Wawryk & Anor v Mercedes-Benz Australia/Pacific Pty Ltd & Anor (Costs Ruling)
[2024] VSC 186
•22 April 2024
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL COURT
GROUP PROCEEDINGS LIST
S ECI 2022 04768
| PAUL WAWRYK (and another according to the schedule) | Plaintiffs |
| v | |
| MERCEDES-BENZ AUSTRALIA/PACIFIC PTY LTD (ACN 004 411 410) (and another according to the schedule) | Defendants |
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JUDGE: | Sloss J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 22 March 2024 |
DATE OF RULING: | 22 April 2024 |
CASE MAY BE CITED AS: | Wawryk & Anor v Mercedes-Benz Australia/Pacific Pty Ltd & Anor (Costs Ruling) |
MEDIUM NEUTRAL CITATION: | [2024] VSC 186 |
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PRACTICE AND PROCEDURE – Costs – Where defendants’ application for strike-out and plaintiffs’ application for leave to amend their pleading in a group proceeding were listed for hearing on the same day – Court dismissed application for leave to amend but gave plaintiffs a further opportunity to amend their pleading and stood over defendants’ application for strike-out for further hearing – Parties were agreed as to orders, save as to costs – Exercise of Court’s discretion as to costs in circumstances where there is some overlap between the applications – Whether the Court should make an order for costs in respect of the plaintiffs’ unsuccessful application in advance of the further hearing and determination of the defendants’ strike-out application and the plaintiffs’ proposed further application for leave to amend – Northern Territory v Sangare (2019) 265 CLR 164 – Oshlack v Richmond River Council (1998) 193 CLR 72 – Teico Investments Pty Ltd v WA Blue Gum Limited [2022] VSC 453 – Court should exercise its discretion as to costs now rather than defer the exercise to an unspecified date when the other applications are to be heard and determined – Defendants as successful party are entitled to the usual order as to costs.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Dr P K Cashman and Dr D J Townsend | Gerard Malouf & Partners |
| For the Defendants | Mr G Kozminsky and Ms A Martyn | Herbert Smith Freehills |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Procedural history.............................................................................................................................. 2
Hearing of the applications on 28 February 2024......................................................................... 5
Parties’ submissions.......................................................................................................................... 8
Plaintiffs’ outline of submissions................................................................................................ 8
Proposed Order 1................................................................................................................. 8
Proposed Alternative Order 2.......................................................................................... 10
Defendants’ costs submissions.................................................................................................. 11
Oral submissions made at the hearing on 22 March 2024..................................................... 13
Defendants’ oral submissions.......................................................................................... 13
Plaintiffs’ oral submissions.............................................................................................. 20
Defendants’ oral reply submissions................................................................................ 23
Consideration and disposition...................................................................................................... 23
Conclusion......................................................................................................................................... 33
HER HONOUR:
Introduction
On 21 November 2022, the plaintiffs, Paul Wawryk and Craig Stubbings (the plaintiffs), commenced this proceeding as a ‘group proceeding’ pursuant to Part 4A of the Supreme Court Act 1986 (Vic). They named two Mercedes-Benz entities as defendants – Mercedes-Benz Australia/Pacific Pty Ltd, as the first defendant, and Mercedes-Benz Group AG, as the second defendant. At all relevant times, the first defendant, which was incorporated in Australia, was a wholly owned subsidiary of the second defendant, which was incorporated in the Federal Republic of Germany.
The proceeding was brought by the (lead) plaintiffs on their own behalf and on behalf of the ‘Group Members’ who were defined (at the inception of the proceeding) as being those persons who, during the ‘Relevant Period’ between 1 January 2009 and 21 November 2022, ‘purchased or leased or otherwise acquired a legal interest in Australia’ in an ‘Affected Vehicle’, being certain models of Mercedes-Benz vehicles fitted with diesel engines, as defined in the pleading, with model years ranging from 2009 to 2018.[1]
[1]Statement of Claim filed on 21 November 2022 (SOC), at [1].
The plaintiffs in the Group Proceeding claim damages and other remedies against Mercedes-Benz Australia/Pacific Pty Ltd and Mercedes-Benz Group AG arising out of the use of alleged ‘defeat devices’ (or defeat device-equivalents) in obtaining the certification of specified Mercedes-Benz diesel engine models as meeting regulatory standards for emissions. In essence, the plaintiffs contend that during normal vehicle operation and use the relevant diesel engines did not, in fact, meet the emissions standards that the defendants represented they did.[2]
[2]See Mercedes-Benz Emissions Group Proceeding Summary Statement (21 November 2022), at [2.1].
In those circumstances, in their Amended Statement of Claim filed on 30 June 2023 (ASOC), the plaintiffs alleged that because of the installation of ‘undisclosed emissions modification devices’ (UEMDs), during normal vehicle operation the Affected Vehicles emitted levels of oxides of nitrogen (NOx) in excess of those permitted under applicable standards,[3] and they pleaded claims against the defendants, as follows:[4]
[3]Amended Statement of Claim (ASOC), at [1], [49]-[52].
[4]As summarised in the defendants’ submissions on application for strike out, particulars and production (1 November 2023), at [5]-[6].
·The claims made against the first defendant, an Australian company, are for:
a.misleading and deceptive representations,[5] concealment,[6] and silence[7] related to compliance with emissions standards;
[5]ASOC, at [60]-[83] and [90]-[92].
[6]ASOC, at [65].
[7]ASOC, at [84]-[89].
b.non-compliance with the statutory guarantee of acceptable quality.[8]
[8]ASOC, at [97]-[101].
·The claims made against the second defendant, a German company, are for:
a.misleading and deceptive representations in relation to emissions standards;[9]
b. deceit,[10] negligence[11] and unconscionable conduct.[12]
[9]ASOC, at [93]-[96].
[10]ASOC, at [102]-[104].
[11]ASOC, at [105]-[107].
[12]ASOC, at [108].
Procedural history
Pursuant to leave granted under r 36.04(1) of the Supreme Court (General Civil Procedure) Rules 2015 (Rules),[13] on 30 June 2023, the plaintiffs filed their ASOC, which was substituted for the Statement of Claim filed on 21 November 2022 (SOC).
[13]Leave under r 36.04(1) was granted by the Honourable Justice Delany on 26 May 2023.
Neither Mercedes-Benz Australia/Pacific Pty Ltd nor Mercedes-Benz Group AG has yet filed a defence to the plaintiffs’ SOC or ASOC. Prior to the filing of any defence, the defendants wrote to the plaintiffs on 28 February 2023 and 7 June 2023 (in respect of the SOC), and again on 12 July 2023 (in respect of the ASOC), seeking further and better particulars of specified paragraphs and issued notices to produce. However, when the plaintiffs did not provide what the defendants considered to be an adequate response to those requests, and did not comply with the notices to produce, the defendants proceeded to file an application by summons on 14 July 2023 seeking:
(a) to strike out various paragraphs of the ASOC pursuant to r 23.02 of the Rules;
(b) in the alternative, pursuant to r 13.11(1) of the Rules, for the plaintiffs to serve further and better particulars to certain paragraphs of the ASOC; and
(c) for the plaintiffs to produce certain documents identified in the Notice to Produce dated 7 June 2023 pursuant to r 29.11 of the Rules.
On 27 October 2023, the Honourable Justice Nichols made orders timetabling the filing of submissions and authorities in respect of the defendants’ application.[14] The defendants’ application was listed for hearing on 28 November 2023. However, as Nichols J became unavailable to hear the matter, the hearing and determination of the application was allocated to me.
[14]Orders of the Honourable Justice Nichols made on 27 October 2023.
On 1 November 2023, the defendants filed an outline of submissions in support of their summons. Annexed thereto was a proposed form of amended summons in which the defendants sought to have additional paragraphs of the ASOC made the subject of the relief sought at the hearing. (A further amended version of this amended summons was later filed in Court on 28 February 2024 (Defendants’ Amended Summons).)
