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  4. Challis v Ford Motor Company of Australia Pty Ltd - [2023] QDC 193

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Challis v Ford Motor Company of Australia Pty Ltd[2023] QDC 193

Reported at (2023) 3 QDCR 226

Challis v Ford Motor Company of Australia Pty Ltd[2023] QDC 193

Reported at (2023) 3 QDCR 226

DISTRICT COURT OF QUEENSLAND

CITATION:

Challis & another v Ford Motor Company of Australia Pty Ltd & another; Challis v Ford Motor Company of Australia Pty Ltd [2023] QDC 193

PARTIES:

CHRISTINE CHALLIS

(First Plaintiff)

AND

BRUCE CHALLIS

(Second Plaintiff)

v

Ford Motor Company of Australia Pty Ltd

ACN 004116 223

(First Defendant)

AND

Mackay City Auto Group Pty Ltd acn 125 986 503

(Second Defendant)

And

CHRISTINE CHALLIS

(First Plaintiff)

AND

BRUCE CHALLIS

(Second Plaintiff)

v

FORD MOTOR COMPANY OF AUSTRALIA PTY LTD

ACN 004116 223

(Defendant)

FILE NOS:

BD No 813 of 2020 and 4687 of 2019

DIVISION:

Civil

PROCEEDING:

Application

ORIGINATING COURT:

Brisbane District Court

DELIVERED ON:

31 October 2023

DELIVERED AT:

Brisbane

HEARING DATES:

11 and 12 August 2022 and 1 November 2022

JUDGE:

Porter KC DCJ

ORDER:

  1. Proceeding 813/20 be permanently stayed.
  2. Proceeding 4687/19 be permanently stayed.

CATCHWORDS:

PROCEDURE – STATE AND TERRITORY COURTS: JURISDICTION, POWERS AND GENERALLY – INHERENT AND GENERAL STATUTORY POWERS – TO PREVENT ABUSE OF PROCESS – OTHER PARTICULAR CAUSES – where the plaintiffs in both proceedings purchased a Ford Ranger – where around six weeks after purchasing the Ranger a fire started in the engine bay while it was turned off and parked in the garage of the plaintiffs’ home – where the fire caused significant damage to the Ranger and the home – where the Ranger was insured by Youi Pty Ltd and the home was insured by AAI Ltd trading as APIA – where fire investigators for both Youi and APIA inspected the vehicle – where the investigator for Youi removed parts of the battery and various wires and sent them to a metallurgist for further testing – where the fire investigators and the metallurgist produced reports opining that the cause of the fire was an electric fault potentially caused by a defect in the starter motor solenoid – where solicitors for Youi contacted Ford Motor Company of Australia Pty Ltd asserting the plaintiffs’ right to bring a claim in respect of the damage to the vehicle – where Youi authorised the disposal of the battery items prior to commencing proceedings without the defendants having inspected them – where Youi exercising rights of subrogation commenced proceedings against the defendants for damage to the vehicle – where after commencing proceedings Youi authorised the disposal of the Ranger without the defendants having inspected it – whether the prosecution of the proceedings after the disposal of the battery items or the Ranger is an abuse of process – whether the proceedings should be stayed as an abuse of process

INSURANCE – SUBROGATION – where after the disposal of the Ranger, APIA exercising rights of subrogation commenced proceedings against Ford for damage to the plaintiffs’ home – where the proceedings were also brought by the plaintiffs in their own right for damage to their uninsured contents – where neither APIA nor the plaintiffs had any involvement in or knowledge of Youi’s decision to dispose of the battery items or the Ranger – whether the proceedings commenced by APIA exercising rights of subrogation or commenced by the plaintiffs in their own right are an abuse of process as a result of the destruction of the battery items or the Ranger – whether the proceedings should be stayed as a result of any abuse of process  

CASES:

Allen v Snyder [1977] 2 NSWLR 685

Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167

Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256

British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197

Capic v Ford Motor Company of Australia Pty Ltd (2021) 154 ACSR 235

Clark v State of New South Wales (2006) 66 NSWLR 640

Di Carlo v Dubois [2007] QCA 316

Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89

Fuji Xerox Australia Pty Ltd v Lee & Anor [2003] QSC 303

Gill v Ethicon Sarl (No 5) [2019] FCA 1905

Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609

Jacob v Utah Construction and Engineering Ltd (1966) 116 CLR 200

Jago v District Court of New South Wales (1989) 168 CLR 23

Logicrose Ltd v Southend United Football Club Ltd (reported in the Times of 5 March 1998)

McHenry v Lewis [1882] 22 Ch 397

Melbourne Investments Pty Ltd v Myer Holdings Ltd (2017) 53 VR 709

Melco Engineering Pty Ltd v Eriez Magnetics Pty Ltd [2007] QSC 198

Oceanic Sun Line Special Shipping Company Ltd v Fay (1988) 165 CLR 197

Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264

Ratcliffe v Watters (1969) 89 WN NSW Part 1 497

Sun v He (No 2) [2020] NSWSC 1298

Victoria International Container Terminal Limited v Lunt (2021) 388 ALR 376

Walton v Gardiner (1993) 177 CLR 378

Wilson v Raffalovich (1881) 7 QBD 553

LEGISLATION:

Competition and Consumer Act 2010 (Cth) Sch 2 s 54, 55, 140, 141

Uniform Civil Procedure Rules 1999 (Qld) rr 149, 150(4), 166, 367

In BD No 813 of 2020

COUNSEL:

K Horsley for the Plaintiffs

E Robinson for the First Defendant

H Blattman KC for the Second Defendant

SOLICITORS:

Ligeti Partners Lawyers for the Plaintiffs 

Allens for the First Defendant 

Carter Newell Lawyers for the Second Defendant 

In BD No 4687 of 2019

COUNSEL:

C Heyworth-Smith KC and S Lane for the Plaintiffs

E Robinson for the Defendant

SOLICITORS:

Mills Oakley for the Plaintiffs 

Allens for the Defendant 

Summary6

Introduction6

The facts8

Before the fire8

The initial expert investigations9

Mr Nystrom’s first report10

Mr Cox’s first report and Mr Nystrom’s first update11

Mr Pellegrino’s report11

Mr Nystrom’s second and third updates and Mr Cox’s second report12

Summary of initial investigations13

Further events prior to the Youi proceedings14

Youi’s internal investigation14

Dealings with Ford before the Youi proceedings15

The Youi proceedings are commenced18

Disposal of the Ranger20

Events following disposal of the Ranger23

The APIA proceedings25

The current applications25

expert evidence at trial26

Mr Cousins first report26

Mr Denham’s report30

Mr Nystrom’s response to the first Cousins report32

Mr Cousins’ second report35

Admissibility of Mr Cousin’s evidence35

Oral evidence38

Mr Cousins38

Mr Nystrom39

Mr Pellegrino41

Mr Denham41

Leave to read further affidavit refused42

Relevant principles42

Abuse of process and disposal of relevant material42

Curial response to abuse of process50

Abuse of Process: Youi proceedings51

Disposal of the Ranger51

Youi’s intention in disposal of the Ranger53

Disposal of the battery items54

British American Tobacco is not inconsistent with Batistatos54

British American Tobacco distinguished59

Disposal of battery items an abuse of process61

Plaintiffs bound by Youi’s conduct61

abuse of process: APIA proceedings61

Summary61

General principles: subrogation62

Plaintiffs bound by Youi’s conduct in Youi proceedings63

APIA proceedings an abuse of process by the plaintiffs65

APIA’s “what if” contention66

If British American Tobacco applied, there is no abuse of process67

Should the proceedings be stayed?67

The centrality of the causation issue67

Efficacy of further inspection of the chattels68

Inadequacy of photographic record71

Expression of opinions as to causation?72

The onus at trial73

Other relevant evidence74

Curial responses short of staying proceedings74

Conclusion74

Summary

  1. [1]
    The plaintiffs’ Ford Ranger was destroyed by fire on 26 September 2017.  The plaintiffs contend that the fire was the result of a defect in the Ranger and sue Ford Motor Company of Australia Pty Ltd (Ford) and Mackay City Auto Group Pty Ltd (Mackay City Autos) in proceedings 813/20 for the value of the Ranger and sue Ford in proceedings 4687/19 for damage to their house resulting from the fire.  Different insurers are conducting the two proceedings by subrogation.  After commencement of the former claim, the Ranger was disposed of by the plaintiffs’ car insurer before Ford inspected it.  Certain parts were also disposed of after notice of the claim was given to Ford.  Ford and Mackay City Autos contend in those circumstances that the claim for the value of the Ranger is an abuse of process which calls for the stay of those proceedings.  Ford further contends that the claim for damage to the house is also an abuse of process which calls for the same response.  For the reasons which follow, I consider that both proceedings should be stayed as an abuse of process.

Introduction

  1. [2]
    For purposes of these applications, the following matters are not contentious:
    1. On about 17 August 2017, the plaintiffs, Mr and Mrs Challis, purchased a new Ford Ranger (the Ranger) from Mackay City Autos;
    2. The Ranger was supplied to Mackay City Autos by Ford in about February 2017; and
    3. On 26 September 2017, a fire broke out in the garage where the Ranger was parked causing the destruction of the Ranger and significant damage to the plaintiffs’ home.
  2. [3]
    The insurer of the Ranger was Youi Pty Ltd (Youi).  Exercising rights of subrogation Youi, by the plaintiffs, brought proceedings seeking damages of $52,000 from Ford as manufacturer, and Mackay Autos as seller (proceedings 813/20,[1] the Youi proceedings).  Those proceedings were filed (in the Magistrates Court) on 20 November 2018.  The insurer of the plaintiffs’ house was AAI Limited trading as APIA (APIA).  Exercising rights of subrogation APIA, by the plaintiffs, brought proceedings seeking damages of $498,766.87 from Ford only (proceedings 4687/19, the APIA proceedings).   The plaintiffs also sue Ford for their own benefit in the APIA proceedings for $47,702 for uninsured loss of contents of their home.  The APIA proceedings were commenced on 20 December 2019.
  3. [4]
    After the fire, experts for each of Youi and APIA inspected the Ranger and in doing so removed some parts and wires considered relevant to the cause of the fire.  Those experts provided reports opining on the cause.  In about April 2018, prior to any proceedings being commenced, but after a detailed written demand had been made on Ford by Youi, Youi gave instructions for the disposal of some of the parts and wires removed from the Ranger.  In about February 2019 , after commencement of the Youi proceedings and before the commencement of the APIA proceedings, Youi gave instructions for the Ranger to be disposed of for salvage.  Youi obtained advice from solicitors which authorised disposal prior to doing so.  Neither Ford nor Mackay City Autos had inspected the Ranger or the parts and wires at that time.
  4. [5]
    Ford and Mackay City Autos (the defendants) contend that the disposal of the Ranger and some of the parts and wires by Youi renders the Youi proceedings an abuse of process.  Ford advances the same contention in respect of the APIA proceedings.  These contentions give rise to the following principal issues:
    1. First, does the disposal of the Ranger and the parts and wires by Youi, in the context in which that occurred, make the pursuit of the Youi proceedings an abuse of process?
    2. Second, if so, is the pursuit of the APIA proceedings also an abuse of process, even if APIA had no part in directing the disposal of the Ranger and the parts and wires;
    3. Third, if the proceedings are an abuse of process, is it possible for there to be a fair trial of the proceedings or should there be a stay of one or both proceedings?

The facts

Before the fire

  1. [6]
    In about February 2017, Ford supplied the Ranger to Mackay City Autos.  On 16 August 2017, the plaintiffs acquired the Ranger from Mackay City Autos.  The Ranger was collected by the Challises on that day.[2] 
  2. [7]
    On 11 August 2021, Mrs Challis swore an affidavit stating that the Ranger had some accessories added at the request of the plaintiffs, being a towpack, canopy and window tinting.[3]  It appears from the affidavit that these modifications were made prior to the plaintiffs collecting the Ranger on 16 August.  Although they sound electrically benign (and the consensus of the experts is that the fire was likely caused by an electrical fault), there are electrical works associated with the towpack, and one of the experts considered that work a possible cause of the fire.[4]  Mrs Challis further swore that but for those changes, neither she nor Mr Challis “made or caused to be made (by engaging any third party) any modifications to the vehicle”.[5] 
  3. [8]
    All the experts who examined the Ranger and provided opinions on the cause of the fire, prior to its disposal, acted based on the evidence by Mrs Challis as to modifications.  Indeed, Ford’s expert at trial of the applications (Mr Cousins) also prepared his first report on the same basis.  Neither of the experts who inspected the Ranger observed evidence of any other electrical modifications.  They assumed the correctness of their instructions.
  4. [9]
    On 19 April 2022, Mr and Mrs Challis swore that prior to collection of the car, Mr Challis requested that Mackay City Autos install a towpack, canopy and window tinting as well as a tubliner and a 12V rear socket.   Mr Challis says of the 12V rear socket:

The 12V rear socket was a socket installed in the tray of the car. We used this to plug in a portable fridge when we purchase perishable goods and had to travel any distance.  The fridge was never stored in the tray when not in use.[6]

  1. [10]
    Mr Challis exhibits an invoice said to relate to the “modification made to the vehicle”.  That invoice is dated 12 September 2019, a month after the Ranger was purchased and delivered to the Challises and is issued by the service area of Mackay City Autos.  Mr Challis says that there were no further modifications to the Ranger and that the Ranger was never taken to another mechanic for any work to be performed.
  2. [11]
    There are ambiguities arising out of these later affidavits. It does not appear that all the modifications described by Mr Challis were installed prior to delivery of the ranger.  Mackay City Autos’ solicitors instructed that the tubliner and 12V rear socket were recorded in service records not sales records, suggesting that those items were not part of the sale, or at least were not installed at the time of delivery.  That tends to be confirmed by the date on the invoice attached to Mr Challis’ affidavit, which post-dates the date of acquisition of the Ranger by some 4 weeks.  This is inconsistent, though, with instructions given to Mr Denham (Youi’s expert in this application) who was told that all modifications were made prior to the plaintiffs collecting the Ranger.[7]  
  3. [12]
    Further, the invoice exhibited to the later affidavits does not record supply of the 12V rear socket.  The items in that invoice describe the installation of tubliners.  Mackay City Auto’s solicitors (Carter Newell) confirmed to Ford’s solicitors (Allens) that the invoice disclosed installation of a 12V rear socket.[8]  However, that confirmation must be mistaken.  Only Mr Cousins appears to have noted this anomaly.[9]
  4. [13]
    The timing and method of installation of the 12V rear socket was potentially   significant evidence.  It seemingly involves the installation of a circuit supply cable which extends right into the engine bay and attaches to the battery.  As will be seen, the experts consider the fire likely started in the engine bay due an electrical fault, though the precise fault is uncertain.  None of the experts who examined the vehicle before it was disposed of were instructed that a 12V rear socket was installed, or noted its presence, or looked for it when examining the vehicle, or considered its implications for causation of the fire.  (It appears for example, that on the day after the fire, Mr Nystrom was informed about all the modifications to the Ranger by Mr Challis, other than the 12V rear socket.)[10]
  5. [14]
    Further, if the 12V rear socket was installed after collection of the Ranger, then the timing of that installation could be central to any inference of causation.  The Ranger operated safely for seven weeks without incident.  If the 12V rear socket was installed days before the fire, or it was first used at that time, it might become an even greater suspect.  
  6. [15]
    Mrs Challis’ second affidavit does not explain how this matter was overlooked in her first affidavit.  Mr Challis does not explain how this was not drawn to the attention of the experts who attended the site.  The true position was only disclosed after these applications had been in preparation for some time and required re-briefing of Mr Cousins and briefing of yet another expert, Mr Denham.  It is unsatisfactory that I have no explanation for how this was overlooked until April 2022 and no accurate evidence as to the facts relating to this modification.

The initial expert investigations

  1. [16]
    The fire occurred on 26 September 2017.  It was described by Mr Challis.[11] He said he drove the Ranger in the afternoon and parked it at about 4pm in the garage.  He and his wife went to bed about 8:10 pm.  At about 8.20pm they heard a loud bang.  Mr Challis went to investigate and heard noises in the garage.  He opened the door and saw flames coming from the engine bay.  He noticed the Ranger had moved forward from its parked location.  He tried to extinguish the fire but it was too intense.  The fire brigade attended.  The plaintiffs notified Youi at about 10am on 27 September and presumably notified APIA as well.  The first on the scene was Mr Nystrom.[12]  He is a forensic fire investigator with Australian Forensic Pty Ltd.  He was instructed by APIA.  

Mr Nystrom’s first report

  1. [17]
    Mr Nystrom inspected the Ranger in situ on 4 October 2017 on APIA’s instructions.  He took photographs.  He provided his first report on 5 October 2017.  
  2. [18]
    As to the cause, he relevantly concluded:

The fire must have been one that resulted from a fault in the motor vehicle.  At this time we have not been able to pin point the result of that fault, though the writer has taken possession of the remains of the battery cable from the positive battery terminal to the starter solenoid and a steel bracket to which it had welded.  These are presently being forwarded to a forensic metallurgist for further examination.

That sample also contained a small diameter conductor that was attached to the positive battery terminal, which exhibited melting that appeared to the writer to be the result of the heat of the fire…[13] 

  1. [19]
    As to the vehicle, the Ranger was to be taken to Pickles in Mackay for further examination, including by Youi.  He observed:

We would propose that an appropriate approach to the further examination would be that the vehicle be removed to a suitable mechanical workshop where it can be hoisted and an examination can be undertaken with the assistance of a qualified mechanic.  That could be undertaken jointly with any expert who might be appointed by the motor insurer.

As the evidence indicates that the fire spread out of the parked vehicle, you may consider it appropriate to advise Ford Motor Company or the dealership as they also may wish to also [sic] inspect or examine the burnt vehicle.  We will leave these matters to your consideration.

  1. [20]
    I note:
    1. Mr Nystrom’s view that the fire started in the car’s engine bay has not been subsequently disputed by any of the many experts;
    2. Mr Nystrom plainly contemplated that other parties with an interest in the cause of the fire in the Ranger would wish to examine the car; and
    3. Mr Nystrom removed parts from the Ranger.  

Mr Cox’s first report and Mr Nystrom’s first update

  1. [21]
    Mr Nystrom sent the battery cable and other parts to Mr Simon Cox, a forensic metallurgist.  Mr Cox analysed them and provided a report on 20 October 2017.  Mr Cox was not called. 
  2. [22]
    Mr Cox described the parts provided to him in his report at page 2.  They comprised the positive battery clamp and attached cables, a portion of a major cable with an attached terminal bolt and a metal bracket (the battery cable items).   The report is in technical language.  One of the major cables were understood by Mr Cox to be the cable from the battery to the starter motor.  Mr Cox concluded, inter alia, that the damage to the starter motor battery cable and the other items suggested that the cause of the fire might be related to a defect in the starter motor solenoid.[14]  Mr Cox seemed to be influenced in developing this theory by the fact that the Ranger had moved forwards during the fire, suggesting that the starter motor cranked the engine.
  3. [23]
    Mr Nystrom provided Mr Cox’s report to APIA under cover of his second report dated 30 October 2017.  He summarised Mr Cox’s conclusion more broadly as being that the evidence seemed to indicate that some form of failure occurred at or in the vicinity of the starter motor solenoid.  After referring to his discussions with Mr Pellegrino for Youi, he concluded:

Our joint focus at this time is in the area of the starter motor/solenoid, so it would be necessary for the vehicle to be removed from Pickles and taken to a facility where it can be hoisted and the relevant parts removed.  We have been in discussion with [Mr Pellegrino] regarding this …They also advise that they would prefer to advise [Ford] so that their representative can be present, obviating any conflict that may later arise if parts were to be removed before Ford have had the opportunity to undertake an examination.

Mr Pellegrino’s report

  1. [24]
    Mr Pellegrino is a forensic fire investigator.  At the time of his inspections he was employed by GKA Investigations Group (GKA).  On 5 October 2017 he was instructed by Youi to investigate the fire.  He attended the site on 16 October 2017.  The Ranger was still in position at that time.  He took photographs.  He was also provided with Mr Cox’s first report.
  2. [25]
    On 7 November 2017, Mr Pellegrino provided his report to Youi.  He recorded a discussion with Mr Challis in which he was told that modifications to the Ranger comprised a tow pack, tubliner and canopy, with no other modifications made.[15]  In his examination of the Ranger he noted that the engagement of the starter motor and the electrical arcing noted by Mr Cox might have been a cause of, or an effect of, the fire.  He noted the battery cable items had been sent to him by Mr Cox.
  3. [26]
    He agreed in Mr Nystrom’s view that the fire started from an electrical malfunction inside the engine bay but that the amount of fire damage was going to make identification of the exact cause difficult.  He also observed:

An electrical fault can manifest over time and arc damage or melting is not always a resulting feature.  High resistance or hot joints can cause cables or connections to overheat causing the protective PVC cable insulation to ignite, which can spread to nearby combustible materials.  High resistance joints can be very difficult to locate unless an obvious point of origin can be established.  Some of the electrical components had been removed from the vehicle and the electrical system was extensively fire-damaged and altered before my examination.

  1. [27]
    As to causation he said:

11.1 Mr Challis stated that the fire had originated from the engine bay of the subject vehicle, while it was parked inside the garage.

11.2  At this stage, after considering the available information, I have formed the opinion that the fire to the subject vehicle was caused by an electrical fault inside the engine bay.

11.3  Due to the extensive damage inside the engine bay identifying the physical damage pertaining to the fault has not yet been established.  Components of the vehicle had been removed before my examination.

  1. [28]
    Despite the fire damage he observed, he considered a further inspection was worth undertaking.  He agreed there should be a further joint inspection which included the manufacturer of the Ranger.  Importantly, he also observed that the battery cable items show that there was an auxiliary cable attached to the positive battery terminal and that further inquiries were required to determine “what was linked to the auxiliary cable, when the cable was installed and who installed it”.[16] This appears to be a reference to the second of the two cables attached to the positive terminal referred to in Mr Cox’s report.  Mr Cox’s report does not appear to consider the nature or effect of that auxiliary cable.  His metallurgical investigations apparently caused him to focus on the cable running to the starter motor solenoid.
  2. [29]
    Mr Pellegrino has not given any further report.  The further steps Mr Pellegrino recommended do not appear ever to have been carried out.

Mr Nystrom’s second and third updates and Mr Cox’s second report

  1. [30]
    In Mr Nystrom’s second update he reports he further examined the Ranger at a local mechanical workshop.  He said that the solenoid and starter motor (starter motor items) had been removed.  There is no evidence that Ford was notified of this examination as suggested by Mr Nystrom and Mr Pellegrino and if not, why not.  The starter motor items were sent to Mr Cox.  Mr Cox provided a further report.[17]
  2. [31]
    That report and Mr Nystrom’s conclusions are set out in Mr Nystrom’s third update dated 1 June 2018 where he relevantly writes:

The second report by Simon Cox & Associates Pty Ltd is attached.  The report is technical in nature but, when taken into consideration in the light of the earlier metallurgist’s report, the evidence indicate [sic] a reasonably simple position, that due to a fault in the vehicle, the starter motor became engaged and contacts welded.  In consequence, the cable overheated through resistive heating sufficient to cause the ignition of the insulation cable.  That, in turn has led to a fire that broke out in the engine bay of the vehicle.

