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Catchwords: COSTS — party/party — exceptions to general rule that costs follow the event — plaintiff seeking indulgence — where plaintiff unsuccessfully pursued litigation, is dissatisfied with legal representation and claims financial hardship — usual costs order cannot justly be refused

Legislation Cited: Civil Procedure Act 2005 (NSW), ss 26, 98
Uniform Civil Procedure Rules 2005 (NSW), r 42.1

Cases Cited: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27
Commonwealth v Mewett (1997) 191 CLR 471; [1997] HCA 29
Ji v Gu [2026] NSWSC 796
Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59
Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25
Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11

Category: Costs

Parties: Qiaofen Ji (Plaintiff/Cross-Defendant)
Yi Fen Gu (Defendant/Cross-Claimant)

Representation: Counsel:
Qiaofen Ji (self-represented) (Plaintiff)
Dr S Baron Levi (Defendant)
Solicitors:
Qiaofen Ji (self-represented) (Plaintiff)
International Lawyers Co-operative (Defendant)

File Number(s): 2025/67142

Publication restriction: No

JUDGMENT

1. In July 2026 I gave judgment for Ms Gu, Ms Ji having unsuccessfully pursued orders for possession of Ms Gu’s home, which secured advances dealt with in a January 2024 facility agreement which they had entered and Ms Gu having successfully pursued her cross-claim: Ji v Gu [2026] NSWSC 796.

2. The parties were unable to agree the resulting costs order at a time when Ms Ji was no longer legally represented.

3. The usual order under the Uniform Civil Procedure Rules 2005 (NSW) is that costs follow the event: r 42.1. In this case, that is an order in favour of Ms Gu, but Ms Ji sought a departure from that order. Namely, that the parties bear their own costs.

4. The Court’s discretion to make such an order under s 98 of the Civil Procedure Act 2005 (NSW) is not in issue, but its exercise is resisted by Ms Gu. She presses an order in her favour for the costs of both Ms Ji’s claim and her cross-claim, as agreed or assessed.

5. The applicable principles were discussed in Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [24]-[35]. They include:

6. orders for costs are intended to be compensatory, not punitive: Latoudis v Casey (1990) 170 CLR 534 at 543, 562-563, 567; [1990] HCA 59; Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [1], [44], [67], [80], [82], [134];

7. there is nothing punitive in an order that the successful party be compensated for having been unsuccessfully sued: Sangare at [31];

8. the costs power must be exercised judicially, by reference only to considerations relevant to its exercise and upon facts connected with or leading up to the litigation: Latoudis at 539-540, 557, 561-562, 569; Oshlack at [65], [134];

9. “one of the most, if not the most, important” principles being that “the successful party is generally entitled to his or her costs by way of indemnity against the expense of litigation that should not, in justice, have been visited upon that party”: Oshlack at [66]-[67], [35], [134];

10. the application of that principle may be modified or displaced where the successful party’s conduct in relation to the conduct of the litigation justifies a different outcome. For example, where the successful defendant by its conduct induced the plaintiff to believe that he or she had a good cause of action, unreasonable delay or a want of the cooperation required of litigants to ensure the “just resolution of the real issues in civil proceedings with minimum delay and expense”: Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 at [90];

11. it being basic justice that a successful party should be compensated for expenses incurred by being obliged to litigate by the unsuccessful party. The successful party, whether rich or poor, not having asked to be subjected to the expense of unmeritorious litigation. The statutory power to order costs affording the successful party necessary protection against unmeritorious litigation. Which is no less unmeritorious because it is pursued by a person who is poor, or who is a litigant-in-person: Sangare at [27];

12. whether a party is rich or poor thus generally has no relevant connection with the litigation. Although a party’s financial position may inform the structure of a costs order. “For example, impecuniosity may justify providing for the payment of costs over time in order to avoid inflicting unnecessary hardship while at the same time improving the likelihood of compliance with the order”: Sangare at [32]; and

13. a costs order against an impecunious party should thus not be refused because it would be futile. The very existence of the resulting debt created by the Court’s order being of benefit to the successful party and it being unable to be assumed that the unsuccessful party will never have the means to pay the debt in whole or in part, or that it might not otherwise be turned to valuable account by the beneficiary of the order: Commonwealth v Mewett (1997) 191 CLR 471 at 535; [1997] HCA 29.