On 22 November 2023, the solicitors for the plaintiffs informed the Court that the plaintiffs were seeking leave to file a summons, to be made returnable on 28 November 2023, for the following orders:
(a) for a third defendant, Mercedes-Benz AG, which was incorporated in the Federal Republic of Germany and is a wholly owned subsidiary of the second defendant, to be joined pursuant to r 9.06(b)(i) of the Rules;
(b) to file an amended Writ pursuant to r 36.01 of the Rules;
(c) to file a Further Amended Statement of Claim (Further ASOC) pursuant to rr 36.01(1) and 36.04(1)(b) of the Rules; and
(d) for costs of the application for leave to be costs in the cause.
By an email sent later that day, the solicitors for the plaintiffs informed the Court that the defendants did not consent to the plaintiffs’ proposed summons being made returnable on 28 November 2023.
Against that background, the matter was called on for mention on 24 November 2023, following which orders were made vacating the hearing of the defendants’ summons on 28 November 2023, listing both the defendants’ application and the plaintiffs’ proposed summons for hearing on 28 February 2024 and timetabling the dates for the filing of the parties’ respective outlines of submissions etc.
Pursuant to those orders, on 8 December 2023, the plaintiffs filed a summons seeking:
(a) leave to join Mercedes-Benz AG as third defendant pursuant to r 9.02;
(b) in the alternative, to join Mercedes-Benz AG as third defendant pursuant to r 9.06(b)(i);
(c) leave to file an Amended Writ pursuant to r 36.01;
(d) leave to file a (revised) Further Amended Statement of Claim ((revised) Further ASOC) pursuant to rr 36.01(1) and 36.04(1)(b); and
(e) costs be costs in the cause
(plaintiffs’ application).
In addition, on 8 December 2023, the plaintiffs also filed their outline of submissions and an affidavit of their solicitor, Mr Matthew Yan Ho Lo, affirmed on 7 December 2023.
On 2 February 2024, the defendants filed their outline of submissions and an affidavit of their solicitor, Mr Damian Bernard Grave, sworn on 1 February 2024.
On 16 February 2024, the solicitors for the plaintiffs emailed the Court seeking orders to be made by consent allowing for an extension of the time for the plaintiffs to file their material in reply. However, the defendants responded, stating that they did not consent to the correspondence being sent and indicated that they did not consent to any orders of this kind being made. In those circumstances, the matter was listed for a further mention on 23 February 2024.
On 19 February 2024, the plaintiffs filed their reply submissions in respect of their application. The plaintiffs noted that there had been significant recent developments that necessitated them making further pleading amendments. The plaintiffs annexed to their submissions a form of their proposed Amended Writ and a further iteration of their proposed Further Amended Statement of Claim (proposed (revised) Further ASOC) on which they now sought to rely in place of their earlier (revised) Further ASOC. The amendments proposed sought to address matters that were raised in the defendants’ submissions and in evidence filed by them in response to the plaintiffs’ application, and the plaintiffs indicated that they no longer pressed certain amendments to paragraphs the subject of their (revised) Further ASOC (attached to the plaintiffs’ summons dated 8 December 2023).
At the mention on 23 February 2024, orders were made allowing the plaintiffs to file and serve an amended summons reflecting the amendments proposed in their reply submissions filed on 19 February 2024. The plaintiffs proceeded to file their amended summons on 26 February 2024.
Hearing of the applications on 28 February 2024
On 28 February 2024, both the plaintiffs’ amended summons (filed on 26 February 2024) and the defendants’ amended summons (that was formally filed in Court on 28 February 2024) came on for hearing.
During the course of the hearing, it became clear that there were some significant shortcomings in the plaintiffs’ pleading and in the particularisation of the claims made in their proposed (revised) Further ASOC and also in their articulation of the basis on which they seek to join Mercedes-Benz AG as a third defendant to the proceeding. While counsel for the plaintiffs acknowledged the tenor of those shortcomings, nevertheless, the oral submissions made on behalf of the plaintiffs that day indicated that there was scope for re-pleading the gist of the relevant allegations and the basis for joinder of the third defendant, and for the provision of further and better particulars, which may address (some of) the pleading issues raised by the defendants.
In those circumstances, the Court indicated that the efficient and preferable course was to dismiss the plaintiffs’ amended summons (filed on 26 February 2024) and allow the plaintiffs the opportunity to bring forward a further iteration of their proposed Amended Writ and their proposed Further ASOC for consideration. To accommodate that course, the further hearing of the defendants’ amended summons (filed on 28 February 2024) was to abide the filing of the plaintiffs’ amended documents, and was adjourned to a date to be fixed.
At that point, senior counsel for the defendants, Mr Kirkwood SC, noted that as the Court was not granting leave to amend in accordance with the (then) currently proposed Further ASOC (dated 26 February 2024), he anticipated that ‘given obviously the enormous expense that’s been incurred in getting the matter to this point that [his] client will want to have its costs of at least some of what’s occurred to date’.[15] Accordingly, he enquired as to whether the Court was ‘receptive to considering that issue now?’ Discussion then ensued, in general terms, about what might be an appropriate form of order, during which exchange, counsel for the plaintiffs, Dr Cashman, informed the Court ‘if there’s going to be an argument about costs there’s a Calderbank offer and letter that will loom large in the discussion.’[16] Dr Cashman also mentioned that there is another group proceeding on foot against the Mercedes-Benz companies that has been filed by Piper Alderman. He said that Justice Nichols has made orders by consent pursuant to which the competing parties will confer as to whether the matters can go forward collaboratively or whether there is going to be a contested carriage motion.[17] The matter was then stood down to allow the parties to seek instructions.
[15]Transcript 28.02.24, at p.99 (Mr Kirkwood SC).
[16]Transcript 28.02.24, at p.104 (Dr Cashman).
[17]Transcript 28.02.24, at pp.97-98 (Dr Cashman).
At the conclusion of the hearing, I requested that the parties consult and seek to agree upon a minute of proposed orders to be made. The parties responded by email on 8 March 2024 indicating that while they were generally agreed as to the orders to be made, they were unable to agree upon the appropriate order as to costs. In the email of 8 March 2024, the solicitors for the defendants, with the consent of the plaintiffs, provided the Court with two versions of minutes of proposed orders, one prepared on behalf of the plaintiffs and the other on behalf of the defendants, and stated, inter alia, that while the plaintiffs were content for the Court to determine on the papers which orders to make, the defendants sought to be heard on the question of costs.
Against that background, on 14 March 2024, the Court made and authenticated orders concerning the defendants’ amended summons, the plaintiffs’ amended summons, the plaintiffs’ further revised proposed Amended Writ and proposed Further ASOC, and the further mention of the proceeding. Relevantly, in the case of the plaintiffs’ amended summons, the Court ordered that it be dismissed, and set a timetable for the filing of submissions and any evidence on which the parties proposed to rely on the issue of the costs of the plaintiffs’ amended summons, including the costs of the hearing on 28 February 2024. The issue of costs was listed for hearing to take place on 22 March 2024.
Pursuant to those orders, on 18 March 2024, the plaintiffs filed their outline of submissions and an affidavit of Mr Gregory John Mackey on which they sought to rely, deposing as to the fact that the plaintiffs had made a Calderbank offer to the defendants on 12 December 2023. The defendants also filed their outline of submissions on 18 March 2024. In addition, the defendants provided a link containing an application book of some 1000+ pages, which the parties had indicated they proposed to refer to and rely upon at the hearing.
Parties’ submissions
Plaintiffs’ outline of submissions
In their outline of submissions, the plaintiffs propose that the costs of the plaintiffs’ amended summons filed on 26 February 2024 be reserved (Proposed Order 1), or alternatively, that there be no order as to the plaintiffs’ costs[18] and that the defendants’ costs of the plaintiffs’ amended summons be the defendants’ costs in the proceeding (Proposed Alternative Order 2).
[18]With the (stated) intent and effect that the plaintiffs will bear their own costs.
In support of their submissions, the plaintiffs rely on the First Affidavit of their solicitor, Gregory John Mackey sworn 7 February 2024 and the Third Affidavit of Mr Mackey sworn 18 March 2024, and the exhibits thereto.
Proposed Order 1
In support of their Proposed Order 1, that costs of the plaintiffs’ amended summons should be reserved, the plaintiffs submit that the time to determine the question of costs is ‘not yet ripe’, as the pleadings amendment and objection process is still incomplete. The plaintiffs point to the fact that both the plaintiffs’ amended summons and the defendants’ amended summons concern interconnected or related subject matter – the latter concerning whether certain paragraphs of the plaintiffs’ pleading should be struck out and whether particulars and production of documents should be ordered – and the former concerning whether leave should be granted to amend certain paragraphs of the ASOC and to add Mercedes-Benz AG as third defendant and amend the Writ accordingly.
