Torley v Hyundai Motor Company Australia Pty Limited (No 3)

[2024] FCA 209

FEDERAL COURT OF AUSTRALIA

Torley v Hyundai Motor Company Australia Pty Limited (No 3) [2024] FCA 209  

File numbers:	NSD 131 of 2023 NSD 132 of 2023
Judgment of:	YATES J
Date of judgment:	8 March 2024
Catchwords:	COSTS – determination of appropriate costs order – where respondents’ successfully confined applicants’ discovery application
Cases cited:	Torley v Hyundai Motor Company Australia Pty Limited (No 2) [2023] FCA 1545
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	31
Date of last submission/s:	22 December 2023
Date of hearing:	Determined on the papers
Counsel for the Applicants:	Mr J Zmood and Mr L Judd
Solicitor for the Applicants:	Johnson Winter & Slattery
Counsel for the Respondents:	Dr R Higgins SC and Mr B Mostafa
Solicitor for the Respondents:	Quinn Emanuel Urquhart & Sullivan

ORDERS

NSD 131 of 2023

BETWEEN:

CRYSTAL CAROL TORLEY

Applicant

AND:

HYUNDAI MOTOR COMPANY AUSTRALIA PTY LIMITED

First Respondent

HYUNDAI MOTOR COMPANY

Second Respondent

ORDER MADE BY:	YATES J
DATE OF ORDER:	8 MARCH 2024

THE COURT ORDERS THAT:

1.The applicant pay the respondents’ costs of and incidental to the applicant’s discovery application (referred to in the reasons for judgment) seeking non-standard discovery.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ORDERS

NSD 132 of 2023

BETWEEN:

DAVID JOSEPH SCHLEEHAUF

First Applicant

JESSICA CHANTAL GODAN

Second Applicant

AND:

KIA AUSTRALIA PTY LTD

First Respondent

KIA CORPORATION

Second Respondent

ORDER MADE BY:	YATES J
DATE OF ORDER:	8 MARCH 2024

THE COURT ORDERS THAT:

1.The applicants pay the respondents’ costs of and incidental to the applicants’ discovery application (referred to in the reasons for judgment) seeking non-standard discovery.

Note:   Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

YATES J:

INTRODUCTION

1. On 21 December 2023, following the publication of reasons for judgment on 7 December 2023 (Torley v Hyundai Motor Company Australia Pty Limited (No 2) [2023] FCA 1545), I made orders, in agreed form, for non-standard discovery to be given by the respondents. Those orders also provided for an exchange of submissions on the costs that should be awarded in respect of the determination of the applicants’ respective interlocutory applications seeking non-standard discovery (I will refer to the interlocutory applications filed on 27 September 2023 and the amended interlocutory applications filed on 21 November 2023 as the discovery applications).

2. The applicants contend that the respondents should pay the applicants’ costs of preparing and filing the discovery applications; of preparing and filing the affidavit of Christopher Mark Beames made 26 September 2023 (the first Beames affidavit); and of reviewing and advising in relation to the affidavit of Andrew Stuart Corkill made 3 November 2023 (the Corkhill affidavit).  As to the balance of the discovery applications, the applicants contend that they should pay 50% of the respondents’ costs, with the remaining 50% to be costs in the cause or reserved. 

3. The respondents propose that costs should follow the event and that, as they were substantially successful in the discovery applications, the applicants should pay their costs.  Alternatively, the respondents propose that the costs of the discovery applications should be their costs in the cause. 

   BACKGROUND

4. On 1 September 2023, the applicants’ solicitors wrote to the respondents’ former solicitors proposing discovery in respect of certain categories of documents.  Five categories were identified.  The applicants’ solicitors expressed a willingness to confer as to whether discovery in respect of those categories should be confined to a particular period or particular bodies within the organisational structures of the respondents.

5. On 4 September 2023, the respondents’ former solicitors responded, saying that the request for discovery was premature and should await inspection of the applicants’ vehicles, which might allow the issues between the parties to be narrowed.  The respondents’ former solicitors also argued that the categories of documents being sought were broad and that, for reasons they explained, production of the documents would require significant resources.

6. On 5 September 2023, the Court made an order that the parties confer about the desirability of the respondents giving a first tranche of discovery, and the scope of that discovery. 

7. On 12 September 2023, the applicants’ solicitors and the respondents’ former solicitors conferred.  The respondents’ former solicitors maintained the position that discovery, at that time, was premature.  The applicants’ solicitors then indicated that the applicants would file interlocutory applications seeking non-standard discovery.

8. On 19 September 2023, the Court made orders, by consent, providing for the applicants to file and serve interlocutory applications seeking discovery.  The Court made other procedural orders directed to the preparation and hearing of those applications.

9. On 26 September 2023, the applicants filed the discovery applications and the first Beames affidavit.  The discovery applications sought 30 categories of documents in the Hyundai proceeding and 24 categories of documents in the Kia proceeding.  Other than the five categories of documents identified on 1 September 2023, none of the categories had been discussed with the respondents’ former solicitors before the discovery applications were filed.

