FEDERAL COURT OF AUSTRALIA

Capic v Ford Motor Company of Australia Limited (Costs Forthwith) [2019] FCA 1065

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application filed by the Respondent on 12 October 2017 be dismissed.

2.    The Applicant pay the Respondent’s costs of the interlocutory application.

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

REASONS FOR JUDGMENT

PERRAM J:

1    This proceeding is a class action concerning allegedly defective transmission systems of certain imported Ford vehicles supplied by the Respondent. The proceeding has not had a smooth ride.

2    The Respondent seeks its costs in respect of its application filed on 12 October 2017 for an anti-suit injunction against the Applicant (‘the Anti-suit Injunction Application’). The Anti-suit Injunction Application was brought to restrain the Applicant’s application for discovery in the United States (‘the US Application’). The Anti-suit Injunction Application has not been determined on its merits but has been rendered unnecessary by the dismissal by the United States District Court of the US Application.

3    The Respondent also seeks that its costs of a number of applications determined in this proceeding be paid forthwith, those applications being:

    an application by the Applicant to restrain the Respondent from communicating with group members (‘the Communications Application’);

    two applications by the Applicant to amend the Second Further Amended Originating Application and Second Further Amended Statement of Claim (‘the Pleadings Amendment Applications’); and

    the Anti-suit Injunction Application (if costs are ordered in its favour).

4    The parties agreed these various issues should be determined on the papers.

Costs of the Anti-suit Injunction Application

5    As part of the discovery process in this proceeding, the Applicant has sought access to material which was discovered in similar proceedings before the United States District Court for the Central District of California. I set out the background to these materials in Capic v Ford Motor Company of Australia Limited (No 4) [2017] FCA 1575 at [3]-[17].

6    The Applicant has made a number of attempts to access this material. One method was an application in this Court for a letter of request to the United States District Court seeking production of the US material. That was discontinued on 30 August 2017 with costs ordered against the Applicant.

7    Another method employed was to apply to the United States District Court for discovery pursuant to § 1782 of Title 28 of the United States Code. The Applicant made such an application twice. She did not seek leave from this Court before pursuing her first § 1782 application.

8    The first § 1782 application was met by the Respondent’s Anti-suit Injunction Application. I set out the background to the first § 1782 application in Capic v Ford Motor Company of Australia Limited (No 4) [2017] FCA 1575 in the course of granting leave to the Applicant to pursue her second § 1782 application (at [18]-[19]):

18    From a relatively early date in this proceeding the Applicant has been seeking to access this US material. On 27 January 2017, she filed an application in this Court for the issue of a letter of request to the US District Court for the Central District of California seeking the production of an electronic copy of the documents discovered in the US proceedings. This application then underwent several developments. First, on 1 February 2017 at a case management hearing, the Applicant foreshadowed seeking orders under § 1782. At another hearing on 7 June 2017, the Applicant announced that she was going to seek the lifting of an order in the US which prevented the Applicant’s lawyers in the US from speaking to the Applicant’s lawyers in this case. On 30 August 2017, the interlocutory application of 27 January 2017 was discontinued and the Applicant ordered to pay the costs. The Applicant also foreshadowed that she might apply for an order under § 1782 in California and Ford Australia foreshadowed that it might, in response, apply for an anti-suit injunction in Australia in this proceeding. At that time, what the Applicant wanted seemed to lack focus.

19    The Applicant then applied in the US, on 15 September 2017, for an ex parte order under § 1782 against Capstone (that is, the plaintiffs’ lawyers in the US). The Applicant was ordered by the US District Court for the Central District of California on 25 September 2017 to serve Ford US which then opposed the application on bases which included that it was not appropriate to seek the documents from the plaintiff’s lawyers in the US proceeding and that Ford US was the proper defendant. On 16 October 2017, Judge Mumm agreed with this and refused the application: Biljana Capic v Capstone Law APC (unreported, United States District Court, Central District of California, Mumm J, No. MC-17-118-UA, 16 October 2017). Judge Mumm was told that I was aware of the application which was being made to him. I am by no means certain that is a correct statement and it is certainly not a complete one. I was aware an application might be made but I was also aware that an anti-suit injunction might be sought if it was. The time for me to express my views on the § 1782 procedure had not yet arrived. I did not therefore regard myself as having, at that stage, given a green light to the § 1782 application.

9    The dismissal of the Applicant’s first § 1782 application by the US District Court for the Central District of California rendered the Respondent’s Anti-suit Injunction Application in this Court obsolete and thus it was never heard. The Respondent would nevertheless like its costs.

10    Ordinarily, costs will not be ordered where a matter has not been heard although in appropriate circumstances a costs order may be made: Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin [1997] HCA 6; 186 CLR 622 (‘Lai Qin’) at 624. This may occur where one party has acted so unreasonably that the other party should be awarded costs, or where one party was almost certain to have succeeded if the matter had been heard: Lai Qin at 624-625.

