It is not uncommon for hire car proceedings to be issued separately from proceedings for repair costs. This is particularly so as the hire car costs are an uninsured claim not otherwise in the purview of the subrogated insurer.
The commencement of separate proceedings has caused defendants to defend the second in time proceedings on the basis of a split cause of action or issues related to concluded proceedings. The courts have addressed the issue on a number of occasions.
An early case is Kaporis v Riddington [2011] NSWLC (10 Nov 2011) where there was a consent judgment for the hire costs. The defendant sought to defend the repair proceedings on the basis of the previous judgment. The court noted that personal injury claims were a well-recognised exception.
[In] the English Court of Appeal decision of Brunsden v Humphrey (1884) 14 QBD 141 the majority of the Court held that where the negligent act of the defendant results in both property damage and personal injury, a plaintiff may recover damages in an action in respect of the property damage, and still recover damages in a second action relating to the personal injury. This decision has been accepted as the common law position in Australia in Jackson v Goldsmith (1950) 81 CLR 446 per Fullagar J at 467.
The court found that Sec 24 of the Civil Procedure Act is widely drafted and in effect is a statutory enactment of the principle Res Judicata. As the cause of action for car hire and repair is negligence and same in both proceedings the first judgment shuts out the second proceedings [whilst it remains on foot].
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In Round v Mace [2012] NSWLC (26 Sept 2012) the defendant sought to obtain a judgement in the proceedings issued first by filing a Notice of Acknowledgement resulting in a judgement that was then used to shut out the proceedings issued secondly. The judgment was set aside. The case focused on Anshun estoppel and an abuse of process.
The court noted that the correct procedure was for proceed by motion under the UPCR rules 13.4 or 14.28.
‘While question of abuse of process would normally be raised by notice of motion pursuant to UCPR 13.4 or UCPR 14.28 the defendant has elected to raise the issue by way of the defence filed. As these are proceedings being heard and determined within the Small Claims division of the Local Court the informal processes of the Court allow this issue to be determined in conjunction with the substantive issues.’
The intention in two proceedings was not ‘motivated by any improper purpose’. The defendant was on notice of the hire claim so was not misled. Claims of Anshun estoppel and an abuse of process were rejected.
In Chand –v– Zurich Aust Insurance [2015] NSWSC 102 (25 Feb 2013) there was again a consent judgement. The court found that Zurich were unaware of the hire proceedings but the defendant subrogated insurer AAMI were aware of those proceedings and that Zurich had a claim that they wished to recover. The consent judgment was set aside. The Morganite principle was applied viz that a general release by the insured does not shut out subrogated rights when on notice. The point here is that the judgement does need to be set aside.
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Peters v De Armas [2014] NSWLC (16 April 2014) Hire car proceedings by Mr Peters. NRMA seeks repair recovery of Mr Peters. Plaintiff sues in different capacity, as subrogated. [As an aside AAMI was aware of hire proceedings but did not tell NRMA]. NRMA not shut out and can sue. No need to set judgement aside.
On appeal Peters v De Armas [2015] NSWSC 1050 (29 July 2015). Whilst there was the same course of action there was no privity of interest. Res Judicata and Sec 24 defences no not inhibit the claim.
Dunn v Ghoban & Nandi Services [2014] NSWLC (31 Jul 2014)
This judgment was delivered shortly after Peters v De Armas and the appeal decision was not taken into account.
There was an application to set aside a default judgment entered up in hire proceedings. Chand was distinguished as the defendants ‘neither procured a release or a consent judgment’. The court decided that a default judgment for uninsured losses by the plaintiff could bind the subrogated insurer. This is in direct conflict to Peters v De Armas. The court refused to set aside the default judgment, if properly entered up. The court found a procedural irregularly and so set the judgment aside.
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Conclusion
First is there a common cause of action. If so is there privity of interest. If so is there a recognised exception eg personal injury. If not is there a judgment. Note in Shehata v Landi [2015] NSWLC 2015/6674 (24 Mar 2015) the court rejected a Sec 24 motion because the repairs had been settled without the filing of a ‘final’ order. If there is a judgment can it be set aside. Seeking to defend on the basis of a spit cause of action is not necessarily straightforward.