The plaintiffs submit that ‘[t]he inherent enmeshment’ of the two summonses is made clear from the fact that they were heard together on 28 February 2024 and in circumstances where the parties each filed submissions dealing with both issues. Further, they said, while the plaintiffs’ amended summons has been dismissed, the defendants’ summons has been adjourned to a date to be fixed pending the plaintiffs providing the defendants with a further revised proposed Amended Writ and further revised proposed ASOC. Accordingly, the plaintiffs submit that until such time as the pleading amendment and any objections that may be raised by the defendants have been resolved, ‘[i]t would be artificial to make costs orders on merely one aspect of this enmeshed and ongoing issue at this intermediate stage.’[19]
[19]Plaintiffs’ submissions on costs (18 March 2024), at [3.1].
The plaintiffs also refer to their ‘without prejudice’ Calderbank offer made by letter from their solicitors to the defendants’ solicitors on 12 December 2023, to not press numerous paragraphs of their Further ASOC, to which the defendants never responded. The relevance of the plaintiffs’ Calderbank offer is not further elucidated in their outline of submissions – having referred to it, the plaintiffs simply continue by stating:[20]
Further, having reviewed evidence and submissions served by the Defendants on 02 February 2024, the Plaintiffs did not press for leave to amend a substantial number of paragraphs (or parts thereof).
[20]Plaintiffs’ submissions on costs (18 March 2024), at [3.2] (footnotes omitted).
Against that background, the plaintiffs submit that ‘[t]he proper order is that costs be reserved.’[21] It is unclear precisely what the plaintiffs meant by the expression ‘costs be reserved’. (In ordinary circumstances, when a court orders that ‘costs be reserved’, without more, the effect of the order is that when final orders are made following delivery of judgment, unless the court otherwise orders, ‘the reserved costs are the parties’ costs in the proceeding’.[22] In other words, upon delivery of judgment the successful party would be entitled to the reserved costs. It transpired that the plaintiffs intended to convey a different meaning, which is discussed later in these reasons.)
[21]Plaintiffs’ submissions on costs (18 March 2024), at [3.3].
[22]See r 63.22 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
Proposed Alternative Order 2
In the event that the Court declines to make the plaintiffs’ Proposed Order 1, they submit that their Proposed Alternative Order 2 should be made.
There are two limbs to the plaintiffs’ Proposed Alternative Order 2:[23]
a. there is no order as to the Plaintiffs’ costs of the Plaintiffs’ Amended Summons, with the intent and effect that the Plaintiffs shall bear their own costs; and
b. the Defendants’ costs of the Plaintiffs’ Amended Summons are the Defendants’ costs in the proceeding.
[23]Plaintiffs’ submissions on costs (18 March 2024), at [1.2].
The plaintiffs submit that the first limb of their Proposed Alternative Order 2, concerning the plaintiffs’ costs, ‘is consistent with the dismissal of the Plaintiffs’ Amended Summons by consent.’[24]
[24]Plaintiffs’ submissions on costs (18 March 2024), at [4.2].
As to the second limb of their Proposed Alternative Order 2, the plaintiffs contend that the proposed order ‘is consistent with the ordinary position which obtains under … r 63.17.’[25] The plaintiffs submit:[26]
[4.3]. . . that, given the fact that the process of pleadings amendment and objection is clearly ongoing and it [sic] not complete, any order as to the Defendants’ costs is better made in terms consistent with r 63.17 rather than with the principle of costs following the event (which is derived, of course, from non-group proceedings), as, properly regarded, there is not yet in substantive terms any ‘event’ for the costs to follow. The ‘event’ could not properly be before the making of orders on the Defendants’ Amended Summons (presently stood over, and possibly to be amended) and orders in respect of the further revised FASoC which the Plaintiffs are to bring forth. Further, even if the ‘event’ were regarded in a narrow and technical sense as the dismissal of the Plaintiffs’ Amended Summons, on inspection it is not clear that the ‘event’ is a simple ‘loss’ by the Plaintiffs and a ‘win’ by the Defendants. The Defendants did not actually oppose the grant of leave in respect of many paragraphs, common questions and relief, and abandoned their opposition to the grant of leave in respect of many other paragraphs and common questions (most significantly those relating to ADR 81) on the morning of the hearing.
[4.4]As there is not yet any substantive ‘event’ for costs to follow, and even if there were, it would not be clearly one in favour of the Defendants over the Plaintiffs, the proper order is that the Defendants’ costs be their costs in the proceeding.
[25]Plaintiffs’ submissions on costs (18 March 2024), at [4.3].
[26]Plaintiffs’ submissions on costs (18 March 2024), at [4.3]-[4.4] (footnotes omitted).
Finally, the plaintiffs submit that their proposed orders will promote the efficient progression of the case, and not allow a position where the parties are caught in ‘the lateral eddies of interlocutory costs disputes’ and ‘potentially the stagnant pools of taxation of interlocutory costs orders’.[27] The reserving of costs, so the plaintiffs submit, would serve to disincentivise the defendants from taking steps which would delay the progress of the proceeding and frustrate efforts by the plaintiffs to obtain information relevant to their claims.[28]
[27]Plaintiffs’ submissions on costs (18 March 2024), at [5.1].
[28]In their submissions, the plaintiffs reference several instances in which they consider conduct of the defendants has caused delay to the proceeding and frustrated the plaintiffs’ attempts to obtain material relevant to their claims.
Defendants’ costs submissions
In support of their application for costs the defendants relied upon, inter alia, the Third Affidavit of their solicitor, Damian Bernard Grave sworn 14 July 2023, the Sixth Affidavit of the plaintiffs’ solicitor, Matthew Yan Ho Lo affirmed on 22 November 2023 and a full copy of the without prejudice Calderbank offer made by the plaintiffs (including the enclosed order the plaintiffs proposed be made by consent) dated 12 December 2023.
The defendants submit that they should be awarded their costs of and incidental to the plaintiffs’ application, given that the plaintiffs were unsuccessful both in seeking to amend their pleading in the form of the proposed (revised) Further ASOC (or any of the earlier iterations proposed) and to join Mercedes-Benz AG as a third defendant to the proceeding.
In their written submissions, the defendants sought a costs order in the following terms:[29]
[29]Submissions on Costs of the Defendants (18 March 2024), at [12].
The plaintiffs pay the defendants’ costs of and incidental to the plaintiffs’ summons filed on 8 December 2023 and amended by amended summons dated 19 February 2024 (and filed on 26 February 2024), including without limitation:
(a) the costs of and incidental to the mention on 23 February 2024;
(b) the costs of and incidental to the hearing on 28 February 2024;
(c) the costs of and incidental to the:
(i)proposed further amended statement of claim of November 2023;
(ii)proposed further amended statement of claim of December 2023;
(iii) proposed further amended statement of claim of February 2024.
Prior to the hearing as to costs, the solicitors for the defendants provided a minute of proposed orders, framed as per their written submissions but with an additional order seeking the costs of and incidental to the hearing on 22 March 2024.[30]
[30]It will be noted that no order is sought by the defendants as to the costs of the mention held on 24 November 2023. The mention held that day preceded the issue of the plaintiffs’ summons (on 8 December 2023) and the order that was made that day expressly reserved costs: see Orders made on 24 November 2023, authenticated on 27 November 2023, at [9].
In seeking the orders outlined above, the defendants rely upon the well-established principles concerning the power to award costs, as enunciated by the High Court of Australia in Northern Territory v Sangare (Sangare),[31] as being ‘sufficient to dispose of the matter’.[32] In Sangare, the High Court reiterated that the ‘power to award costs is a discretionary power … that must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation.’[33] Further, their Honours said:[34]
25A guiding principle by reference to which the discretion is to be exercised – indeed, “one of the most, if not the most, important” principle – is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party. The application of that principle may be modified or displaced where there is conduct on the part of the successful party in relation to the conduct of the litigation that would justify a different outcome. For example, a successful defendant may be refused its costs on the ground that its conduct induced the plaintiff to believe that he or she had a good cause of action. …
[31](2019) 265 CLR 164 (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ).
