Australia's #1 for Law

Join 150,000 Australians every month. Ask a question, respond to a question and better understand the law today!

NSW Commercial Law - Is Respondent Entitled to Claim Party Costs?

Discussion in 'Commercial Law Forum' started by mark faulks, 7 July 2016.

  1. mark faulks

    mark faulks Member

    7 July 2016
    Likes Received:
    If an applicant discontinues proceedings, I am aware that the applicant bears the onus of disproving the liability to pay costs for the respondent. My question is that, if the respondent failed to file a notice of appearance for a particular amount of time, specifically not filing it until around the time of the discontinuance notice, is the respondent still entitled to claim party/party costs for the time before the notice of appearance was filed under commercial law?

    Thank you.
  2. Rod

    Rod Well-Known Member

    27 May 2014
    Likes Received:
    Are you wanting only party/party costs or indemnity costs (ie legal costs paid as well)?
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...
  3. @thelawbundle

    @thelawbundle Well-Known Member

    27 October 2014
    Likes Received:

    I'm not a NSW lawyer so you should get the following checked with your local community legal centre. However, this will hopefully be of some assistance to you.

    You should note that whilst your understanding is generally correct (i.e. the applicant now has the onus to disprove the liability to pay costs) there are a lot of discretionary factors that could be relevant here and it is difficult to tell from your questions whether (for example) an offer to settle was made by you, whether the defendant engaged a solicitor, whether this is a family provision matter etc. (all of this, and more, can influence whether a person is entitled to party/party costs, indemnity costs etc.).

    A good case to read for the NSW law regarding costs where a party discontinues their matter is Johnson v Clancy (see here: The general law on costs in these NSW matters is summarised as follows:

    "[16] Under s 98 of the Civil Procedure Act 2005, the court has a wide discretionary power to make orders for costs. The general principle concerning costs is that the unsuccessful party should pay the costs of the successful party. However that principle is subject to certain exceptions.

    [17] Although, in the instant case, the proceedings have been discontinued, and, to that extent, the Plaintiffs may be regarded as the unsuccessful party...

    [18] The Uniform Civil Procedure Rules 2005 (“UCPR”), rule 12.1, provides:

    (1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant:
      • (a) with the consent of each other active party in the proceedings, or
      • (b) with the leave of the court.
    [19] So far as is relevant, UCPR, rule 42.19, provides:

    (1) This rule applies to proceedings that are discontinued by the plaintiff, as referred to in rule 12.1
    (2) Unless the court orders otherwise, or the notice referred to in rule 12.1 (2) otherwise provides, the plaintiff must pay such of the defendant’s costs as, at the date on which the notice of discontinuance was filed, had been incurred by the defendant in relation to each claim in respect of which the proceedings have been discontinued
    (3) …"​

    Mark - as you will note from the above passage - if the Applicant discontinues the proceeding the general rule is that the plaintiff pays the costs up until the date that the notice of discontinuance was filed. Rule 42.2 of the UCPR (NSW) make it clear that these costs are generally to be paid on the "ordinary basis". In conducting an assessment of costs payable on the ordinary basis, a costs assessor must consider:
    • (1) whether it was reasonable to carry out the work to which the costs relate;
    • (2) whether the work was carried out in a reasonable manner; and
    • (3) what is a fair and reasonable amount of costs for the work concerned.
    As you will note - it is open to the costs assessor to decide that any work carried out in relation to preparing the Notice of Appearance was unreasonable (and therefore not payable) for example.

    As well as the above, the NSW Supreme Court in Johnson v Clancy also stated that the following principles are relevant in determining who is to bear the burden of costs in a case where the proceedings are discontinued before a final hearing:

    • (d) Generally, there must be some proper justification, sound positive ground, or a good reason, for departing from the ordinary position: Fordyce v Fordham at [2] per Santow JA; Australiawide at [54] per Bryson JA; circumstances in which it has been held appropriate to depart from the ordinary position include where the proceedings have been rendered unnecessary by circumstances beyond the plaintiff’s control; where the plaintiff achieved practical success in the proceedings, or where costs have been significantly increased by the unreasonable conduct of the defendant. If there is to be a departure it should be done in a particularized, and principled way.

      (g) It may be necessary to analyze the whole of the proceedings to determine the appropriate costs order: Fordyce at [67] per McColl JA. A relevant consideration is whether the plaintiff acted reasonably in commencing the proceedings and whether the defendant acted reasonably in defending them:Australian Securities Commission v Aust-Home Investments Ltd at 201 (cited with approval in Foukkare); all the relevant circumstances, and not just the fact of discontinuance, should be considered; thus, the reasons for the discontinuance can bear heavily on the exercise of the discretion as to costs: McClure v City of Stirling (No 3) [2009] WASC 247 [4]; O’Neill v Mann [2000] FCA 1680; Beeson v Carrello As Liquidator of Gecko Managment Pty Ltd (In Liq) [2010] WASCA 155 at [13].

      (h) In a particular case, it might be appropriate for the Court, in its discretion, to consider the conduct of the defendant prior to the commencement of the proceedings where such conduct may have precipitated the litigation: Foukkare at [66] per Beazley JA;
    Mark - it is unclear what stage you are at so far (e.g. whether this matter is before a costs assessor or whether you are considering an appeal of the costs assessment etc.)

    However, what is hopefully clear from the above is that there are a number of exceptions to the general rule that the applicant must pay the defendant's costs in the circumstance that you've described.

    Practically - I recommend that you approach your local community legal centre to explain what stage you are at with this matter. They should be able to give you some procedural advice as to what to do next, if anything (the forms to complete, etc.).

    If any of the above discretionary factors are relevant - you can discuss these further with your community solicitor with a view to raising them as a possible defence to any claim for costs made by the defendant.

    Hope this helps and good luck.
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...
  4. Serge Gorval

    Serge Gorval Well-Known Member
    LawTap Verified Lawyer

    2 November 2015
    Likes Received:
    Unless you're legally represented, you have no claim for costs as a lay person. If you are legally represented then your solicitor should be claiming these costs for you?
    Stop hovering to collapse... Click to collapse... Hover to expand... Click to expand...

Share This Page