Previous proceedings brought by a credit hire car provider in
the name of an insured do not necessarily preclude a later
On 29 July 2015 Wilson SCJ refused leave to AAMI to appeal
against a determination by Magistrate Milledge of the NSW Local
Court in Peters v D'Armas.
Peters had an insured loss for damage to his vehicle and had
also hired a replacement vehicle on credit. The credit hire
provider had commenced and lost proceedings in Peters' name
against AAMI's insured D'Armas. NRMA had also
commenced subrogated proceedings in Peters' name without
knowing about those earlier hire car proceedings.
AAMI sought to strike out the NRMA proceedings on the basis of
estoppel and the operation of S.24 of the Civil Procedure Act 2005
(NSW). Whilst arguably much of the determination turned on
what was described as "the inexplicable failure of AAMI to
refer to the first proceedings during its dealings with the
NRMA", the comments of the Supreme Court nevertheless
will have a significant effect on the conduct of matters before
lower courts where much of this litigation is conducted.
Notable in Wilson SCJ's judgment is the
Ordinarily, it is the privity of interest which determines
whether the parties are considered to be the same. "Privity of
interest" was defined ... as"a sufficient degree of
identification between the two to make it just to hold that the
decision to which one was party should be binding in proceedings to
which the other is party."
Implicit in her Honour's determination of the matter is
a conclusion that there was not a sufficient degree of
identification between Mr. Peters acting in his personal capacity
and the NRMA acting through Mr. Peters, to regard a decision
relevant to one entity as binding on the other. Whilst the cause of
action may have been the same, the redress sought was very
different and, accordingly, it was open to her Honour to consider
that the matters litigated and the interests determined were also
Although reasonable minds might differ as to the conclusion
reached, it is not without precedent.
In Linsley v Petrie  1 VR 427, the Victorian Court of
Appeal considered that an insurer with a conflicting interest would
not be bound by issue estoppel from earlier proceedings brought in
the insured's name, in which the real party was his
Smith AJA made some further obiter remarks.. to the effect
that it was difficult to accept that issue estoppel should bind a
litigant as to issues raised and determined in earlier proceedings
that were not initiated by that person and over which he or she
exercised no control.
Arguably, the same should apply to the question of the
applicability of the doctrine of res judicata. The NRMA, a party
with a legitimate interest in the determination of the issue of
negligence relevant to the 2012 collision, did not initiate the
(very limited) claim filed by Mr. Peters, and had no say in the
pleadings or in the manner in which the litigation was conducted
and the issues raised by it for determination. Its complete
ignorance of the suit arose, certainly by the default of Mr. Peters
but also, in her Honour's view, by the almost studied failure
of the plaintiff's representatives to refer to it in dealings
with the NRMA. Her Honour was clearly of the view that, should the
de Armas motion succeed, an injustice would be occasioned to the
NRMA, and the real issues between the parties would not have been
Her Honour's ruling leaves it open to the parties to
have heard and determined the real issues in the proceedings, and
prevents one litigant from taking advantage of the actions of
another to shut out from the proceedings an entity with a
legitimate interest in the proceedings.
Although the decision relates to circumstances in which the
insurer was unaware of the credit hire proceedings, we expect that
insurers in the Local Court will be better able to argue that they
should no longer be denied the ability to seek recovery of
subrogated losses, despite previous credit hire
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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