Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Charafeddine v Morgan [2014] NSWCA 74 Hearing dates: 28 February 2014 Decision date: 21 March 2014 Before: Beazley P at [1]; Macfarlan JA at [35]; Leeming JA at [36] Decision: Appeal dismissed with costs. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: ESTOPPEL - issue estoppel - plaintiff claimed personal injury damages in the District Court after previously defending a claim for property damage arising from the same motor vehicle accident in the Small Claims Division of the Local Court - whether the Court has a discretion not to apply an issue estoppel where there are 'special circumstances' - correctness of Arnold v National Westminster Bank [1991] 2 AC 93 Legislation Cited: Local Court Act 2007 Cases Cited: Administration of Papua and New Guinea v Daera Guba [1973] HCA 59; 130 CLR 353 Arnold v National Westminster Bank [1991] 2 AC 93 Blair v Curran [1939] HCA 23; 62 CLR 464 Brisbane City Council v Attorney-General for Queensland [1979] AC 411 Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2] [1967] 1 AC 853 Cassegrain v Gerard Cassegrain & Co Pty Limited [2013] NSWCA 454 Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 CSR Timber Products Pty Ltd v Weathertex Pty Ltd [2013] NSWCA 49; 83 NSWLR 433 Henderson v Henderson (1843) 3 Hare 100 Kuligowski v Metrobus [2004] HCA 34; 220 CLR 363 Linsley v Petrie [1998] 1 VR 427 O'Toole v Charles David Pty Ltd [1991] HCA 14; 171 CLR 232 Pastras v Commonwealth (1966) 9 FLR 152 Squires Transport Pty Ltd v Turnor [2004] WASCA 245 Tuifino v Warland [2000] NSWCA 110; 50 NSWLR 104 Texts Cited: K R Handley, Res Judicata (4th ed, 2009, Lexis Nexis) Category: Principal judgment Parties: Hanadi Charafeddine (Appellant) James Roko Morgan (Respondent) Representation: Counsel: J Jobson (Appellant) K Rewell SC (Respondent) Solicitors: Stephen Spinak Solicitor (Appellant) Spark Helmore Lawyers (Respondent) File Number(s): CA 2013/66159 Decision under appeal Jurisdiction: 9101 Citation: Charafeddine v Morgan [2013] NSWDC 7 Date of Decision: 2013-02-11 00:00:00 Before: Gibson DCJ File Number(s): 2012/60189 Judgment 1BEAZLEY P: This is an appeal from a decision of Gibson DCJ in which her Honour struck out the appellant's statement of claim and dismissed her proceedings with costs: Charafeddine v Morgan [2013] NSWDC 7. The appellant had claimed personal injury damages arising from a motor vehicle accident in which she was involved on 8 September 2009. The statement of claim was struck out on the basis that the proceedings were not maintainable because an issue estoppel arose from a judgment in proceedings between the appellant and the respondent in the Local Court which had been determined in the respondent's favour. 2The point in issue on the appeal is relatively narrow. The appellant contends that having regard to the nature of the proceedings in the Local Court and, in particular the legislative and other restrictions upon the manner in which such proceedings may be conducted in the Small Claims Division, her proceedings in the District Court ought not be defeated by the operation of an issue estoppel. This contention involved the proposition that the court has a discretion not to apply an issue estoppel where there are "special circumstances": see Arnold v National Westminster Bank [1991] 2 AC 93. 3The appellant was involved in a motor vehicle accident that occurred on 8 September 2009, when her vehicle collided with the respondent's vehicle at the intersection of Scott Street and South Terrace, Greenacre. At the time of the collision, the appellant was making a right-hand turn from Scott Street into South Terrace, when the respondent's vehicle, which was travelling in a westerly direction along South Terrace, collided with the appellant's vehicle. Local Court proceedings 4The respondent had brought proceedings in 2010 in the Local Court for property damage, claiming a sum of $5,004.20, being the write-off value of his vehicle. The appellant filed a defence in which she denied negligence and pleaded contributory negligence. 5The proceedings were heard in the Small Claims Division of the Local Court in 2011. Pursuant to the Local Court Act 2007, s 35(1), claims in the Small Claims Division are heard either by a magistrate or an assessor, who in accordance with s 17 is legally qualified. Proceedings in the Small Claims Division are to be conducted with as little formality and technicality as is appropriate: s 35(2). The rules of evidence do not apply: s 35(3). A magistrate or assessor may inform himself or herself on any matter relating to the proceedings in such manner as is considered appropriate: s 35(5). Proceedings are not required to be recorded: s 35(6). 6Witnesses may not be cross-examined except to the extent authorised by the Rules of Court or Practice Note: s 35(4). The Court's Practice Note requires that any application to orally examine a witness at the trial must be made at the pre-trial review, which is listed within six weeks of the date on which a defence is filed: Local Court of New South Wales, Practice Note Civ 1, cl. 20.1. In determining whether to order a witness to attend for oral examination, the court will consider the circumstances of the case, including the amount involved, whether there is a real issue as to credibility and whether there is a significant conflict in the evidence: cls 20.7 and 20.8. 