, which will enable far more cases to begin in the county court.
Equity proceedings
The equity jurisdiction is explained in section 23 of the County Courts Act 1984 and relates to a wide range of equity proceedings including the administration of estates, the execution or variation of trusts, dissolution or winding-up of partnership, specific performance or rectification of certain agreements, and enforcing charges.
In each case, the limit of jurisdiction has been £30,000 since 1981. Unwary practitioners often fall foul of this, particularly where a charging order has been obtained in relation to a judgment debt exceeding £30,000 – although the charging order can be validly obtained in the county court, an application to enforce the charge by sale has to be made in the High Court.
From 22 April 2014 the equity limit will increase to £350,000, by virtue of the County Court Jurisdiction Order 2014.
However, although this will enable many more cases to be issued in the county court, practitioners should still be cautious when doing so. This is because of the Lloyd/Hart practice note on Chancery business in the county court issued in 2004.
Lloyd/Hart note
The note seeks to assist practitioners and judges to determine whether cases of a Chancery 'flavour' should be case managed and tried in any county court or in a Chancery county court, i.e.a county court which coincides with a Chancery District Registry (Birmingham, Bristol, Cardiff, Leeds, Liverpool, Manchester, Newcastle upon Tyne and Preston), to be dealt with by judges with Chancery expertise.
It lists case types that should usually be transferred to a Chancery county court, and those that should not.
Among the cases that should normally be transferred are disputes among shareholders, probate claims, claims relating to estates, trusts and charities, claims for dissolution of partnerships and claims for rescission for undue influence.
Claims that should not be transferred include those about residential mortgages and tenancies and to enforce charging orders.
Some do not need to be transferred if they do not involve complex issues, including neighbour disputes and claims under section 14 of the Trusts of Land and Appointment of Trustees Act.
Deciding factors
The note helpfully sets out the relevant factors to consider when deciding on the appropriate court, and includes a reminder that the claim form in such a case should be marked as Chancery Business: CPR 7 PD 2.5 (defined as including the specific matters assigned to the Chancery Division by schedule 1 to the Supreme Court Act 1981).
With the increase in the county court’s jurisdiction, practitioners still need to give careful consideration to whether Chancery cases should be issued in the Chancery Division or the county court and, if in the county court, whether they should be case managed and tried in a Chancery county court.
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KEY POINTS
• Some proceedings must be dealt with at a Chancery county court (e.g probate proceedings – CPR 57.2)
• Proceedings should be commenced in the High Court if their complexity warrants this (PD7, para 2.4) or if the amount concerned exceeds £350,000 (from 22 April)
• County court claims relating to Chancery business should be marked ‘Chancery Business’ (PD7, para 2.5)
• Consider at the earliest opportunity, by reference to the Lloyd-Hart Note, whether the case should be (a) managed and (b) tried in a Chancery county court
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District Judge Graeme Smith sits at Manchester County Court