Taking into account the result of our examination of the vehicle and its surroundings shortly after the fire, the evidence attributes the fire origin to the engine of the Ford Ranger, and the cause to an electrical fire.

Conclusion

Origin: the fire in the dwelling of the Insured at Halliday Bay initiated from within the engine bay, consistent with the observations of Mr CHALLIS, who observed flames and sparks coming out from under the bonnet of the engine bay.

Cause: an electrical fault occurred in the engine bay that led to the starter being engaged, resulting in contacts welding and resistive heating to the battery cable and ultimate ignition of ignitable material within the engine bay. 

  1. [32]
    Mr Nystrom does not identify what the fault was, where it occurred nor how.  It also appears to continue Mr Cox’s focus on the starter motor.  The other auxiliary cable identified by Mr Pellegrino is not considered.  Nor is any other possible cause. 

Summary of initial investigations

  1. [33]
    As a result of the above, the state of the investigations as at June 2018 was as follows:
    1. Mr Nystrom had inspected the Ranger in situ and again at a mechanics’ workshop, he had provided a report and two updates, and he had concluded (taking into account Mr Cox’s reports) that the origin of the fire was the engine bay of the Ranger and the cause was an unidentified electrical fault;
    2. Mr Pellegrino had inspected the Ranger on one occasion, he had considered Mr Cox’s first report, he advised further investigations but did not appear to have been instructed to undertake them, and had reached a similar conclusion as Mr Nystrom as to the broad nature of cause of the fire, but could not identify the particular electrical defect;
    3. The Ranger was at Pickles at Mackay, the battery cable items were in Mr Pellegrino’s possession, and the stater motor items appear to have been with Mr Cox; and
    4. None of the experts referred to a 12V rear socket in any report or update and it is reasonable to assume they did not know to look for it.  (So much was confirmed in cross examination at trial).

Further events prior to the Youi proceedings

Youi’s internal investigation

  1. [34]
    Having dealt with the process of investigations following the fire, I now turn to the events involving the insurers, the applicants and their solicitors up to the commencement of the Youi proceedings.  
  2. [35]
    The first person with responsibility for the Youi claim was Mr Leon Haycock.  Mr Haycock was an experienced motor vehicle claims assessor.  Where a claim involved a vehicle insured by Youi, his role involved broadly three matters: whether the policy responded to a claim, if so whether the vehicle was repairable or should be written off, and whether there might be grounds for recovery from a third party of an insured loss.  Where the circumstances of the loss were unusual, such that issues of whether the policy responded and/or whether a third party might be liable for the loss, Mr Haycock could engage an investigator to investigate the circumstances of the loss. 
  3. [36]
    Mr Haycock was allocated the claim by the plaintiffs on 29 September 2017.   He concluded the loss was unusual because the Ranger was stationary when the fire occurred, and the Ranger was new.  Mr Haycock accepted that even at that early stage, he considered there might be a claim against the third party to recover any loss for which Youi was liable.
  4. [37]
    He initially instructed GKA Investigations (GKA) to carry out a desktop investigation.  That involved GKA reviewing the documentary evidence only.  He gave that instruction on about 4 October 2017.  On 11 October 2017, GKA informed Mr Haycock that it recommended a physical inspection for possible recovery.  Mr Haycock accepted this also referred to recovery against a potential third party.  He instruction GKA to carry out the physical inspection.  As noted above, Mr Pellegrino inspected the Ranger in situ on 17 October.  On 18 October it was transferred to Pickles for storage and Mr Haycock warned Ms Hopkins, a procurement officer for Youi, not to allow the Ranger to be sold until investigations were completed for possible recoveries. 
  5. [38]
    On 7 November 2017, Mr Haycock received the Pellegrino report.  Once he received that report, Mr Haycock was satisfied that the policy responded.  He presumably advised that the claim be met and had little more to do with the matter until April 2018.  Thereafter the management of the matter passed to Youi’s recoveries section. 
  6. [39]
    Once Mr Haycock’s work was at an end, the file passed to the recoveries section at Youi.  Ms Hopkins’ involvement thereafter was limited.  She was responsible for dealing with third party suppliers to Youi, including Pickles.  She was the direct contact for giving them instructions as to the fate of the car, however, she had no role in deciding those instructions.  That was apparently a matter for the Youi Recoveries section. 

Dealings with Ford before the Youi proceedings

  1. [40]
    The recoveries section is the in-house department of Youi responsible for management of recovery actions and liaising with external solicitors.  In this case, Youi notified Ford of a potential claim by letter from its solicitors, Ligeti Partners (Ligeti), at the latest, by 28 March 2018.   On that day Ms Thompson, a senior associate at Ligeti, wrote to Ford.  The letter demonstrates that Youi had in mind a case of the kind ultimately advanced from that early date:

We act for Christine Challis on instructions from Youi Pty Ltd in relation to an incident on 26 September 2017 wherein our client’s property and motor vehicle were damage in a fire [sic].

Out client’s vehicle was a 2017 Ford Ranger XLS (registration number XJB) (“the Ford vehicle”).  We enclose forensic reports that show the fire was most likely caused as a result of an electrical malfunction, which originated within the engine bay of the Ford vehicle.  The forensic evidence has established that the fire occurred within (as opposed to externally to) the Ford vehicle.

Our client seeks to recover from your company, as the manufacturer of the Ford vehicle, the loss and damage, she had suffered as a result of the incident.  Our client’s claim against your company is in reliance on Sections 140 and 141 of the Australian Consumer Law (“ACL”).  Those provisions impose a liability on the manufacturer of a product which has a safety defect.  A product would have a safety defect pursuant to Section 9 of the ACL if their “safety is not such as persons are generally entitled to expect”.  Our client purchased the Ford vehicle only a few weeks prior to the incident, and had only driven the vehicle approximately 1,700 kilometres.  In addition, the ignition of the Ford vehicle had been off, and the vehicle parked in our client’s garage for approximately 4.5 hours prior to the incident.

Clearly, a person is entitled to expect that such a new vehicle will not spontaneously catch fire.

The Courts have consistently held that it is not necessary to establish the precise mechanism of failure to succeed in a cause of action brought pursuant to the above consumer protection provisions.  Notably, we refer you to the case of Batchelder & Anor v Holden Limited [2009] VSC 29.  The Victorian Supreme Court in that matter held that the consumer was able to succeed in bringing such a claim without proving the specific nature of a product defect, and that it was for the manufacturer to establish a defence that the defect did not exist at the time of supply.

We enclose our client’s proof of loss documents in support of the total loss of the Ford vehicle. We do not currently hold instructions in relation to our client’s claim for the damage to her property. 

  1. [41]
    The letter attached forensic reports.  I infer that meant that Ligeti provided Mr Pellegrino’s report (he was Youi’s expert) along with Mr Nystrom’s reports.  So much seems clear given that Mr Cox’s reports were included in Mr Nystrom’s updates and Ford had Mr Cox’s report.
  2. [42]
    On 5 April 2018, Mr Sullivan, Senior Legal Counsel of Ford, responded to that letter by an email as follows:[18]

I have received your letter of 28 March 2018.  Please confirm urgently that both the site where the fire occurred and the vehicle itself are available for inspection by an expert we intend to engage.

  1. [43]
    On 10 April 2018, he sent a further email stating:[19]

I refer to my email of 5 April 2018 below and note that I have not received a response.  Please confirm as a matter of urgency that the evidence has been preserved and is available for inspection by Ford Australia being both the site where the fire occurred and the vehicle itself.

  1. [44]
    Ms Thompson responded immediately on the same day, writing:[20]

I am currently seeking instructions with respect to whether the incident site has been preserved.  In relation to the vehicle, it is still intact and available to be examined by your expert, however we require an undertaking that any testing carried out will be non-destructive.

We will then organise for your expert to attend with a Youi assessor for the purposes of the inspection of the vehicle.

Disposal of the battery items

  1. [45]
    As of 10 April 2018, the battery items and the starter motor items had been removed from the car.  GKA had the battery items.  The starter motor items appear to have remained with Mr Cox.  Ironically, on the same day that Ms Thompson was writing to Ford, GKA sent an email to Mr Haycock of Youi containing an invoice for work done and a warning, “Please note that with regards to the exhibit we are holding (starter motor cables) storage fees apply every six months unless we receive written advice from you that we can dispose of it.” On 12 April 2018, Mr Haycock responded, informing GKA Investigations, “Please dispose of item in storage (cables)”.[21]  The battery items were disposed of. [22]
  2. [46]
    This might seem an odd decision given that the battery items were directly relevant to the apparent cause of the fire and Mr Haycock knew this.  Doubly odd, given that at that time, Youi’s solicitors had sent the letter referred to in paragraph [40] and received the request to inspect the car.
  3. [47]
    Mr Haycock said in his affidavit that when he received the email from GKA, he formed the view that there was no need to hold the battery items because indemnity had been conferred.  He went on, somewhat inconsistently, “I did not know there was recovery action in progress or if I did know, I did not think the cables were needed for the recovery”.[23]
  4. [48]
    In cross examination, Mr Haycock accepted he had in contemplation at the time of his initial involvement, that there was the potential for claims against third parties.  He said he did not specifically contemplate at the time who the third party might be (though he knew Ford was the manufacturer).[24]  It is a little difficult to accept that he did not consider Ford as a potential third party.  He accepted later that he knew there was a potential claim against the manufacturer.  He must have realised, then, there was a potential claim against Ford.  He volunteered that there might also be a claim against the mechanic.  That was also an obvious possibility.  He also accepted that it might be important to the possible third parties to inspect the battery items and accepted that despite that he made no inquiry about whether the battery items had been inspected by the third parties. 
  5. [49]
    Mr Haycock was an experienced loss assessor.  It seems odd that he gave instructions to dispose of the battery items which were, based on the existing reports, relevant physical evidence to a potential third party claim.  Further, while not suggesting Mr Haycock was being unhelpful in cross examination, I got the impression he was uncomfortable with his decision with the benefit of hindsight.  In my view, the explanation for the instruction to dispose of the items lies in a failure of Mr Haycock to advert to the potential importance of the battery items, especially as the request came out of the blue some time after he had finished his active role in the claim.  
  6. [50]
    Mr Thompson, Mr Haycock’s supervisor, also gave evidence and was cross examined.  I did not think his evidence assisted.  He certainly was aware at the time of Mr Haycock’s decision that proceedings were contemplated against at least Ford and that inspecting the battery items would have been important evidence for Youi or Ford.  He and Mr Haycock both maintained that the decision to dispose of the battery items would have been discussed with him but neither recalled any such discussion.  I do not accept it likely that the matter was discussed.  The battery items were neither valuable nor bulky and likely seemed insignificant to Mr Haycock.  An experienced subordinate does not always go to a superior, even if strictly speaking they should.  If there was a discussion, it was brief.

Further correspondence about inspection

  1. [51]
    On 19 June 2018, Ms Thompson followed up with Mr Sullivan in relation to his 10 April request to inspect.[25]  No mention was made of the disposal of the battery items, though there is no evidence Ms Thompson knew that had occurred.  Mr Sullivan responded, confirming that Ford did intend to inspect the vehicle. On Friday 22 June 2018, Ms Peeler of Ford sent Ms Thompson an email stating, relevantly:[26]

…I can confirm…Ford’s intention to inspect the vehicle in question. 

Can you please let me know the current location of the vehicle so that we can arrange some possible dates for travel…

We note that some parts and wiring were removed from the vehicle during the investigation process and sent to forensic metallurgist Simon Cox for inspection…Ford will also require these parts to be made available for the inspection please…

  1. [52]
    On 27 June 2018, Ms Thompson replied:[27]

Dear Catherine,

I am currently liaising with my client with respect to the inspection date.  Please be advised that any inspection will be on the basis an undertaking is given that the testing will be non-destructive, and carried out with a Youi Assessor in attendance.

Below is a link containing photographs taken by GKA investigations.

[link]

Murray Nystrom and Simon Cox were not engaged by my client but by APIA, and therefore recommend you contact them direct to obtain further information or items.

  1. [53]
    There was an exchange about the efficacy of the link, then apparently no further contact from Ford for a month.  Ms Thompson emailed Ms Peeler again on 29 July 2018:[28]

Hi Christine,

I am awaiting the updated dropbox details.

In the interim, my client is prepared to allow your assessor to inspect my client’s vehicle without a Youi assessor provided an undertaking is given that the inspection and testing will be non-destructive.

I have received correspondence from Mackay City Group wherein they advised their assessor has determined the cause of the fire to be a faulty motor solenoid to the vehicle.

My client continues to hold Ford liable for the loss and damage.

My client will allow a further 14 days for your client to obtain a report. My instructions are to commence proceedings against Ford without further notice thereafter.

[underlining added]

  1. [54]
    Ford did not obtain a report in the 14-day time period provided.  Nor is there any evidence I could locate of any communications from Ford between the 29 July 2018 letter and the issue of proceedings by Youi.

The Youi proceedings are commenced

  1. [55]
    Youi made good on its warning in its 29 July 2018 letter by issuing proceedings against Ford and Mackay City Autos on 28 November 2018 in the Magistrates Court of Queensland, seemingly without further notice. 
  2. [56]
    Youi’s pleading as filed has remained unamended.  It is consistent with its foreshadowed claim in the 29 July 2018 letter.  Relevantly, the plaintiffs allege:
    1. Ford supplied the Ranger to Mackay City Autos, who sold it to the plaintiffs as consumers under the Competition and Consumer Act 2010 (Cth) (CCA) and ACL;
    2. Ford and Mackay City Autos gave statutory guarantees of quality and fitness for purpose and Mackay City Autos gave equivalent warranties in the sale contract;
    3. The Ranger ignited while parked in the plaintiffs’ garage causing damage to the Ranger and the plaintiffs property;
    4. The damage was caused by a “safety defect” in the Ranger and accordingly Ford is liable for that damage pursuant to s. 140 and 141 ACL; and
    5. The damage was caused by a failure to comply with the statutory guarantees by both defendants and accordingly both are liable for the damage.
  3. [57]
    The statement of claim is not a high example of the pleader’s art:
    1. It has ambiguities in language and logic. For example, why does it plead damage to property and contents when no claim is made for that loss?  And exactly what is the breach relied upon in respect of which statutory guarantee? 
    2. Merely alleging a safety defect without more is not sufficient in my view, properly to plead the breach by Ford or Mackay City Autos of the statutory guarantees.  The plaintiffs’ case is that the cause of the fire was “safety defect”.  It does not plead what that defect was.  Presumably it was a matter of inference.  However, it is an inference which is the essential allegation in the claim.  Despite that, the plaintiffs do not plead the facts from which that vital inferred fact arises, contrary to Uniform Civil Procedure Rules 1999 (Qld) r 149(1)(c) (UCPR) (even if r 150(2) does not strictly apply);
    3. The plaintiffs rely on ss. 140 and 141 ACL against Ford, even though those provisions are irrelevant to its claim for damages for loss of the Ranger itself.  That has the consequence that the phrase “safety defect” used in the pleading does not have any significance; and
    4. The plaintiffs plead a claim against Ford for breach of the guarantee in s. 55(2) ACL.  That provision does give rise to a claim against Ford as a manufacturer.  In any event, s. 55(2) is concerned with a “disclosed purpose” or advertised purpose.  There is no allegation of any such purpose.
  4. [58]
    In any event, on my reading of the pleading, the case is that the cause of the fire was a defect in the manufacture of the car, and that fact is to be inferred from the circumstances in which the fire occurred (albeit those are not pleaded).
  5. [59]
    It seems copies of Mr Nystrom’s report and updates were provided to Ford by early November 2018.  It is unclear whether they were provided to Ford with APIA’s knowledge and consent, nor whether they made their way to Mackay City Autos, though that seems likely.  At the time, Ford had only received notice of a claim by Youi.
  6. [60]
    Mackay City Autos filed its defence on 7 January 2019.  Mackay City Autos defended the principal allegations against it in paragraphs 7 and 8 of the statement of claim by filling the lacunae in the Youi pleading and positively alleging how the Ranger ignited, seemingly with a view to establishing at trial that the fire was the fault of Ford.
  7. [61]
    The Mackay City Autos defence alleges relevantly in paragraph 3:
  1.  the incident was a consequence of a faulty starter motor solenoid which:
  1.  caused the starter motor to crank the engine;
  1.  which sequentially caused the heating of the battery/Starter motor cable sufficient to damage the insulation to allow the cable to short circuit;
  1.  which sequentially caused the ignition of the insulation encasing the cable resulting the fire
  1.  …
  1.  the incident was the consequence of a manufacturing defect in the Plaintiff’s vehicle for which [Ford] is responsible…
  1. [62]
    How liability under contractual warranties or the guarantee in s. 54 of acceptable quality is avoided because the defect was a manufacturing defect is unclear.  However, Mackay City Autos can and did seek common law and statutory indemnity from Ford for manufacturing defects.  The causation analysis advanced by Mackay City Autos seems to adopt the theory of Mr Nystrom but misunderstanding that it was Mr Nystrom’s view that an unidentified fault caused the starter motor to crank, not necessarily a faulty starter motor solenoid (see paragraph [31] above).  (Though I suppose it might be based on a further expert report or opinion I have not seen).
  2. [63]
    Ford filed its defence on 21 January 2019 which, inter alia, put in issue the cause of the fire, though the initial defence contained no positive alternative case.  It also pointed out that none of ss 55, 140 and 141 ACL give rise to a claim against Ford. 
  3. [64]
    On 8 February 2019, Mackay City Autos filed an (amended) third-party claim[29] and statement of claim against Ford.  Interestingly, it did not specifically plead its causation analysis articulated in its defence to the Youi SOC in its third-party statement of claim.  It merely alleges that if the Ranger was defective then Ford breached terms of the dealer franchise agreement and ss 54 and 55 ACL.

Disposal of the Ranger

  1. [65]
    By the end of January 2019, Ford had put the plaintiffs’ causation of the fire in issue and Mackay City Autos had contended Ford was responsible for the fire on a particular causation analysis.  By the end of February 2019, Youi had disposed of the car.  That came about as follows.
  2. [66]
    The story begins with Ms Hopkins, referred to in paragraph [38] above.  Ms Hopkins’ evidence is important because it provides Youi’s explanation of the process leading to disposal.   Ms Hopkins, by her affidavit, explained that she had noted Mr Haycock’s warning that the Ranger was not to be disposed of until investigations for possible recoveries were completed.  She said that the automated file system used by Youi prompted her every couple of months on the need to keep the Ranger and that she would then call recoveries to see if Youi still needed to retain the vehicle.  She identified examples from February and July 2018 where she inquired and was informed by recoveries that the vehicle was still required.  She said each time she inquired until February 2019, she was told to hold onto the car.  On 14 February 2019 she sent another email to recoveries asking if she could dispose of the car.  The answer came back on 19 February 2019 from ‘Melis01r’ that the Ranger could be released for sale.  ‘Melis01r’ referred to Melissa Reagan of the recoveries section.
  3. [67]
    Before turning to Ms Reagan’s evidence it is useful to finish with Ms Hopkins.  She said after the advice from Ms Reagan, she would have used Youi’s direct access to Pickles’ system and advised that the Ranger could be sold.  On 26 March 2019, Ms Hopkins received an invoice from Pickles recording that the Ranger had been sold on 19 March for $50.  That is the only evidence of the fate of the car.  There is no evidence of what became of it after that.  Ms Hopkins was not cross examined.  I accept her evidence.
  4. [68]
    Ms Hopkins’ evidence explains that the genesis of the idea of disposing of the Ranger was unconnected with any specific intention in any Youi officer to dispose of the Ranger to frustrate Ford’s investigations of the cause of the fire.  Rather, the idea was prompted by an automated managerial system.
  5. [69]
    Ms Hopkins’ evidence also provides little reason to think that the Ranger is located somewhere else, more or less intact, for Ford to examine.  A Ranger sold for $50 which was in the condition of the Ranger in this case is unlikely to have been preserved by the purchaser for long.  The likely inference is that any useful parts would have been removed and the carcass recycled or otherwise disposed of.  Further, it is very likely the car would not have been carefully stored or moved, and further degradation of any available evidence is highly likely.  Youi is the party who caused the Ranger to be sold, and has the commercial relationship with the auction house, it was for Youi to lead any evidence which might suggest the contrary.  I reject APIA’s suggestion that the applicants have somehow failed to establish the loss of the opportunity to examine the Ranger.
  6. [70]
    I now turn to the process between 14 and 19 February 2019 in the recoveries section.  The principal witness dealing with these events was Ms Reagan.  Ms Reagan swore an affidavit and was cross examined.  In her affidavit she says that she is now a solicitor but that in February 2019, she was not admitted and worked in the recoveries team for Youi.  For a time she had conduct of a recovery action for the Ranger.  She recalled that Youi was seeking recovery from Ford and the dealer.  She referred to the query from Ms Hopkins, noting that the procurement team often made such inquiries.  She said that at that time, Ligeti had been engaged by Youi.  She called a Mr Khouri, as solicitor of that firm, and asked if the Ranger could be salvaged.  She said Mr Khouri said he would look at it and let her know.  The next day she says she received a letter from Mr Khouri which provided, after a claim summary which identified the claim relating to the Ranger (the February letter):

We refer to your telephone conversation with the writer on 15 February 2019 whereby you queried whether you could dispose of the salvage of the vehicle.  The remains of the vehicle are currently being stored at Pickles Auctions.

We were anticipating that TP1 would want to inspect the remains of the vehicle at Pickles Auctions prior to the filing of legal proceedings.  Accordingly, prior to legal proceedings being issued we notified TP1 that we would allow 14 days for them to arrange an inspection of the vehicle.  We did not receive a response to our correspondence and note that legal proceedings were issued on 14 November 2018 and we are yet to receive notification from TP1 that they would like to inspect the remains of the vehicle.

Accordingly, we believe your office is able to dispose the vehicle [sic] with “clean hands”.[30]

  1. [71]
    Mr Khouri did not give evidence.  Ms Reagan was cross examined.  She accepted she would have known as of February 2019 that proceedings had been commenced, that Ford had filed a defence, that Mackay City Autos had filed a Third Party Notice and that this meant the proceeding was contested.  She said she approached Ligeti because she understood that generally Youi had to retain all evidence where it could and accepted that if Youi was a defendant, she would want to inspect the evidence, (though she added “in a timely way”). 
  2. [72]
    She accepted that at the time she received the February letter she understood that Ford and Mackay City Autos might still wish to inspect the Ranger.  She was referred to the email at paragraph [53] above but said she had not seen that email before.  However, she accepted that to her knowledge, as at February 2019, Youi had never communicated to Ford that it would dispose of the Ranger.   
  3. [73]
    Mr Robinson for Ford, then put to Ms Reagan that she had a second conversation with Mr Khouri.  There is a diary note of such a conversation.  Ms Reagan was unsure if that occurred or not. Mr Robinson put to Ms Reagan that she had a fifteen-minute discussion with Mr Khouri in which various issues were suggested to have been discussed.  She did not recall two conversations.  Either way, Mr Robinson asked whether various matters had been discussed.  The flavour of the cross examination is as follows:

Did you discuss whether disposal of the vehicle might be a contempt of court or an abuse of process?   I don’t recall that.  I feel like that would have been something I would have recalled.  Sounds serious.