[32]Submissions on Costs of the Defendants (18 March 2024), at [3].
[33]Sangare at 172 [24] (citations omitted) (emphasis in italics added).
[34]Sangare at 173 [25] (citations omitted) (emphasis in italics added).
While contending that the principles in Sangare are enough to dispose of the matter, the defendants also relied on the following matters in support of the orders sought:
(a) the plaintiffs’ failure was absolute;
(b) the defendants have raised concerns about the plaintiffs’ pleadings for more than a year;
(c) the plaintiffs have not only produced a defective statement of claim and a defective amended statement of claim, but have proposed numerous ill-conceived amendments,[35] resulting in wasted costs and time;
[35]The defendants refer to the proposed amended statements of claim of November 2023, December 2023 and February 2024.
(d) the basis for the proposed joinder of Mercedes-Benz AG was fundamentally misconceived;
(e) there has been no disentitling conduct on the part of the defendants (of the kind their Honours in Sangare indicated might have weighed against the exercise of the discretion in the successful party’s favour);[36] and
(f) r 63.17 of the Rules does not relate to the present case – r 63.17 by its terms applies only ‘[w]here a pleading is amended’.
[36]Sangare, at 173 [25].
Oral submissions made at the hearing on 22 March 2024
The hearing as to costs that was held on 22 March 2024 took place by audio-visual link. By agreement made between the parties, counsel for the defendants addressed the Court first, followed by counsel for the plaintiffs.
Defendants’ oral submissions
Counsel for the defendants commenced by emphasising that in the plaintiffs’ amended summons two applications were made, neither of which was successful. In essence, the defendants contended that in the case of the joinder application, the joinder of Mercedes Benz A-G was opposed essentially because no cause of action was proposed against it, with the result that the application was doomed to fail. Secondly, in the case of the proposed pleading amendment, the defendants contended that the plaintiffs’ conduct has caused delay and expense, and after five attempts to produce a pleading that is compliant with the Rules – being the SOC, the ASOC and three iterations of their proposed further revised ASOC – the position is that the plaintiffs have failed to bring forward a pleading that complies with the Rules. In those circumstances, the defendants submitted that the costs of each application should ‘follow the event’.
Counsel for the defendants also referred the Court to the recent decision of Attiwill J in Teico Investments Pty Ltd v WA Blue Gum Limited (Teico Investments).[37] In Teico Investments, which counsel described as a case with ‘analogous circumstances’[38], the Court gave leave to the plaintiffs to amend their statement of claim to make amendments that were not opposed but otherwise refused leave to make amendments to their pleading that were opposed. When dealing with the issue of costs, the Court ordered the plaintiffs to pay the defendants’ costs of and incidental to the summons, to be taxed on the standard basis in default of agreement. In so doing, his Honour stated:[39]
[37][2022] VSC 453.
[38]Transcript 22.03.24, at p.5 (Mr Kozminsky).
[39]Teico Investments, at [12]-[14].
Analysis
12In my view, it is appropriate and just to order that the plaintiffs pay the costs of the defendants of and incidental to the plaintiffs’ summons filed 5 April 2022 to be taxed on a standard basis in default of agreement.
13At the trial there will not be any consideration of the impugned amendments and whether they are unintelligible and embarrassing. The Court is in a position to determine where the justice lies between the parties upon the issue of the costs of the plaintiffs’ summons.
14The plaintiffs were not successful on the contested matters the subject of the plaintiffs’ summons. The defendants succeeded in opposing leave being given for the plaintiffs to make the impugned amendments.
. . .
Relying upon the ‘analogous position’ in Teico Investments, counsel for the defendants submitted that there is ‘no principled reason’ to deny the defendants their costs,[40] and there is no disentitling conduct on the part of the defendants and no issues on which the plaintiffs had success which would justify a reduction in costs. Further, he observed, ‘[t]here was no pleading amended here so the rule [relevantly, r 63.17] has no application.’[41]
[40]Transcript 22.03.24, at p.7 (Mr Kozminsky).
[41]Transcript 22.03.24, at p.7 (Mr Kozminsky).
Counsel for the defendants also pointed out that the plaintiffs, in their outline of submissions, refer at several places (for e.g., at [3.1] and [4.2]) to the plaintiffs’ summons having been dismissed by consent, which is not correct. Rather, counsel said the true position was that at the hearing on 28 February 2024 the plaintiffs were seeking to defend their pleading and persuade the Court that the orders they sought should be made.[42] And it was only when the Court indicated that there were real shortcomings with the formulation of their pleading, and its failure to comply with the pleading rules, that counsel for the plaintiffs stated:[43]
[DR CASHMAN:] . . . In light of what Your Honour’s said, as I apprehend it we’re going to get another bite at the apple as it were, in which case I’m not sure that it would assist Your Honour greatly for me to try and defend the existing pleading any more today.
[42]Transcript 22.03.24, at p.10 (Mr Kozminsky).
[43]Transcript 28.02.24, at p.87 (Dr Cashman).
It was against that background that counsel for the plaintiffs later acknowledged that the appropriate order to be made by the Court was for their summons to be dismissed, as follows:[44]
DR CASHMAN: Your Honour, I don’t think we can resist what my friend seeks in relation to our summons. It’s no longer relevant so - - -
HER HONOUR: Exactly.
DR CASHMAN: - - - I’m happy for that to be dismissed. In terms of the defendant[s’] summons, having heard what Your Honour says we have no difficulty with that being adjourned.
[44]Transcript 28.02.24, at p.108 (Dr Cashman).
Counsel for the defendants submitted that given what had taken place in advance of the hearing on 28 February 2024, with the filing of several affidavits and submissions by or on behalf of the respective parties, the issues that were joined, and what took place at the hearing, ‘the proper characterisation of the hearings is as follows: There was a contested hearing and at its conclusion the plaintiffs capitulated.’[45] Further, counsel submitted, that to the extent that it could be said or inferred that there was any ‘consent’ on the part of the plaintiffs, that consent only ‘occurred at the very end of the day after all the affidavits had been filed, all the submissions had been filed and there had been full argument. In other words, after all the costs had been incurred.’[46]
[45]Transcript 22.03.24, at p.11 (Mr Kozminsky).
[46]Transcript 22.03.24, at p.12 (Mr Kozminsky).
Turning to the plaintiffs’ Calderbank offer, counsel for the defendants noted that the orders the plaintiffs sought and proposed that the defendants consent to as part of the Calderbank offer were not included in exhibit ‘GM-8’ of the affidavit of their solicitor, Mr Gregory Mackey, filed on 18 March 2024, and accordingly, a copy was made available at the hearing.[47] Counsel for the defendants referred to the plaintiffs’ proposed orders (attached to the Calderbank offer letter) and submitted that the end point was that:[48]
[MR KOZMINSKY:] . . . Not one of the orders, not a single one of the orders that our friends asked the defendants to agree to were made. And some of the orders weren’t even sought. . . .
. . .
So with the greatest of respect, Your Honour, we’re not even able to identify how the plaintiffs could possibly seek to rely on this offer on the question of costs.
[47]Bundle of documents provided by the defendants to be relied upon by the parties at the costs hearing (22 March 2024), at pp.506-509.
[48]Transcript 22.03.24, at p.13 (Mr Kozminsky).
To the extent that the plaintiffs sought to rely upon their Calderbank offer as a mechanism for encouraging the defendants to withdraw their opposition and not oppose leave to amend, or to reduce the scope of the ‘impugned’ amendments, the defendants’ response was two-fold.
First, the defendants submitted that relevantly, the dispute before the Court on 28 February 2024 was about the amendments to which the defendants did make opposition, and they were successful in that pursuit.