10. The applicants contend that, between 12 September 2023 and 26 September 2023, “the respondents said nothing and did nothing to soften their hard objection to providing non-standard discovery”. 

11. The respondents changed solicitors on 27 September 2023.  The applicants contend that, following that change, the respondents did not offer to confer about the categories of documents being sought in the discovery applications and did not give any indication that they would consent to orders for non-standard discovery. 

12. Nevertheless, the filing of Mr Corkhill’s affidavit signified a departure from that position.  In his affidavit, Mr Corkhill (a partner with the respondents’ new solicitors) deposed:

    With some limited exceptions discussed further below, the respondents are generally not opposed to initial non-standard discovery of the type sought by the applicants, provided that the documents requested (1) are generally likely to assist in narrowing the issues in dispute, and (2) can be obtained from centralised repositories in an efficient and cost-effective manner, bearing in mind the likelihood that the applicants will seek further standard discovery from the respondents after seeking to amend their statements of claim.

13. The applicants contend that this statement, taken with the respondents’ proposal (also referred to in Mr Corkhill’s affidavit) to produce relevant documents confined to the US Production Set (referred to in the reasons for judgment given on 7 December 2023 at [15] – [20]) was a “radical volte face” and a “concession” that was provoked by the applicants’ decision to press ahead with their discovery applications.  They contend that in the period between 6 November 2023 and 16 November 2023 (when the discovery applications were heard), the respondents’ “concession” was the “catalyst for productive conferral between the parties”.

14. For their part, the respondents argue that, despite the applicants not having previously raised most of the categories of documents in the discovery applications prior to the filing of those applications, they have dealt with the applications by “developing a proposal that, subject to minor amendments, was ultimately reflected in the Court’s judgment”.  The respondents submit that, in effect, the conferral that is required by para 10.5 of the Court’s Central Practice Note (CPN-1) occurred after the discovery applications were filed. 

15. On 6 November 2023, eight business days before the hearing of the discovery applications, the respondents’ solicitors wrote to the applicants’ solicitors reiterating the statement made in the Corkhill affidavit that, generally, the respondents were not opposed to initial non-standard discovery provided that the documents were genuinely likely to assist in narrowing the issues in dispute and could be obtained from centralised repositories in an efficient and cost-effective manner. 

16. In their letter, the respondents’ solicitors proposed amendments to the categories of documents sought by the applicants which, they argued, was a reasonable compromise that would provide many of the materials requested by the applicants and would avoid an unnecessary burden being placed on the respondents at an early stage of the proceedings.  The respondents’ solicitors suggested that if the applicants agreed to the respondents’ discovery proposal, then the parties would avoid the cost and time of preparing for, and conducting, contested discovery applications.  The respondents’ solicitors suggested that if the respondents’ proposal was accepted, the discovery applications could be dismissed with no order as to costs.  They also said that if the respondents’ proposal was not accepted, and the outcome of the discovery applications was not more favourable to the applicants than the offer made, the respondents would seek their costs of the discovery applications on an indemnity basis.  I should make clear that the respondents do not now seek indemnity costs.

17. As I have noted, in the reasons for judgment published on 7 December 2023, I referred to a repository of documents called the US Production Set.  These were documents produced by the respondents in representative proceedings commenced in the US District Court for the Central District of California involving similar claims to those brought by the applicants in these proceedings.  In respect of a number of categories of technical documents sought by the applicants in the discovery applications, I accepted the respondents’ position that discovery, at that stage, should be confined to documents from this repository, despite the applicants’ opposition to that course.

18. At the time, the applicants expressed concern that the US Production Set might not contain the documents they seek or, at least, all the documents they seek.  The applicants’ present submissions continue to express scepticism.  The applicants contend that, until the respondents give discovery of relevant documents from the US Production Set, it will not be possible for them to assess whether the documents produced from that repository bear any “equivalency” with the categories of documents sought in the discovery applications. 

19. The applicants submit that, at the time I determined the discovery applications, there was no reliable evidence regarding the contents of the US Production Set or that production confined to those documents would be a reasonable substitute for the discovery they seek.  They contend that, in those circumstances, it was not unreasonable for them to press for discovery pursuant to the broader scope of the technical documents referred to in the discovery applications. 

    THE SUBMISSIONS

20. The applicants submit:

    21. Without filing the Discovery Applications and the First Beames Affidavit, it is entirely reasonable to conclude that the respondents would not have made the Respondents’ Concession. Indeed, that concession was not made until more than five weeks after the Discovery Applications were filed and served. Ultimately, it resulted in the respondents agreeing to give discovery against most of the categories sought by the applicants.

    22. With respect to the remainder of the Discovery Applications, the respondents obtained a modest measure of success; without qualification, the Court accepted the respondents’ arguments in relation to the Balance Categories.