…

Did you discuss whether Ligeti or Youi might make contact with Ford or the dealer to see whether they still wished to inspect the vehicle?‑‑‑I do not recall.

Did you discuss any effect that disposing of the vehicle would have on Ford or Mackay City Auto in the proceeding which was on foot?‑‑‑I do not recall.

Did you discuss any benefit which Youi or the plaintiffs would receive from disposing of the vehicle?‑‑‑I don’t recall.

Did you discuss how disposal of the vehicle might affect any future proceedings, for instance, commenced by the home insurer?‑‑‑I do not recall.

I suggest to you that one of the reasons why you did have a conversation of this kind is that you were deeply concerned – having regard to your general understanding that evidence should be retained so that other parties may inspect it, you were deeply concerned that disposing of the vehicle would prejudice Ford or the dealer?‑‑‑No.

And you were concerned that it might be unlawful?‑‑‑No.

  1. [74]
    Ms Reagan said she did not discuss Mr Khouri’s advice further and took responsibility for informing Ms Hopkins she could dispose of the Ranger.  She said she did not harbour doubts as to the correctness of the advice in the letter when she read it.  Although Ms Reagan did not recall a telephone call from Mr Khouri, the diary note of that call was tendered.  It gives an insight in my view into the thinking which lay behind the February letter:[31]

we think we’ve given TP plenty of notice, they didn’t … [pay up?[32]]

we think we’ve got clean hands

Ok to dispose of vehicle

Events following disposal of the Ranger

  1. [75]
    On 9 May 2019, Ford’s solicitors, Allens, sent an email to Ligeti Partners asking about the location of the vehicle so that it could be inspected.[33]  On 13 May 2019, Ligeti Partners responded:[34]

We refer to your email dated 9 May 2019.

Our client’s vehicle has been salvaged and is no longer available for inspection.

In this regard, on 29 July 2018, Ms Celine Thompson of our office emailed Catherine Peeler of your client and notified her that our client is prepared to allow your client’s assessor to inspect our client’s vehicle without an assessor from our client present. Ms Thompson went on to state that a further 14 days would be allowed for your client to obtain a report. We enclose a copy of the correspondence between Ms Thompson and Catherine Peeler for your reference.

Our client did not receive a response from your client and legal proceedings were ultimately issued in November 2018. As our client did not receive further notification from your client with respect to an inspection opportunity, our client salvaged the vehicle.

  1. [76]
    Allens responded on 19 June 2019.  The letter set out the chronology as Allens knew it at that time and, not surprisingly, asserted that the vehicle should not have been destroyed while the proceedings remained on foot. 
  2. [77]
    Ligeti’s response, sent on 27 June 2019, contended that Ford had been given a sufficient opportunity to inspect the vehicle and that the failure of Ford to inspect justified destruction of the vehicle, given the costs of storing a vehicle destroyed by fire.[35]  There followed these paragraphs:[36]

Other Matters

Our position is that your client has not been prejudiced in any event by reason of the above. It was given an opportunity to arrange an inspection of the vehicle and failed to do so. Further, your client has been provided with three separate reports with respect to the cause of the fire. We are also now able to provide comprehensive images (200+) of the vehicle after the fire, including close up images of the area of fire origin.

These can no doubt be provided to an expert and will therefore allow your client to obtain any additional expert opinion it deems necessary and/or appropriate to assist with its defence of the claim.

We likewise dispute the salvaging of the vehicle limits our client’s ability to convince the Court of causation or otherwise prove our case. We point out that often in product liability claims, particularly those involving catastrophic fires, the physical evidence is destroyed and/or unavailable in any event. Our client need only convince the Court that on the balance of probabilities, the vehicle was the source of the fire. It need not prove the specific nature of any manufacturing fault or failure which caused the fire (we refer you to the authority of Batchelder & Anor v Holden Limited [2009] VSC 29).

In all the circumstances, we advise our client will not discontinue the proceeding against your client and maintains your client is liable for the claimed damages.

  1. [78]
    The subsequent correspondence takes matters no further, except that Allens discovered the destruction of the battery items and complained about that in similar terms.  On 27 August 2019, Ford filed an amended defence in the Youi proceedings in which it articulated an alternative causation analysis for the fire:
    1. By paragraph 3(c), alleging that the Ranger was:

modified after manufacture (not by Ford) by installing additional wiring, including [Mackay Autos] modifying the vehicle before providing it to the plaintiffs by installing a towpack and accompanying trailer wiring;

  1. By paragraph 6(a):

 As to paragraph 6 of the SOC, Ford:

  1.  denies the allegations in that paragraph because any loss and damage was not caused by the matters pleaded therein but rather, if the fire began in the vehicle rather than externally (which is not admitted) was caused by auxiliary cables and/or wiring which were not installed by Ford.

The APIA proceedings

  1. [79]
    The plaintiffs issued the APIA proceedings on 20 December 2019.  In contrast to the Youi pleading, the APIA statement of claim pleads the cause of the fire:

Cause of the Fire

  1.  The Fire and the loss and damage which resulted from it (as particularised in paragraph 13 below) occurred because of a defect within the [Ranger’s] engine bay which led to the starter being engaged resulting in:

 (a) the contacts welding;

 (b)  resistive heating to the battery cable; and

 (c)  the ignition of ignitable material within the engine bay.

   Particulars

Report by Simon Cox & Associate Pty Ltd dated 10 May 2018

Report by Australian Forensic Pty Ltd dated 4 June 2018

  1. [80]
    In my view, this pleading accurately articulates the hypothesis developed by Mr Nystrom.  APIA pleaded that Ford breached the statutory guarantees in the ACL.  It pleaded alternatively that the fire being caused in the manner alleged was a “safety defect” which entitled the plaintiffs to a remedy under ss 140 and 141 ACL.  The APIA pleading pleaded damage from the fire to the House and its contents.  It did not bring proceedings against Mackay City Autos.  
  2. [81]
    The APIA proceeding comprises two distinct claims for damages.  Paragraph 13 claims the loss and damage to the house and its contents to the extent the plaintiffs were indemnified for that loss by APIA.  That is the amount in respect of which APIA is subrogated to the entitlement of the plaintiffs against Ford.  That sum is $498,766 (the insured loss).  Paragraph 14 claims on behalf of the plaintiffs for loss and damage to the house and contents which was not insured.  By its amended pleading filed 21 May 2020, the plaintiffs particularised that component of the claim and claimed $47,702 (the uninsured loss).  
  3. [82]
    Soon after filing the APIA proceedings, Mills Oakley (for APIA) filed an application for the Youi proceedings to be transferred to the District Court and for the proceedings to be heard together.  On 24 February 2020, Judge Reid ordered that the Youi proceedings be transferred to the District Court from the Magistrates Court and that the Youi and APIA proceedings be heard together.  
  4. [83]
    On 23 June 2020, Ford filed its defence.  It was in substantially the same form as the amended defence filed in the Youi proceedings.  It contained the same key allegations as set out in paragraph [78] above (as paragraphs 6 and 10 respectively).  

The current applications

  1. [84]
    Following correspondence in each matter relating to the issue of interrogatories, applications were filed on 23 July 2021 in each proceeding by Ford seeking that the proceedings be placed on the Commercial List and, more controversially, that interrogatories be answered by the plaintiffs and that affidavits be filed explaining the circumstances of the destruction of the Ranger and the battery items.  Those applications were heard by me on 4 August 2021.  By that time, the respondents had agreed to answer the interrogatories.  Mrs Challis’ affidavit of 11 August 2021 at paragraph [7] above appears to have been filed by way of answers to those interrogatories.  
  2. [85]
    On 13 August 2021, I gave judgment on those applications (Challis v Ford Motor Company of Australia Pty Ltd [2021] QDC 177), ordering the respondents to provide affidavits addressing the matters identified by Ford in the schedule to the applications which, broadly, sought clarification of the circumstances surrounding the admitted disposal of the Ranger and the battery items. The affidavits of Ms Reagan, Mr Haycock and Ms Hopkins relied on in these applications were filed pursuant to those orders.
  3. [86]
    On 11 February 2022, Ford filed applications for each proceeding to be permanently stayed.  Mackay City Autos was served and appeared supporting that application in the Youi proceedings.  I have already set out the substance and effect of the affidavit evidence of the parties in respect of the initial set of reports on causation obtained soon after the fire.  I have done the same in respect of the affidavits and evidence at trial relating to the circumstances of the disposal of the Ranger and the battery items. I have not yet dealt with the expert evidence at trial of the applications.  This evidence was primarily concerned with technical aspects informing whether there could be a fair trial of the proceedings despite disposal of the Ranger and the battery items.  That evidence comprised the following:
    1. Two expert reports from an expert in fire investigation, Mr Timothy Cousins (11 February 2022 and 5 May 2022).  Mr Cousins’ report was prepared without inspecting the Ranger, as by the time of his reports it had been salvaged;
    2. A further report from Mr Nystrom responsive to Mr Cousins’ first report, focussing on the fair trial issues raised by Mr Cousins;
    3. A report from another fire investigation expert, Mr Denham, tendered by Youi.  Mr Denham’s report was also prepared without inspecting the Ranger.
  4. [87]
    Oral evidence was given by each expert, along with Mr Pellegrino, although he did not prepare a further report.  It is to that evidence I now turn.

expert evidence at trial

Mr Cousins first report

  1. [88]
    Mr Cousins was briefed with the Cox, Nystrom and Pellegrino reports.  He was also briefed with a series of photographs (taken by Mr Nystrom and Mr Pellegrino) and some Ford workshop documents for the Ranger.  Mr Cousins was instructed to provide his opinion broadly on the following matters:
    1. The deficiencies if any in the methods or conclusions of previous reports;
    2. The effect of disposal of the battery items or the Ranger itself on Mr Cousins’ ability to express an opinion on the cause of the fire, including what tests can no longer be done and whether the photographs are adequate for the purpose; and
    3. The “most logical explanation” for the cause of the fire.
  2. [89]
    Mr Cousins’ report is detailed.  I summarise its principal relevant aspects as follows.
  3. [90]
    Mr Cousins expressed the opinion based on photographs that there were two connections added to the positive battery terminal which in his view were unfused: see photograph 8 on page 14.  He explained that such connections are a fire risk.  It is useful to set out his explanation of this:

[21] The subject (+) Connection to the battery shows two unknown non-factory un-fused electrical connections.  One of these is positioned on the battery post tensioning lug (‘Battery Post Tensioning Lug’) shown in Photos 8 & 9 above and below.

[22]  Based on the photo 12 above, and applying circuit theory, it is highly likely that the two unknown battery connections onto the (-) Battery Terminal are the associated return paths for the two unknown un-fused connections on the (+) Battery Terminal Photo 8 above.

[23]  With the matter set out in the previous paragraph in mind, I draw attention to the Warning in the Ford Body Equipment Manual (Appendix B) pg 52 which makes it clear that these two unfused connections are contrary to the safety advice provided by Ford.

[24] The warning ‘Under no circumstances should any unfused connections be made directly to any of the vehicle’s battery terminals’ is significant for two reasons:

  1. The first is that such connections bypass the battery management system which serves to protect the battery from running flat.
  1. The second and more important reason is that fuses are there to protect the wiring looms from accidental overcurrent conditions that can result in a fire.  An unfused connection to the battery should be seen as a clear and present fire risk.
  1. [91]
    He set out the seven principles for establishing the cause of the fire set out in the National Fire Protection Association Standard 921 (NAFI 921) being to determine:
    1. The area of the fire origin;
    2. The point of fire origin;
    3. The first fuel ignited;
    4. The source of ignition;
    5. The ignition sequence;
    6. The fire spread; and
    7. The root cause.
  2. [92]
    Mr Cousins addressed the methodological differences he had with the other experts.  He expressed no concerns with Mr Pellegrino’s methodology.  He articulates at length his opinion as to the deficiencies he identified in Mr Nystrom’s methodology.  His principal concern is that Mr Nystrom had evidence in photographs he possessed which showed at least one of the battery connections (which Mr Cousins styled “third party wiring” seemingly to distinguish it from factory wiring) but did not consider the possibility that this caused the fire.  He also expressed the opinion, again in some detail, that Mr Nystrom did not consider the safeguards in the starter motor system which made a fault in that system an unlikely cause of the fire.  
  3. [93]
    Mr Cousins also addressed the impact of the disposal of the Ranger and the battery items on his investigation of the cause of the fire.  Given the issues in these applications, I need to address the competing opinions on this issue from Mr Cousins and Mr Nystrom in a little detail.
  4. [94]
    Mr Cousins said that the loss of the evidence impacted each of three stages of the investigation of the cause of the fire.  Those three stages were: inspect the Ranger, inspect the parts and test any hypotheses formed.
  5. [95]
    As to the inspection of the Ranger, he said inability to inspect affected his ability to form a view on the cause in four ways:
    1. First, it affected Mr Cousins’ chances of determining the area and point of origin of the fire because he could not make various observations he describes[37] to identify how the fire moved within the engine bay. Further it affected his ability to consider Mr Nystrom’s views;
    2. Second, inspection would have assisted Mr Cousins in assessing the likelihood of the fire having been caused by third party wiring.  He explains two ways such wiring could have caused the fire (wiring by a route which exposed the wire to contact with other parts or wiring being unfused).   He then explains the investigation he would have tried to undertake.  It is worth setting it out:

In order to include or eliminate the third party wiring as being material to the cause of the fire I would have sought to inspect that 3rd party wiring along its full length, in particular the condition of the terminations (for example crimped or soldered lug) at the end of the wiring.  It is unknown to me whether this wiring formed part of the wiring that was initially removed by Mr Nystrom or whether it remained with the Vehicle at the time it was salvaged.  There are eight wire ends that would have been of interest to me (two on the battery positive terminal, two the battery negative terminal, two on one of the unknown devices (positive and negative)).  I would also expect Mr Nystrom to have taken photographs of all cable ends of parts removed from the vehicle.  Mr Nystrom’s report and photographs only show two of the unidentified cable ends removed from the positive battery terminal.  For this reason it is reasonable to expect that the six other cable ends remain with the Vehicle.[38]

  1. Third, inspection of the Ranger would have facilitated his assessment of the opinion of Mr Nystrom as to the significance of the starter motor issue.  Again, he gives a detailed explanation of the investigation he’d have undertaken.[39]
  2. Fourth, he opines that inspection might have opened up further avenues of inquiry that he could not determine from the evidence he had.
  1. [96]
    As to the disposal of the battery items,[40]  Mr Cousins again made four points:
    1. First, he said that if he had access to the starter motor cable (one of the cables removed as part of the battery items it seems), he would have tested Mr Nystrom (and Mr Cox’s) theory that the stater motor cable was heated over its whole length and that that ignited its insulation by having another metallurgist analyse the cable at multiple points in its length. This would have permitted him to assess the role if any of the starter motor in causing the fire (and see his detailed argument that it was unlikely this occurred in any event in paragraphs 71 to 72 of his first report);
    2. Second, as to the positive battery terminal, he observed that the battery is a source of energy which could cause ignition and needed careful analysis.  The positive battery terminals and connections were a necessary part of that analysis.  He also observed from photographs some indication of localised heating near the third party wiring he had observed.  He said photographs did not replace inspection of the items themselves because:
  1.  Photographs cannot convey the full detail required to make a full assessment of the Positive Battery Terminal.  For example, some detail can only be revealed by microscopic examination, or sampling and chemical analysis.
  1.  If I cannot physically examine the Positive Battery Terminal then I cannot know whether or not there are other features of significant interest which may be relevant to determining the cause of the fire in the Vehicle.
  1. Third, he opined that disposal of some of the third-party wiring meant he could not analyse its insulation because certain kinds of insulation are not suitable for use within an engine.  He explained that though the insulation would have burned up, he could test for chlorides in the wiring remnants.
  2. Fourth, he made again the fourth point noted in paragraph [95](d) above.
  1. [97]
    He said that photographs of the fire he had seen were not sufficient to determine the cause.  He said:
  1.  Photographs of the Vehicle are far from sufficient to determine the cause of the fire.  The three dimensional movement of a fire, trapped initially by the bonnet, requires a three dimensional understanding of the relevant location and potential heat release rates of various engine and electrical components.  Two dimensional photographs cannot convey this information.
  1.  In addition, without physical examination there is no way to trace any of the Vehicle’s wiring, including the 3rd party wiring, its function and whether it was attached to any devices. 
  1. [98]
    Finally, he opined that the most logical cause of the fire was “that the 3rd party wiring, unprotected by appropriate fuses, short circuited, overheated and started the fire” and that this fire caused the energisation of the starter motor solenoid and engaged the starter motor.  Notably he added: while that was a logical explanation, he was unable to provide a firm view without physical inspection of the Ranger.

Mr Denham’s report

  1. [99]
    One might have thought that there were already enough experts engaged by the time Mr Cousins had delivered his report.  At this point, however, the Challis’ affidavits disclosing the 12V rear socket were served.  Youi briefed yet another expert, Mr Denham.  None of the respondents’ other experts deal with the implications of the 12V rear socket, even though Mr Nystrom filed a further report.
  2. [100]
    Mr Denham’s report is mercifully brief.  He summarises the reports dealt with so far, as well as yet another by a Mr Conway which seemingly was obtained by Ford but not tendered in evidence.  (Mr Denham also refers to two reports by Mr Pellegrino, though I am aware of only one report of substance, that referred to in this judgment.  Fortunately, nothing seems to turn on this).
  3. [101]
    Mr Denham opines that the area of origin of the fire was the engine bay based on photographs and Mr Challis and the other experts’ observations of the vehicle.  Of more interest is his views as to point of origin and cause.
  4. [102]
    Mr Denham’s views can be summarised as follows.
    1. First, while the area of origin is evident, the point of origin “cannot be established from the fire patterns due to the severe fire damage within the Engine Bay”.[41]  This appears to disagree with Mr Cousins’ assessment in paragraph [95](a) above, though Mr Denham does not address Mr Cousins’ views as to how this might have been done despite the damage.
    2. Second, he considers an electrical failure the only likely cause of the fire, based on acceptance of Mr Challis’ evidence that the car had not been driven for four hours.
    3. Third, he refers to Mr Nystrom’s and Mr Cox’s analysis of the starter motor.  Helpfully, he also refers to Mr Cousins’ analysis of the starter motor system, which he accepts.  Like Mr Cousins, he considers this evidence equivocal as to cause because the cranking of the starter motor, though it explains the movement of the car, could be the cause of, or an effect of, the fire.  He concludes that a form of electrical failure is the only likely cause, however “insufficient evidence is available to identify the specific electrical failure that occurred."[42]
    4. Fourth, Mr Denham turns to what he designates as “non-factory vehicle modifications”.  One of the oddities of the trial was that, although Youi sought to tender Mr Denham’s report in full, APIA (who was in the same interest) delivered a list of objections, all of which were conceded by Youi.  Some of the objections were considered in more detail, ironically with Mr Robinson, on behalf of Ford, contending for their admissibility.  I ruled on those objections.[43]  I will summarise the evidence as it was ultimately adduced on this issue.
  5. [103]
    Mr Denham listed the final list of modifications, including the tow pack, the tubliner and the 12V rear socket.  He was instructed, on specific inquiry by him, that all those modifications had been carried out prior to delivery.   It appears from the Challis’ affidavits of 22 April 2022, that the modifications were made after delivery (see paragraphs [11] to [15] above).  It is unhelpful that Mr Denham was not acting on unambiguous instructions on this issue.
  6. [104]
    Mr Denham explained that the tow pack or the 12V rear socket were in his view the likely cause of the electrical fault which caused the fire,[44] because both would or could involve a circuit supply cable running through the engine bay to the battery and there was evidence of such cables being attached to the battery.[45]  In this respect his focus is like that of Mr Cousins.  He thought those modifications the likely cause of the fire because during his professional calling, he becomes aware of recalls for faulty or defective items.  He thought it likely that if there was any history of a manufacturing defect causing a fire in Ford Rangers, he would have heard about it.[46]
  7. [105]
    Mr Denham disagreed specifically with two opinions expressed by Mr Cousins:
    1. He is critical of Mr Cousins calling the modifications to the wiring to the battery as 3rd Party wiring because he was instructed that all the modifications were made before delivery.  As I have said, that appears to be a position based on ambiguous instructions; and
    2. He impliedly disagrees that inspection of the Ranger or the battery items might have been material because the photographs show that the engine bay suffered extreme damage and that all polymeric material and small wires were destroyed.  Further he opines that Mr Nystrom and Mr Pellegrino are experienced and appropriately recorded physical evidence by photographs. He expressly concludes that “further first-hand examination of the Vehicle and its parts is unlikely to have uncovered additional pivotal evidence in this matter”.

Mr Nystrom’s response to the first Cousins report

  1. [106]
    On 20 April 2022, Mr Nystrom was instructed by APIA to provide a report responding only to those parts of Mr Cousins’ report which related to the effect of disposal of the Ranger and the battery items on investigation of the fire.  He was not briefed with Mr Denham’s report.  His responsive report was dated 29 April 2022.
  2. [107]
    Mr Nystrom rejected Mr Cousins’ views as to the effects on his analysis of causation of disposal of the Ranger and the battery items.  Mr Nystrom first responds to some methodological criticisms by Mr Cousins.  Having read with care the parts of both reports in question, I have concluded that these exchanges do not much assist me.  The ultimate point made by Mr Cousins is that Mr Nystrom concluded the cause of the fire was an unspecified electrical fault when it would have been better to seek to identify that fault, considering in particular the possible impact of the so-called 3rd party wiring. In this regard Mr Nystrom said:

In the second question, I am asked to consider paragraph 36.g.ii of Mr Cousins’ report about whether inspection of the vehicle by another expert would have enabled that expert to determine the cause of the “electrical fault”:

4.2.1 In my opinion, the cause of the electrical fault that led to the starter operating leading to the fire would not be able to be determined by another expert’s examination of the vehicle due to the fire damage in the engine bay;

4.2.2 The vehicle was examined on three occasions of which I am aware.  Two of those examinations were undertaken by me and another by Mr Pellegrino…I was not present for Mr Pellegrino’s examination, nor have I reviewed his report.  In my opinion, by the completion of Mr Pellegrino’s examination and my two examinations, nothing else remained that would have better determined the cause of the electrical fault that led to the starter operating.

