Edwards v Hyundai Motor Company Pty Ltd

SUPREME COURT OF VICTORIA

COURT OF APPEAL

S EAPCI 2024 0073

SAMANTHA JANE EDWARDS	First Applicant
JOSEPHINE DOLORES HOPPNER	Second Applicant
v
HYUNDAI MOTOR COMPANY AUSTRALIA PTY LIMITED (ACN 008 995 588) AND OTHERS ACCORDING TO THE SCHEDULE ATTACHED	Respondents

S EAPCI 2024 0074

DAVID JOHN SIMS	Applicant
v
KIA AUSTRALIA PTY LIMITED (ACN 110 483 353) and others according to the schedule attached	Respondents

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JUDGES:	McLEISH, ORR JJA and MATTHEWS AJA
WHERE HELD:	Melbourne
DATE OF HEARING:	Determined on the papers
DATE OF JUDGMENT:	8 April 2025
MEDIUM NEUTRAL CITATION:	[2025] VSCA 67
JUDGMENT APPEALED FROM:	[2024] VSC 301 (Nichols J)

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COSTS – Discontinued applications for leave to appeal – Applicants seeking orders that each party bear their own costs – Supreme Court (General Civil Procedure) Rules 2015, r 64.29(4) – Applicants submit proposed appeals rendered nugatory by intervening events – Applicants made forensic decision to discontinue applications for leave to appeal and file new applications in trial proceeding – Applications for orders displacing costs rule in r 64.29(4) refused.

Soteriadis v Nillumbik Shire Council [2015] VSC 363, applied.

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Counsel
Applicants:		Ms S Scott
First and Second Respondents:		Mr B Mostafa
Third Respondent:		Mr WAD Edwards KC with Mr P Strickland
Solicitors
Applicants:	Banton Group
First and Second Respondents:	Quinn Emanuel Urquhart & Sullivan
Third Respondent:	Maurice Blackburn

MCLEISH JA
ORR JA
MATTHEWS AJA:

