In the matter of Arada Australia Pty Ltd (No 2)

On 15 October 2025, I dismissed the plaintiffs’ application for an interlocutory injunction (see In the matter of Arada Australia Pty Ltd [2025] NSWSC 1292). These reasons address costs.

The plaintiffs submit that the costs of the parties should be the costs in the cause. The defendants submit that the plaintiffs should pay their costs.

The plaintiffs contend that while the Court has an unfettered discretion in respect of costs, the “usual position” in interlocutory applications is that the costs of the parties should be costs in the cause. They refer to r 42.7 of the Uniform Civil Procedure Rules 2005 (NSW) and cite: Skytraders Pty Ltd v Meyer [2023] NSWSC 857 at [2]; His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) [2007] NSWCA 142 at [16]-[28].

UCPR r 42.7(1) provides as follows:

UCPR r 42.1 is also relevant. It provides:

The relevant combined operation of these rules is that there is a general rule that if the Court makes any order as to costs, it is to order that costs follow the event unless it appears to the Court that some other order should be made, and that in the event there are no orders made as to costs on an interlocutory hearing, or costs are reserved, then the costs of an interlocutory hearing will form part of the parties’ costs for the purposes of any final costs orders.

In my view, there is some danger in saying that the “usual position” in interlocutory applications is that the costs of the parties should be costs in the cause. This suggests that there is some kind of general rule or starting point that the costs of the parties in interlocutory applications are costs in the cause and that there should be some reason for departing from this “usual position”. It does not appear to me that UCPR r 42.7 should be read as qualifying UCPR r 42.1. The general rule in UCPR r 42.1 applies to interlocutory applications. There remains a discretion and various practices and principles that have developed to assist the Court in the proper exercise of its discretion.

The decision in His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) considers principles that inform the exercise of discretion in awarding costs in the context of interlocutory proceedings. The analysis mainly concerns the appropriate order as to costs when a plaintiff has successfully obtained an interlocutory injunction. In that context, it will often be appropriate for the costs of the interlocutory hearing to be costs in the cause because if the plaintiff fails at the final hearing, it may be appropriate that the plaintiff pay the defendant’s costs of the hearing of the interlocutory injunction.

Different considerations arise when a plaintiff’s application for an interlocutory injunction has failed. In Ausino International Pty Ltd v Apex Sports Pty Ltd [2006] NSWSC 1119 (cited in His Eminence Metropolitan Petar, Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand v The Macedonian Orthodox Community Church St Petka Incorporated (No 2) at [25]), Campbell J observed as follows (at [55]) (emphasis added):

In my view, the general rule should apply in this case unless there is some reason to depart from it. The plaintiffs essentially advance 3 arguments to support their contention that costs should be costs in the cause.

First, they contend that the outcome of the application should be seen as a “one-all draw” because the defendants conceded that they were required to register Mr Alha as a director with the Australian Securities and Investments Commission, which was something that the plaintiffs had been demanding for almost 12 months. To describe the outcome of the application as a “one-all draw” is not a helpful or reasonable reflection of the result of the contest. The defendants effectively conceded the plaintiffs’ position on this issue in their written submissions. The matter did not take any time at the hearing. It was properly described as peripheral to the application and was not the reason the hearing was required to be conducted with great urgency. The plaintiffs’ modest success on this part of the application does not warrant any departure from the general rule.

Second, the plaintiffs contend that given the defendants accepted that there was a serious question to be tried, it cannot be said that the plaintiffs acted unreasonably in bringing the application. I do not consider this is a matter that weighs in the exercise of discretion. Unsuccessful plaintiffs will generally be ordered to pay costs even though they did not act unreasonably in making the application. If a plaintiff is unreasonable in bringing an application, the consequence may be an order for costs on an indemnity basis. The defendants do not seek an indemnity costs order in this case.

Third, the plaintiffs contend that the defendants’ success at the interlocutory hearing essentially arose because of evidence they served the day before the hearing, which changed the defendants’ position. The interlocutory hearing came on with urgency (proceedings were commenced on Friday 10 October 2025 and the hearing occurred on 14 October 2025). The defendants’ evidence was served on the first business day after the proceedings were commenced. They cannot be criticised for late service of evidence. The evidence may have reflected a shift in the position taken by the defendants up to the commencement of the proceedings. However, the plaintiffs pressed their application even after the evidence was served. I do not consider that this consideration justifies a departure from the general rule.

None of the matters advanced by the plaintiffs persuade me that the appropriate order is anything other than an order that the plaintiffs pay the defendants’ costs.

I order that the plaintiffs pay the defendants’ costs of the interlocutory application that was heard on 14 October 2025.