  1. [108]
    It is odd for Mr Nystrom to rely on Mr Pellegrino’s examination and report to bolster his opinion when Mr Nystrom was not present for the inspection and the report recommended further inspection despite the fire damage.  His comments were also made in ignorance of the 12V rear socket.  Mr Nystrom relies on his second examination as bolstering his opinion.  However, so far as I can determine from the reports, that examination was not a general investigative examination but rather carried out to test a specific hypothesis and to remove the stater motor for that purpose.
  2. [109]
    Mr Cousins at times appears to ascribe to Mr Nystrom the opinion that the cause of the fire might have been the starter motor system itself.  I do not take that from his reports, though it might be implied at times.  In any event, there is much unfruitful evidence about this issue. 
  3. [110]
    As to Mr Cousins’ specific points summarised in paragraphs [95] and [96] above, Mr Nystrom cavils with numerous points.  The principal issues are as follows.
  4. [111]
    As to the effect of not being able to inspect the Ranger (using my numbering from [95] above):
    1. First, Mr Nystrom generally agrees that further investigations of the kind Mr Cousins describes could, in theory be used to determine fire spread.  However, in the case of the Ranger that is not the case because of the several tonnes of debris in and around the Ranger after the fire.  This is likely to have masked the reliability of indicia within the engine bay.  (I observe here that while Mr Nystrom makes that proposition, there was no debris in the engine bay because of the hood and presumably none inside the body of the vehicle.  Further, it does not appear that Mr Nystrom tried to work through areas of rubble at the time, making his observations that nothing useful could have been found less persuasive);
    2. Second, Mr Nystrom criticises Mr Cousins for his focus on third party wiring (rather than factory wiring).  As to the first causation hypothesis, he contends that no inspection could have allowed determination of the route of any such wiring because such wires are usually held in place with items which perish in a fire.  He concluded that having examined the vehicle twice, in his opinion it was not possible to reliably document the routing of such wires. (Again, though, it does not appear that he looked for such wiring or found it impossible to find any.)  As to the second causation hypothesis, he argues that there is evidence from which it could be inferred that the wiring showed in the photographs were protected by after market circuit breakers.  He next criticises Mr Cousins for observing that after market wiring was for an unknown device.  Mr Nystrom relies on the original Challis instructions in that regard.  He says those items were in the back of the Ranger so the connector for those devices could not have caused the fire (as it started in the engine bay).  (Although he was not instructed about the 12V socket, the same reasoning seems to apply to that.)
    3. Third, Mr Nystrom confirms that he does not explain the fire as caused by the starter motor as I have noted.
    4. Fourth, Mr Nystrom rejects the possibility of presently unforeseeable avenues of inquiry emerging from an inspection.  He rejects the possibility that there were other modifications because Mr Nystrom relied on his instructions from the Challises.  (As I have observed, those instructions were wrong in at least one vital respect: the 12V rear socket.)
  5. [112]
    As to the effect of not being able to inspect the battery items (using my numbering from [96] above):
    1. First, he defers to Mr Cox on the analysis of the wire.  (Notably, he does not suggest that analysis of that wire would not be relevant to excluding or proving the starter motor system as part of the cause of the fire.  I note that such examination would arguably assist Ford in demonstrating that it was not at fault); 
    2. Second, Mr Nystrom disputes Mr Cousins’ opinion as to what is communicated by the photographs he refers to.  This dispute is important.  Mr Nystrom says that “the mark to which Mr Cousins refers is simply rust colour” and dark marks around it are soot from his gloves worn in his examination.  So Mr Nystrom says that the marks Mr Cousins sees in the photographs does not relate to local heating.  He goes on to reject Mr Cousins’ opinions about what might have been revealed by examination of this area by asserting that the only evidence of any significance in that area of the engine bay was a melted conductor Mr Nystrom found. (I observe that that demonstrates a difficulty with photographs, with experts disputing about what a photograph shows.)
    3. Third, he rejected Mr Cousins view as to the efficacy of testing for chlorides as a method of determining whether third party wiring was properly insulated, because chlorides can be laid down on wires for other reasons in a fire.  He refers again to the after market circuit breakers as a basis for concluding that any such modifications had protection in any event. (Oddly, this is the first time that Mr Nystrom refers to what he observed to be after market circuit breakers.  This suggests that there were after market modifications, whether secured by circuit breakers or not.  Nonetheless it seems Mr Nystrom did not investigate what the wires were attached to or might have been attached to and how.) 
    4. Fourth, Mr Nystrom does not address this point but one infers that he has the same response as to the equivalent point made in relation to the Ranger.
  6. [113]
    Finally, Mr Nystrom responds to Mr Cousins’ opinion as to the most logical cause of the fire summarised in paragraph [98] above.  He disagrees because he considers that the existence of after market circuit breakers suggest that any third-party wiring was protected by an appropriate fuse.  He maintains his view that the fire was caused by an electrical fault in the engine bay, but that nothing further can be determined as to the cause. 
  7. [114]
    He criticises Mr Cousins for not explaining why the most logical explanation is the third-party wiring.  This complaint is unfair.  Mr Cousins says why he holds that view in paragraphs 42 to 48 of his first report.  In part, it is the evidence that third party wiring was apparently unfused, a point addressed by Mr Nystrom, and in part for other reasons.  Mr Cousins’ reasons included evidence of unprofessional workmanship and Mr Cousins’ experience that third party wiring is frequently not subject to the same engineering safety considerations as factory wiring.  These reasons are not addressed by Mr Nystrom.  They are broadly consistent with Mr Denham’s views. 
  8. [115]
    Further, it is unknown what Mr Nystrom makes of the emergence of the 12V rear socket modification.  Both the Denham report and the Challis’ affidavits were available before Mr Nystrom’s report was provided.   It might have been of particular relevance given Mr Nystrom’s firm reliance on the correctness of the instructions from the Challises: see for example [111](d) above.  However, as he explained in cross examination, he only saw Mr Denham’s report and heard about the 12V rear socket one hour before his cross examination.

Mr Cousins’ second report

  1. [116]
    Mr Cousins’ second report was dated 29 April 2022.  He was briefed with Mr Denham’s report and instructed to assume the correctness of Mr Denham’s statement that the modifications included a 12V rear socket and tubliner.  He focussed on the former.
  2. [117]
    Mr Cousins confirmed that he was unaware of the 12V rear socket and saw no evidence of it in any photograph briefed to him.  He was instructed to advise if that modification was relevant to assessing potential cause.  He said it was because it presented potential ignition mechanisms by way of fault in the part, fault in the installation or excessive load.  He said that the actual ignition point can be at some distance from the defect such that while the 12V rear socket could be the cause of the problem, it could manifest itself in ignition in the engine bay.
  3. [118]
    He identified three possible arrangements for the installation of the 12V rear socket, each of which might have different points of failure and require different tests to investigate.  He said he could not tell which was used without examining the Ranger.  Another possibility might be workshop records, though there is no evidence of such records for this work.  He then explained the different tests he would have wished to carry out depending on the arrangement of the installation.
  4. [119]
    He also discussed the tow pack which he had not discussed in his first report.  His report was brief on this item:

While I was aware of the existence of the 3,500 kg Tow pack I note that this was also a non-factory modification.  I would have also considered a series of tests in relation to the Tow pack.  This would include at the least, an audit of the number and size of conductors, including the number of individual strands, and the position of any joints, fuse assemblies, relays or electronic circuits associated with this modification.  This would have provided the basis for assessing whether or not the 3,500 Tow Pack was a possible cause of the fire.  This would also have required me to physically inspect the Vehicle.

Admissibility of Mr Cousin’s evidence

  1. [120]
    The respondent challenged the admissibility of Mr Cousins’ evidence on the basis that he was not qualified to give expert opinion evidence on the cause of the fire.   Mr Cousins was examined and cross examined on a voir dire.  After argument, I ruled his evidence admissible and indicated I would provide reasons later.  My reasons are provided here.
  2. [121]
    The gravamen of the challenge to Mr Cousins’ expertise was as follows:
    1. Mr Cousins had started many tertiary degrees but had only finished a Masters degree in Entrepreneurship in 2006 which was not relevant to fire investigation;
    2. Mr Cousins had no trade qualifications;
    3. Mr Cousins’ CV disclosed little experience in vehicle fires;
    4. Mr Cousins held registration as a National Association of Fire Investigators (NAFI) certified Fire Investigation and Explosion Investigator and Fire Investigation Instructor, but relied on no tertiary qualifications to obtain those registrations;
    5. Mr Cousins’ experience was said to be focussed on engineering systems failure and at least part of his career has seemingly been spent in that area, limiting his capacity to build experience in fire investigation;
    6. Mr Cousins’ CV and other evidence tendered at the voir dire was limited in showing the extent of his work in fire investigation.
  3. [122]
    For the following reasons, the evidence established that Mr Cousins had sufficient special knowledge and skill to provide an opinion on fire investigation techniques as applicable to the Ranger fire and on the possible cause of the fire. 
  4. [123]
    First, I do not think it was to the point that Mr Cousins did not have a directly relevant tertiary degree.  There seems to be no directly relevant tertiary degree for fire investigators.  The one qualification which was on its face directly relevant was the Graduate Certificate in Fire Investigation from Charles Sturt University.  In a double irony, that qualification was also obtained by APIA’s expert Mr Nystrom, but Mr Cousins criticised at some length the efficacy of that course to teach fire investigation techniques.  There was no evidence of any other tertiary degree directly relevant to developing fire investigation expertise.  Rather Mr Cousins gave evidence that he came to fire investigation from his practical experience with electrical systems failures.  Thereafter he developed broader experience in fire investigation.  That experience was relied upon by him to obtain his NAFI accreditations. 
  5. [124]
    This manner of developing fire investigation expertise is reflected in the resumes of the other experts:
    1. Mr Denham has no tertiary degree.  He came to fire investigation through electrical trades route.  He did relevantly complete a diploma of Fire Scene Examination in 1997 offered by the Queensland Fire and Rescue Authority.  It is evident from his resume that this course likely set him on the path to developing practical expertise, seemingly though engagement with the professional activities of the Queensland Association of Fire Investigators (QAFI).  Mr Denham is also a member of the International Association of Arson Investigators (IAAI). 
    2. Mr Nystrom has a tertiary degree in Chemistry from the then Queensland Institute of Technology.  That degree could be of some relevance to fire investigation to the extent it turns on analysis of chemical issues, though it depends on the course content.  Mr Nystrom’s only apparently directly relevant qualification is the graduate certificate that Mr Cousins deprecated.  The true path to fire investigation expertise for Mr Nystrom appears to have been involvement in police work which led him to work in the scientific section of the QPS and seemingly inspired him to take his degree.  Again, that seems to have led Mr Nystrom to develop expertise in practice in fire investigation.  He is also a member of the two professional bodies referred to by Mr Denham along with others. 
    3. Mr Pellegrino is much younger than any of the other experts.  He has a degree in forensic investigation from Canberra Institute of Technology.  His is probably the most directly relevant degree qualification, though the degree seemingly covers the whole field of forensic investigation of which fire investigation is just a part (and Mr Nystrom explained that police investigators are less interested in machinery fires,[47] presumably because they rarely involve an offence).  He appears to have worked full time in fire investigation only since 2010 but has managed to investigate over 1000 scenes.  This suggests expertise can be quickly accumulated in this field.  He is also a member of the IAAI and seemingly the NSW equivalent of the QAFI.
  6. [125]
    Second, although the other experts were not members of the NAFI, the evidence supported the view that it was a professional body which required proven experience to obtain its various certifications.  None of the other experts expressed the view that it was not a reputable professional body.  Indeed, the evidence disclosed a variety of fire investigation professional associations, indicative of an area of specialised knowledge which has not coalesced into an established institutional qualification and training process of the kind applicable to longer standing professions like medicine, law and engineering.  There is no reason why expertise cannot properly be developed by the ad hoc processes which seem to apply to fire investigation.  It certainly worked for Mr Holmes, whose tertiary education (such as it was) was evidently not the foundation for his demonstrated expertise in many areas of forensic science.[48]
  7. [126]
    Third, I do not think it impugns Mr Cousins’ expertise in this area to focus on other areas where he also professes expertise.  Mr Nystom and Mr Pellegrino also profess expertise in other areas; the former in several including, somewhat incongruously, slip and fall cases and the latter in building construction.
  8. [127]
    Fourth, it is frequently the case that where a person purports to give expert evidence without the necessary expertise, their opinions can be shown to be fundamentally defective by experts in the field of knowledge.  Each of Mr Nystrom and Mr Denham had cause to consider aspects of Mr Cousins’ first report.  While Mr Nystrom cavilled with some of Mr Cousins’ views, the disagreement was of the kind one ordinarily sees between experts, rather than a critique of the expertise of Mr Cousins’ technical analysis.  Mr Denham agreed in much of Mr Cousins’ analysis and critiques only two aspects of it.  Those critiques are again in the nature of the ordinary range of expert opinion.
  9. [128]
    Finally, cross examination on some specific parts of his previous work did not persuade me that Mr Cousins lacked sufficient investigation experience to be able to express expert opinions.  For example, I was not persuaded that experience in vehicle fires was required to provide opinion on the cause of a fire and the techniques for investigating a fire in a vehicle.  As the fire was agreed to be electrical in character, it could just as well be said that experience in electrical fires was required.  In any event, Mr Cousins had given evidence in a vehicle fire case before.  Ultimately, I saw no reason to doubt that he had been involved in many fire investigations over his career.

Oral evidence

Mr Cousins

  1. [129]
    Mr Cousins accepted that critiques of Mr Nystrom’s analysis made by reference to the NFPA criteria could be made without inspecting the vehicle.  He was asked about his ability to trace possible after market wiring in circumstances where the connections at either end had been destroyed and/or the wire itself was destroyed.  He said that wires would not be destroyed.  He said that even if connections were severed it might be possible to infer which wires were connected at a connection point by reference to common characteristics of the wire and that part of the wire still connected. He said debris would not necessarily affect the ability to infer the location and connection of a severed wire, it depended on location of the debris. 
  2. [130]
    He was then referred to photographs of the debris in parts of the Ranger but maintained that it might have been possible to trace severed and broken wires, depending on where the wires ran.  While doing so, however, he freely accepted that it might not have been possible, and indeed volunteered that there were problems in the engine bay as any severed wire would fall to the ground, while maintaining that careful examination might still have permitted inferences to be drawn as to what wires ran to which connections.
  3. [131]
    He accepted he could judge whether the fire originated in the battery from a photograph. He accepted that he would have to refer to reference sources to be able to identify all parts in the engine bay, even if he saw the Ranger in situ or in the workshop.  He accepted that the conduits for wires in the engine bay and ties for wiring would have been consumed by the fire, though they might have left marks depending on how the fire progressed.  He was asked about whether, looking at the photographs, he could have identified heat patterns.  Mr Cousins said they could not be identified from photographs.  He also maintained that despite the presentation of the Ranger, it could have been possible to identify heat patterns resulting from shielding, though he accepted that if only limited sections of the wire showed a heat pattern, it would not be possible to identify where it started or finished from the heat pattern.
  4. [132]
    Ms Heyworth-Smith, for APIA, then moved to the 12V rear socket issue.  Mr Cousins said that no photograph showed that part and that he would need to inspect it to determine its existence (which he accepted would be unnecessary if it was admitted it was present) and to determine where it was located and how it was wired.  He accepted that depending on what the 12V rear socket was made of, that item might have been consumed by the fire, though that depended on the heat of the fire.  He maintained that for some materials, like brass, even if they melted evidence of the socket would remain.
  5. [133]
    He was then asked about his views as to the tow pack (see paragraph [119] above).  He was taken to a photograph of the rear of the vehicle. It was suggested he could see in that photograph an orange square which was the power source for the tow pack.  Mr Cousins disagreed and said the item pointed out by counsel was an Anderson plug which had a different function.  He rejected the suggestion that he could see in that photograph the tow socket, even from a high-resolution image.  Mr Cousins then accepted that some high-definition photographs he was taken to could be used to identify some heat pattern, though he had not scrutinised those photographs for that purpose.
  6. [134]
    Mr Cousins was then examined about his evidence that Mr Nystrom’s report failed properly to examine the possibility that third party wiring had caused the fire.  He rejected as absurd the proposition that the photographs he had been briefed with were as useful as an inspection of the Ranger for assessing the existence of third-party wiring.  I thought his answers in this part of his cross-examination persuasive.[49]
  7. [135]
    Finally, Mr Cousins was cross examined about the role of the issue of after market fuses raised by Mr Nystrom (see paragraph [113] above).  Mr Cousins explained how even if those fuses related to the third-party wiring attached to the battery, they did not provide protection for the wire between the fuse and the battery itself.  That explanation seemed logical. I have no reason to reject it.  He accepted that he could make that observation, however, without needing to inspect the Ranger.
  8. [136]
    Mr Horsley appeared for Youi.  Mr Horsley’s cross examination was confined.[50]  Mr Cousins freely conceded that the photographs taken by Mr Pellegrino were an exemplary example of a fire scene survey but drew a distinction between that and being able to test a hypothesis.  Mr Horsley did not take up Mr Cousins’ offer to elaborate.
  9. [137]
    Mr Cousins was a persuasive witness both in the voir dire and at trial.  He made concessions with disinterested frankness and alacrity.  He volunteered matters which were contrary to any interest in defending his hypotheses or proving his expertise.  His volunteering of criticism of the Diploma he and Mr Nystrom share stands out, but there were other examples.  He struck me as a careful and precise analyst. He was able to give logical and clear explanations for his conclusions and opinions.  It might be that on occasions his views tend to the theoretical, but generally I found him to be a persuasive expert.

Mr Nystrom

  1. [138]
    In cross examination, Mr Nystrom agreed that inspection of the site of a fire was very significant in determining the point of origin and the cause of a fire.  He accepted that he wished to have a second inspection to assist in determining those matters. He accepted he thought it important that Ford was present for the further inspection, though said he did not expect Ford to brief a fire inspector.  He thought it helpful because a Ford technician could assist in pointing out what was “natural to the car and what was a third party component”.   He said he did not consider whether the Ranger would be disposed of before Ford could inspect it.  He said that he took photographs at both inspections for his own purposes and considered them sufficient for that.  His focus at the inspections and in removing parts for Mr Cox to examine was again to facilitate his own inspection.
  2. [139]
    Mr Nystrom was not aware of the 12V rear socket nor Mr Denham’s views about it.  He only saw Mr Denham’s report an hour before he gave evidence.  He accepted though that the 12V rear socket could, in theory, have ignited a fire in the engine bay of the Ranger.  However, he expressed the view that the after market circuit breakers, if attached to the 12 V rear socket wire, would have prevented such a fire.  He conceded that he did not know if that wire was in fact routed through those circuit breakers.   In that case, he said, there could be three items contributing to the cause of the fire: the socket itself, the wire and its insulation, and the place where the unprotected wire touches an ignition source.[51]  He accepted that he did not look for the 12V rear socket and that he did not seek to remove debris to look for it.  It was evident to me that Mr Nystrom could not say whether, on investigation, it would have been located or not.
  3. [140]
    Mr Nystrom was then cross examined about those parts of his report in [112] and [113] above.  Mostly notable was the cross examination about Mr Cousins’ view that an opportunity to inspect would have facilitated investigating the possibility of the fire being caused by third party wiring.  Mr Nystrom said:

You agree – I’m sorry, you agree with the proposition that a physical inspection of the vehicle would’ve assisted in determining whether third party wiring may have caused the fire?   Look, I – I agree with the – the general proposition but the – the reality is that the objective assessment in examination of the vehicle is not to whether one particular component or one particular manufacturer’s component caused the fire.  The examination is to – to establish where did the fire initiate and then try to identify what caused it without knowledge of who owns what bit that caused the fire, if you know what I mean.

  1. [141]
    In my respectful view, that answer evaded the question, and it was a key question.  On further questioning, he then reiterated his view that the although the wiring of the modifications could have started a fire in theory, in practice they could not because of the circuit breakers he had observed.[52]
  2. [142]
    Mr Robinson then turned to the starter motor issue.  Mr Nystrom agreed that it was relevant to determining the cause of the fire to work out if the starter motor cranking was the cause or an effect of the fire.  However he went on:

So when you say three fire examiners investigated that, are you suggesting by that that it is, indeed, appropriate for a fire investigator to do so?   Well, it’s certainly appropriate to examine the vehicle but whether one would specifically examine it to – to make a determination whether the starter motor kicking in was the cause of the fire or the result of the fire is something I couldn’t really say. 

  1. [143]
    He said that that would be a matter for an auto-electrician or a metallurgist.  However, whether the starter motor solenoid was the cause or effect of the fire is central to the causation issues. 
  2. [144]
    Mr Nystrom accepted Mr Cousins’ view that examination of the (lost) positive battery terminal was a necessary part of a causation analysis.  He was asked about his opinion in [112](b) above. He said that the explanation he gives of a soot mark is an obvious inference from comparing two photographs of the same area.  When challenged on whether that was an obvious inference, or just something he knew because he had inspected the Ranger, Mr Nystrom’s answer was unresponsive.[53]  I was not persuaded by Mr Nystrom’s evidence that the photographs provided a satisfactory answer to Mr Cousins’ evidence that an inspection of the engine bay might have provided useful information about fire spread.  Rather it highlighted how different hypotheses drawn from indications in the photographs could not be satisfactorily tested by reference to those photographs alone.
  3. [145]
    In re-examination, relevantly, Mr Nystrom repeated his detailed explanation (see [112](c) above) as to why as a matter of chemical science, he disagreed that it would be possible to infer, from chlorides located in the engine bay, the ignition or propagation of fire by PVC and other wire insulation materials.  Mr Nystrom spoke confidently and persuasively in this area, perhaps reflecting his particular expertise in chemistry.  He also gave further evidence about why it is unlikely looking for the 12V rear socket would have been successful.  Respectfully, I thought his evidence in this regard a little speculative.

Mr Pellegrino

  1. [146]
    In cross examination, Mr Pellegrino said he recommended an onsite inspection.   He accepted he had not been asked to inspect the starter motor.  He said he would have suggested Ford should be advised of any further inspection because he understood the car was under warranty and thought Ford “entitled to have a look at the vehicle”.  He also said that Ford would be able to provide useful information which might assist in identifying the cause.  Mr Pellegrino said he did not look for any 12V rear socket because he knew nothing about it.  He accepted it could possibly have caused the fire and that he would have looked for it if he had known about it.  He said that if he had found a 12V socket, he would have investigated how it was routed.
  2. [147]
    He said that photographs are no substitute for a physical inspection because photographs are two dimensional.  He accepted when he photographed the vehicle he was not intending to create a complete record and that he expected further investigation would occur.

Mr Denham

  1. [148]
    Much of Mr Denham’s evidence in cross examination has already been outlined.  The following additional matters arose.
  2. [149]
    Mr Denham was asked about the circuit breakers referred to by Mr Nystrom.  He said he did not notice them in his review of the photographs.  As to the effect of the circuit breakers he said:

If there was a circuit breaker on the wire as close as reasonably possible to the battery terminal, would that have made it improbable that some malfunction, whatever was at the other end of that wire, could have caused the fire?   It reduced the possibility, but it doesn’t completely remove the possibility.

  1. [150]
    He went on to explain why that was so and concluded: “So it’s entirely plausible that you can have an electrical fault and initiate a fire even when they’ve got protection on them”.  This appears more equivocal than Mr Nystrom’s evidence.  He accepted that if he had been aware of the 12V rear socket he would have investigated its wiring just as he would have all the wiring in the vehicle.   He also accepted that an inspection is preferable to relying on photographs and that while fire inspectors take care in their photographs, there can be matters overlooked.

Leave to read further affidavit refused

  1. [151]
    On the afternoon of the second day of trial, Mr Horsley for Youi sought leave to read and file a further affidavit.   I heard that application for leave and determined it on that day.  My reasons appear in the transcript at 2-140.15 to 2-143.12.  