Secondly, where (initial) opposition to certain of the plaintiffs’ proposed amendments was (later) withdrawn, such as occurred in the case of the Australian Design Rule 81 (ADR 81) allegations, the withdrawal was the end point of a series of complaints made by the defendants in respect of each iteration of the further amended pleadings. In essence, in the case of ADR 81, the defendants’ complaint was to the effect that the plaintiffs had failed to identify a linkage between the rule and the allegations made against the defendants and ‘to articulate how it is contended the alleged defeat UEMDs and levels of NOx have any relationship to fuel consumption labelling requirements in ADR 81.’[49] Counsel for the defendants submitted that it was not until the plaintiffs produced their third iteration of the proposed further amended pleading that, for the first time, they purported to draw that link, following which a decision was taken by the defendants to no longer press that point. In those circumstances, counsel submitted:[50]
[MR KOZMINSKY:] . . . And so really that doesn’t militate against an order of costs, it supports it, that an allegation was made that was defective, we flagged the concerns in detailed submissions and the plaintiffs then put [sic] them on board and made necessary amendments.
The most that could be said for our friends is that it is neutral. It wasn’t the subject of dispute on the hearing before Your Honour because we no longer pressed it, but that’s the history to it. So it’s not as if there were some amendments made late last year or in the middle of last year and at the 11th hour we dropped our opposition. That’s not what occurred, and that might have been the impression one had got from reading our friend’s submissions.
[49]Defendants’ outline of submissions (2 February 2024), at [41].
[50]Transcript 22.03.24, at p.16 (Mr Kozminsky).
Reference was also made to an aide-mémoire that the plaintiffs’ counsel had prepared and provided to the Court to better explain their Calderbank offer – counsel for the defendants submitted that the aide-mémoire contains express errors, errors by omission and is incomplete, and that the Court ‘ought not rely on the document.’[51]
[51]Transcript 22.03.24, at p.23 (Mr Kozminsky).
The defendants also addressed the plaintiffs’ submission that there was an overlap between the plaintiffs’ amended summons (which has been dismissed) and the defendants’ amended summons (which has been stood over). First, the defendants submit that, at a level of principle, the matters raised by the plaintiffs could not disentitle them to an order for costs, because the defendants ‘succeeded on a summons which was dismissed’[52] and in dismissing the summons the Court effectively ‘resolved the matters the subject of that summons.’[53] That is to say, the matter now before the Court is the costs incurred by the defendants on the plaintiffs’ amended summons ‘that was heard, dismissed and has been resolved.’[54] Further, the defendants submitted that to the extent the plaintiffs may be suggesting there is some sort of complexity because of an overlap of issues, that might be relevant on a taxation of costs to be undertaken by the taxing master at the conclusion of the proceeding, but ‘it can’t be a principal basis to deny [the defendants] costs of a summons which [they] succeeded on.’[55] And while (substantive) orders were not made on the defendants’ amended summons, the defendants contended a ‘point of basic fairness’ arises because ‘it is clear that in substance the summons was successful.’[56]
[52]Transcript 22.03.24, at p.17 (Mr Kozminsky).
[53]Transcript 22.03.24, at p.17 (Mr Kozminsky).
[54]Transcript 22.03.24, at p.17 (Mr Kozminsky).
[55]Transcript 22.03.24, at p.18 (Mr Kozminsky).
[56]Transcript 22.03.24, at p.18 (Mr Kozminsky).
In elucidating the last proposition, counsel for the defendants proffered the following explanation:[57]
[57]Transcript 22.03.24, at pp.18-21 (Mr Kozminsky).
[MR KOZMINSKY:] . . . Your Honour will recall that the proposed further amended statement of claim was in part a response to the strike out application. And the plaintiff’s [sic] amendment application in substance consumed the arguments on the defendant’s [sic] application. And because the former application was unsuccessful, it means the latter application was, in substance, successful. And I don’t make that submission, Your Honour, at some abstract level of generality. I’m going to do it with real specificity.
. . .
. . . And so the bottom line is, Your Honour, the matters raised on the defendant’s [sic] summons had to be and were considered on the hearing of the plaintiff’s [sic] summons. And Your Honour ultimately concluded that the current pleading was not good enough.
Now, can I then try to take a step back and to unpick what’s occurred? The reason why, Your Honour, my client’s summons was stood over rather than the orders sought being made on 28 February, is because Your Honour adopted what was, with respect, a practical approach and practical considerations in reaching that conclusion.
. . .
. . . You make clear that the pleading’s not good enough, and then at p107, Your Honour, this is where the practicality of Your Honour’s approach comes through. At line 6, what Your Honour said is that Your Honour permitted my client’s summons to remain on foot so that if the foreshadowed fourth version of the proposed further amended statement of claim is defective, my client didn’t need to put on another summons.
But that doesn’t gainsay the fact, Your Honour, that my client succeeded on the plaintiff’s [sic] summons and in doing so had to address, did address and succeeded on the substance of the matters of the defendant’s [sic] summons. And as a matter of fairness, Your Honour, and that’s where I began this part of the submission, as a matter of fairness, it will be unjust and, with respect, extraordinary, to deny my client’s costs because their summons was stood over for practical reasons which in substance stemmed from the proposition that Your Honour thought, and I don’t mean any disrespect, but Your Honour thought that the proposed further amended statement of claim was so defective it needed to be redrafted from scratch and there was no utility in striking out particular paragraphs. That would be an extraordinary and unjust outcome.
Turning to part 5 of the plaintiffs’ outline, headed ‘Avoidance of incentive for Defendants to continue to delay progress of proceeding’, counsel for the defendants submitted that the sundry matters raised therein are wholly irrelevant to the exercise of the Court’s discretion as to costs. Further, in the case of the plaintiffs’ complaint about the conduct of the defendants in objecting to the plaintiffs having access to the documents subpoenaed from the State and Territory regulatory authorities, counsel observed that on 19 March 2024 Steffensen AsJ had upheld the defendants’ objection.
In closing, the defendants submitted that over the course of more than one year, they have been vexed with five wholly defective pleadings, and have been required to attend several hearings, and file affidavit material and submissions to facilitate that course, which has entailed an expenditure of time and them incurring costs. In circumstances where the Court is of the view that the current pleading falls short of what is required under the Rules, the defendants submit they are entitled to an order for their costs.
Plaintiffs’ oral submissions
Counsel for the plaintiffs commenced by referencing the affidavit evidence filed in support, and in particular the ongoing requests the plaintiffs made seeking information from the defendants, most recently about software upgrades, which requests have gone unanswered, and seeking clarification about the German corporate re-arrangement undertaken by the Mercedes-Benz group of companies in March 2019 that the plaintiffs say is relevant to their application for joinder of Mercedes-Benz AG as third defendant. Having reiterated their sundry complaints about the defendants’ lack of co-operation, counsel for the plaintiffs then turned to address their aide-mémoire concerning the Calderbank offer.
Dr Cashman explained that what the aide-mémoire does, ‘perhaps with a few glitches’, is to summarise the history of this dispute with reference to the relevant paragraphs of the plaintiffs’ proposed Further ASOC (dated 8 December 2023) (and where the numbering has changed, the relevant paragraph of the earlier ASOC), which are listed in column 1, and then in column 2 it describes the subject matter of those paragraphs.[58] Column 3 lists the paragraphs which the plaintiffs, in their Calderbank offer, offered not to press. Column 4 records what the plaintiffs understood, correctly or otherwise, to be the defendants’ position as at 2 February 2024 in relation to the plaintiffs’ proposed Further ASOC (dated 8 December 2023); column 5 summarises the plaintiffs’ revised position by reference to the 26 February 2024 iteration of their proposed (revised) Further ASOC; and column 6 summarises what the plaintiffs understood, correctly or otherwise, to be the defendants’ position as at the hearing on 28 February 2024.
[58]Transcript 22.03.24, at pp.27-28 (Dr Cashman).
Counsel submitted the aide-mémoire demonstrates that:[59]
[DR CASHMAN:] . . . What has occurred has been an iterative process during which many of the contentious paragraphs have been resolved, either by the plaintiffs not pressing them or by the defendants no longer pressing their objections.
A number of areas previously in contention have been progressively whittled down and the pleading controversy is yet to be resolved.
[59]Transcript 22.03.24, at p.29 (Dr Cashman).
Against the background of iterative versions of the pleadings being prepared, and the ambit of the dispute between the parties having been narrowed somewhat, counsel for the plaintiffs turned to the issue of costs and submitted:[60]
[DR CASHMAN:] In the circumstances we would submit that the approach foreshadowed by Your Honour in relation to costs of the hearing of 28 February should be adopted. In other words, we don’t seek to deny the defendants their costs, we simply wish to reserve the determination of that question until the pleading issue is finally resolved. That was where Your Honour had indicated the matter should go, as we apprehend Your Honour’s comments on the last occasion, and with respect, we submit that should be the case.