7A party dissatisfied with an order or judgment of the Small Claims Division may only appeal to the District Court on the ground of lack of jurisdiction or denial of procedural fairness: s 39(2). 8The Court was informed that there had been no application by either party for cross-examination and the matter was heard in accordance with the conventional procedures of the Small Claims Division. In addition to the pleadings, the 'evidence' before the assessor was by way of a statutory declaration sworn by the respondent, a signed statement by the appellant, a police report, photographs and a copy of the "red book" in support of the value of the respondent's vehicle, which was written off in the accident. The parties made submissions to the assessor and the appellant made a statement to the assessor, which appears to have been treated as evidentiary. 9The account of the accident by the parties was relatively brief. The appellant, in her statement, said that she had nearly completed her turn when the respondent's vehicle overtook other vehicles in front of it that were turning left. She said that the respondent's vehicle was "outside its lane of traffic in the middle of the road and trying to overtake them on the outside with no lane". The appellant said that her vision was obscured by the cars on her right that were making a left hand turn. She said she was proceeding slowly, making her right hand turn, and "hardly saw the car speeding through the intersection towards me". 10The respondent, in his statutory declaration, said that there was a stop sign controlling the traffic on Scott Street driving along South Terrace. He said that just as he was about to pass Scott Street, a vehicle came straight out of Scott Street to make a right hand turn to travel east on South Terrace. He said the vehicle did not stop at the stop sign or even slow down. He said "[i]t just came straight out and made a right hand turn in front of me". He stated his speed at the time was between 40 and 50 km/h. 11In May 2011, the assessor, in an ex tempore judgment, found that the appellant was responsible for the collision by failing to give way to a vehicle already on the road and entered a verdict for the respondent. District Court proceedings 12The District Court proceedings for personal injury were commenced by the appellant nine months after judgment was given by the assessor in the Local Court proceedings. The appellant pleaded her claim, relevantly, as follows: "... 5. On or about 8 September 2009 [the appellant] was driving along the Scott Street, Greenacre with the intention of making a right-hand turn into South Terrace. 6. As [the appellant] approached the intersection she observed that there was no traffic to impede her right hand turn as the vehicle to her right indicated with a blinker that it was doing a left hand turn. 7. As [the appellant] proceeded across the intersection the respondent's] vehicle proceeding at excessive speed overtook the said vehicle doing a left hand turn and collided with [the appellant's] vehicle causing injury, loss and damage. 8. The collision was a result of the negligence of [the respondent's] vehicle. ..." 13The appellant particularised the allegation of negligence as follows: proceeding at excessive speed in the circumstances; overtaking a vehicle when it was unsafe to do so; failure to steer, control, or so manage a vehicle so as to avoid an accident; failure to brake so as to avoid an accident; and failure to keep a proper lookout. 14The respondent in his defence to the District Court statement of claim admitted para (5), did not admit para (6) and denied paras (7) and (8). The respondent also pleaded contributory negligence against the appellant. 15At the commencement of the hearing of the proceedings in the District Court, the respondent made an application for summary judgment on the basis that he was entitled to the benefit of an issue estoppel on the question of negligence, as this issue was raised in both proceedings and was determined in his favour in the Local Court. Gibson DCJ held that there was an issue estoppel binding the parties on the issue of negligence. Her Honour also declined to exercise a discretion not to apply the principle to these proceedings, should such a discretion be available to her. Issue estoppel 16It was not disputed on the appeal to this Court that the determination of the proceedings in the Local Court in favour of the respondent gave rise to an issue estoppel on the question of negligence, namely, that the appellant had breached her duty of care to the respondent. The assessor made no express finding on the question of contributory negligence, although it is apparent from his reasons that he understood that contributory negligence was in issue and he determined that the appellant was solely responsible for the accident. 