An unfavourable determination of a property damage claim in the
Local Court involving decisions as to fault and contributory
negligence can amount to issue estoppel of subsequent personal
On 8 September 2009, Ms Charafeddine (plaintiff) and Mr Morgan
(defendant) were involved in a motor vehicle accident.
Mr Morgan sued Ms Charafeddine in the Local Court for damage to
his motor vehicle. The property damage claim came before the
Assessor on 2 May 2011. The Assessor then gave a decision in favour
of Mr Morgan, after considering statements from both parties.
Findings as to contributory negligence, liability and speed were
made. That decision was not challenged.
Ms Charafeddine commenced proceedings in the District Court in
relation to injuries sustained in the accident. Mr Morgan filed a
Defence denying liability and pleaded the following:
"The defendant says that these proceedings are not
maintainable due to an issue estoppel which has arisen as a result
of a judgment in the Local Court of NSW on 2 May 2011 in favour of
the defendant in these proceedings against the plaintiff in these
proceedings in the matter of James Roko Morgan v Hanadi
Charafeddine 2010/356559, relating to property damage suffered by
Mr Morgan in the same accident as is the subject of these
At the commencement of the Hearing, the defendant brought an
application for summary judgment on the basis that his success in
the Local Court proceedings amounted to issue estoppel, as it
raised common issues (namely, breach of duty of care and
The matter came before Judge Gibson who determined that there
were 2 issues before her:
Whether there was issue estoppel.
Whether, if there was issue estoppel, the Court should exercise
a discretion not to apply the principles of issue estoppel.
Whether there was issue estoppel
The governing principles of issue estoppel as stated by Dixon J
in Blair v Curran2 were noted by Handley JA in
Tiufino v Warland3 . The principal issue for
determination is whether the issue was the same as that which had
been decided in the Local Court, there being disputes as to whether
the parties and causes of action were the same.
Judge Gibson found that the facts in this case were identical to
Tiufino and the circumstances differed in only 2 respects;
namely that the relevant legislation and court rules had changed
and the subject proceedings were commenced some 9 months after the
proceedings in the Local Court were concluded.
The plaintiff submitted that it was not enough for the issues to
be common, but that the legislative structure in the Local Court
was so different that it would preclude questions of issue estoppel
arising. The plaintiff raised the following issues in this
There are limited rights of appeal from the Local Court
There was no entitlement to cross-examination and as such there
could be no finding as to credit.
The decision was made by an Assessor rather than a
Judge Gibson determined, however, that Tiufino was
binding on the District Court and that she was not persuaded that
the orders made by the Local Court did not amount to issue
Whether, if there was issue estoppel, the Court
should exercise a discretion not to apply the principles of issue
Judge Gibson noted that the authorities upon which the Court can
exercise a discretion rested on "an uncertain
foundation". Nonetheless, Judge Gibson determined that no
such discretion should be exercised in this matter as there were
strong reasons to apply the principles of issue estoppel, including
for the purposes of delivering justice between the parties, and
avoiding the parties and the community devoting further resources
to the re-agitation of a matter which have been the subject of
earlier proceedings. This was particularly so as the Plaintiff was
aware of the local Court decision in advance of commencing the
This case confirms the application of issue estoppel in motor
vehicle accident claims where a determination is made by an
inferior Court. In most instances this involves the Local Court
making a determination in respect of a property damage claim.
The application of these principles can work both in favour of
and against the insurer. It is important that insurers determine
the status of any property damage claims at the outset, and if
necessary, thought should be given to seeking to delay or join
The failure of a party to call a witness does not necessarily give rise to an adverse inference being drawn in accordance with Jones v Dunkel (1959) 101 CLR 298. An unfavourable inference is drawn only if evidence otherwise provides a basis on which that unfavourable inference can be drawn.
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