11    This latter inquiry is difficult in the present context because the Anti-suit Injunction Application was not compromised by the parties but rather rendered redundant by the US District Court’s refusal of the § 1782 application five days after the Anti-Suit Injunction Application was filed. In that regard the observations of Davies AJA in Edwards Madigan Torzillo Briggs Pty Ltd v Gloria Stack [2003] NSWCA 302 at [5] are pertinent:

When proceedings are brought to an end without a determination after a trial, the judge may find it difficult, even impossible, to make an award of costs. If the judge does make an award, it will generally be because the judge is satisfied that one party has had a substantial victory and the other a substantial loss, or that there has been a marked difference in the reasonableness of the actions taken by the parties, so that one party should be rewarded for its reasonable actions and the other party should suffer a detriment in costs.

12    It is well established that before a party seeks to obtain evidence in the United States under § 1782, that party should seek the endorsement of this Court first: Jones v Treasury Wine Estates Ltd [2016] FCAFC 59; 241 FCR 111 at 118-119 [48]. Where a party makes a § 1782 application without the prior endorsement of this Court the grant of an anti-suit injunction may ensue: see Jones v Treasury Wine Estates Ltd [2016] FCAFC 59; 241 FCR 111; Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (No 4) [1996] FCA 119; 64 FCR 61.

13    Nothing in this proceeding was so novel as to justify the Applicant acting contrary to well-established principle and failing to seek an endorsement of her first § 1782 application. Further, the matter was compromised not by a mutual agreement between the parties or an independent intervening event, but because the Applicant’s first § 1782 application was dismissed by the US District Court as it improperly sought discovery from the wrong party. Whilst it is true, as the Applicant submitted, that the failure of the first § 1782 application is a red herring with respect to the likelihood of success of Anti-suit Injunction Application, it does serve to mark the stark contrast between the reasonableness of the positions of the parties on the application. The Applicant, in what may safely be described as a misadventure, failed to seek the leave of this Court to obtain discovery from persons who turned out to be the incorrect parties in the United States. The Respondent, in the ordinary course, brought an application for an anti-suit injunction which was both foreseeable and reasonable.

14    The Respondent should have its costs of the Anti-suit Injunction Application.

Costs forthwith

15    Rule 40.13 of the Federal Court Rules 2011 (Cth) (‘FCR’) provides the following:

40.13    Taxation of costs awarded on an interlocutory application

If an order for costs is made on an interlocutory application, the party in whose favour the order is made must not tax those costs until the proceeding in which the order is made is finished.

Note:    The Court may order that costs of an interlocutory application be taxed immediately.

16    This rule creates the ordinary rule that costs of an interlocutory application are not to be taxed immediately. As the note to the rule intimates, however, the ordinary rule may be displaced and an order may be made for costs to be paid forthwith by engaging either FCR 1.34 or FCR 1.35: see Federal Treasury Enterprise (FKP) Sojuzplodoimport v Spirits International B.V. (No 5) [2018] FCA 19 (‘Spirits’) at [5]-[6].

17    Displacing the ordinary rule does not occur as of usual course. Central to the inquiry of whether costs should be paid forthwith is an assessment of whether the interests of justice in the circumstances sufficiently outweigh the policy considerations behind FCR 40.13 to justify a departure from the rule: Axent Holdings Pty Ltd v Compusign Australia Pty Ltd (No 3) [2018] FCA 6 at [13]. Those policy considerations include the desirability of avoiding multiple taxations, the dissuasion of the pursuit of multiple interlocutory applications and a recognition that set-offs may be available where prior or subsequent cost orders are made in the opposite direction: Courtney v Medtel Pty Limited (No 3) [2004] FCA 347 at [20]; Bailey v Beagle Management Pty Ltd [2001] FCA 60; 105 FCR 136 at 145 [37].

18    The ordinary rule is therefore only departed from where the interests of justice require such a departure: Thunder Racetiming and Scoring Pty Ltd v Dorian Industries Pty Ltd [1992] FCA 423; 36 FCR 297 at 312. This may occur where final judgment (and therefore taxation of costs) will not be delivered for a substantial period of time, where the interlocutory disputation is discrete from the rest of the proceeding or where a party has engaged in unreasonable behaviour which has caused the other party to incur significant additional expenditure which would not have been incurred if the other party had acted with competence and diligence: Spirits at [9].

19    The last consideration is of particular note. An order for costs to be payable forthwith is not to be seen as akin to an indemnity costs order or an adverse costs order. It is to be borne in mind that where a party relies on the unreasonable conduct of the other party in its interlocutory disputation, an order for costs to be payable forthwith will generally only be made where the conduct has caused significant additional costs such that the interests of justice demand a departure from the ordinary rule: Spirits at [11].

20    Turning to the present application, the costs of the Pleading Amendment Applications may be dealt with first. On 31 October 2018 I refused with costs an application brought by the Applicant to file further amended pleadings: Capic v Ford Motor Company of Australia Limited (No 7) [2018] FCA 1631. The application had been brought shortly after a new team of solicitors was engaged to assist the Applicant in the matter. The new pleadings enlarged the class and raised a number of new allegations, many of which were supported by a statement of agreed facts between the ACCC and the Respondent tendered in another proceeding (‘the ACCC Proceeding’) and annexed to the judgment Australian Competition and Consumer Commission v Ford Motor Company of Australia Limited [2018] FCA 703. That judgment had been handed down on 22 May 2018. The Applicant again sought to file further amended pleadings for which leave was granted by consent on 24 January 2019 with costs thrown away ordered in favour of the Respondent.