17Although the existence of an issue estoppel was not disputed on the appeal, it is useful at the outset to set out the relevant principle. In Blair v Curran [1939] HCA 23; 62 CLR 464, at 531-532, Dixon J explained that: "A judicial determination directly involving an issue of fact or of law disposes once and for all of the issue, so that it cannot afterwards be raised between the same parties or their privies. The estoppel covers only those matters which the prior judgment, decree or order necessarily established as the legal foundation or justification of its conclusion. ... Nothing but what is legally indispensable to the conclusion is thus finally closed or precluded. In matters of fact the issue-estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right established." 18There are a number of ancillary principles that are also well established. Insofar as they are relevant to this matter, they are as follows. 19The judgment or order of an inferior court within jurisdiction can create an issue estoppel binding in a superior court: see Tuifino v Warland [2000] NSWCA 110; 50 NSWLR 104 at [27] per Handley JA (Mason P and Powell JA agreeing) and cases cited therein. An issue estoppel may also arise as a result of the determination of a tribunal which has jurisdiction to decide finally an issue arising between parties: Administration of Papua and New Guinea v Daera Guba [1973] HCA 59; 130 CLR 353 at 453; Kuligowski v Metrobus [2004] HCA 34; 220 CLR 363 at [22]; CSR Timber Products Pty Ltd v Weathertex Pty Ltd [2013] NSWCA 49; 83 NSWLR 433 at [15]. 20There may be a judicial determination, notwithstanding that the rules of evidence and other legal procedures do not apply to the proceedings in which the decision was made: see Pastras v Commonwealth (1966) 9 FLR 152 at 155 per Lush J; K R Handley, Res Judicata (4th ed, 2009, Lexis Nexis) at [2.03]. 21The existence of a right of appeal from the determination of the primary decision maker does not impinge upon the operation of the principle of issue estoppel. A decision is final unless and until disturbed on appeal: Kuligowski at [25]; Carl Zeiss Stiftung v Rayner & Keeler Ltd [No 2] [1967] 1 AC 853 at 935. Special circumstances 22The appellant submitted that there were special circumstances in this case such that the issue estoppel, which clearly arose from the findings of the Local Court, ought not bar her proceedings in the District Court. 23In Arnold v National Westminster Bank PLC, Lord Keith (the other members of the House agreeing) stated, at 107, that there may be special circumstances where an issue estoppel does not operate. His Lordship suggested that this derived from the statement of Wigram VC in Henderson v Henderson (1843) 3 Hare 100 at 114-115. That was a case of cause of action estoppel in which Wigram VC explained that the estoppel would act as a bar "except under special circumstances". Lord Keith referred to a number of cases, including Brisbane City Council v Attorney-General for Queensland [1979] AC 411, and concluded, at 107, that the approach of Wigram VC, although stated in another context, "has been held to be applicable also to issue estoppel". 24In Arnold v National Westminster Bank PLC Lord Keith accepted, therefore, that there may be special circumstances so that an issue estoppel may be held not to operate and, noting that the case before the House was concerned with the nature of such special circumstances, enumerated the matters that might satisfy that description. First, there may be special circumstances where earlier proceedings had resulted in a default judgment: at 107. Secondly, there may be special circumstances where in the later proceedings, a party has brought forward further relevant material which could not, by reasonable diligence, have been produced by that party in the previous proceedings: at 108-109. Thirdly, his Lordship also considered, at 111, that a change in the law, in the sense that a later decision in other proceedings had ruled upon the point in issue contrary to the determination in the matter in which the estoppel is pleaded in bar, could constitute special circumstances. 25Arnold v National Westminster Bank PLC appears not to have been applied by any Court in Australia. In O'Toole v Charles David Pty Ltd [1991] HCA 14; 171 CLR 232 at 258, Brennan J observed that the decision of Browne-Wilkinson VC at first instance in Arnold, in which his Honour held there to be special circumstances establishing an exception to the application of the issue estoppel, "rests on an uncertain foundation". Doubt as to the existence of exceptions to the application of an issue estoppel was voiced by Callaway JA in Linsley v Petrie [1998] 1 VR 427 at 449 and Murray ACJ in Squires Transport Pty Ltd v Turnor [2004] WASCA 245 at [5]. It was, however, unnecessary for their Honours to decide the question: Linsley v Petrie at 441 per Hayne JA, 449 per Callaway JA and Smith AJA; Squires Transport Pty Ltd v Turnor at [5] per Murray ACJ, [63]-[64] per Templeman J and [97] per McKechnie J. 26In Tiufino v Warland, Handley JA noted, at [30], that the case before the Court was not the appropriate occasion to consider whether the qualification to the general rule of issue estoppel established by Arnold v National Westminster Bank PLC should be accepted in this jurisdiction. Similarly, in Commonwealth of Australia v Cockatoo Dockyard Pty Ltd [2006] NSWCA 322 Tobias JA, with whom Giles JA and Santow JA agreed, held that it was "neither necessary nor appropriate" to determine whether Arnold was part of the law of New South Wales. More recently, in Cassegrain v Gerard Cassegrain & Co Pty Limited [2013] NSWCA 454, it was assumed but not decided that there may be exceptions to the application of an issue estoppel in special circumstances: see at [96]-[98]. 