Challis & Another v Ford Motor Company of Australia Pty Ltd & Another; Challis v Ford Motor Company of Australia Pty Ltd [2023] QDC 215

DISTRICT COURT OF QUEENSLAND CITATION: Challis & another v Ford Motor Company of Australia Pty Ltd & another; Challis v Ford Motor Company of Australia Pty Ltd [2023] QDC 215 PARTIES: CHRISTINE CHALLIS (First Plaintiff) AND BRUCE CHALLIS (Second Plaintiff) v FORD MOTOR COMPANY OF AUSTRALIA PTY LTD ACN 004116 223 (First Defendant) AND MACKAY CITY AUTO GROUP PTY LTD ACN 125 986 503 (Second Defendant) And CHRISTINE CHALLIS (First Plaintiff) AND BRUCE CHALLIS (Second Plaintiff) v FORD MOTOR COMPANY OF AUSTRALIA PTY LTD ACN 004116 223 (Defendant) FILE NOS: BD No 813 of 2020 and 4687 of 2019 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: Brisbane District Court DELIVERED ON: 24 November 2023 DELIVERED AT: Brisbane HEARING DATES: 11 and 12 August 2022 and 1 November 2022 -- 1 of 7 -- 2 JUDGE: Porter KC DCJ ORDER: 1. In proceeding 813/20, the plaintiffs pay the defendants’ costs of the application and the proceeding on the standard basis. 2. In proceeding 4687/19, the plaintiffs pay the defendant’s costs of the application and the proceeding on the standard basis. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – PARTIES AND NON- PARTIES – NON-PARTIES GENERALLY – where the court made orders permanently staying two proceedings – where the plaintiffs were the same in both proceedings, but different insurers, APIA and Youi, conducted each proceeding in exercise of a right of subrogation – where Youi caused the abuse of process in both proceedings – whether Youi should pay the plaintiffs costs in the proceedings conducted by APIA CASES: Bischoff v Adams [1992] 2 VR 198 Knight v FP Special Assets Ltd (1992) 174 CLR 178 COUNSEL: In BD No 813 of 2020 K Horsley for the Plaintiffs E Robinson for the First Defendant H Blattman KC for the Second Defendant SOLICITORS: Ligeti Partners Lawyers for the Plaintiffs Allens for the First Defendant Carter Newell Lawyers for the Second Defendant COUNSEL: In BD No 4687 of 2019 C Heyworth-Smith KC and S Lane for the Plaintiffs E Robinson for the Defendant SOLICITORS: Mills Oakley for the Plaintiffs Allens for the Defendant [1] On 31 October 2023, I delivered judgment in applications for permanent stays made in each of the above proceedings (the principal judgment), by which I ordered that both proceedings be permanently stayed. These reasons are to be read with the principal judgment and defined terms in that judgment used here have the same meaning as in that judgment. [2] The two proceedings were stayed because I found that the disposal of the battery items in the shadow of the commencement of the Youi proceedings and the -- 2 of 7 -- 3 disposal of the Ranger after the commencement of those proceedings were abuses of process that affected both proceedings, and further, that there could not be a fair trial of either the Youi or the APIA proceedings following that disposal. [3] I invited the parties to make submissions as to costs. These reasons deal with those submissions. Defendants’ costs in both proceedings [4] The plaintiffs in the Youi and APIA proceedings concede costs should be ordered in favour of the successful applicant/defendant/s in each proceeding on a standard basis, subject to two matters. [5] First, Youi submits that because the Youi proceedings were initially in the Magistrates Court, Ford and Mackay City Autos ought to have their costs on the scale applicable in that Court up to the transfer of the proceedings to this Court. I do not intend to limit costs of the Youi defendants in that manner. The issues in the Youi proceedings were always going to be complex once the defendants discovered what had occurred with the chattels, and properly dealt with in this Court. Further, that period in which the proceedings were in the Magistrates Court is a very minor part of the costs in the proceedings. Even if I thought it otherwise appropriate to make the order sought by Youi, the cost of separating out that part of the costs relevant to just the Magistrates Court stage is not proportionate to the amount that would be involved. [6] Second, APIA submits that it should not be required to pay Ford’s costs up to the filing of the application for the permanent stay of the proceedings. APIA submits that Ford unreasonably delayed in filing its application and thereby was responsible for costs incurred by the plaintiffs in pursuing their claims up to the time the application was filed. APIA relies on the fact that Ford knew the Ranger had been salvaged before the APIA proceedings commenced and further, APIA gives as its principal examples of Ford’s slow conduct of the proceedings: (a) Bringing an application for interrogatories (filed on 23 July 2021), more than 9 months after pleadings had closed. Judgment in respect of this application was delivered on 13 August 2021; (b) Delaying until 11 February 2022 to obtain an expert report relevant to the application (notwithstanding that the expert had been instructed by letter dated 15 March 2021); and (c) Delaying in bringing this application until 11 February 2022, a delay of nearly 2 years from the time the proceedings