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Costs on discontinuation August 2, 2016

Hopoate v National Rugby League Limited [2016] NSWSC 1029

Legal principles

  1. A plaintiff who discontinues proceedings must ordinarily pay the costs of the party against which the discontinued claim was brought, unless the court otherwise orders: UCPR r 42.19(2). This would mean that Mr Hopoate would pay the costs of the NRL. The rule falls short of a presumption that costs will be ordered against the discontinuing party: Fordyce v Fordham [2006] NSWCA 274; 67 NSWLR 497. However, it does create a starting point by requiring the plaintiff to pay the defendant’s costs of the proceedings unless that outcome is displaced by a discretionary decision. Ultimately, any order as to costs remains a matter in the court’s discretion and will be awarded as the court sees fit: Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365.
  2. The effect of r 42.19 is that if some other order is to be made, the discontinuing party will have to show some proper justification for a different costs consequence: Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32; Australiawide Airlines Ltd v Aspirion Pty Ltd [2006] NSWCA 365.
  3. In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 McHugh J said at 624 – 625 (citations omitted):

In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried.

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.

  1. As I apprehend the present case, Mr Hopoate relies on the principle in Lai Qin to argue for a contrary order costs on three bases. First, that the proceedings were commenced reasonably; secondly, that the discontinuance of the proceedings was a consequence of having achieved practical success in relation to the claim, thereby rendering the prosecution of the proceedings futile; and thirdly, that the NRL was unreasonable in its conduct during the proceedings. I will deal with each of these submissions in turn.
  2. It is important to note from the outset that in Australiawide Airlines Limited v Aspirion Pty Limited [2006] NSWCA 365 at [64], and Bitannia Pty Ltd v Parkline Constructions [2009] NSWCA 32 at [78], the Court of Appeal has said that McHugh J’s statements in Lai Qin are not readily applicable to a decision to be made under UCPR in r 42.19, because the starting point is different than the starting point considered in Lai QinLai Qin involved different rules of court. In those cases, the Court of Appeal held that whilst the question of whether the plaintiff has acted reasonably in commencing and continuing proceedings is a relevant consideration, it is not determinative.

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