[60]Transcript 22.03.24, at p.29 (Dr Cashman).
When the Court sought to clarify with Dr Cashman what precisely was conveyed by that submission, he elaborated further by stating:[61]
[DR CASHMAN:] . . . But we’re now faced with a position where, having been given a chance to get out [sic] pleadings in order without a resolution on whether or not the previous draft was correct or not, and it hasn’t simply been resolved, we would simply say when it is resolved let the defendants be heard and get their costs if they’re entitled to them. It’s just simply, we would say, premature whilst that remains in limbo.
We may well press quite a number of the paragraphs which the defendants have taken objection to. We may not. But we don’t know at this point. We’ve got until, I think, next Friday to resolve that. And at the moment we would submit that without prejudice to their entitlement to seek costs, we say they can seek it when the ground rules are clear, when the dust has settled, when the pleadings have been resolved and where there’s no longer any dispute. That doesn’t seem to be an extraordinary difficult proposition for the defendants to live with, but I appreciate costs now are better than possible costs in the future.
[61]Transcript 22.03.24, at p.35 (Dr Cashman).
When the Court observed that the outline of submissions the plaintiffs filed did not advance as one of the scenarios they contended for, that the Court should defer making any order as to costs at this stage and instead deal with the issue of the defendants’ costs in respect of each earlier iteration of the pleading as and when the Court rules on the next version of the pleading, the following exchange took place:[62]
[62]Transcript 22.03.24, at p.36-37.
HER HONOUR: . . . That wasn’t one of the scenarios that your submissions record.
What you seem to be saying - - -
DR CASHMAN: I think it is, Your Honour.
HER HONOUR: Well, show me where it is because I didn’t read your submission in that way. But that seems to be what you’re saying today. Show me where it is in your - - -
DR CASHMAN: Yes, Your Honour’s correct in the sense that it says ‘Reserved’ but what it was intended to be – mean, ‘reserved pending resolution of the pleadings dispute’.
HER HONOUR: Well there’s a big difference between the two, and you’ll understand why I say that.
DR CASHMAN: I agree with that, Your Honour, and I was going to come to that point.
HER HONOUR: So if what you’re saying is that the issue of the defendant’s [sic] costs of each of the successive iterations and matters that they’ve put forward in their order should be stood over until such time as the plaintiff [sic] has brought forward its next iteration of the pleading and it’s been considered by the court, that’s one thing. But that’s different, in my view, to the costs of the plaintiff’s [sic] amended summons being reserved or the defendant’s [sic] costs being reserved.
DR CASHMAN: I’m sorry, Your Honour, that should have added the words, ‘pending’ – and what I prepared to say in my written submissions was the following, ‘The defendant’s [sic] costs should be reserved pending resolution of the pleadings dispute.’ That’s what we understood Your Honour was foreshadowing on the last occasion, and if the draft submissions don’t make that clear I regret that. But that was our intention.
HER HONOUR: Well I certainly put that forward at the last hearing and then Mr Kirkwood said no, he wanted to raise the point and we stood down and came back.
DR CASHMAN: Yes.
As matters transpired, counsel for the plaintiffs acknowledged that once the Court has completed dealing with the pleading and associated issues, the defendants are entitled to agitate for an order directed to ameliorating the burden of the costs incurred by them, and effectively thrown away, in dealing with the deficiencies in the successive iterations of the plaintiffs’ pleadings.[63] Accordingly, notwithstanding that the plaintiffs failed to advance that scenario with clarity in their outline, the position now is that the plaintiffs are content for the defendants’ application for such costs to be stood over and abide the final determination on the pleadings issues.
[63]Transcript 22.03.24, at p.43 (Dr Cashman).
Defendants’ oral reply submissions
In reply, counsel for the defendants made three points.[64] First, Mr Kozminsky submitted that the fact that the parties have narrowed the issues in dispute does not disentitle the defendants from recovering the costs of the disputed issues which were heard and determined on 28 February 2024. Secondly, counsel contended that on 28 February 2024, the issue that was before the Court was whether the plaintiffs ought to have leave to file and serve their proposed (revised) Further ASOC (dated 26 February 2024). The Court was of the view that the current pleading was simply not good enough. Thirdly, counsel contended that as the defendants have succeeded in demonstrating that there was a fundamental error in the plaintiffs’ pleading, it is not apparent how anything that might happen in the future could change that fact, and the defendants ought be entitled to an order for costs of the kind sought in respect of the plaintiffs’ amended summons.
[64]Transcript 22.03.24, at pp.44-46 (Mr Kozminsky).
Consideration and disposition
The issue of costs, which arises in the present case in respect of the plaintiffs’ unsuccessful application to amend their pleading and join a non-party, does not call for elaborate and lengthy reasons adverting to every matter debated in argument, as was explained by the Court of Appeal in Luxmore Pty Ltd v Hydedale Pty Ltd.[65]
[65](2008) 20 VR 481 (Maxwell P and Kellam JA).
Section 24(1) of the Supreme Court Act 1986 (Vic)[66] and Part 4.5 of the Civil Procedure Act2010 (Vic) (which deals with the Court’s powers as to costs) provide that the Court has a broad discretion in determining questions of costs.
[66]Section 24(1) provides:
(1)Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.
The issue of what is the appropriate order for costs in any particular case is a matter within the Court’s discretion, to be exercised in accordance with the well-established principles referred to by the High Court in Sangare. Necessarily that task involves the exercise of the Court’s discretion upon facts connected with or leading up to the relevant litigation, and as the Court reiterated in Sangare, an important or guiding principle ‘is that the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party.’[67]
[67]Sangare at 173 (Kiefel CJ, Bell, Gageler, Keane and Nettle JJ), citing Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co [No 2] [1953] 1 WLR 1481 at 1484; [1953] 2 All ER 1588 at 1590. See also Harold v Smith (1860) 5 H & N 381 at 385 [157 ER 1229 at 1231]; Oshlack v Richmond River Council (1998) 193 CLR 72 at 96-97 [66]–[67], see also at 86 [35], 120–121 [134].
That important or guiding principle reflects what is often referred to as the ‘usual order as to costs’. In Oshlack v Richmond River Council (Oshlack),[68] McHugh J explained what is meant by that expression and the objectives the Court seeks to meet in exercising its discretion as to costs, as follows:[69]
[68](1998) 193 CLR 72.
[69]Oshlack at 97–98 [67]-[69]. While McHugh J dissented in the result in Oshlack, his Honour’s statement of the relevant principles was not contrary to the reasoning of the majority.
The usual order as to costs
67.The expression the “usual order as to costs” embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party.[70] If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
68.As a matter of policy, one beneficial by-product of this compensatory purpose may well be to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved. Large scale disregard of the principle of the usual order as to costs would inevitably lead to an increase in litigation with an increased, and often unnecessary, burden on the scarce resources of the publicly funded system of justice.
69.The traditional exceptions to the usual order as to costs focus on the conduct of the successful party which disentitles it to the beneficial exercise of the discretion. In Anglo-Cyprian Trade Agencies Ltd v Paphos Wine Industries Ltd,[71] Devlin J formulated the relevant principle as follows:
“No doubt, the ordinary rule is that, where a plaintiff has been successful, he ought not to be deprived of his costs, or, at any rate, made to pay the costs of the other side, unless he has been guilty of some sort of misconduct.”
”Misconduct” in this context means misconduct relating to the litigation,[72] or the circumstances leading up to the litigation[73]. Thus, the court may properly depart from the usual order as to costs when the successful party by its lax conduct effectively invites the litigation[74]; unnecessarily protracts the proceedings[75]; succeeds on a point not argued before a lower court[76]; prosecutes the matter solely for the purpose of increasing the costs recoverable[77]; or obtains relief which the unsuccessful party had already offered in settlement of the dispute[78].
[70]Latoudis [v Casey] (1990) 170 CLR 534 at 543 per Mason CJ; at 562-563, per Toohey J; at 566-567, per McHugh J; Cachia v Hanes (1994) 179 CLR 403 at 410, per Mason CJ, Brennan, Deane, Dawson and McHugh JJ.
