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Texts Cited: N.A.

Category: Costs

Parties: Fidem 2 Pty Ltd (first plaintiff)
Joseph Alha (second plaintiff)
JJJ Family Holdings Pty Ltd (third plaintiff)
Arada Australia Pty Ltd (first defendant)
Arada Dev Corp Pty Ltd (second defendant)
Arada Holdings Australia Pty Ltd (third defendant)
Arada Management Services Pty Ltd (fourth defendant)
Ahmed AlKhoshaibi (fifth defendant)
Alae (Aladdin) Kheir (sixth defendant)

Representation: Counsel:
R M Foreman SC; K E Holcombe (plaintiffs)
S G Finch SC; R Zambelli; T F Scott (defendants)
Solicitors:
Arnold Bloch Leibler (plaintiffs)
Gilbert + Tobin (defendants)

File Number(s): 2025/390509

Publication restriction: N.A.

JUDGMENT

1. 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.

2. 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.

3. 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].

4. UCPR r 42.7(1) provides as follows:

(1) Unless the court orders otherwise, the costs of any application or other step in any proceedings, including—

(a) costs that are reserved, and

(b) costs in respect of any such application or step in respect of which no order as to costs is made,

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

5. UCPR r 42.1 is also relevant. It provides:

Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs.

6. 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.

7. 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.

8. 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.

9. Different considerations arise when a plaintiff’s application for an interlocutory injunction has failed. In Ausino International Pty L**td 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 contrast, the present proceedings before me are brought on the basis that they are an interlocutory process. The usual order which is made as to costs concerning interlocutory processes, is that if the plaintiff is the applicant, and succeeds, then the costs of the interlocutory process become the plaintiff’s costs in the cause, while, if the plaintiff is the applicant, and loses, the usual order is that the plaintiff pay the defendant’s costs of that application.

This passage indicates that it would ordinarily be expected that where a plaintiff seeks an interlocutory injunction and fails, the general rule will apply and the plaintiff will be ordered to pay the defendant’s costs. See also Re JC Jewels Pty Ltd (No 2) [2024] NSWSC 581.

10. 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.

11. 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.

12. 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.

13. 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.

14. 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.

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

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