were ordered to be heard together. [7] I am not persuaded by that submission. [8] The first difficulty with it is that the argument, even if it has merit, can only apply to costs thrown away as a result of that alleged unreasonable delay. APIA does not articulate the costs order it seeks in that manner. Rather it assumes that no costs incurred before Ford filed its application for a stay would have been incurred in any -- 3 of 7 -- 4 event. I am unwilling to make any such assumption. Certainly, it is difficult to see why the costs of preparing the claim and statement of claim were thrown away. Any delay by Ford had nothing to do with the incurring of those costs. [9] The next difficulty is that while Ford might not have filed its application for a permanent stay until 11 February 2022, Ford did give unequivocal notice that it maintained the APIA proceeding were an abuse of process and why in its first defence filed in the proceedings on 23 June 2020. From that point on, APIA took the risk on costs it incurred in continuing its proceedings in the face of Ford’s pleaded case that the APIA proceedings were an abuse of process. Ford’s defence gave notice relatively early in the proceedings. APIA filed its statement of claim on 20 December 2019 and its amended statement of claim on 21 May 2020. Ford filed its defence on 23 June 2020. There was hardly much time for costs to be incurred in that period, much less costs thrown away. [10] Finally, I do not accept the premise that Ford had unduly delayed the conduct of the proceedings. Ford was in the position of trying to determine what had occurred in the dealings with the Ranger and the battery items in circumstances where it had no direct knowledge of the facts. The application itself was a complex one, which gave rise to subtle points of expert evidence. For those reasons and for the further points made by Mr Robinson in his submission on this issue on behalf of Ford, I am not persuaded that there was undue delay in bringing of the application specifically nor in Ford’s conduct of the proceedings generally. [11] No other submissions were made which touch on the costs orders in favour of the respondents. Accordingly, I order that: (a) The plaintiffs pay the defendants’ costs of the application in the Youi proceedings and of the Youi proceedings on the standard basis; and (b) The plaintiffs pay the defendant’s costs of the application in the APIA proceeding and of the APIA proceedings on the standard basis. APIA’s claim against Youi [12] APIA seeks an order that the costs payable to Ford and its own costs in the APIA proceedings be paid by Youi. Youi is not a party to the APIA proceedings, and nor for that matter is APIA. The plaintiffs in each case are the Challises.1 [13] APIA’s submissions recognise that on one view of it, the order it seeks must, as a matter of form, be an order in favour of the plaintiffs in the APIA proceedings and against the plaintiffs in the Youi proceedings. Can the plaintiffs be ordered to pay costs to themselves? The underlying assumption of APIA’s submissions is that the Court should look through the legal form of the proceedings and focus on the substance of the position in equity. APIA submits that because both proceedings were being conducted pursuant to equitable rights of subrogation, I should, in effect, ignore the effect of making orders against and in favour of the Challises in the different proceedings. I am not satisfied that this is an adequate answer to the 1 See [233] to [235] of the principal judgment -- 4 of 7 -- 5 problem of making an order in favour of the plaintiffs which is also directed to the plaintiffs. Fortunately, APIA provided an alternative approach. [14] APIA submitted in the alternative that the Court could make orders against Youi directly (rather than against the Challises as plaintiffs in the Youi proceeding) in the following form: (a) Youi pay the defendant’s costs of the APIA Proceeding; and (b) Youi pay the plaintiffs’ costs of the APIA Proceeding. [15] This form of order sits more comfortably with the principles which APIA invokes to sustain the substantive outcome it seeks, i.e. that Youi pay APIA’s costs. APIA’s approach draws on the principles applicable to the making of costs orders against third parties to litigation. Subject to one matter, this seems the correct form of order to give effect to the substantive arguments APIA advances. The proviso is that the first order should probably require Youi to indemnity APIA for Ford’s costs of the proceedings. APIA should not be able to avoid its primarily liability to Ford even if it is entitled to look to Youi in turn as the author of APIA’s exposure to Ford. [16] I accept that it would be open to the Court to make a third-party costs order against Youi in favour of the plaintiffs in the APIA proceedings. The conduct which APIA relies upon to justify the third-party costs order is Youi’s disposal of the Ranger and the battery items. That conduct occurred during the exercise of the equitable right of subrogation2 in relation to the same cause of action as that advanced by the plaintiffs in the APIA proceedings. There is an analogy with the position of the non-party in Bischoff v