Relevant principles

Abuse of process and disposal of relevant material

  1. [152]
    The power of the Court to stay the proceedings arises if their prosecution is an abuse of process.  It is convenient first to consider whether the disposal of the Ranger or the battery items was an abuse of process before considering the consequences of any such abuse. 
  2. [153]
    Whether conduct is an abuse of process can appear to overlap with whether there should be any curial response to that conduct.  For example, if the Ranger was disposed of, but its examination was of marginal relevance, it would be arguable that that conduct was not an abuse of process or that if it was, its disposal would not impact on the fairness of the trial.  However, that merely reflects the fact that the relevance of the Ranger as real evidence would be a central consideration to both issues.  Similarly, the intention with which evidence is disposed of can be relevant both to whether the conduct is an abuse of process (particularly for disposal of evidence before proceedings are commenced) and whether a fair trial is possible (because it might be inferred the evidence would have assisted the other party).  Again this is an example of the same fact having relevance at both stages of the inquiry.
  3. [154]
    The range of conduct which can amount to an abuse of court processes is matched by the range and flexibility of the responses available to a court to an abuse of process.  The categories of conduct which can amount to an abuse of process are not closed.  However, abuses of procedure usually fall into one of three categories: the invocation of the court’s process for an illegitimate purpose, the circumstance where use of the court’s procedures is unjustifiably oppressive to one of the parties, or use of the court’s procedures would bring the administration of justice into disrepute.[54]
  4. [155]
    The destruction by a party to proceedings of documents or real evidence which is relevant to issues in dispute in those proceedings is a recognised category of abuse of process.  The authorities further divide that category of conduct into two sub-categories: where the destruction occurs before proceedings are commenced and where the destruction occurs after proceedings are commenced.
  5. [156]
    The authorities were helpfully summarised and the principles stated by Johnson J in Clark v State of New South Wales (2006) 66 NSWLR 640 as follows:

[100] The principles surrounding the consequences of destruction of potential evidence by a party have emerged largely from cases where destruction has occurred before the commencement of proceedings.

[101] Applications for a stay or dismissal of proceedings (Fuji Xerox Australia Pty Ltd) or entry of a verdict for the defendant (British American Tobacco Australia Services Ltd v Cowell) have not been granted. Where destruction of potential evidence or fabrication of evidence has occurred after proceedings have commenced (Arrow Nominees Inc), dismissal of proceedings has been ordered. In cases where material is intentionally suppressed but is finally produced (Logicrose), the Court has taken the view that the Court's processes have not been defeated and that the proceedings should be allowed to proceed.

[102] In other cases, the issue has been left to the drawing of inferences adverse to the party who has destroyed the material prior to trial, applying the principles in Allen v Tobias and Katsilis. Whether an adverse inference will be drawn, and the strength of the inference, will depend upon the particular circumstances of the case. In a clear case of conscious destruction of material which was likely to be used in evidence, a strong inference adverse to the destroying party may be drawn with the ultimate inference being of the type referred to in Marsden v Amalgamated Television Services Pty Ltd.

[103] However, the remedies available in such circumstances are not confined to the drawing of appropriate inferences. If the conduct of the destroying party may be characterised as an abuse of process, then the power of the court to stay or dismiss proceedings may be utilised in an appropriate case. This power is to be exercised sparingly.

[104] Ordinarily, a party is entitled to initiate and continue proceedings with the court determining those proceedings on their merits. Where, however, a party to proceedings intentionally destroys material which is significant to the determination of the proceedings, and such destruction occurs after the proceedings have been commenced, then a clear foundation would appear to exist for the court to call in aid its power to stay or dismiss the proceedings. The court will have in mind the interests of the individual parties to the civil proceedings, but also the protection of the administration of justice and the integrity of the courts and the system of justice generally. Resolution of an application for a stay or dismissal of the proceedings will consider the question whether a fair trial may take place in the absence of the destroyed material even where an appropriate inference may be drawn adverse to the destroying party.

  1. [157]
    That statement of principle must be understood in the context of the facts before his Honour.  In that case, the plaintiff had commenced proceedings seeking damages for false imprisonment and related torts in respect of alleged acts by NSW police officers.  At the start of the trial, the plaintiff’s senior counsel informed the court that the plaintiff had a tape recording with incriminating statements from a police officer.  The tape was said by the plaintiff’s counsel to be of great significance in the trial and the matter was adjourned with directions to facilitate technical analysis.  Soon after, the plaintiff destroyed the tape.  The defendant sought a stay of the proceedings.   His Honour found, unsurprisingly, that the plaintiff knew about the evidential significance of the tape when he destroyed it.  Not surprisingly, his Honour found the destruction of the tape to be a stark example of abuse of process:

[144] I am satisfied that the destruction of the tape by the plaintiff constitutes an abuse of process. The destruction of material which is in existence, and is to be subjected to analysis pursuant to court direction for evidentiary use in current proceedings, is a clear example of such abuse. It is not necessary for the defendant to establish that the acts of the plaintiff were delinquent, blame­worthy or contumelious for the purposes of establishing abuse of process: Batistatos. Nevertheless, the circumstances of the present case establish, to the civil standard, an intentional destruction of items of potential evidence when their evidentiary significance was known to the plaintiff. The conduct of the plaintiff may be characterised appropriately as blameworthy or contumelious.

[145] In my opinion, the circumstances of this case constitute a stark example of abuse of process. This is not a case where items of potential evidence were destroyed before the commencement of proceedings. The plaintiff destroyed the tape and compact disc after the proceedings were on foot. Further, the act of destruction occurred within hours of directions being made by a judge of this Court with respect to the preservation of the items in question for technical analysis to determine their genuineness. All of this was to be done for the purpose of future use of the items in evidence in the proceedings.  I accept the submission of Mr Neil that this case constitutes a high watermark of the class of abuse of process involving destruction of potential evidence.

[146] If the test in British American Tobacco Australia Services Ltd v Cowell is applied, I am satisfied, on the balance of probabilities, that the acts of the plaintiff in destroying the items constituted conduct falling within s 317(a) or s 319 of the Crimes Act.

  1. [158]
    His Honour’s reference to Batistatos has relevance to these applications.  His Honour was plainly referring to the propositions articulated in [61] of his judgment:

[61] In Batistatos, the High Court determined that it was not necessary that there be an element of contumelious disregard, oppressive conduct or moral delinquency before the power to intervene with respect to abuse of process could be exercised. In this regard, the Court determined that statements to this effect in Birkett v James [1978] AC 297 ought not be followed in Australia: Batistatos. Gleeson CJ, Gummow J, Hayne J and Crennan J said (at 1116 [70]; 442 [70]):

“[70] What Deane J said in Oceanic Sun Line Special Shipping Company Inc v Fay [(1988) 165 CLR 197 at 247] with respect to the staying of local proceedings, is applicable also to a case such as the present one. His Honour emphasised that there was no ‘requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff’; what was decisive was the objective effect of the continuation of the action. (Footnote omitted)”

I note that Batistatos was a case involving abuse of process by reason of delay and not conduct of the type involved in this case. Nevertheless, the statements concerning the elements of abuse of process assist in the resolution of the present case.

  1. [159]
    Johnson J’s summary of the principles referred to in [156] above were approved by the majority of the NSW Court of Appeal in Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264.[55]  That case is also helpful in considering these applications.
  2. [160]
    Palavi concerned a defamation proceeding by Ms Palavi.  She alleged she had been defamed by being described, inter alia, as a “slut” and a “madam”.  The defendant described the plaintiff in those terms after the plaintiff was interviewed in a television current affairs program.  During the interview, she professed involvement, in procuring female company for professional rugby league players.  The defendant defended, relevantly, on the basis of truth in the case of the latter imputation and substantial truth in the case of the former.  Ms Palavi had referred to salacious material on her mobile phones in the interview.  Disclosure orders were made applying inter alia to the contents of the mobile phones. 
  3. [161]
    At the trial of the stay application it was found that the plaintiff had deliberately disposed of two phones after commencement of the proceedings and indeed after being informed of the need to disclose relevant material on those phones in the proceedings.  Further, it was found that they had been disposed of for the purpose of avoiding compliance with an order for discovery.  Those findings were not challenged on appeal.  Not surprisingly, both at trial and on appeal, it was found that the conduct was an abuse of process.  The real issue in the appeal was what the correct response to that abuse of process should be.  Again, while this was a case involving disposal of relevant material after commencement of proceedings, it had the added feature that it was done in the face of known obligations to disclose and for the purpose of frustrating court processes.
  4. [162]
    There are other cases involving, broadly, acts of misconduct in relation to evidence after proceedings have commenced, but these involve acts which were found to have been directed at supressing evidence harmful to that party’s case or promoting fraudulent evidence harmful to the other party’s case.[56]  However I was not referred to a case where relevant material was disposed of intentionally but without an accompanying intention to interfere with the conduct of the proceedings after the commencement of proceedings.  More on that later.
  5. [163]
    There is an example of a case involving disposal of relevant real evidence without an accompanying intention to frustrate a trial in Fuji Xerox Australia Pty Ltd v Lee & Anor [2003] QSC 303.  That case involved disposal before proceedings were commenced.  Fuji had rented a copier to a company, and the defendant guaranteed that obligation.  Fuji terminated the agreement and repossessed the copier for failure to pay rent.  It later sued for damages on the agreement.  The defendant counterclaimed on the basis that the copier was defective.   Prior to proceedings, the copier had been destroyed.  In a manner analogous to this case, the defendant[57] had retained a mechanical engineer to advise on the performance of the copier but his work was frustrated by his inability to inspect the machine.  The defendant sought to stay Fuji’s proceedings as an abuse of process.  Chesterman J observed:

[8] I accept the defendant's submission that if it be shown that the photocopier was destroyed in order to deprive him of critical evidence and prevent him advancing a good arguable the case the court would intervene to ensure that the attempt to distort the course of justice did not succeed. The particular order to achieve that end would depend on the circumstances. In British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197 the court drew attention to the limited authority on the point but concluded (in a case involving the destruction of relevant documents before proceedings were commenced):

  1.  … There must be some balance struck between the right of any company to manage its own documents, whether by retaining them or destroying them, and the right of the litigant to have resort to the documents of the other side. The balance can be struck ... if it be accepted that the destruction ... before the commencement of litigation may attract a sanction (other than the drawing of adverse inferences) if that conduct amounts to an attempt to pervert the course of justice or (of) contempt of court, meaning criminal contempt ...
  1.  Accordingly, there being no authority being directly in point, we consider that this court should state plainly that where one party alleges against the other the destruction of documents before the commencement of the proceeding to the prejudice of the party complaining, the criterion for the court's intervention (otherwise than by the drawing of adverse inferences, and particularly if the sanction sought is the striking out of the pleading) is whether that conduct of the other party amounted to an attempt to pervert the course of justice or ... contempt of court occurring before the litigation was on foot.'
  1. [164]
    Chesterman J found that the copier had been refurbished and relet, and then disposed of in the ordinary course by Fuji prior to the commencement of proceedings.  He found that the person responsible for the disposal of the copier knew nothing of the proceedings.  His Honour dismissed the application by the defendant on the basis that the disposal was not done to defeat the defendant’s case and because there was some evidence on the issue of proving the defect such that inspection would procure nothing of relevance.  Although his Honour did not expressly put his conclusion in these terms, it is evident from the reasons that his Honour concluded there was no abuse of process and that if there was, the disposal did not prevent a fair trial.
  2. [165]
    In that case, his Honour was consciously approaching the matter based on the dichotomy between destruction before and after proceedings commenced.  In reaching his conclusion, he made the following observations: 

[14] It is not the case that a trial will only be fair if all possible evidence relevant to the issues in dispute is available to the parties. It is common experience that witnesses die or cannot be found, or that documents are lost or that objects or scenes which may help to determine a disputed course of events change or are obliterated. The parties must do the best they can with what is available. A trial in which a witness, even a critical witness cannot be called can still be fair.

[15] The remedy sought by the defendant’s application is drastic. It is to preclude the plaintiff from pursuing what is an arguable right to recover a substantial sum of money. I apprehend that a court would only accede to such an application where it is clear that there cannot be a fair trial and that that consequence is a result of the deliberate action of a party to the litigation.

[16] In this regard, the intention of the person who destroys evidence or puts it beyond the reach of his opponent is critical. Actions which are themselves lawful may amount to a contempt of court if done with the intention to interfere with the course of justice. This was pointed out by the High Court in Lane v Registrar of Supreme Court of New South Wales (1981) 148 CLR 245 at 258, at which the Court (Gibbs CJ, Mason J, Murphy J, Wilson J and Brennan J) said:

‘… Thus it may be lawful for one man to advise another to take a holiday in Brazil, but the giving of the advice may constitute a contempt of court if the advice is given for the purpose of keeping the witness out of the way to avoid service of a subpoena. It may be lawful to dismiss a servant … but if this is done for the purpose of punishing him for having given evidence it is a contempt of court.’

  1. [166]
    Justice Chesterman consciously applied the principles in British American Tobacco Australia Services Ltd v Cowell [2002] VSCA 197 in respect of disposal of relevant material prior to commencement of proceedings.  That issue arises in these proceedings in two respect:
    1. In respect of the disposal of the battery items by Youi, which occurred before commencement of the Youi proceedings; and
    2. To the extent that APIA is not bound by the acts of Youi, in respect of disposal of the Ranger and the battery items, both of which events occurred before commencement of the APIA proceedings.
  2. [167]
    In each respect, Ford invites this Court not to follow British American Tobacco.   An analysis of that case is called for.
  3. [168]
    The facts of British American Tobacco are a little complicated and must be set out to understand the case properly.  The case arose out of proceedings by Ms McCann, (then her executor Mr Cowell), against British American Tobacco as manufacturer of cigarettes that Ms McCann smoked.  Ms McCann alleged, broadly, that smoking the defendant’s cigarettes caused her lung cancer and that the defendant was negligent in not taking reason steps to reduce the risk of addiction, including disparaging established research which indicated the danger of smoking.  The defendant defended, inter alia, on the basis that its cigarettes did not cause Ms McCann’s illness, and that the risks of smoking were always well known and in the public domain.  Ms McCann commenced her proceedings in 2001.  
  4. [169]
    Prior to the start of Ms McCann’s litigation, the company had a policy as to retention and disposal of documents.  This was referred to as the document retention policy.  The policy was focussed on what could or should be retained out of the extensive records accumulated by the company’s activities, with the balance to be disposed of.  From 1990, British American Tobacco (or its predecessors) were defendants in various proceedings around Australia.  Also from 1990, and because of the litigation, the defendant’s management put in place various “hold orders” on the document retention policy, which directed staff not to dispose of any document which could be relevant to litigation without clearance from the company’s solicitors.
  5. [170]
    The various pieces of litigation were all finally resolved by March 1998.  At that time, the hold orders were revoked and a direction was given to staff to implement the long-suspended document retention policy.  At that point, numerous documents were destroyed, including many documents discovered in earlier litigation.  It was accepted that some of the destroyed documents would have been relevant in the Cowell proceedings.  In March 1999, further proceedings were commenced and a fresh batch of hold orders were issued by management.  The recommencement of the (selective) document retention policy was undertaken only after receiving advice from the company’s solicitor that it was lawful to do so.  In particular, the company officer asked the company’s solicitors whether there was any obligation to retain documents which might possibly be relevant in legal proceedings where no such proceedings are in existence.  He received advice that there was no such obligation where no legal proceedings had been commenced.  In what appears to have been an oversight, the solicitor’s advice did not refer to the obligation, if any, where legal proceedings were anticipated but not yet commenced.
  6. [171]
    The litigation arose out of a complicated series of steps in disclosure litigation.  Ultimately, the case advanced to the trial judge was based on alleged failures to comply with the duty of disclosure.  The trial judge found that the defendant had not complied with disclosure orders and found that the document destruction process prior to 1990 and after March 1998 was undertaken deliberately for the purpose of defeating prospective litigants.  His Honour then found that the frustration of the disclosure process caused prejudice to the plaintiff which justified striking out the defence.
  7. [172]
    On appeal, the Court overturned the decision for reasons related to the analysis of the disclosure point.  They need not concern us.  The Court then turned to the issue of interest here.  The issue as it presented itself to the Court was articulated as follows:

[143] The application to strike out the defence was advanced on the basis that there had been a failure to give proper discovery to such a degree and in circumstances so serious as gravely to prejudice the plaintiff in the conduct of the litigation. It was submitted that the court in its discretion should conclude that the only appropriate sanction was to strike out the defence. As the judge noted specifically in his reasons for judgment, the plaintiff did not put her case on the basis of contempt of court or interference with the course of justice; nor indeed was it expressed to be based upon abuse of process although, in his Honour’s view, in effect that principle was being drawn upon inasmuch as the court was said to be exercising its inherent jurisdiction to control the conduct of the parties to ensure full and frank compliance with its rules. It was submitted that the court should strike out a defence where the defendant, by its conduct, denies the plaintiff a fair trial, and particularly so where that result was deliberate on the part of the defendant. Thus, the application made by the plaintiff rested pretty plainly on what was said to have been the wholesale destruction of documents, before the commencement of the proceeding, to the prejudice of the plaintiff. The criterion, according to the plaintiff, was denying the plaintiff a fair trial.

[144]   In contrast, the defendant submitted that any party was free, in an adversarial system, to do what it liked with its own documents before the commencement of litigation. There was no authority, said the defendant, for the proposition that a company was not entitled to destroy documents before proceedings were on foot against it. The plaintiff, it submitted, had to rest content with the drawing of inferences adverse to the defendant, if the destruction of documents by the defendant proved relevant. No principle existed, Mr Myers argued, that prior to the commencement of proceedings a possible opponent had “to assist the other side in potential litigation”. Even in the course of the trial, the system being adversarial, the trial was to be conducted in accordance with the rules of court and any obligations owed to the court, but beyond that the litigation had to be conducted on the basis that the court should determine the issues as presented by the parties. Any notion otherwise of what was a “fair trial” must prove no criterion at all — or at all events prove to be merely subjective, putting at risk the rule of law.

  1. [173]
    With respect, the analysis which immediately followed encapsulates the conflicting policy issues that the Court was grappling with (and which arise again here):

[145] In our opinion, both parties adopted a position which was too extreme. On the one hand it was troubling that the defendant seemed to be claiming carte blanche to destroy documents, however imminent the proceeding against it and however relevant, and obviously relevant, the documents would be. Suppose, for the sake of argument, a continuing dispute between neighbours over a fence line — or perhaps, as in one of the cases to be mentioned, a continuing dispute between employer and employee over the dangers and risks involved in repetitive work of a certain type. It surely cannot be the case that the prospective defendant, learning that litigation was about to be commenced against it, could simply destroy all relevant records bearing upon the principal issue, for the purpose only of defeating the claim when brought against it. On the other hand, if it be supposed, for the sake of argument, that there is some impediment to such conduct by a person apprehensive of litigation against him or her, how far back does the obligation to preserve documents reach? It surely cannot be, as suggested by the plaintiff in argument, that the defendant was in this instance at fault in destroying documents in 1985 because those documents might well be (or perhaps were) relevant in this proceeding which the plaintiff commenced against the defendant in 2001. It must remembered that a hold order, precluding the implementation of the document retention policy, was put in place in November 1990 once litigation commenced against the defendant in Australia, and that the last of those hold orders was revoked only in March 1998. Yet the plaintiff’s claim to have the defence struck out relied not only on the destruction of documents in 1998; it went back much further than that (although to what precise, or even approximate, date if not “early 1990”, was not made clear on appeal).

  1. [174]
    The Court then engaged in an exhaustive review of authority in Australia, England, Canada and the USA and concluded (again articulating important policy considerations):

[172] The foregoing is sufficient to demonstrate how limited is the nature of the authority available. Nothing governs directly, and there are many questions raised (especially by the cases in England) even where the destruction of documents occurs after the commencement of a proceeding, let alone before it. The judge here was disposed to accept a “fair trial” as constituting the relevant criterion, but when documents are destroyed before the commencement of a proceeding, that test is less than helpful. After all, what is a “fair trial”? According to the defendant, there is a fair trial if, according to the rules of court and the obligations of the parties to the court, the court adjudicates upon the documents put in evidence and the oral testimony of the witnesses during the hearing. Of course what is a “fair trial” must inform any test which is adopted, but it cannot stand in place of one.

  1. [175]
    Chesterman J extracted the articulation of the principle to be applied in the extract from Fuji in paragraph [163] above. 
  2. [176]
    These observations were, strictly speaking, obiter because as the Court of Appeal noted, the case below was run on the basis of the disclosure argument rather than commission of an offence or contempt.[58]

Curial response to abuse of process

  1. [177]
    Where relevant material has been destroyed in a manner which amounts to abuse of process in a proceeding, the Court’s response is not concerned with punishing the party responsible for the abuse of process nor with denunciation of the conduct.  Rather, the Court must consider whether there can still be a fair trial of the proceedings.[59]  The Court’s powers extend to staying or dismissing the proceedings. 
  2. [178]
    The starting position in considering the proper response to an abuse of process of any kind is that a plaintiff is entitled to have his or her proceedings heard and determined.  The onus of demonstrating that a fair trial cannot be held lies on the party contending for that conclusion.
  3. [179]
    The Court will not stay proceedings where a fair trial can be secured by other means.  That can be by leaving the innocent party to rely on the drawing of inferences adverse to the other party.  However, whether an adverse inference will be drawn and the likely strength of that inference will depend on the circumstances of the case.  Where the Court concludes that the disposal of evidence was done with the intention of preventing that evidence being available at the trial, the inference might be very strong.[60]
  4. [180]
    A fair trial can also be secured by the Court making other orders short of staying the whole proceedings such as striking out or excluding issues affected by the conduct,[61] or by excluding particular evidence.[62]  Indeed, in protecting its own processes from abuse, the Court can fashion any order properly adapted to that end. However, where no other option is sufficient to secure a fair trial, the Court may stay or dismiss the proceedings.
  5. [181]
    To stay a proceeding is a significant step and is a power which should be exercised sparingly.  The test for determining when a fair trial is not possible has been articulated in various ways: where proceedings “are seriously and unfairly burdensome, prejudicial or damaging”;[63] “where there is a real and substantial risk that the defendant will not have a fair trial” ;[64] where proceedings are “manifestly unfair” to the other party.[65] 
  6. [182]
    In Pavlavi, Allsop P articulated the test in the context of the facts in that case in this way:

[95] Here, the legitimate findings of the primary judge more than amply provided a foundation for his orders. On the findings, the applicant deliberately disposed of two phones that contained relevant material of real significance to the propounding of the defence of the respondent. This was brought about by the knowing and deliberate conduct of a plaintiff who comes to court seeking redress. It plainly amounted to an abuse of process. It created a not insignificant risk to the ability of the respondent successfully to propound its defence. The respondent may (without this material) still have been able to do so; but a real and substantial risk was deliberately created by the applicant that could be seen, at least, to impair that defence. Taking into account, in particular, all the considerations in the Civil Procedure Act, ss 56 and 58, like the primary judge, I would strike out imputations 3(a) and (b)(i).

