Estoppel: exceptions to the rule?

Charafeddine v Morgan [2014] NSWCA 74


The appellant sought to set aside a decision to strike out her personal injury claim based on estoppel, namely her earlier property claim for the damage to the motor vehicle had been dismissed on the basis she was negligent, which finding on negligence was relied upon.


Beazely P (Macfarlan and Leeming JJA concurring)

17 Although 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.”


18 There are a number of ancillary principles that are also well established. Insofar as they are relevant to this matter, they are as follows.


19 The 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].


20 There 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

22 The 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.


23 In 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“.


24 In 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.


25 Arnold 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.


26 In 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].


27 For the reasons that follow, this case is also not the appropriate occasion to consider this question.


28 Before 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].


29 The 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.


30 The 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.


31 The 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.


32 There 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.


33 Although 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.


34 For the foregoing reasons, I am of the opinion that the appeal should be dismissed with costs.


Brisbane Barrister – David Cormack

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