These applications for leave to appeal were discontinued on 18 December 2024 by the filing of notices of discontinuance under r 64.29(1) of the Supreme Court (General Civil Procedure) Rules 2015. By r 64.29(4), unless the Court otherwise orders, the applicants will be required to pay the respondents’ costs of the applications.
The applicants seek orders that each party bear their own costs. For the reasons that follow, such orders should not be made. Rule 64.29(4) should apply to require the applicants to pay the respondents’ costs of the applications for leave to appeal.
The proceedings in respect of which leave to appeal was sought were two of four overlapping group proceedings concerning alleged defects in the anti-lock braking systems of vehicles supplied by the respective first and second defendants. The two subject proceedings were commenced in the Federal Court of Australia and subsequently transferred to the Supreme Court. The other two proceedings, brought by different applicants against the same defendants, were commenced in the Supreme Court.
On 29 June 2023, the two courts made substantially identical orders by consent. These orders, modelled on those made in Lidgett v Downer EDI Ltd (‘Lidgett’)[1] and Maglio v Hino Motor Sales Australia Pty Ltd (‘Hino’),[2] were directed at providing a regime which would govern the hearing and determination of the question which of the overlapping proceedings should be heard and determined. In Lidgett, Delany J described such orders as being ‘designed to encourage each party to put forward … the proposal that would best advance the interests of group members’.[3] Those proposals are colloquially referred to as ‘carriage’ proposals. The orders contemplated a competitive element, allowing for each plaintiff to serve a statement of position and to revise that statement once, in response to the material served by other parties.
[1][2023] VSC 574 [34] (Delany J).
[2][2023] VSC 757 [63] (M Osborne J).
[3][2023] VSC 574 [34]. See also Edwards v Hyundai Motor Company Australia Pty Ltd [2024] VSC 301 [106] (Nichols J) (‘Edwards’).
The statements of position were required to enable the reader to ‘understand the essence’ of the plaintiffs’ ‘carriage’ proposals and to contain sufficient detail to allow for a meaningful comparison of those proposals. The matters to be covered included: the proposed funding arrangements, including funding terms, conditions and percentages; costs estimates; and the net hypothetical return to members.
The regime was directed at facilitating the just, efficient, timely and cost-effective resolution of the real issues in dispute, consistently with the overarching purpose in the Civil Procedure Act 2010.[4] This did not, however, preclude the possibility of amending orders later being made to permit a party to further revise their statement of position beyond the single revision for which the orders provided.
[4]Hino [2023] VSC 757 [28] (M Osborne J); Edwards [2024] VSC 301 [107] (Nichols J).
Such amending orders were sought in the present case, relevantly to enable the applicants to revise their statements of position to reflect the fact that they had different legal representation, and the fact that their new solicitors would be engaged on different commercial terms and, in particular, would seek a group costs order. The applicants’ previous solicitor had proposed a ‘no win no fee’ arrangement involving a litigation funder.
The primary judge permitted the amendment sought by the applicants in respect of the identity of their solicitors, but refused the amendment in respect of the different funding terms. That refusal was the subject of the applications for leave to appeal, subsequently discontinued.
The applicants bear the burden under r 64.29 of persuading the Court that it should ‘otherwise order’ with respect to costs. For the purpose of resolving that issue, orders were made on 6 January 2025 for the filing of written submissions on that question, the last of which were filed on 31 March 2025. The parties indicated that they were content for the matter to be decided on the papers.
The applicants submit that the proposed appeals had been overtaken by intervening events. Specifically, the day after they filed their written cases, the applicants wrote to the first and second respondents (being the Hyundai and Kia corporate entities respectively) regarding safety recall reports issued by the National Highway Traffic Safety Administration in the United States of America, inquiring whether defects identified in those reports affected vehicles in Australia. On 1 August 2024, the relevant Commonwealth department published a recall notice for a defect said to be substantially similar to those identified in the proceeding commenced by Ms Edwards. It was said that this would increase the number of affected Hyundai vehicles, if the pleadings in that proceeding were to be amended, from 242,864 to 318,304.
Similarly, on 9 October 2024, the Commonwealth published ten recall notices for defects said to be substantially similar to those identified in the proceeding commenced by Mr Sims. It was said that this would increase the number of affected Kia vehicles, if the pleadings in that proceeding were to be amended, from 88,784 to 192,885.
The applicants considered that such increased numbers of vehicles the subject of the proceedings would lead to an increase in the potential pool of damages in the event of a successful outcome, which it was said affected the ‘commercial considerations’ relevant to the conduct of both proceedings, ‘necessitating’ both an amendment of the pleadings and the ‘revisitation of the commercial funding terms offered by the parties’.
The applicants submit that this amounted to a material change in circumstances and that, if they were to obtain orders permitting them to amend their pleadings and to serve revised statements of position including revised costs and retainer agreements, the proposed appeals would be rendered nugatory. As mentioned below, the question whether such amendments should be permitted has been the subject of procedural orders in the Trial Division and that issue remains to be decided in each proceeding.
The first and second respondents in each proposed appeal submit that the applicants discontinued their appeal proceedings even though they might not succeed in obtaining orders enabling them to amend their pleadings and revise their statements of position so as to accommodate the ‘revisitation of the commercial funding terms offered by the parties’ in light of the further recall notices. They had chosen to seek amending orders on the basis of the intervening recall notices rather than to persist in doing so on the basis of the change of solicitor upon which they had unsuccessfully relied in the applications the subject of the proposed appeals. This was said to be a forensic decision which sought to overcome the effect of the impugned ruling without challenging it directly.