 [emphasis added]

Abuse of Process: Youi proceedings

Disposal of the Ranger

  1. [183]
    The disposal of the Ranger after commencement of proceedings by Youi was an abuse of process.  
  2. [184]
    First, as will be examined in more detail below, at the time of the disposal of the Ranger it was plain from the pleadings already filed in the Youi proceedings that the cause of the fire in the Ranger was the central issue in dispute.  It was central not only as between Youi and Ford and Mackay City Autos, but also between Ford and Mackay City Autos.  The disposal of relevant evidence after the commencement of proceedings by a party is prima facie an abuse of process.
  3. [185]
    Second, I reject the suggestion that the disposal of the Ranger by Youi was justified by the failure of Ford to inspect the Ranger within the time that Youi retained it.  The February letter from Ligeti Partners relied on by Ms Reagan to justify disposal of the Ranger (see paragraph [70] above), itself relied on notice having been given to Ford that it could inspect the vehicle within 14 days.  That must have been a reference to the email of 29 July 2017 (see paragraph [53] above).  There was no other communication said to justify the assertion in the February letter. 
  4. [186]
    The problem with relying on that email was that it did not inform Ford that if it failed to inspect within 14 days, Youi would dispose of the Ranger.  Rather, it informed Ford that it would commence proceedings without further notice if Ford did not inspect and obtain its own report after 14 days.  Once proceedings were commenced, the threatened action had been taken.  Ford had no reason to think that time limit specified in the 29 July email had any other significance.  Indeed given that proceedings had been commenced, Ford would have been justified in assuming that the Ranger would not be disposed of, given that the email made quite plain that, on the plaintiff’s case at least, it was a defect for which Ford was responsible which caused the fire.  Even a lay person uninstructed in the subtleties of the law on abuse of process would have been entitled to assume that the Ranger would not be disposed of without further notice.  The fact that Youi was advised by its solicitors that it could dispose of the Ranger with “clean hands” does not change the position.  The advice was wrong, and the fault for that as between Youi and the applicants lies with Youi.
  5. [187]
    Third, it was contended by Youi that Ford in fact had an opportunity to inspect the Ranger in the period between April 2018 and February 2019 and that if it had taken up that opportunity, the untimely disposal would not have occurred.[66]  As a matter of strict ‘but for’ causation, that might be correct.  However, that is no answer to the conduct of Youi.  Nothing Ford did communicated that it did not want to inspect the Ranger, and in those circumstances the responsibility lay with Youi, once proceedings were commenced, not to dispose of material evidence, especially evidence so fundamental to the issues in dispute.  I do not agree that Ford had an evidential onus to lead evidence as to why it did not inspect in the period that was, unilaterally, allowed by Youi.  Even if Ford did have such an onus, I would not infer from the lack of such evidence that Ford decided it did not intend to inspect the Ranger.[67]  Such an inference is breathtakingly improbable in the circumstances where the effect of the plaintiffs’ case was to suggest some manufacturing defect in a car sold widely in Australia. 
  6. [188]
    Fourth, the disposal of the vehicle was not justified by the cost of storage.  There was no evidence as to the cost of storage, but it is unlikely it was a large sum.  Further, if that was truly a significant issue, it should have been raised with Ford and Mackay City Autos.  In any event, the proposition that a party is entitled to dispose of relevant evidence after commencing proceedings because of the cost of holding that evidence is wrong.  

Youi’s intention in disposal of the Ranger

  1. [189]
    Youi’s intention in disposing of the Ranger is not strictly relevant to whether there is an abuse of process where material evidence is disposed of after proceedings commence.  However, that intention can be relevant to the Court’s response to the abuse of process.  It is hardly surprising that a Court will be more inclined to conclude that a strong curial response is required, and more inclined to conclude that a fair trial is not possible at all, if a party has disposed of material evidence with the intention of preventing the other party from having access to that evidence for the purpose of conducting its case.[68]  The underlying assumption seems to be that where evidence is disposed of with that intention, it is likely the evidence would have been unfavourable to the party disposing of it.  Why else, one might ask, would it be disposed of?
  2. [190]
    I am unpersuaded that Youi disposed of the Ranger with the specific intention of denying to Ford and Mackay City Autos access to the evidence it provided in defence of the plaintiffs’ claims.  There were two officers of Youi who played a part in deciding to dispose of the Ranger: Ms Hopkins and Ms Reagan.
  3. [191]
    As to Ms Hopkins, I refer to paragraphs [66] to [68] above.  Ms Hopkins’ evidence supports the conclusion that the disposal of the Ranger was prompted by the internal procedures adopted by Youi for management of chattels related to insurance claims.  She was not challenged on this point and I accept her evidence.  Insofar as Ms Hopkin’s state of mind represents the intention of Youi, there was no intention to deny the defendants access to the Ranger.  Rather, Ms Hopkins was acting to give effect to management procedures.  
  4. [192]
    As to Ms Reagan, her evidence is summarised in paragraphs [70] to [74] above. Ford mounted a spirited attack in cross examination and in its submissions on Ms Reagan’s evidence.  However, Ford ultimately did not seek a finding that Ms Reagan intended to interfere with the proper administration of justice nor a finding that Ms Reagan’s motive was to prevent Ford or Mackay City Autos from inspecting the Ranger.  It was correct not to seek such a finding. 
  5. [193]
    I find Ms Reagan had no such intention or motive.  Ms Reagan had no reason to so act.  She was plainly concerned to ensure she did not act improperly and sought legal advice to ensure that her response to Ms Hopkins was lawful.  She took legal advice on the matter and that advice was that it was permissible to dispose of the Ranger.  Although she had experience in management of insurance litigation, she was entitled to act on legal advice from Youi’s solicitors briefed in the matter unless she believed it to be wrong.  I accept that she believed the advice to be correct. 
  6. [194]
    Ford submitted that I should find that Ms Reagan was aware that Ford might still wish to inspect the Ranger.  I think there is little doubt that Ms Reagan thought that might be the case.  It was an obvious reason for her to seek legal advice.  I do not accept, however, that issues of contempt of court or abuse of process were raised during the telephone conversation she had with Mr Khouri.  I accept Ms Reagan’s evidence that if such a matter had come up, she would have recalled it and would have hesitated about proceeding with instructions to dispose of the Ranger.  At the least she would have raised it with her supervisor, something she did not do. 
  7. [195]
    All that happened here is that Ms Reagan was prompted by Ms Hopkins about disposal of the Ranger.  Ms Reagan was plainly concerned not to do that if it was in some way unlawful or improper.  She sought legal advice and was advised that in the circumstances Youi could properly dispose of the Ranger.  That is the obvious implication of the clean hands comment.  I find Ms Reagan believed, based on that advice, that Youi was free to dispose of the Ranger and could not be properly criticised by Ford for doing so.

Disposal of the battery items

  1. [196]
    I refer to paragraphs [45] to [50] above. As I concluded there, the explanation for the instruction to dispose of the battery items lies in a failure of Mr Haycock to advert to the potential importance of the battery items.  That conclusion is inconsistent with any finding that Mr Haycock had an intention to prevent Ford having an opportunity to inspect the battery items.  Ford expressly concedes as much and further concedes that the disposal did not amount to a criminal offence or contempt.
  2. [197]
    Those findings and concessions have the consequence that, if British American Tobacco is applied to the disposal of the battery items, that conduct cannot amount to an abuse of process.  Youi contends that British American Tobacco should be applied in respect of disposal of the battery items.
  3. [198]
    Ford invites this Court not to follow that decision.  It contends that this Court should determine that disposal of relevant evidence before commencement of proceedings may be an abuse of process, without proof of any intention to prevent the other side from accessing the evidence, depending on the circumstances and that in the circumstances of this case, the disposal of the battery items was indeed an abuse of process.  I will deal with those submissions next. 
  4. [199]
    However, I note that whether the disposal of the battery items was or was not itself an abuse of process is a secondary consideration in these applications.  While Mr Cousins explained that further examination of the battery items might have disclosed information of some use in determining causation, it was of secondary importance compared to the disposal of the Ranger itself.  Further, even if the disposal of the battery items itself is not an abuse of process, the loss of that evidence adds to the importance of the Ranger in investigating causation.

British American Tobacco is not inconsistent with Batistatos

  1. [200]
    Ford submits that I should not follow British American Tobacco because it is inconsistent with the decision of the High Court in Batistatos.  
  2. [201]
    This Court should follow the decision of an intermediate appellate Court of another State on a matter of uniform national legislation or common law unless it considers the decision plainly wrong.[69]  However, this Court should follow decisions which bind it, in preference to decisions which do not, including inconsistent decisions of other intermediate appellate courts, [70] and it is the duty of this Court to determine for itself if there is such an inconsistency.[71]  Obviously, a decision of the High Court binds this Court.  If it were the case that I determined that British American Tobacco was impliedly overruled by Batistatos, then my duty would be to follow the High Court decision, regardless of whether I thought British American Tobacco right or wrong.  However, care should be exercised in concluding that implied inconsistency arises, particularly where there is a decision directly on point which binds a court and the inconsistency is said to arise from the decision in the higher court dealing with a different context or subject matter.[72]   That observation applies in my view mutatis mutandis to the approach a Court should take to decisions which for one reason or another, should be followed unless considered plainly wrong.[73]
  3. [202]
    An answer to Ford’s submission first requires a consideration of Batistatos and the cases which have followed it.  Mr Batistatos was injured in a car accident in 1965.  Prior to the accident he had an intellectual disability.  He became a quadriplegic after the accident.  In 1994, he commenced proceedings alleging negligence in the construction and maintenance of the road where the accident took place.  It was accepted he was always under a disability so that the relevant limitation period did not run.  The defendants brought an application seeking the dismissal or stay of the proceedings as an abuse of process.  The applicants failed before the trial Judge but succeeded on appeal.
  4. [203]
    Before the High Court the principal argument of the plaintiff was articulated as follows:

[59] Here the ground taken by the plaintiff is one which, if accepted, would have denied, in the circumstances, the existence of the power to order the permanent stay. The plaintiff accepts that his case in the Court of Appeal would have failed if there had been misconduct shown on his part which caused the inability of the defendants to have a fair trial. But, the plaintiff submits, in the absence of such a showing of misconduct, there was no power to make the order complained of by the plaintiff.

[…]

[61] Counsel for the plaintiff developed the submission by placing particular emphasis upon the operation of s 52 of the Limitation Act. This had suspended the running of the limitation period for the duration of the disability suffered by the plaintiff. Reference was made to a number of English authorities. These were said to demonstrate that where there is a statutory limitation period any exercise of power to stay proceedings commenced within that period must be exceptional and could not be supported merely by prejudice which might be expected to flow from the effluxion of time within the limitation period. The plaintiff submitted that some element of “oppressive” conduct on the part of the plaintiff must be discernible before the court would exercise the power to order a permanent stay. The “oppression” lay in conduct which was burdensome, harsh, wrongful.

  1. [204]
    The majority (Gleeson CJ, Gummow, Hayne and Crennan JJ) rejected that argument, concluding that there was no such negative implication arising from statutory limitation periods.  They observed that the limitation period must be pleaded as a defence to a claim and that as a consequence the fact that a statutory period had not expired meant only that there is no accrued right to defend on that basis.  They reasoned:

[63]   In that setting it is unsatisfactory to speak of a common law “right” which may be exercised within the applicable statutory limitation period, and of the enacting legislature as having “manifested its intention that a plaintiff should have a legal right to commence proceeding with his action”. The words are those of Lord Diplock in Birkett v James. The difficulty is in the expression “a legal right”. The plaintiff certainly has a “right” to institute a proceeding. But the defendant also has “rights”. One is to plead in defence an available limitation defence. Another distinct “right” is to seek the exercise of the power of the court to stay its processes in certain circumstances. On its part, the court has an obligation owed to both sides to quell their controversy according to law.

[64]   It is a long, and impermissible, step to deny the existence of what may be the countervailing right of a defendant by imputation to the legislature of an intent, not manifested in the statutory text, to require the court to give absolute priority to the exercise by the plaintiff within the limitation period of the right to initiate proceedings. The truth is that limitation periods operate by reference to temporal limits which are indifferent to the presence or absence of lapses of time which may merit the term “delay”.

[65]   The “right” of the plaintiff with a common law claim to institute an action is not at large. It is subject to the operation of the whole of the applicable procedural and substantive law administered by the court, whose processes are enlivened in the particular circumstances. This includes the principles respecting abuse of process.

  1. [205]
    In rejecting the plaintiff’s argument, the majority concluded:

[69]   The descriptions, rather than definitions, given in this court and set out earlier in these reasons post-date Birkett v James and do not provide any ground for a requirement of oppressive conduct by the plaintiff. Rather, as in the circumstances of the present case, attention must be directed to the burdensome effect upon the defendants of the situation that has arisen by lapse of time. The Court of Appeal held that this was so serious that a fair trial was not possible. The result was that to permit the plaintiff’s case to proceed would clearly inflict unnecessary injustice upon the defendants.

[70]  What Deane J said in Oceanic Sun Line Special Shipping Co Inc v Fay, with respect to the staying of local proceedings, is applicable also to a case such as the present one. His Honour emphasised that there was no “requirement that the continuance of the action would involve moral delinquency on the part of the plaintiff”; what was decisive was the objective effect of the continuation of the action.

  1. [206]
    Ford argues that Batistatos is inconsistent with British American Tobacco in two respects.
  2. [207]
    First, Ford contends that a requirement of moral delinquency as an essential element of an abuse of process when evidence is disposed of prior to commencement of proceedings is inconsistent with the conclusion in Batistatos.  In particular, Ford says that a Batistatos stands for the proposition that focus on moral delinquency or oppressive conduct by the plaintiff involves focus on the wrong issue and that the correct focus of attention is the effect of the conduct on the defendant.  Ford submitted there was no justification for a special rule for just one category of abuse of process (disposal of evidence prior to commencement of proceedings) where blameworthy conduct is required.
  3. [208]
    Second, Ford contends that the rejection of the test of a fair trial as the way to determine if there has been an abuse of process in British American Tobacco is inconsistent with the express adoption of that test as the correct one for determining whether an abuse has arisen in Batistatos. 
  4. [209]
    APIA submits that I should follow British American Tobacco.  APIA contends that there is good reason for the rule applied in British American Tobacco.  It relies on the necessary balancing of rights in the circumstance of disposal of material before there is any proceeding on foot, as articulated in paragraph [173] of British American Tobacco.
  5. [210]
    Both parties accept that no other intermediate Court of Appeal has considered the correctness of British American Tobacco and that no other trial court has determined a direct challenge to its correctness whether standing alone or in light of Batistatos.  The decision has been applied from time to time, most relevantly in this State in Fuji by Chesterman J.  It must be recognised, though, that like other cases applying the decision, there was no challenge to the correctness of British American Tobacco in Fuji.
  6. [211]
    I am not persuaded that British American Tobacco is inconsistent with Batistatos for three main reasons. 
  7. [212]
    First, I do not accept the underlying premise of Ford’s argument that Batistatos stands for the proposition that intention or purpose accompanying an act can never be a relevant consideration in determining if an abuse of process has occurred.  The majority judgment in Batistatos does not say that.  It is not surprising that it did not.  Abuse of process is a broad concept covering many different categories of conduct.  Batistatos was concerned with only one category: where the bringing of proceedings by a plaintiff within the limitation period can comprise an abuse of process due to the effluxion of time.  Further, the majority judgment was engaged with a specific submission based on the character of causes of action not subject to a limitations defence under statute.  I can see no warrant for treating the rejection of the specific argument in Batistatos as supporting the unstated conclusion that it applies in all abuse of process cases.  It plainly would not apply to that category of abuse of process where proceedings are brought for a collateral or improper purpose.[74]   In reaching that conclusion I apply the caution advised in Utah where the decision said impliedly to be overruled is on the specific point before the trial judge.
  8. [213]
    Second, I do not accept Ford’s argument that the disposal of relevant evidence before proceedings is sufficiently analogous to the bringing of proceedings after delay such that moral delinquency must have the same relevance in both cases.   True it is that in both cases, the party has a “right” which it is free to exercise or not as it sees fit: in the delay cases it is the right to bring proceedings and in disposal of evidence cases, it is the right to keep or dispose of chattels and documents belonging to a person.  However, the right to commence proceedings is of a different character from a right to keep or dispose of chattels and documents. 
    1. In the Batistatos situation, the party will be a potential plaintiff.  The party will have the power over whether and when proceedings are commenced.  The party will know (or at least be able to determine) the likely issues in the potential proceeding, at least from its perspective. 
    2. In the British American Tobacco situation, at least on the facts as considered by the Court of Appeal in that case, the party will be a potential defendant.  That party will not have any power over whether or when proceedings are commenced.  It will frequently not know or be able to determine the likely issues in a potential proceeding.  Indeed in many cases it will not even be aware of the existence of that proceeding.
  9. [214]
    Further, there is a compelling factual distinction.  In the Batistatos situation, the potential plaintiff bears no material financial or practical burden in choosing to exercise its right to litigate or not.  In the British American Tobacco situation, that is unlikely to be the case.  British American Tobacco provides a good example.  A business accumulates large amounts of documentation.  Filing, retaining and storing documents can involve a great deal of cost and time.  That remains true in the digital age.  While the cost of retaining and storing documents is less, the digital age generates much larger quantities of documents.  The retaining of such documents in a format which facilitates searching is also a substantial and potentially costly task.
  10. [215]
    This case is another such example, and one where the doubtful advantages of digital archiving are not present.  Companies like Youi and APIA undoubtedly deal with larges quantities of chattels in the form of vehicles and parts of vehicles and other damaged insured chattels.  While storage of these kinds of chattels is unlikely to be expensive on a per unit basis, the total costs would quickly accumulate over years, not to mention the cost of keeping track of the chattels.  It is not in the least surprising that an insurer would have arrangements of the kind described by Youi’s witnesses for the disposal of chattels.  It is always possible that six years (or longer) after a car accident, a large third-party property claim might arise in respect of which the damaged vehicle is important.  In that case, an insurer might have long disposed of the damaged insured vehicle in the ordinary course.  Should the insurer have to retain all its insured chattels indefinitely, or at least until all statutory limitations periods expire, to avoid the risk that an abuse of process might arise in some unforeseen circumstance?  I am not persuaded that they should be subject to that burden.
  11. [216]
    Third, the rejection by the Court of Appeal of the fair trial test is not in my view inconsistent with Batistatos.  As evident in the cases dealing with disposal of evidence, the approach of Courts to that issue has frequently adopted something a two step approach.  First, is the disposal of material evidence an abuse of process? Second, if so, can there be a fair trial?  In my view, the observations in paragraph [172] of British American Tobacco are concerned with identifying the test for whether disposal of evidence before proceedings are commenced is an abuse of process, not with identifying the basis for the curial response to any such abuse which is established.   This can be inferred not only from the place of the relevant observations in the judgment but also from the fact that the Court went on, from paragraph [176] to consider the correctness of the Judge’s conclusions as to the importance of the destroyed documents to the conduct of the trial. 
  12. [217]
    A two step process is also clearly evident in cases involving the propounding of forged documents, or the suppression of relevant evidence.[75]  Both of those categories of case can amount to a clear abuse of process, but the question of whether there can be a fair trial must still arise.  Batistatos does not appear to take the same two step approach.  The majority judgment poses just the single question: does the delay frustrate a fair trial of the proceedings for the defendant.  That is consistent with the type of abuse under consideration in Batistatos.  There is no abuse caused by the mere fact of bringing proceedings after a long delay, unless that delay prejudices a fair trial.  However, the two step approach seems to be entrenched in the judgments where the issue relates to the disposal of material evidence. 

British American Tobacco distinguished

  1. [218]
    British American Tobacco concerned an abuse of process when a potential defendant disposes of documents prior to anticipated proceedings.  In my view, the position of a potential plaintiff is quite different.  A potential plaintiff either knows, or has the capacity to determine, whether and when it will commence proceedings.  A fortiori where the potential plaintiff is in fact aware of the cause of action and facts informing a claim that the plaintiff intends to bring.  In my view, the potential plaintiff who, for example, has taken all pre-commencement steps short of filing is in substantially the same position as the plaintiff who has commenced proceedings.  I can see no persuasive reason to distinguish between the two.  Indeed to apply the demanding test articulated in British American Tobacco to that potential plaintiff is an invitation to such a party to adopt a casual and careless approach to the preservation of plainly relevant evidence right up to the moment before proceedings are filed. 
  2. [219]
    It may be a matter of fact and degree whether a potential plaintiff has sufficient knowledge of their prospective claim and of the potential relevance of the destroyed evidence to fall within the category of plaintiff described in the proceeding paragraph.  Given my findings of fact above, and law below, it is unnecessary to attempt any general exposition of the circumstances where a potential plaintiff ought to be treated as in the same position as an actual plaintiff   for the purposes of this category of abuse of process.
  3. [220]
    Further, the potential plaintiff is in a much better position to make an informed judgment as to where its interests lie when considering whether to keep or dispose of documents and chattels.  It can balance risks more effectively where the question to be considered is whether there is a prospect that that party will be a plaintiff in proceedings.
  4. [221]
    In my view, British American Tobacco can be distinguished from this case because that case involved conduct of a potential defendant, not a potential plaintiff. That point of distinction also arguably arises in the Fuji case where, although Fuji was the plaintiff, the performance of the copier was relevant to the counterclaim. In that respect, Fuji was a defendant.   In this case, on the facts as I have found them, the battery items were disposed of in a factual circumstance so close to disposal after commencement of the proceedings, as to be properly dealt with on the same principles. 
  5. [222]
    I refer to paragraphs [40] and [41] above.  As is identified there, as of 28 March 2018 Youi had:
    1. Gathered evidence from its experts,
    2. Instructed solicitors and obtained legal advice as to its claim;[76]
    3. Identified that it had a cause of action against Ford arising out of a likely electrical fault in the engine bay;
    4. Asserted to Ford that its cause of action was for a safety defect in respect of which Ford was obliged to demonstrate that the defect did not exist at the time of sale;
    5. Identified the amount of its claim and assembled the documents necessary to document that claim; and
    6. Demanded payment from Ford within 21 days. 
  6. [223]
    Further, Ford’s responses on 5 and 10 April 2018 were inconsistent with an intention to admit and pay the claim.  The battery items were disposed of on 12 April 2018.  On 20 November 2018, Youi commenced proceedings on precisely the basis articulated in its letter of 28 March 2018.
  7. [224]
    To apply a different test for determining if the disposal of the battery items was an abuse of process to that applied for determining if the disposal of the Ranger was an abuse of process is not rationally defensible.  While it is correct that the commencement of proceedings engages obligations which are not formally engaged before that point, the difference between Youi’s position on 28 March 2018 and 28 November 2018 is one of form not substance.   
  8. [225]
    Abuse of process is not an inflexible doctrine.  Quite the opposite.  It is a doctrine which can respond as required to ensure that the processes of the Court are not abused.  In my respectful view, it is open to the Court in applying that doctrine to look to substance rather than form.  Here, it is my opinion that on the facts of this particular case, the principles applicable to disposal of relevant evidence after commencement of proceedings are engaged.  

Disposal of battery items an abuse of process

  1. [226]
    The consequence of the above analysis is that the disposal of the battery items by Youi was an abuse of process.  