27For the reasons that follow, this case is also not the appropriate occasion to consider this question. 28Before proceeding to explain why that is so, it should be noted that Tiufino v Warland involved a motor vehicle accident where there was a claim for property damage in the Local Court and a claim for personal injuries in the Supreme Court: see at [2]. In Tiufino Handley JA stated, at [48], that even if the defence of issue estoppel had not been made out, he would have held that the magistrate's decision in favour of the respondent made the maintenance of the proceedings in the Supreme Court an abuse of process. His Honour observed that the appellant had complete control over the proceedings in the Local Court through the solicitor and counsel of her choice, and there had been a full hearing on the merits. His Honour was of the view, therefore, that an attempt to re-litigate the simple issues of fact was an abuse of process: see at [50]. 29The appellant in this case submitted that the procedures adopted in the Small Claims Division gave rise to special circumstances so that the issue estoppel ought not to apply in this case. She submitted that the legislation governing the conduct of matters in the Small Claims Division involved a recognition that the full panoply of the processes engaged by adversarial proceedings was not appropriate and were too expensive for small civil claims: see Second Reading Speech 5 December 1990 in respect of the Local Courts (Civil Claims) Amendment Bill. The amendments introduced by that Bill were to the predecessor Act to the Local Court Act 2007. The amended provisions have been included in the present Act. 30The non-adversarial aspects that apply to proceedings brought in the Civil Claims Division of the Local Court under the Local Court Act have been set out at [5]-[7] above. The appellant also stressed the absence of a general right of appeal from a decision made in the Small Claims Division. This was important, on the appellant's submission, because it meant that there was no means of correction of error. However, she accepted that this Court in Commonwealth of Australia v Cockatoo Dockyard Pty Ltd, at [451], considered that the absence of a right of appeal did not, of itself, constitute a special circumstance. 31The appellant also sought to distinguish the decision in Tiufino v Warland. In that case, the proceedings had been conducted in the General Division of the Local Court and, as was permissible in that division, had been conducted on an adversarial basis. Witnesses had been cross-examined and the presiding magistrate had made findings of credit. However, this submission overlooked the availability of a number of processes available to the appellant that would have potentially afforded her the protection that it was contended she did not have by the matter being conducted in the Small Claims Division. In particular, she could have sought to have the matter transferred to the General Division or have applied apply to have witnesses, including the defendant, cross-examined. She did none of those things. 32There were two other avenues available to the appellant to protect her position. She could have commenced her personal injuries claim in the District Court and sought the property damage claim transferred to the District Court to be heard at the same time. Alternatively, as an interim measure, she could have applied for an adjournment to allow herself time to commence her personal injuries claim. 33Although the appellant was self-represented in the Local Court and indicated to the assessor that she did not understand the processes of the Court, her defence to the property damage had been prepared and filed by a solicitor and her statement bore the same solicitor's fax number. Accordingly, even if the absence of legal representation is a factor that could give rise to, or is relevant to the existence of, special circumstances, that factor would not have been available to the appellant. 34For the foregoing reasons, I am of the opinion that the appeal should be dismissed with costs. 35MACFARLAN JA: I agree with Beazley P. 36LEEMING JA: I agree with the orders proposed by the President and her Honour's reasons for them. In particular I agree with her Honour's observations as to the narrowness of this appeal. The appellant's case was confined to showing that there were special circumstances sufficient to displace the issue estoppel. The respondent for his part did not submit that there was no special circumstances exception but was content to deny that any special circumstances had been made out. 37The unargued question may be a large one. Its resolution may be influenced by whether a subrogated insurer is conducting the litigation in the insured's name: cf Linsley v Petrie [1998] 1 VR 427. It does not arise, because I agree with the President that no special circumstances are disclosed by the present case. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 March 2014