    23. With respect to the Technical Categories, the Court appeared to adopt a provisional approach in relation to the sufficiency of the respondents’ proposal framed around the US Production Set. Yates J assumed the respondents would not proffer discovery limited to the US Production Set ‘as a barren exercise’. Indeed, the applicants will not know if production on these terms will be fruitful or barren until discovery has been completed.

    24. If it transpires that production limited to relevant documents contained in the US Production Set is a barren exercise, the respondents should not be awarded their costs. Whereas, if production on these terms is satisfactory, and no further orders for non-standard discovery are required, the respondents ought to have certain of their costs related to that issue/category, if they carry the causes.

21. The respondents submit that, although they do not seek costs on an indemnity basis, their solicitors’ letter of 6 November 2023 made clear that they would seek costs against the applicants if the applicants elected to proceed with the discovery applications in the face of the respondents’ proposal.  They submit that, by proceeding with the discovery applications, the applicants caused the respondents to incur costs in circumstances where the applicants must have appreciated that, if broader discovery was not ordered, those costs would likely be visited on them. 

22. Accordingly, the respondents submit that costs should follow the event.  They argue that the parties joined issue as to whether the respondents should be ordered to give discovery that was broader than the discovery they proposed.  They contend that the respondents prevailed on that “event”.  

23. The respondents also contend that, in awarding costs, the Court must take into account any failure to comply with the duty imposed on parties to conduct proceedings in a way that is consistent with the overarching purpose.  They contend that the applicants’ lack of conferral before filing the discovery applications was such a failure and that this stands as an additional reason for making an order that would see the respondents’ costs paid, regardless of the final outcome of the proceedings. 

    CONSIDERATION

24. The discovery contemplated by the applicants’ solicitors’ letter of 1 September 2023 was not the discovery sought in the discovery applications as filed.  That said, when the parties’ solicitors conferred on 12 September 2023 about the desirability of the respondents giving an initial tranche of discovery, as required by the orders made on 5 September 2023, the respondents’ attitude was that, even in respect of the then five categories of documents, discovery was premature. 

25. In their submissions, the respondents argue that it will never be known whether productive conferral would have occurred had the applicants foreshadowed their “new approach” (i.e., for broader discovery) prior to filing the discovery applications.  Hypothetically, that is true.  However, given the respondents’ attitude as at 12 September 2023 to giving discovery in respect of the original five categories of documents, it seems hardly likely that their attitude to discovery would have been any different if, at that time, they had been confronted with a much broader discovery proposal that included those documents.  Had there been any real likelihood of a different attitude being expressed, the respondents could have applied to adduce evidence of that fact.  They did not.

26. Whilst noting these matters, I do not place much significance on the toing and froing between the parties prior to the filing of the discovery applications.  Of greater significance is that fact that, in the face of the discovery applications, discussions did occur between the parties on the scope of discovery as then sought.

27. As matters eventuated, these discussions were productive.  As recorded at [3] of the reasons for judgment published on 7 December 2023, at the time the discovery applications were called on for hearing, the parties had reached a measure of agreement in relation to the categories of documents for which discovery should be given at that time, and the scope of that discovery.  However, as also recorded, there remained significant disagreement between them as to whether discovery should extend to other categories of documents and, if so, the scope of the discovery that should be given in that regard.  It was the resolution of that disagreement which, by then, formed the subject matter of the discovery applications.

28. As explained in the reasons for judgment published on 7 December 2023, I was persuaded by the position advanced by the respondents—namely, that, at that time, more limited discovery than sought by the applicants should be ordered in respect of technical documents falling within categories 18 to 26, 27 and 29.  I nevertheless accepted that a further application for discovery might eventuate depending on the outcome of the discovery initially given.  That acceptance, however, does not gainsay the fact that I did not accept the position advanced by the applicants in respect of those categories.  I also did not accept the position advanced by the applicants in respect of the remaining categories in dispute.

29. I am not persuaded that the orders proposed by the applicants are appropriate.  It is true that, prior to filing the discovery applications, the applicants had been met with an in limine objection based on prematurity.  They nevertheless decided to take the opportunity to pursue an initial tranche of discovery by reference to a much broader range of documents than originally proposed.  I do not accept that, in those changed circumstances, the applicants are entitled to the costs of preparing and filing the discovery applications and the first Beames affidavit, or of reviewing the Corkhill affidavit, regardless of the outcome of the discovery applications. 

30. Furthermore, in those changed circumstances, the respondents (for whatever reason) did not maintain their initial objection, but sought to arrive at a proposal that might be acceptable to all parties.  The proposal advanced by the respondents was not acceptable to the applicants, but it was acceptable to the Court.  In the end, the respondents succeeded in confining the applicants’ applications for discovery, and the applicants failed to persuade me that broader discovery was warranted at that time.

31. In the circumstances, the applicants should pay the respondents’ costs of the discovery applications.  Orders will be made accordingly.   

I certify that the preceding thirty-one (31) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Yates.

Associate:

Dated:       8 March 2024