Plaintiffs bound by Youi’s conduct

  1. [227]
    For the reasons given commencing from paragraph [237] below, I find that Youi’s conduct bound the plaintiffs in the Youi proceedings.  Those proceedings are an abuse of process.

abuse of process: APIA proceedings

Summary

  1. [228]
    The APIA proceedings are an abuse of process.  That conclusion flows from three propositions:
    1. First, by reason of the conduct of the Youi proceedings by Youi pursuant to equitable rights of subrogation, the plaintiffs are bound in the Youi proceedings by the acts of the Youi officers in disposing of the battery items and the Ranger which amount to an abuse of process in that proceeding;
    2. Second, the APIA proceedings involve the assertion by the same plaintiffs of the same causes of action as those asserted in the Youi proceedings and turn on the same causation issues.  The plaintiffs are not permitted to avoid the abuse of process in the Youi proceedings by pursuing another proceeding in relation to the same cause of action and causation issues, simply because it was issued later in time.  Prima facie, therefore, the APIA proceedings are also an abuse of process at the suit of the plaintiffs; and
    3. Third, APIA is conducting the APIA proceedings pursuant to the right of subrogation.  As such, APIA stand in the shoes of the plaintiffs such that if the proceedings are an abuse of process by the plaintiffs, APIA can be in no better position. 

General principles: subrogation

  1. [229]
    The above analysis of APIA’s position depends substantially on the application of the doctrine of subrogation in the context of indemnity insurance.  The doctrine has been summarised in this way in a leading text:

Subrogation may be described in broad terms as the substitution of one person for another, so that the same rights and duties as attached to the original person attach to the substituted one.  It is a transfer of rights from one person to another without assignment or assent of the person from whom the rights are transferred, and which takes place by operation of law in a whole variety of widely differing circumstances.  The purpose of subrogation is to prevent one person being unjustly enriched at the expense of another and the doctrine finds its most common application in the field of insurance law.  The possibility that the insured may recover more than an indemnity results from the common law principles that a person who is insured and who has recovered his entire loss from an insurer is not prevented from proceeding against the wrongdoer because insurance recoveries are to be left out of account in determining the amount of liability, and that the insurer is required to make payment to the insured despite the fact that the insured has a cause of action against a third party in respect of the loss.[77]

  1. [230]
    Despite some debate in the past, it now seems settled that rights of subrogation arise in equity, at least in Australia.[78]
  2. [231]
    The doctrine has two limbs.  It confers a right on the insurer who has indemnified an insured to pursue any remedy the insured may have against a third party for the insurer’s own benefit.  It also confers a right on the insurer to recover from the insured any benefit the insured receives in reduction or extinction of the insured loss.  Both rights assume indemnity has been granted.[79]  (There is no need to consider the situation prior to granting of indemnity in either the Youi or APIA proceedings.)
  3. [232]
    In the former case, subrogation does not involve an assignment of the insured’s cause of action.  Where the insured has a claim against a third party which diminishes the indemnified loss, the insurer exercises the right by bringing proceedings in the name of the insured against the third party.   If the insured party does not consent to that course, it can be compelled by order.  Because the insurer is conducting a claim of the insured, the insurer’s rights are necessarily only as good as those of the insured and can stand in no better position in the claim than the insured.  The insurer takes the claim subject to any defences available to the third party against the insured.  It is also subject to procedural restrictions such as arbitration clauses or exclusive jurisdiction clauses.[80]
  4. [233]
    While the proceedings are conducted in all respects as proceeding brought by the plaintiff:

The underwriters are, in the sense in which the phrase is always used, the real plaintiffs, that is, they are the persons instructing the solicitors, the person paying for the action, the persons entitled to benefit by the action, and the persons to lose by the action if it is lost; but in point of law they are not the plaintiffs, the plaintiffs on the record being the only person who can be recognised as plaintiffs.[81]

  1. [234]
    Generally, the position of the insurer as the real plaintiff is studiously ignored procedurally.  The insured is obliged to make disclosure, (though the insurer can be compelled as a relevant non-party), judgment is entered in the name of the insured and costs are awarded in favour of or against the insured.[82]  
  2. [235]
    The relationship between insured and insurer in respect of proceedings brought relying on the right of subrogation are not properly characterised as proceedings in which the insured is a trustee of the cause of action for the insurer.  One important distinction is that the beneficiaries cannot control the trustee’s exercise of discretions.  In contrast, in subrogation proceedings, the insurer conducts the proceedings and does so in its own interests with a view to obtaining the benefit of the cause of action.[83]
  3. [236]
    Subrogation must also be distinguished from the common law doctrine of abandonment.  The doctrine has a specific meaning in the marine insurance area.  Of relevance here is its broader meaning applicable to all indemnity insurance: 

Where an insured is paid for total loss, the remains of the subject matter must be abandoned to the insurer.  Abandonment, if accepted by the insurer, confers upon it ownership of the abandoned property, whereas subrogation merely gives the insurer the power to exercise the insured’s rights of suit and to claim payments made to the insured in diminution of its loss.[84]  

Plaintiffs bound by Youi’s conduct in Youi proceedings

  1. [237]
    It is an inevitable consequence of the insurer’s subrogation right that the acts of the insurer in the conduct of the proceedings will bind the insured.  The precise scope of that power to affect the rights of the insured will depend, at the margins, on whether and to what extent an act or omission by the insurer can be characterised as being in the exercise of, or sufficiently related to, the exercise of the equitable right.  Here, the question which arises is whether the disposal of the battery items and the Ranger by officers of Youi are acts which bind the plaintiffs.
  2. [238]
    I find that they were so bound.  From at least 18 March 2018, when Youi’s solicitors sent the letter of demand to Ford, Youi was plainly exercising rights of subrogation.  Although it was not examined at trial, there is little reason to doubt that the plaintiffs had by that time been indemnified by Youi for the loss of the Ranger.  The battery items and the remains of the Ranger were chattels which were relevant evidence in the claim against Ford.  Dealing with those chattels falls within the scope of acts by Youi in the conduct of the claim the plaintiffs had against Ford and Mackay City Autos.  In exercising rights of subrogation, Youi is conducting the plaintiff’s claim on behalf of the plaintiffs.  It necessarily follows that the plaintiffs are bound by Youi’s conduct of those proceedings.  Where Youi’s acts are such as to give rise to an abuse of process, the plaintiffs are bound by those acts and by the conclusion that the Youi proceedings were an abuse of process.
  3. [239]
    No distinction between Youi and the plaintiffs can be drawn in respect of the consequences in law of Youi’s conduct in the Youi proceedings.  Two arguments were advanced to the contrary.
  4. [240]
    First, it was submitted that the disposals were not an abuse of process because at the time of disposal of the battery items and the Ranger, those chattels belonged in law to Youi by operation of the common law doctrine of abandonment.  The submission was that the plaintiffs were not affected by Youi’s conduct in disposing of Youi’s own chattels.   In my view, there are two reasons why this argument fails.  First, abandonment only arises at the time of full indemnity.  It was not clear on the evidence whether that had occurred at the times of the disposals.  Nor was it established that the terms of the Youi policy was consistent with that doctrine.  Further, it is at least arguable that abandonment is subject to acceptance and it is not established by evidence that any such acceptance occurred.[85]  
  5. [241]
    Further, if the proposition is correct, it would permit an insurer exercising equitable rights in the conduct of litigation to dispose of relevant evidence which it acquired through its rights of subrogation, and thereby avoid the impact on the proceedings conducted pursuant to that equitable right.  That cannot be correct.  It is an argument which seeks to excise by reference to an issue of legal form, the substantive effect of conduct of proceedings pursuant to the equitable doctrine of subrogation.  Equity looks to substance not to form.   The transfer of legal title by abandonment, if it occurred, was an event which was an incident of the relationship out of which the rights to subrogation arose and are so closely connected to those rights as to be properly considered as acts done by Youi as the subrogated insurer in the conduct of the Youi proceedings.
  6. [242]
    Second APIA contended that while Youi’s acts bound Youi in the Youi proceedings, they did not bind the plaintiffs.  That argument was articulated as follows:

Subrogation does not make one party an agent for the other party for all purposes, such that the conduct of one must be sheeted home to the other.  The Defendant would have it that the conduct of Youi should be sheeted home to Mr and Mrs Challis (and therefore to their subrogated home insurer, Apia) because Youi has exercised a right of subrogation.  While Youi might stand in the shoes of Mr and Mrs Challis for the purposes of pursuing the litigation, that does not render them responsible for every aspect of Youi’s conduct such that when they are the plaintiffs in completely different litigation seeking to recover different loss, Youi’s conduct should prejudice their ability to continue the proceeding.

  1. [243]
    This submission might be thought to make two distinct contentions:
    1. The first is the plenary proposition in the first sentence. 
    2. The second is a more confined point, being that while the plaintiffs might be bound by Youi’s conduct in the Youi proceedings, they were not bound in completely different litigation seeking to recover different loss.
  2. [244]
    To the extent I have accurately understood the first contention, I disagree.  For the reasons already given, I consider the acts of disposing of the chattels were done in relation to the conduct of Youi exercising rights of subrogation and necessarily bind the plaintiffs.  I deal with the second contention next.

APIA proceedings an abuse of process by the plaintiffs

  1. [245]
    APIA’s second contention is premised on the proposition that the APIA proceeding is “completely different litigation” to recover different loss.  In my respectful view, that proposition is incorrect.  A comparison of the two pleadings demonstrates that:
    1. The APIA and Youi proceedings advance the same causes of action against Ford: being damages under ss. 271 or 272 ACL for breach of statutory warranty and compensation for loss arising from a safety defect under ss. 140 to 141 ACL;[86] and
    2. The APIA and Youi proceedings articulate the same basis for those claims, being the fire in the Ranger on 26 September 2017; and
    3. Perhaps most compelling, the two proceedings turn on the same principal issue: whether the fire in the engine bay was caused by electrical malfunction for which Ford and/or Mackay City Autos were responsible.
  2. [246]
    Further, the loss claimed is not different loss in any legally relevant sense.  The Youi proceedings seek damages for the immediate loss of the Ranger from the fire and the APIA proceedings seek damages for the consequential loss represented by the spread of the fire.  The claims might be characterised as being for different heads of loss (though that might be debated), but are effectively for the same loss: being the property loss consequent on the ignition of the fire in the engine bay.  To paraphrase a well known aphorism, the proceedings have distinctions, but they are not different. But for the different insurers, the plaintiffs could have brought the claim for the two heads of loss in the same proceeding. 
  3. [247]
    Indeed, the bringing of the two proceedings in respect of the same matter by the same plaintiff is itself an abuse of process. In McHenry v Lewis [1882] 22 Ch 397, the English Court of Appeal recognised that, prima facie, where the same matter is pursued in two different proceedings, the maintenance of both proceedings is vexatious, and the Court will put the plaintiff to an election. That principle is of longstanding.[87]  It is arguable that the bringing of separate proceedings by the plaintiffs, albeit explained by the different insurers, is itself an abuse of process on that basis alone. 
  4. [248]
    However, the bringing of the APIA proceedings by the plaintiffs is an abuse of process in another more compelling sense.  As I have found, the plaintiffs are bound by Youi’s conduct in the Youi proceedings.  The abuse of process arising out of the disposal of the chattels binds the plaintiff in those proceedings, being proceedings for damages flowing from the fire in the Ranger.  The only relevant respect in which the APIA proceedings differ from the Youi proceedings is that they were brought after the disposal of the chattels.  APIA contends that this engages British American Tobacco, such that, unlike the Youi proceeding, an intention to frustrate Ford must be established before the later APIA proceedings are an abuse of process.  Let it be assumed for present purposes that that is correct (notwithstanding my observations about the different approach which should be taken where considering the conduct of a potential plaintiff).
  5. [249]
    The difficulty is that the APIA proceedings are also proceeding for damages flowing from the fire in the Ranger.  The plaintiffs cannot try to avoid the conclusion that its conduct in pursuing Ford for damages flowing from the fire in the Ranger is an abuse of process by bringing a later, second proceeding which seeks damages for the same causes of action arising out of the same facts but after the disposal of the evidence.  To split the claims in this manner, even if done because there are two different insurers, is itself an abuse of process because its objective effect is to avoid the abuse of process by the plaintiffs in the earlier proceeding and in respect of the same claims.  That is an improper use of the Court’s processes. 
  6. [250]
    Therefore, at the suit of the plaintiffs, the APIA proceedings are in my view an abuse of process.  In exercising its rights of subrogation, APIA must take the plaintiffs and the claim as it finds them.  The APIA proceedings are an abuse of process by reason of conduct for which the plaintiffs are in law responsible in respect of the Youi proceedings.  APIA cannot avoid that conclusion. 
  7. [251]
    I note in passing that not only is APIA bound by the consequences of the plaintiffs’ conduct in the Youi proceeding, but so are the plaintiffs as persons suing for their own benefit in the APIA proceedings for the uninsured home and contents loss.  This aspect of the proceedings highlights that there can be no meaningful distinction drawn between the plaintiffs and APIA in the APIA proceedings.

APIA’s “what if” contention

  1. [252]
    In answer to the proposition that the plaintiffs are bound by Youi’s conduct of the Youi proceedings, APIA posits this “what if” scenario.  Let is be assumed that Youi paid out the claim and decided not to pursue Ford and then salvaged the vehicle.  In that circumstance, it is argued, the salvage would have been by a “stranger” to the APIA proceeding.  APIA argues in that circumstance, the plaintiffs in the APIA proceeding could not be said to be responsible for the salvage of the vehicle. There are two responses to that. 
  2. [253]
    The first is that that is not what happened.  The plaintiffs by Youi commenced proceedings, attracting the principles applicable to disposal of relevant evidence in that circumstance.  It is of no assistance in analysing this case to posit one different in a material respect. 
  3. [254]
    The second is that APIA’s hypothetical scenario is ambiguous.  The relevance of Youi’s conduct in that case depends on the circumstances in which the Ranger is salvaged.  If the Ranger was salvaged at a time when it remained the property of the plaintiffs but was held by Youi as bailee investigating the claim, then it would have been disposed of by Youi as agent for the plaintiffs and it would be a situation covered by British American Tobacco (if that case is to be applied).   If on the other hand the property had passed to Youi from the plaintiffs, perhaps by the indemnity insurance doctrine of abandonment, a different analysis might arise.  Posing hypothetical scenarios raises more questions than it answers.  

If British American Tobacco applied, there is no abuse of process

  1. [255]
    Ford further argued that even if British American Tobacco was found to apply, I should find that the disposal of the Ranger and the battery items were a contempt of Court.  I do not find that argument persuasive but it is unnecessary to decide it given my other findings.  

Should the proceedings be stayed?

  1. [256]
    I have concluded that both the Youi proceedings and the APIA proceedings are an abuse of process.  I have found that the abuse of process arises (indirectly for the APIA proceedings) from the destruction by Youi of both the battery items and the Ranger (hereafter the chattels).  The next question to resolve is what the response of the Court ought to be to that abuse of process.   As I have already noted, the ultimate question is whether, despite the disposal of the chattels, a fair trial can be had of the Youi and APIA proceedings, with or without conditions.
  2. [257]
    For the reasons that follow, I do not think a fair trial is possible of either proceeding. 

The centrality of the causation issues

  1. [258]
    In considering whether a fair trial is possible, it is necessary to identify the importance of the issue to which the chattels are relevant.  The more important the issue, the more careful the Court must be in assessing the impact of the loss of the chattels on a fair trial.  In this case, the chattels could scarcely be of more relevance to the resolution of the issues in dispute in the two proceedings.  An analysis of the pleadings demonstrates that the main issue in dispute is the precise electrical fault which caused ignition of the fire. 
  2. [259]
    In the Youi proceedings:
    1. Youi pleads that the fire was the result of a safety defect and the result of a failure to comply with the statutory warranties of acceptable quality and fitness for purpose.  It does not plead the cause of the fire, but it is evident the cause will be relevant to whether either proposition can be established;
    2. Ford defends in the Youi proceedings on the basis that, relevantly, if the fire started in the car, it was caused by cables not installed by Ford;
    3. Mackay City Autos defends in the Youi proceedings on the basis that the fire was caused by a faulty starter motor solenoid and was the result of a manufacturing defect for which Ford is responsible;
    4. Mackay City Autos also sues Ford as a third party, presumably on the same causation hypothesis;
    5. Ford defends the third party proceedings on the same basis as it defends the Youi proceedings.
  3. [260]
    In the APIA proceedings:
    1. APIA pleads a specific causation case (although one which does not plead a specific fault which caused ignition).  It pleads that the fire was caused by an electrical fault in the engine bay which caused the starter motor to engage, the contacts to weld, resistive heating of the battery cable and ignition of ignitable material in the engine bay;
    2. Ford denies that allegation and again defends on the basis that the fire was caused by wiring installed by someone other than Ford.
  4. [261]
    Notwithstanding non-admissions by Ford and Mackay City Autos, there is acceptance by all parties that the fire ignited in the engine bay and that it was caused by some form of electrical fault.  The evidence led in this hearing supports the conclusion that the principal issue in dispute in the trial, probably the only significant issue in dispute, will be what electrical fault caused ignition and who was responsible for that fault. 
  5. [262]
    The options on the pleadings, and on the expert evidence, are:
    1. A manufacturing defect of some kind in the Ranger’s electrical system;
    2. A fault in the modification to the factory electrical system made by Mackay City Autos at the time of the supply of the Ranger or after; or
    3. A fault in the modification of the electrical system by a third party, being neither Ford nor Mackay City Autos.
  6. [263]
    The real issue at trial will be not just whether the fire was caused by an electrical fault which caused ignition in the engine bay, but the more subtle question as to whether such electrical fault was caused by the factory electrical system as manufactured or post-manufacture modifications to that system and if the latter, whether that electrical fault occurred because of error by Mackay City Autos or by some third party (the causation issues).

Efficacy of further inspection of the chattels

  1. [264]
    All the experts agreed that inspection of the Ranger was an important step to determining the cause of the fire.  They could scarcely say anything else.  The importance of inspection was demonstrated by the conduct of the experts who had the opportunity to inspect.  Mr Pellegrino inspected the Ranger on site because he considered a “desktop” review was not adequate.  He also believed that further inspection should occur (despite seeing the fire damage for himself), involving Ford.  Mr Nystrom also inspected the Ranger on site.  Mr Nystrom arranged a further inspection to obtain parts from the Ranger to test his hypothesis as to the possible cause of the fire. 
  2. [265]
    This latter point dovetails with a point made by Mr Cousins.  He explained that the benefit of inspection is not exhausted on just one inspection (in a complex case at least).  He explained that repeat inspections are useful in testing hypotheses as to causation.  Where an expert is confronted with the subtleties of the causation issues in this case, I accept that it would be a significant potential advantage to determining the likely fault which caused the fire to be able to inspect the vehicle on an on-going basis.  This proposition was also not really disputed.
  3. [266]
    The real question, however, is not whether inspection (or further inspection) of the Ranger was desirable, or good practice, in theory.  It is whether inspection of the chattels could have provided useful evidence on the causation issues in practice.
  4. [267]
    This turns primarily on one issue: whether the Ranger was so badly damaged by the fire that no useful information could have been obtained from further inspection and testing.  The answer to that question cannot be absolute because the Ranger is not available conclusively to answer that question.  So we are concerned with the probability that further inspection could have provided materially relevant evidence.  I am persuaded that there is a real prospect that it could have provided materially relevant evidence.  I explain my reasons.
  5. [268]
    First, while Mr Denham gave evidence supportive of APIA and Youi on this issue, the main joinder of issue was between Mr Nystrom and Mr Cousins.  I prefer Mr Cousins’ evidence.  His explanations as to what he considered could have been productively done to interrogate the remains of the Ranger, though occasionally tending to the theoretical, were nonetheless persuasive.   In contrast, for the reasons I interpolated when reviewing Mr Nystrom’s responses to Mr Cousins’ evidence,[88] I did not find Mr Nystrom’s critique of Mr Cousins views persuasive (except on the chemical analysis point).
  6. [269]
    Further, I found Mr Nystrom’s evidence responding to Mr Cousins’ first report to have a slightly defensive flavour.  My perception of Mr Nystrom’s approach when he was first investigating the fire is that he was not attuned to the subtleties of the causation issues.  I respectfully suggest this might have been because electrical faults were an area in which he was a little less expert than Mr Cousins.  That is not a criticism.  Experts frequently have different but overlapping skills. 
  7. [270]
    Whatever the reason, my conclusion is that once Mr Nystrom formed the view that the cause of the fire was an electrical fault in the engine bay, he considered the cause of the fire sufficiently identified.  Support for that can be found in his lack of interest in the evidence of post manufacture wiring, whether protected by circuit breakers or not.  Nothing was said about those matters until Mr Nystrom’s responsive report to Mr Cousins.  Notably, Mr Denham’s report and evidence gives reason to doubt that the existence of those circuit breakers provided a full answer to the risk from any post manufacture wiring.  Further, my confidence in Mr Nystrom’s analysis is affected by the ambiguity latent in his analysis in respect of the starter motor.  In my respectful view, he appears to have focussed on the starter motor solenoid and the starter motor without fully appreciating that the operating of the starter motor could be a cause or an effect of the fire.  I think this questionable hypothesis informed his approach to inspection of the Ranger and probably his decisions as to what to photograph, at least in less or more detail.
  8. [271]
    Further, the persuasiveness of Mr Nystrom’s evidence was affected by the later emergence of the 12V rear socket.  He asserted confidently in his responsive report to Mr Cousins’ report that on the completion of his inspections nothing remained that would have better determined the cause of the fire.  Except, as it turned out, the existence of a post manufacture electrical modification running, most likely, through the engine bay and quite possibly attached to the battery in an unorthodox manner (as explained by Mr Cousins).
  9. [272]
    Second, the explanation given by Mr Nystrom (and in less detail) by Mr Denham for why nothing could likely be obtained from the Ranger or its parts is not persuasive.  The suggestion is that damage was caused by the intensity of the fire in the engine bay and the debris that fell on the vehicle.  However, despite the intensity of the fire, the after-manufacture circuit breakers were still identifiable.  It seems likely to me that there is a real prospect that other parts or indicators relevant to causation might have been present.  Further, debris can be removed.  No-one tried to do so, so it seems speculative to suggest it could not have been done efficaciously.  Finally, the debris was presumably not within the body of the vehicle.  Wires from, for example, the 12V socket might have been identified which allowed an investigator to work out at least the way that the socket was wired (which I accept could be relevant to causation).
  10. [273]
    Third, there is the mysterious 12V rear socket itself.  Mysterious because despite the owners and the dealer being parties to this litigation, it was only revealed in April 2022.  Mysterious because the invoice said to document the work does not do so.  Mysterious because Mackay City Autos’ solicitors accepted, seemingly based on the invoice, that the dealer had installed the socket. 
  11. [274]
    The 12V socket demonstrates, in the context of this issue, the prospect for Secretary of Defence Rumsfeld’s unknown unknowns.  It is now impossible to know what would have been discovered if the Ranger had been carefully inspected for remnants of the 12V socket and its wiring.  However, Mr Denham and Mr Cousins consider it a suspect in the cause of the fire and those opinions are persuasive.  What might have been revealed by a further detailed investigation of the Ranger and its parts, in relation to the 12V socket or indeed other presently unknown modifications or wiring?  Youi and APIA must contend that the Court ought simply to assume that nothing would have been revealed but I can see no justification for making that assumption. It is inevitable that the disposal of the Ranger has made it now impossible either to discover new potential causes which have been overlooked or to investigate the potential for matters discovered after the disposal to be investigated.
  12. [275]
    Fourth, the respondents also rely on Mr Denham’s evidence.  While I generally accept Mr Denham’s opinions as persuasive, I not persuaded by his firm views on the potential benefit of further inspection.  There are two reasons for that. 
  13. [276]
    The first is that I am not persuaded that there was no prospect of material relevant evidence being obtained from the engine bay or indeed the battery items.  I have already explained that I did not find Mr Nystrom’s critique of Mr Cousins’ suggestions as to how that might occur persuasive.  Further, it is possible that inspection of other parts of the vehicle might have cast light on the cause of the fire: for example the routing of the 12V rear socket wiring.
  14. [277]
    The second is that he seems to rely in part on the fact that Mr Pellegrino and Mr Nystrom have already inspected the vehicle.  However, Mr Pellegrino expected a further inspection and Mr Nystrom’s approach was a little askew in my view for the reasons I have given.  In any event, it is not for an expert to give an opinion based on his opinion about the competence of another expert.  Putting that to one side, the basis for his confidence relies on the range of photographs.  As I will explain, I do not accept that the photographs eliminate the prospect that inspection could have produced material evidence on causation.
  15. [278]
    Fifth, I emphasise that Pellegrino was one of only two experts who saw Ranger, and he thought further investigations worth taking at the time: see paragraph [28] above. He formed that view when the issue was not contentious.  I give that view considerable weight.
  16. [279]
    Ultimately, as I have said, the question is not whether further opportunities to inspect the Ranger would or would not in fact have provided material evidence on causation.  That cannot now be known.  The question which I think must be answered is whether there was a real prospect that that could have occurred.  I am satisfied that the answer to that question is yes.

