State of NSW v Australian Family Assurance Ltd [2003] NSWSC 203

Reported Decision : (2003) 12 ANZ Insurance Cases 61-562

New South Wales Supreme Court

CITATION : State of NSW v Australian Family Assurance Ltd [2003] NSWSC 203 HEARING DATE(S) : 18 March 2003 JUDGMENT DATE : 18 March 2003 JURISDICTION: Equity Division JUDGMENT OF : Palmer J DECISION : Judgment for the Defendant.

CATCHWORDS : RES JUDICATA - ISSUE ESTOPPEL - PRIVY - INSURANCE - Plaintiff claims Defendant insurer bound by issue estoppel arising from judgment in proceedings to which Defendant not a party - whether an insurer who does admit liability under a policy and does not take over defence of proceedings is a "privy" for purpose of doctrine of res judicata or "Anshun estoppel". - HELD: Defendant neither a "privy" to the earlier proceedings nor "Anshun estopped". - Blair & Perpetual Trustee Co Ltd v Curran (Adam's Will) (1939) 62 CLR 464 CASES CITED : - Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 - Spencer Bower, Turner and Handley: "The Doctrine of Res Judicata" (3rd Ed, 1996, paragraph 231) State of New South Wales - Plaintiff PARTIES : Australian Family Assurance Limited - First Defendant Triton Underwriting Insurance Agency Pty Ltd - Second Defendant FILE NUMBER(S) : SC 4800/99 COUNSEL : M.W. Anderson - Plaintiff D.J. Fagan SC - Defendants SOLICITORS : I.V. Knight, Crown Solicitor - Plaintiff Carneys Lawyers - Defendants

Ex tempore

1 The Plaintiff ("the State") sues the First Defendant ("the Insurer") upon a contract of insurance in which the State is not named as an insured. The State says, however, that a judgment in proceedings in the District Court, to which the Insurer was not a party, creates an issue estoppel or an Anshun estoppel whereby the Insurer cannot now deny that, on the true construction of the policy, the State was named as an insured. 2 Alternatively, if there is no issue estoppel, the State contends that on the true construction of the policy it is indeed named as an insured. No cause of action is formulated in the Statement of Claim against the Second Defendant, which was the insurance broker in the relevant transaction. The State has conceded that it is proceeding only against the Insurer. Accordingly, it will not be necessary for me to deal with any claim made by the State against the Second Defendant. 3 The facts are not in dispute and may be stated shortly. By a contract dated 1 January 1997, the Principal of South Bathurst Public School, on behalf of the State, granted to Bathurst Physical Culture Club ("the Club") authority to use certain parts of the school for the teaching of physical culture ("the Community Use Agreement"). Clause 5 of that Agreement provided: " Indemnity