The third respondents, being the respective plaintiffs in the other two proceedings, submit that the applicants were now seeking to pursue the outcome they had been seeking through the proposed appeals ‘through a different route’. This course had involved ‘surrender’ on the proposed appeals, rather than any supervening event removing or modifying the subject of the dispute.[5] The third respondents also submit that the applicants did not discontinue their applications at the earliest opportunity, and that the third respondents had incurred significant costs in the meantime. They seek an order under r 64.29(4) that the applicants pay their costs ‘forthwith’.
[5]Johnson v Clancy [2010] NSWSC 1301 [21] (Hallen AsJ).
In reply, the applicants observe that a judge in the Trial Division made orders on 28 March 2025 for the hearing of their applications to serve revised statements of position as a result of the additional recall notices.[6] They submit that the arguments that they would have advanced in the proposed appeals would ‘by and large’ be advanced in the course of determining the applications to amend their statements of position.
[6]The question of amendment to the pleadings appears to have been deferred.
In our view, the respondents’ submissions should be accepted. The proposed appeals sought to impugn the primary judge’s ruling refusing leave to revise the applicants’ statements of position so as to refer to a new funding agreement consequent upon the change of solicitor. That matter was the subject of specific evidence and argument, which would have fallen for reconsideration if the appeals had succeeded. The applications pending now not only depend on obtaining leave to amend the pleadings, but they rely on different facts and arguments in seeking to revise the statements of position to refer to the recall notices and their effect on funding issues. In particular, there is no reason to think that, if those pending applications are successful, the funding agreements that might be proposed in respect of the enlarged case would be the same as those the applicants previously sought to advance. In short, although related, the two sets of applications are quite distinct.
The matter can be tested by considering what the position would be if the applicants do not succeed in amending their case and revising their statements of position by reference to the new recall notices. The result would be that they had, by discontinuing the proposed appeals, foregone the opportunity of seeking to re-agitate the alternative funding arrangement in respect of the case as it was advanced before the further recall notices. In other words, the applicants chose to discontinue the proposed appeals, irrespective of whether they are able to advance a case, or a funding model, incorporating the additional vehicles affected by the new recall notices. That points to a forensic decision, rather than a proceeding being rendered nugatory as a result of intervening circumstances.
In Soteriadis v Nillumbik Shire Council,[7] Derham AsJ summarised the principles applying to the ordering of costs upon discontinuance of a proceeding in the Trial Division, as follows:
[7][2015] VSC 363.
(a)The rule does not give rise to a presumption that costs will be ordered against the discontinuing party;
(b)However, the rule does create a starting position for the plaintiff or discontinuing party to pay the defendant’s costs, subject to a contrary order;
(c)The contrary order itself involves a discretionary decision to be exercised judicially. If there is to be a departure from the starting position, it should be done in a particularised, and principled way. The Court is required to make such order as it thinks just in the particular circumstances of the case;
(d)The burden is on the party who seeks to persuade the Court that a contrary order should be made. If facts are to be relied upon to found the Court making a different order, the plaintiff will bear the onus of proving the relevant facts;
(e)All the relevant circumstances, and not just the fact of discontinuance, should be considered. This may include a consideration of the whole of the proceedings. Generally the discretion will be exercised on the basis of the objective circumstances established on the evidence and not involve the subjective considerations of one party;
(f)A relevant consideration is whether the plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them. It might also be appropriate for the Court to consider the conduct of the defendant prior to the commencement of the proceedings where such conduct may have precipitated the litigation;
(g)Generally there must be some proper justification, sound positive ground, or a good reason, for departing from the starting position. The reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs, so for example, it may be appropriate to make a contrary order:
(i)Where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff’s control;
(ii)Where the plaintiff achieved practical success in the proceedings;
(iii)Where costs have been significantly increased by the unreasonable conduct of the defendant;
(h)Where the proceedings are discontinued prior to any hearing on the merits, usually it will be impracticable to assess the eventual prospects of success in the action and the Court cannot try a hypothetical action between the parties to determine the question of costs;
(i)There is a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event, or settlement, so removes, or modifies, the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case that usually creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs …[8]
These principles apply with equal force to discontinuance in the Court of Appeal under r 64.29.
[8] Ibid [12].
Here, the appeal proceedings cannot be said, at the time of discontinuance, to have been rendered unnecessary. Nor did the intervening recall notices mean that there was no real issue remaining between the parties in the proposed appeals. There was a live issue which the applicants could have elected to keep pursuing, but they did not. Instead, they put their eggs in a different basket. Having chosen that course, there is no reason why they should not pay the costs of doing so. They should pay the other parties’ costs of abandoning their alternative case, in the usual way.[9]
[9]For the avoidance of doubt, those costs include the costs of the present applications.
The applicants have not shown any positive ground why the Court should depart from the usual rule as to costs upon discontinuance. The applications for orders displacing the usual rule must be refused.[10]
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[10]There is no occasion to make an order that costs be paid ‘forthwith’, as sought by the third respondents. That is provided for by r 63.03(2).

SCHEDULE OF PARTIES

S EAPCI 2024 0073

SAMANTHA JANE EDWARDS First Applicant

JOSEPHINE DOLORES HOPPNER Second Applicant

and

HYUNDAI MOTOR COMPANY AUSTRALIA PTY LIMITED

(ACN 008 995 588)
First Respondent

HYUNDAI MOTOR COMPANY Second Respondent

ANNE-MAREE JOHNSTON Third Respondent

S EAPCI 2024 0074

DAVID JOHN SIMS Applicant

and

KIA AUSTRALIA PTY LIMITED (ACN 110 483 353) First Respondent

KIA CORPORATION Second Respondent

JANE VICTORIA MORONEY Third Respondent

[2025] VSCA 67

8 April 2025