[71][1951] 1 All ER 873 at 874.
[72]King & Co v Gillard & Co [1905] 2 Ch 7; Donald Campbell & Co Ltd v Pollak [1927] AC 732 at 812.
[73]Bostock v Ramsey Urban District Council [1900] 2 QB 616.
[74]Jones v McKie [1964] 1 WLR 960; [1964] 2 All ER 842; Bostock [1900] 2 QB 616 at 622, 625, 627.
[75]Forbes v Samuel [1913] 3 KB 706.
[76]Armstrong v Boulton [1990] VR 215 at 223.
[77]Hobbs v Marlowe [1978] AC 16.
[78]Jenkins v Hope [1896] 1 Ch 278.
In the present case, the plaintiffs have presented a succession of amended pleadings which the defendants have been required to consider and respond to. The procedural history demonstrates that the defendants’ solicitors wrote to the plaintiffs’ solicitors and raised with them a number of issues with the pleading (in the form of the SOC), initially in February 2023 and again in June 2023, and then in July 2023 (in the form of the ASOC). When the defendants’ solicitors received a response that they considered was not an adequate response to the issues raised, they proceeded to file an application by summons on 14 July 2023, seeking to strike out various paragraphs and/or seeking the provision of further and better particulars and certain documents identified in their Notice to Produce dated 7 June 2023.
Since then, the plaintiffs have provided three further iterations of the pleading that they seek to rely upon, and to amend their Writ to add a further defendant to the group proceeding. As a result, the defendants have been required to devote considerable time to considering several iterations of pleadings that are no longer pressed, and to attend before the Court on more than one occasion. Further, the procedural history set out above indicates that the first iteration of the proposed amended pleading did not emerge until on or shortly before 22 November 2023, when the plaintiffs’ solicitors informed the Court that they were seeking leave to file a summons to be made returnable on 28 November 2023, which was the date the defendants’ summons seeking to strike out the ASOC had been fixed by Nichols J for hearing.
When the matter was brought on urgently for mention (by audio-visual means) on 24 November 2023, the Court vacated the hearing of the defendants’ summons on 28 November 2023, and listed both the defendants’ application and the plaintiffs’ proposed summons for hearing on 28 February 2024, being the earliest date convenient to both parties.
Pursuant to the orders made on 24 November 2023, the plaintiffs filed their proposed summons on 8 December 2023. The plaintiffs’ material in support contained a further (second) iteration of their proposed amended pleading and amended writ, to which the defendants were effectively required to respond by 2 February 2024, when filing their submissions and any evidence upon which they proposed to rely in respect of the plaintiffs’ summons. Any submissions in reply from the plaintiffs were due to be filed on 16 February 2024.
The defendants’ material was filed on time. However, by email on 16 February 2024, the solicitors for the plaintiffs informed the Court that, due to reasons outlined in the Affidavit of Gregory Mackey affirmed on 16 February 2024, the plaintiffs were unable to file their reply submissions by 4.00pm that day. As correspondence from the respective parties indicated that the parties were unable to agree on the orders to be made, the matter was again listed for mention (by audio-visual means) on 23 February 2024.
At the mention, the Court noted that the plaintiffs had filed and served their reply submissions (including further proposed amended documentation) on 19 February 2024, and that counsel for the defendants took no issue with the late filing. Paragraph 2 of the orders made that day provided for the plaintiffs to file and serve an amended summons (being an amended form of their summons dated 8 December 2023), such that:
(a) Appendix A to the amended summons reflects the amendments identified in Appendix I (proposed amended writ) to the plaintiffs’ reply submissions dated 19 February 2024; and
(b) Appendix B to the amended summons reflects the amendments identified in Appendix II (proposed further amended statement of claim) to the plaintiffs’ reply submissions dated 19 February 2024.
At the hearing on 28 February 2024, two applications were before the Court. The first was the defendants’ amended summons (filed on 28 February 2024) seeking to strike out paragraphs of the plaintiffs’ (revised) Further ASOC (dated 26 February 2024), the provision of further and better particulars of specified paragraphs and the production of certain documents (identified in the Notice to Produce dated 7 June 2023). The second was the plaintiffs’ amended summons (filed on 26 February 2024) seeking leave to join Mercedes-Benz AG as the third defendant, file an Amended Writ (joining the third defendant and altering the description of the group) and file their proposed (revised) Further ASOC (being a third iteration of their pleading).
At the hearing on 28 February 2024, it became clear, as I have noted above, that there were some significant shortcomings in the formulation of the plaintiffs’ pleading and in the particularisation of the claims made in their proposed Further ASOC, including in their description of the group members, and also in their articulation of the basis on which they sought to join Mercedes-Benz AG as a third defendant to the proceeding. I expressed the view that the pleading required more than piecemeal amendments, stating:[79]
[HER HONOUR:]… I think you actually have to go back and do a bit of root and branch re-organisation of the pleading and follow through in a roadmap in a logical, coherent way the causes of action and what they’re based on from a factual perspective, not from inferences or other things, but put the case as you can on solid foundations and then the defendant hopefully will respond to it.
But as the plaintiffs’ oral submissions had indicated that there was some scope for re-pleading in a way that may address (at least some of) the pleading issues raised by the defendants, the plaintiffs were afforded the opportunity to re-plead the gist of the relevant allegations and the basis for joinder of the third defendant, and provide further and better particulars.
[79]Transcript 28.02.2024, at p.97 (Sloss J).
In those circumstances, orders were made dismissing the plaintiffs’ amended summons filed on 26 February 2024, but fixing a date (being 29 March 2024) for the plaintiffs to provide any further revised proposed Amended Writ and further revised proposed Further ASOC, and providing for the defendants to notify the plaintiffs (by 19 April 2024) whether they consented to the plaintiffs having leave to amend, and thereafter for the parties to confer on proposed orders concerning next steps and provide the Court (on 26 April 2024) with any agreed proposed orders or, if the parties cannot reach agreement, each party’s proposed orders. As there was no utility in striking out particular paragraphs of the pleading, the defendants’ amended summons was stood over to a date to be fixed (pending the filing of any amended documents by the plaintiffs) so as to minimise the costs thrown away.
By email on 27 March 2024, the solicitors for the plaintiffs informed the Court that the plaintiffs in this proceeding have conferred with the plaintiff in the rival group proceeding brought against several Mercedes-Benz entities, being the El-Helou proceeding (S ECI 2024 00234), and an in-principle agreement for cooperation has been concluded, between Gerard Malouf & Partners as the plaintiffs’ solicitors in this proceeding and Piper Alderman as the plaintiff’s solicitors in the El-Helou proceeding. With the in-principle agreement for cooperation having been concluded, the solicitors for the plaintiffs informed the Court that they had contacted the solicitors for the defendants and requested that the timetabled dates in paragraphs 6, 7 and 8 of the orders made on 14 March 2024, be amended, such that:
(a) the date for the plaintiffs to provide any revised proposed Amended Writ and proposed further ASOC (being 29 March 2024) be further extended to 26 April 2024;
(b) the date for the defendants to notify the plaintiffs whether they consent to the plaintiffs having leave to file any revised proposed Amended Writ and proposed further ASOC (being 19 April 2024) be further extended to 17 May 2024; and
(c) the date for the parties to confer on proposed orders concerning next steps and provide the Court with any agreed proposed orders or, if the parties cannot reach agreement, each party’s proposed orders (being 26 April 2024), be further extended to 24 May 2024.
In the absence of any opposition from the defendants to the proposed extension of the timetabled dates, the Court notified the parties that it was content to make orders on the papers substantially in the proposed form, so as to promote the efficient conduct of the proceeding. Accordingly, on 28 March 2024, orders providing for the extended timetable were made and authenticated, substantially in the form proposed.
At a practical level, there is an overlap between the (essentially strike out) relief sought in the defendants’ amended summons and the leave to file an amended pleading sought in the plaintiffs’ amended summons. The defendants’ correspondence in February and June 2023 and/or the first iteration of their summons filed on 14 July 2023 was the impetus for, or set in train, the plaintiffs’ (later) attempts to further amend their pleading, as foreshadowed in their correspondence in November 2023 and sought in their summons filed on 8 December 2023 and their amended summons filed on 26 February 2024. Since the mention on 24 November 2023, the applications brought by the respective parties have been the subject of timetabled orders for the preparation and filing of affidavit material and outlines of submissions and each was listed for hearing on 28 February 2024.