21    The Respondent pointed to four factors as to why those costs should be paid forthwith. First, this proceeding is listed for trial on 15 June 2020 for six weeks and therefore it will not receive the fruits of its order for costs for a significant period of time. Secondly, the Pleadings Amendment Applications contributed to the vacation of the previous trial date. Thirdly, the long delay in the close of the pleadings has been exacerbated by the Applicant’s pursuit of ill-considered and unnecessary claims. Fourthly, the change in scope and nature of the claims under the amended pleadings brought after a late change in solicitors has resulted in ‘an essentially new case’.

22    Whilst there may be some aspects of the pleadings that were amended upon review by the Applicant’s new team of lawyers, many of the amendments brought in new components as a result of the admissions made by the Respondent as disclosed in the ACCC Proceeding. The timing of that proceeding and judgment was not in the Applicant’s control.

23    Further, whilst I rejected the first pleading amendment application, I did in principle permit many of the proposed amended claims if properly pleaded such as the expansion of the group definition and the unconscionable conduct claim. The second pleading amendment application was then granted by consent with costs thrown away. Given that the pleading amendments principally enlarged the claim, I agree with the Applicant’s submission that it is not clear if there are any costs thrown away or, if so, what they would be.

24    Nor, as the Respondent submitted, was the previous trial date vacated because of the Pleading Amendment Applications. The previous trial date was vacated for a menagerie of reasons of which the then foreshadowed Pleading Amendment Applications was largely a dormant member. This is plain from my published reasons for vacating the trial date: Capic v Ford Motor Company of Australia Limited (No 6) [2018] FCA 982.

25    Accordingly, the factors pointed to by the Respondent do not justify a departure from the ordinary rule. I will not order the costs of the Pleadings Amendment Applications to be paid forthwith.

26    That leaves the costs of the Communications Application and Anti-suit Injunction Application. I have set out the background to the Anti-suit Injunction Application above. The Communications Application was heard at the same time as the first pleadings amendment application. The Applicant by interlocutory application sought to restrict the Respondent’s communication with represented and, separately, unrepresented group members. The communications in question related to settlement offers made by the Respondent to customers after they sought to have their vehicles serviced. The Applicant had previously sought injunctions two years prior in similar terms which I refused to make: see Capic v Ford Motor Company of Australia Limited [2016] FCA 1020.

27    After the change in solicitors, the application with respect to represented group members was withdrawn. I refused to order the injunction against the unrepresented group members as the Respondent was already acting in accordance with the terms on which the injunction was sought: Capic v Ford Motor Company of Australia Limited (No 7) [2018] FCA 1631 at [29].

28    Turning to the present application, I do not accept the Applicant’s submission that because class actions, as a pedigree of legal proceedings, inherently breed interlocutory disputation, the Applicant’s conduct is to be seen in that context. As outlined above, the palaver that caused the Anti-suit Injunction Application should never have happened. I can also comfortably say, having been reserved on the matter prior to the change in lawyers, that the Communications Application was an exercise in futility. Mere susceptibility to interlocutory disputation does not justify unmeritorious or unnecessary disputes, nor does the consequential prospect of potential set-offs naturally defeat an application for costs payable forthwith.

29    But those observations by themselves do not sufficiently ground an order for the costs to be paid forthwith. What must be shown is that the circumstances of the application outweigh the policy considerations that ground the ordinary position in FCR 40.13.

30    The Applicant conceded that the Communications Application was a discrete application and noted the delay to the final resolution of these proceedings. Further, as I have observed above, the Communications Application was misconceived. However, whilst the Respondent submitted that it incurred significant additional expenditure in respect of the Communications Application, it has not pointed to what those significant additional costs are apart from its response to the Communications Application. As the Respondent noted, the Communications Application sought nothing more than what the Respondent was already doing. The Respondent accordingly won its costs on the application, but it does not follow that those costs ought to be paid forthwith.

31    Similar considerations apply to the Anti-Suit Injunction. Whilst the Applicant’s conduct in her multiple failed attempts to obtain discovery in the US may possibly amount to conduct warranting an order for costs payable forthwith, the Anti-suit Injunction Application only formed one part of that conduct. On 30 August 2017 I ordered costs against the Applicant with respect to the initial letter of request application, the costs of which was fixed in the amount of $61,695.58 on 13 December 2017. The Respondent does not seek those costs forthwith. Consideration should therefore be confined only to the circumstances that gave rise to the Anti-suit Injunction Application. The Respondent has not pointed to any significant additional expenditure it incurred as a result apart from preparing and filing the Anti-suit Injunction Application. This in itself does not justify departing from the ordinary rule.

Orders

32    I will only make the following orders:

    1.    The interlocutory application filed by the Respondent on 12 October 2017 be dismissed.

2.    The Applicant pay the Respondent’s costs of the interlocutory application.

Associate: A

Dated:    10 July 2019