Adams [1992] 2 VR 198 relied upon in APIA’s proceeding is strong. [17] The question is whether the Court should make the orders sought by APIA. [18] It can be accepted that Youi’s disposal of the chattels was the ultimate cause of the dismissal of the APIA proceedings and that Youi’s conduct was an abuse of process, which infected the APIA proceedings, as I have found in the principal judgment. However, in my respectful view, that is not quite the correct issue to be addressed. The correct issue to consider in respect of APIA’s costs exposure is whether Youi’s conduct was the cause of APIA incurring its own costs and being exposed, through the plaintiffs, to liability to Ford’s costs in a manner which justifies making Youi liable as a third party for those costs. I am not persuaded that it does. [19] First, APIA chose to commence a separate proceeding. It did not have to do so. It could have advanced its claims as part of the Youi proceedings and probably should have done. Not only was Ford faced with two proceedings arising out of the same events, but it was also faced with two proceedings for loss arising from the same cause of action. 2 Or was so closely connected with it as to be incidental to Youi’s exercise of that right See [241] of the principal judgment -- 5 of 7 -- 6 [20] Second, and more significantly, APIA chose fully to participate in resisting Ford’s stay application. It did not have to do so. The issues on the stay application in the Youi proceedings were materially the same as in the APIA proceedings. The only distinction was that arising from the difference in timing of commencement of the two proceedings and from the different insurer in the APIA proceedings. If APIA through the Challises had wished to agitate these specific points, APIA could have appeared and argued those points briefly and with no need to participate in the factual issues at trial (and it was unsuccessful on those specific issues at trial in any event). Instead, APIA filed extensive expert evidence on the causation issues and the impact of disposal of the chattels on those issues and made substantive submissions on most issues in the hearing. Not only did this add to Ford’s costs in the conduct of the stay application, it also resulted in APIA incurring substantial costs of its own when it could have left the running of the substantive issues to Youi. [21] I recognise that the actual hearing was conducted efficiently by all parties with no material overlap in the cross examination by the two legal teams for the respondents. I also recognise that APIA’s team took the lead on some issues. However, APIA’s separate participation still caused it to incur it own costs when it did not have to do so. It also added very significantly to the evidence tendered (Mr Nystrom’s expert evidence for example) and the preparation for and submissions at trial. Further, there were aspects of the trial which were the result solely of APIA’s participation. The extensive challenge to Mr Denham’s report (tendered by Youi) is an example. APIA’s full participation added to the complexity of the hearing and determination of the applications. While I perfectly understand APIA’s decision to take an active role in the proceedings, given the monetary value of its subrogated claim, once that decision was made, it took the risk on a costs order if it was unsuccessful. [22] Third, while I do not consider Knight v FP Special Assets Ltd (1992) 174 CLR 178 overruled Bischoff, there two distinctions between Bischoff and this case. In Bischoff, the learned trial Judge concluded that the third party had destroyed the relevant ticket with the deliberate intention of disposing of embarrassing evidence. That deliberate intention is missing in this case. Further, in Bischoff, the parties to the dispute had no choice but to deal in their trial with the problems caused by the conduct of the third party. Here, as I have observed, might have been a third party to the APIA proceedings, but it was a party in its own right (at least in substance) in the Youi proceedings in which almost identical issues to those in the APIA proceedings arose. And You was always going to resist Ford’s application. Unlike the parties in Bischoff, APIA did not have to intervene to have its interests represented in a dispute with Ford. [23] While it might be possible that APIA has some form of cause of action against Youi, whether at law or in equity, for which the costs of the proceedings might be part of the recoverable loss, such a claim was not articulated. I treat that as a neutral factor in the exercise of my discretion as to costs. -- 6 of 7 -- 7 [24] Finally, it might be possible that some component of APIA’s costs, whether its own or Ford’s, can be shown to have relieved Youi from incurring its own costs and in that sense that Youi benefitted from APIA’s involvement in the trial. However, APIA did not so far as I could determine contend for its orders on that basis. And it would in any event be an unsatisfactory and speculative basis for trying to allocate costs. [25] Overall, I am not persuaded that I ought to order Youi to pay APIA’s costs nor Ford’s costs of the APIA application and proceedings. -- 7 of 7 --