In some circumstances, where there is a demonstrated overlap in subject matter between applications brought by the respective parties, but only one of them is finally determined, it may be appropriate to defer making any ruling on costs until such time as the fate of both applications is known. However, in circumstances such as the present, where the plaintiffs’ application for leave to amend has been dismissed, essentially because the plaintiffs’ pleading requires root and branch amendment, a matter which the plaintiffs acknowledge, it is not appropriate to do so.
In my view, a principled approach, of the kind required by the authorities, would require the Court to exercise its discretion as to costs by reference to the facts connected with or leading up to the relevant litigation. In the present case, the defendants, acting responsibly, brought on a summons seeking to strike out the plaintiffs’ ASOC after having raised a number of issues about the formulation of the plaintiffs’ pleading. It was not until after the defendants’ summons was listed for hearing that the plaintiffs brought forward the first version of their further amended pleading. Two more versions followed, neither of which was satisfactory.
The defendants, as the ‘successful party’ on a summons which has been dismissed, have incurred significant cost and expense in considering and responding to successive iterations of the plaintiffs’ pleading that demonstrably do not conform with the Rules and fail to present a coherent formulation of their case as outlined in opening by their counsel. The defendants have also been required to appear at the mention on 23 February 2024, which was necessitated by the plaintiffs’ failure to comply with the timetabled orders, in addition to the substantive hearing on 28 February 2024 and the hearing as to the issue of costs on 22 March 2024.
In my view, the Court is in a position to determine where the justice lies between the parties on the issue of the costs of the plaintiffs’ amended summons. Having heard argument on the point, I am satisfied that justice and fairness require that the Court determine at this point, rather than at some (as yet) unspecified point after 30 May 2024, the costs burden that has been visited on the defendants as a result of the plaintiffs’ unsuccessful attempts to bring forth a viable pleading that conforms with the Rules and to join the third defendant as a party.
Furthermore, I consider that the approach outlined above is that which is most likely to further the overarching purpose, as required by s 9 of the Civil Procedure Act 2010 (Vic).
It will be recalled that counsel for the plaintiffs submitted that their Calderbank offer would ‘loom large’ in any discussion about costs.[80] However, I do not share that view. The offer, which was contained in the ‘without prejudice’ letter from the plaintiffs’ solicitors dated 12 December 2023, was expressed to be made in accordance with the principles of Calderbank v Calderbank,[81] and remained open until ‘16:00 on 12 January 2024’.[82] The offer so made was referrable to the documents which form Appendices A and B to their revised summons filed on 8 December 2023, being the second iteration of their draft Amended Writ and draft further ASOC respectively.
[80]Transcript 28.02.24, at p.104 (Dr Cashman).
[81][1976] Fam 93.
[82]Third Affidavit of Gregory John Mackey sworn 18 March 2024, Exhibit GM-8.
In essence, in their offer, the plaintiffs proposed that the defendants consent to a suite of orders that were attached, styled as a ‘General Form of Order’, including with a notation that the plaintiffs no longer seek the inclusion in their Further ASOC of certain paragraphs that were set out in their 8 December 2023 draft. The orders proposed to be made ‘by consent’ concerned the following subjects: ‘Plaintiffs’ Revised Summons’, the ‘Defendants’ Summons’, the ‘Vacation of hearing date and remaining case preparation orders pursuant thereto’, ‘Service on Third Defendant, appearance of Third Defendant and filing of Defence(s)’, in addition to orders as to costs and liberty to apply.
Relevantly under the headings of the ‘Plaintiffs’ Revised Summons’ and the ‘Defendants’ Summons’ the following ‘consent’ orders were proposed:[83]
Plaintiffs’ Revised Summons
1.Pursuant to Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) r 9.02, Mercedes-Benz AG be joined as Third Defendant.
[83]Bundle of documents provided by the defendants to be relied upon by the parties at the costs hearing (22 March 2024), at pp.506-507.
2.Pursuant to Rules r 36.01, leave be granted to the Plaintiffs to file an Amended Writ in the form of Appendix A to the Plaintiffs’ Revised Summons.
3.Pursuant to Rules r 36.01 and r 36.04(1)(b), leave be granted to the Plaintiffs to file a Further Amended Statement of Claim in the form of Appendix B to the Plaintiffs’ Revised Summons, with the exclusion of paragraphs 52A, 55A to 55D and 56A to 56Y thereof.
Defendants’ Summons
4.The Defendants’ Summons filed 14 July 2023 (Defendants’ Summons) be dismissed.
In circumstances where the Court has not granted any of the relief sought in those paragraphs of the plaintiffs’ proposed orders, and the plaintiffs’ amended summons has been dismissed, it is difficult to understand how the Calderbank offer could have any bearing on the orders as to costs to be made by the Court on the plaintiffs’ amended summons. Nor does the aide-mémoire document, that was prepared by counsel for the plaintiffs comparing paragraphs of their 8 December 2023 version of the pleading (that was the subject of the Calderbank offer) with paragraphs of their 26 February 2024 version of the pleading, advance the matter. In essence, counsel for the plaintiffs submitted that the aide-mémoire demonstrates that there has been an iterative process during which many of the contentious paragraphs have been resolved, either by the plaintiffs not pressing them or by the defendants no longer pressing their objections with the result that ‘[a] number of areas previously in contention have been progressively whittled down and the pleading controversy is yet to be resolved.’[84] Counsel for the defendants responded by submitting that the aide-mémoire contains errors and is incomplete and ought not be relied upon by the Court.
[84]Transcript 22.03.24, at p.29 (Dr Cashman).
But leaving to one side complaints about its accuracy, what the aide-mémoire appears to demonstrate, at a base level, is that over several months the defendants have been engaged in this iterative process of whittling down the areas of controversy in the plaintiffs’ pleading and that, notwithstanding several attempts to do so, the plaintiffs have been unable to produce a proper pleading that demonstrably conforms with the Rules. I agree with the submission made by counsel for the defendants that the fact that the parties have narrowed the issues in dispute does not disentitle the defendants from recovering their costs on the plaintiffs’ amended summons which was heard and determined on 28 February 2024.
Further, in the present case, it is clear that with the plaintiffs’ amended summons having been dismissed, r 63.17 is not enlivened. That is because r 63.17 provides (emphasis in italics added):
Where a pleading is amended (whether with or without leave) the costs of and occasioned by the amendment and the costs of any application for leave to make the amendment are the parties’ costs in the proceeding, unless the Court otherwise orders.
In the absence of the pleading being amended, no occasion arises for the Court to consider whether the Court should ‘otherwise order[]’ or leave the rule to operate according to its terms.
Conclusion
In my view, insofar as the plaintiffs’ summons and amended summons are concerned, the defendants are entitled to the ‘usual order as to costs’. Further, I do not regard any of the conduct of the defendants about which the plaintiffs have complained as constituting conduct of the kind which would disentitle them to the beneficial exercise of the Court’s discretion as to costs.
Accordingly, I propose to make an order along the lines of that set out in the defendants’ minute of proposed order, but with some minor adjustments as follows:
The plaintiffs pay the defendants’ costs of and incidental to the plaintiffs’ summons filed on 8 December 2023 and amended by amended summons dated 19 February 2024 (and filed on 26 February 2024), including:
(a) the mention on 23 February 2024;
(b) the hearing on 28 February 2024;
(c) the plaintiffs’:
(i)proposed further amended statement of claim of November 2023;
(ii)proposed further amended statement of claim of December 2023;
(iii)proposed further amended statement of claim of February 2024; and
(d)the hearing (as to costs) on 22 March 2024,
such costs to be taxed on the standard basis in default of agreement.
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SCHEDULE OF PARTIES
| S ECI 2022 04768 | |
| BETWEEN: | |
| PAUL WAWRYK | First Plaintiff |
| CRAIG STUBBINGS | Second Plaintiff |
| - v - | |
| MERCEDES-BENZ AUSTRALIA/PACIFIC PTY LTD (ACN 004 411 410) | First Defendant |
| MERCEDES-BENZ GROUP AG | Second Defendant |
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