Inadequacy of photographic record

  1. [280]
    I do not accept that the existence of the photographs means that, despite the matters in the previous section, there is no real prospect that material evidence has been lost.  That is because: 
    1. First, Mr Pellegrino’s photographs were not taken with a view to providing a complete record of all aspect of the vehicle, as was evident from his own evidence.  As Mr Cousins frankly conceded, they were a good example of a set of photographs for an initial fire scene investigation.  Mr Nystrom’s photographs were undoubtedly useful, but again they were not taken to fully record every aspect of the vehicle.  
    2. Second, I accept Mr Denham’s evidence that the limitation with photographs is that they are two dimensional.  They are no substitute for being able to inspect the object photographed.  All the experts agreed in that.[89]
    3. Third, photographs are undoubtedly useful for analysis away from the site or chattel.  However, they can also raise questions which can only be adequately answered by an inspection.  This recognises the reality that in a complex causation analysis, the process for determining causation is an iterative one where hypotheses are tested against the evidence. 
    4. Fourth, the potential limitation of the photographs is revealed again by the fact that no witness could say definitively from the photographs that the 12V rear socket was present, nor how it was wired.[90]

Expression of opinions as to causation?

  1. [281]
    The respondents contend that each of the experts were able to express a view as to the cause of the fire.  The corollary of that proposition according to APIA was that this demonstrated that even without the Ranger, there can be a fair trial in which a range of expert opinions can fairly be advanced.  I am not persuaded of either proposition.
  2. [282]
    First, it is notable that neither Mr Pellegrino nor Mr Nystrom nor Mr Denham express an opinion as to the specific fault or mechanism which caused the initial ignition of the fire.  In broad terms, all three experts conclude that the fire was caused by an unspecified electrical fault which caused a fire to ignite in the engine bay.  This is, from one perspective, an explanation of the cause of the fire.  However, it is an explanation which fails to grapple with the causation issues which so acutely arise.  None of those experts provide evidence on the cause of the fire which answers the causation issues in these proceedings.  Mr Cousins’ opinion is more specific to the so called “third party” modifications but is expressed in terms as comprising the most logical explanation of the fire in the absence of further inspection.  It is also notable that Mr Denham almost goes as far, expressing the view that the non-factory modifications are the likely direct cause, but ultimately did not state that as his final conclusion. 
  3. [283]
    Second, the gravamen of the respondents’ submission on this issue was captured in this submission:[91]

If the Defendant cannot lead evidence to the effect that it cannot obtain expert evidence that expresses an opinion about the most probable cause of the fire, it is submitted that the Defendant is unable to establish that a fair trial cannot take place.

  1. [284]
    In my respectful view that submission is incorrect.  It can be accepted that it is likely that the defendants can obtain expert evidence that expresses an opinion about the cause of the fire.  Mr Cousins provides such an opinion.  As does Mr Denham.  Other experts could be briefed with the photographs, other reports (to the extent they contain relevant facts) and other instructions and asked to provide an opinion based on that evidence.  But the question here is whether there is a real prospect that the evidence upon which experts would be asked to opine could be different if the chattels were available for inspection and testing.   
  2. [285]
    This submission raises another issue which is conveniently dealt with now.  The respondents submitted that it is common for trials involving the cause of a fire to be conducted on limited evidence.  That is a corollary of the destruction wrought by fires.  They also relied on the broad propositions at [14] in Justice Chesterman’s observations from Fuji (cited in paragraph [165] above).  The wisdom of his Honour’s observations cannot be doubted.  However, to my mind they were not intended to communicate that a trial will be fair if evidence from a critical witness is not available because a party has taken active steps to make them unavailable, nor that it will be fair if objects which were available are by deliberate act, obliterated by a party after proceedings commence.
  3. [286]
    To my mind the correct question is whether the trial has been made unfair as compared to the trial which could have been conducted if a party had not interfered with or destroyed relevant evidence.  I have already found that there is a real prospect that inspection could have produced material evidence on causation.  

The onus at trial

  1. [287]
    The legal and evidential onus at trial will be relevant to whether there can be a fair trial of the proceedings for Ford and Mackay City Autos.  I refer to paragraph [262] above which sets out the causation issues.  It can be seen by reference to those issues that if the onus is on the plaintiffs to prove the cause of the electrical fault, then the unfairness to the applicants is somewhat reduced.  The difficulty in establishing the precise cause of the fault would fall substantially on the plaintiffs.  They will have positively to establish whether the fault was a manufacturing fault (to succeed against Ford) or a fault in modification work done by Mackay City Autos. 
  2. [288]
    However, the view advanced by the applicants is that the onus in respect of both the statutory warranty claims and the safety defect claims and will lie on Ford and Ford and Mackay City Autos respectively.  There are some complexities surrounding the question of onus.  However, in my view the analysis set out in paragraph 50 of Ford’s submission dated 4 May 2022 appears correct, especially if one considers the further authorities raised in argument.[92]  It did not appear to me that either Ms Heyworth-Smith[93] or Mr Horsley[94] contended to the contrary.  The gravamen of their submissions was that there was nothing particularly remarkable in the applicants ultimately bearing the onus to make out the precise cause of the fire.  That may be so.  However, it does mean that the lost opportunity to discover evidence on the precise cause of the fire is one which is an unfairness that falls on Ford and Mackay City Autos. 

Other relevant evidence

  1. [289]
    Are there other sources of evidence likely to supplement the deficiency arising from the disposal of the Ranger and its parts?  There are two possible sources of evidence in that regard: the evidence of the Challises as to what modifications were made and when and the evidence from Mackay City Autos as to whether modifications were made by it and if so when and how.  Neither source of evidence meaningfully assists to ensure a fair trial.  I have already explained in detail the difficulties in the evidence so far in respect of modifications from both sources.  Further, As Ms Blattman KC (who appeared for Mackay City Autos) submitted, it is highly likely that recollection of the kind of details necessary to assist in at least reconstructing exactly what work might have been done and how will have faded by now and there is no suggestion that there is further disclosure to be obtained.[95]    

Curial responses short of staying proceedings

  1. [290]
    Ford and Mackay City Autos contend that no curial response short of a stay of both proceedings can address the unfairness arising from the disposal of the Ranger and the battery items.  Neither APIA nor Youi seriously contended to the contrary.  Certainly, no redress can be obtained from Jones v Dunkel inferences in the circumstances of this case, not least because the inference to be drawn would not assist Ford and Mackay City Autos to make out a positive case as to specific causation.  I did consider ordering that APIA and Youi could not rely on expert evidence from any expert who had inspected the Ranger.  However, all that would do is put all experts in the trial in the same position as Mr Denham and Mr Cousins, being unable to express an opinion on the specific cause based on examination of the real evidence.  No other response apart from a stay of both proceedings suggests itself.

Conclusion

  1. [291]
    I order that the Youi and APIA proceedings be stayed.  I will hear the parties as to costs.   

Footnotes

[1] The Youi proceedings were commenced in the Magistrates Court as M5002/18.

[2] Affidavit of Bruce Challis sworn 19 April 2022 at [9] (First Affidavit of Mr Challis).

[3] Affidavit of Christine Challis sworn 11 August 2021 at [3] (Mrs Challis’ Affidavit).

[4] Report of Marty Denham at [10.7] (Denham Report).

[5] Mrs Challis’ Affidavit at [5].

[6] First Affidavit of Mr Challis at [6].

[7] Denham Report at [10.2].

[8] Affidavit of Belinda Heather Thompson sworn 28 July 2023 at exhibit pg 9 (Thompson Affidavit).

[9] Second Report of Tim Cousins dated 5 May 2022 at [5] (Cousins Second Report).

[10] Report of Murray Nystrom dated 5 October 2017 at pg 9 (Nystrom First Report).

[11] Affidavit of Bruce Challis sworn on 1 August 2022 (Second Affidavit of Mr Challis)

[12] Perhaps more correctly Nystrøm or Nyström.

[13] Nystrom First Report at pg 2. 

[14] Report of Simon Cox dated 20 October 2017 at pg 3 – 4.

[15] Report of Mark Pellegrino dated 7 November 2017 at [7.5] (Pellegrino Report).

[16] Pellegrino Report at [12.3].

[17] Second Report of Mr Cox dated 10 May 2018 (Cox Second Report).

[18] Affidavit of Dora Anna Banyasz filed 26 July 2021 at pages 168 to 169 (First Banyasz Affidavit).

[19] First Banyasz Affidavit at pg 168.

[20] First Banyasz Affidavit at pg 168.

[21] Affidavit of Dora Anna Banyasz affirmed 3 August 2021 at pg 117 (Second Banyasz Affidavit).

[22] Affidavit of Gabrielle Elise Fergus affirmed 3 August 2021 at GEF-3.

[23] Affidavit Div 7 para 15

[24] Transcript 1-76.24 and 1-78.

[25] First Banyasz Affidavit at pg 167.

[26] First Banyasz Affidavit at pg 166 to 167.

[27] First Banyasz Affidavit at pg 166.

[28] First Banyasz Affidavit at pg 165.  I note that Mackay City Auto did not adduce evidence of the report referred to by Ms Thompson, though there might not be such a report.  Perhaps Mackay City Auto was referring to the reports already obtained.  

[29] The original filed on 7 January 2019 can be ignored.

[30] Affidavit of Melissa Reagan sworn on 22 September 2021.

[31] Affidavit of Belinda Heather Thompson sworn 28 July 2022 at pg 28.

[32] My reading of the handwritten text.

[33] Affidavit of Dora Anna Banyasz at pg 173.

[34] Affidavit of Dora Anna Banyasz at pg 175.

[35] First Banyasz Affidavit at pg 182 to 183.

[36] First Banyasz Affidavit at pg 183 to 184.

[37] First Report of Tim Cousins dated 11 February 2022 at pg 41 [76] (Cousins First Report).

[38] Cousins First Report at pg 42 [81].

[39] Cousins First Report at pg 43 [83].

[40] Although Mr Cousins does not describe these parts in exactly the same terms as Mr Nystrom, it is evident they are the battery items removed from the Ranger on the first occasion and disposed of on Youi’s instruction.  And see paragraph 97 of his report.

[41] Denham Report at [9.4.5].

[42] Denham Report at [9.4.14].

[43] See my reasons given at Transcript 2-110 ff.

[44] Transcript 2-121.

[45] Denham Report at [10.7] and [10.8]

[46] Transcript 2-122.

[47] Transcript 2-48.

[48] G. Norton, ‘Sherlock Holmes: The Education of the World’s First Forensic Scientist’ (The Hounds Collection, Vol. 10, May 2005) 66-72.

[49] Transcript at 2-34.

[50] His client had the same interest in the expert issues as APIA, but no objection was taken to further limited cross examination.

[51] Transcript 2-59.

[52] Transcript 2-65.

[53] Transcript 2-69.40 and following.

[54] Batistatos v Roads and Traffic Authority of New South Wales (2006) 226 CLR 256 [9]–[15]

[55] At [93] per Allsop P with whom Macfarlan JA agreed.  Allsop P conditioned that approval with reference to the additional obligations of a party in proceedings equivalent to Rule 5 UCPR.

[56] See also Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167: creation of fraudulent documents propounded during disclosure.

[57] The published version of the case recites that the plaintiff retained the engineer, but that seems to be a typographical error: see [7] and [8].

[58] British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524 [143] [175] [185]

[59] Victoria International Container Terminal Limited v Lunt (2021) 388 ALR 376 [18]–[22].

[60] Clark v New South Wales (2006) 66 NSWLR 640 [100]–[104].

[61] Clark v New South Wales (2006) 66 NSWLR 640.

[62] Sun v He (No 2) [2020] NSWSC 1298.

[63] Oceanic Sun Line Special Shipping Company Ltd v Fay (1988) 165 CLR 197, 247 (Deane J); cited in Jago v District Court of New South Wales (1989) 168 CLR 23, 74 (per Gaudron J); Batistatos [70] (Gleeson CJ, Gummow, Hayne and Crennan JJ).

[64] Clark v New South Wales (2006) 66 NSWLR 640 [150].

[65] Walton v Gardiner (1993) 177 CLR 378, 393.

[66] First submissions of Youi dated 26 October 2022 at [37]–[42].

[67] See Second submissions of APIA’s dated 26 October 2022 at [77].

[68] As the Court concluded had occurred in Clark itself.

[69] Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 [135].

[70] Ratcliffe v Watters (1969) 89 WN NSW Part 1 497 at 505

[71] See, in a different context Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609 at [98] – [99]

[72] Jacob v Utah Construction and Engineering Ltd (1966) 116 CLR 200 at 207 per Barwick CJ. 

[73] See an example in a slightly different context in the decision of the NSW Court of Appeal in Allen v Snyder [1977] 2 NSWLR 685 at 689

[74]  See the general discussion of principles in Melbourne Investments Pty Ltd v Myer Holdings Ltd (2017) 53 VR 709 [7] – [15].

[75] See Arrow Nominees Inc v Blackledge [2000] 2 BCLC 167 citing Logicrose Ltd v Southend United Football Club Ltd (reported in the Times of 5 March 1998).

[76] Because I infer the letter was written on instructions and after advice.

[77] W I B Enright and R M Merkin, Sutton on Insurance Law (Thomson Reuters, 4th ed, 2015) [18.10].

[78] J D Heydon, M J Leeming and P G Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (LexisNexis Butterworths, 5th ed, 2014) [9-020] and [9-115]; W I B Enright and R M Merkin, Sutton on Insurance Law (Thomson Reuters, 4th ed, 2015) [18.50]

[79] W I B Enright and R M Merkin, Sutton on Insurance Law (Thomson Reuters, 4th ed, 2015) [18.170]

[80] W I B Enright and R M Merkin, Sutton on Insurance Law (Thomson Reuters, 4th ed, 2015) [18.180]–[18.210].

[81] Wilson v Raffalovich (1881) 7 QBD 553, 558.

[82] Charles Mitchell and Stephen Watterson, Subrogation Law and Practice (Oxford University Press, 2007) 381 – 382.

[83] S R Derham, Subrogation in Insurance Law (The Law Book Company Limited, 1985) 24 – 25.

[84] W I B Enright and R M Merkin, Sutton on Insurance Law (Thomson Reuters, 4th ed, 2015) [18.90].

[85] On this last point see the contention advanced in Submissions of Ford dated 17 October 2022 at [225].

[86] Noting that Youi’s claim for compensation under ss. 140 and 141 ACL appears to be premised on an erroneous understanding of the nature of compensation under those provisions.

[87] It was adopted by Justice of Appeal Keane, as his Honour then was, in Di Carlo v Dubois [2007] QCA 316 (at footnote 8). 

[88] See comment variously made between paragraphs [135] to [142] above.

[89] See the evidence cited in the Submissions of Ford dated 17 October 2022 at [37] to [43].

[90] See the evidence cited in Ford’s second submission at [44] to [51].

[91] APIA’s second submission at [42].

[92]As to statutory warranties see Capic v Ford Motor Company of Australia Pty Ltd (2021) 154 ACSR 235 [606] and [741] and Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211 [160] and as to the safety defect claims see Gill v Ethicon Sarl (No 5) [2019] FCA 1905 [3358] and [3503]

[93] Submissions Transcript 1-98.16 to .33.

[94] Submissions Transcript 1-112.30 to .45.

[95] See the detailed submissions in paragraphs [13] and [14] of Ms Blattman KC’s Second Submission for Mackay City Autos dated 17 October 2022.

Close

Editorial Notes

  • Published Case Name:

    Challis & another v Ford Motor Company of Australia Pty Ltd & another; Challis v Ford Motor Company of Australia Pty Ltd

  • Shortened Case Name:

    Challis v Ford Motor Company of Australia Pty Ltd

  • Reported Citation:

    (2023) 3 QDCR 226

  • MNC:

    [2023] QDC 193

  • Court:

    QDC

  • Judge(s):

    Porter KC DCJ

  • Date:

    31 Oct 2023

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Allen v Snyder (1977) 2 N.S.W. L.R. 685
2 citations
Jump To
Cite 1 - (1977) 2 N.S.W. L.R. 685
Cite 2 - (1977) 2 N.S.W. L.R. 685
Batchelder & Anor v Holden Limited [2009] VSC 29
2 citations
Jump To
Cite 1 - [2009] VSC 29
Cite 2 - [2009] VSC 29
Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256
2 citations
Jump To
Cite 1 - (2006) 226 CLR 256
Cite 2 - (2006) 226 CLR 256
Birkett v James (1978) AC 297
1 citation
Jump To
Cite 1 - (1978) AC 297
British American Tobacco Australia Services Ltd v Cowell (2002) VSCA 197
3 citations
Jump To
Cite 1 - (2002) VSCA 197
Cite 2 - (2002) VSCA 197
Cite 3 - (2002) VSCA 197
British American Tobacco Australia Services Ltd v Cowell (2002) 7 VR 524
1 citation
Jump To
Cite 1 - (2002) 7 VR 524
Capic v Ford Motor Company of Australia Pty Ltd (2021) 154 ACSR 235
2 citations
Jump To
Cite 1 - (2021) 154 ACSR 235
Cite 2 - (2021) 154 ACSR 235
Cases Arrow Nominees Inc v Blackledge (2000) 2 BCLC 167
3 citations
Jump To
Cite 1 - (2000) 2 BCLC 167
Cite 2 - (2000) 2 BCLC 167
Cite 3 - (2000) 2 BCLC 167
Challis v Ford Motor Co of Australia Pty Ltd [2021] QDC 177
1 citation
Jump To
Cite 1 - [2021] QDC 177
Clarke v State of New South Wales (2006) 66 NSWLR 640
5 citations
Jump To
Cite 1 - (2006) 66 NSWLR 640
Cite 2 - (2006) 66 NSWLR 640
Cite 3 - (2006) 66 NSWLR 640
Cite 4 - (2006) 66 NSWLR 640
Cite 5 - (2006) 66 NSWLR 640
Di Carlo v Dubois [2007] QCA 316
2 citations
Jump To
Cite 1 - [2007] QCA 316
Cite 2 - [2007] QCA 316
Dwyer v Volkswagen Group Australia Pty Ltd [2023] NSWCA 211
2 citations
Jump To
Cite 1 - [2023] NSWCA 211
Cite 2 - [2023] NSWCA 211
Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89
2 citations
Jump To
Cite 1 - (2007) 230 CLR 89
Cite 2 - (2007) 230 CLR 89
Fuji Xerox Australia Pty Ltd v Lee [2003] QSC 303
2 citations
Jump To
Cite 1 - [2003] QSC 303
Cite 2 - [2003] QSC 303
Gill v Ethicon Sarl (No 5) [2019] FCA 1905
1 citation
Jump To
Cite 1 - [2019] FCA 1905
Hasler v Singtel Optus Pty Ltd (2014) 87 NSWLR 609
2 citations
Jump To
Cite 1 - (2014) 87 NSWLR 609
Cite 2 - (2014) 87 NSWLR 609
Jacob v Utah Construction and Engineering Pty Ltd (1966) 116 CLR 200
2 citations
Jump To
Cite 1 - (1966) 116 CLR 200
Cite 2 - (1966) 116 CLR 200
Jago v District Court of New South Wales (1989) 168 C.L.R 23
2 citations
Jump To
Cite 1 - (1989) 168 C.L.R 23
Cite 2 - (1989) 168 C.L.R 23
Lane v The Registrar of the Supreme Court of New South Wales (1981) 148 CLR 245
1 citation
Jump To
Cite 1 - (1981) 148 CLR 245
McHenry v Lewis [1882] 22 Ch 397
2 citations
Jump To
Cite 1 - [1882] 22 Ch 397
Cite 2 - [1882] 22 Ch 397
Melbourne Investments Pty Ltd v Myer Holdings Ltd (2017) 53 VR 709
2 citations
Jump To
Cite 1 - (2017) 53 VR 709
Cite 2 - (2017) 53 VR 709
Melco Engineering Pty Ltd v Eriez Magnetics Pty Ltd [2007] QSC 198
1 citation
Jump To
Cite 1 - [2007] QSC 198
Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197
3 citations
Jump To
Cite 1 - (1988) 165 CLR 197
Cite 2 - (1988) 165 CLR 197
Cite 3 - (1988) 165 CLR 197
Palavi v Radio 2UE Sydney Pty Ltd [2011] NSWCA 264
2 citations
Jump To
Cite 1 - [2011] NSWCA 264
Cite 2 - [2011] NSWCA 264
Ratcliffe v Watters (1969) 89 WN NSW Part 1
2 citations
Jump To
Cite 1 - (1969) 89 WN NSW Part 1
Cite 2 - (1969) 89 WN NSW Part 1
Sun v He (No 2) [2020] NSWSC 1298
2 citations
Jump To
Cite 1 - [2020] NSWSC 1298
Cite 2 - [2020] NSWSC 1298
Victoria International Container Terminal Limited v Lunt (2021) 388 ALR 376
2 citations
Jump To
Cite 1 - (2021) 388 ALR 376
Cite 2 - (2021) 388 ALR 376
Walton v Gardiner (1993) 177 CLR 378
2 citations
Jump To
Cite 1 - (1993) 177 CLR 378
Cite 2 - (1993) 177 CLR 378
Wilson v Raffalovich (1881) 7 QBD 553
2 citations
Jump To
Cite 1 - (1881) 7 QBD 553
Cite 2 - (1881) 7 QBD 553

Cases Citing

No judgments on Queensland Judgments cite this judgment.

1

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