The parties’ cases

6. Ms Ji’s case was supported by an affidavit which she affirmed on 7 August. There she deposed to not having brought the proceedings in bad faith, to harass Ms Gu, or to abuse the Court’s process, but because she wanted to pursue legal rights she genuinely believed she had. Always relying on her legal advice.

7. She had repeatedly instructed her lawyer to pursue mediation, sincerely hoping that it could be resolved through negotiation and without substantial legal costs, but had been advised that the matter would proceed to trial.

8. Ms Ji also claimed that she was suffering financial hardship, but advanced no evidence to establish this. She also claimed that she had ceased operating her business in November 2025 and now lived alone without family support or financial assistance. She also claimed that she had other financial obligations, including in relation to a home loan, which also had no evidentiary support.

9. Still she asked that these matters be taken into account in the exercise of the Court’s cost discretion.

10. Ms Gu’s case was that the evidence Ms Ji relied on was not relevant, it not being directed to her conduct, which was not suggested had resulted in any unnecessary costs. Ms Ji not having made any offer of compromise or Calderbank offer, the matters relied on were thus irrelevant to the exercise of the Court’s costs discretion.

11. In reply, Ms Ji relied on Ms Gu not having lodged a caveat over Ms Zhou’s property, as she claimed she had repeatedly advised her to do, as providing a basis for the order she sought. Ms Ji understanding that when the property was sold there remained a surplus of $500,000, which would have been sufficient to satisfy the loan the subject of these proceedings. But she also led no evidence to support this understanding.

12. Ms Ji contended that what was decided in Sangar**e at [24] made Ms Gu’s conduct a proper basis on which to make the costs order she sought. Ms Gu’s failure being directly relevant to what Ms Ji had pursued in these proceedings. That having provided a genuine and practical way for Ms Gu to have avoided or reduced the dispute over which issue had been joined in these proceedings.

13. Ms Ji also relied on her limited command of English to explain why she did not understand the Court’s procedures and had to rely on her former solicitor, who she had repeatedly asked to arrange for a mediation. Not being aware that she could herself have applied under s 26 of the Civil Procedure Act. Such mediation also providing a practical opportunity to avoid the litigation, or reduce costs.

14. That all supporting the making of the order which she sought.

The usual costs order cannot justly be refused

15. I am not persuaded that the just exercise of the Court’s costs discretion permits the order Ms Ji sought. That is because:

16. Ms Ji was legally represented until after the July judgment was given. Her dissatisfaction with that representation, including her solicitor’s claimed failure to pursue the mediation she now says she wanted to engage in, is not relevant to the exercise of the costs discretion. That being incapable of establishing any wrongdoing by Ms Gu;

17. nor is Ms Ji’s claimed impecuniosity relevant, given the applicable principles, which was in any event, not established by the evidence on which she relied;

18. it was Ms Ji who forced Ms Gu to defend her claims, which she successfully resisted, as well as establishing her cross-claim, which Ms Ji unsuccessfully resisted, in considerable part as the result of evidence Ms Ji herself gave;

19. it having been Ms Ji who decided to pursue the litigation, as well as deciding to defend Ms Gu’s cross-claim, despite knowing the matters on which Ms Gu’s success finally turned;

20. that is relevant because one important purpose of the compensatory costs principle is “to instil in a party contemplating commencing, or defending, litigation a sober realisation of the potential financial expense involved”: Oshlack at [68];

21. the adverse findings which I made against Ms Ji, given the evidence which she gave, resulted in conclusions which included that Ms Ji had acted together with Ms Zhou to advance their respective interests, to Ms Gu’s considerable, known detriment: at [121]; that Ms Ji, unlike Ms Gu, was aware of the seriousness of Ms Zhou’s financial problems and the nature of the resulting risk Ms Gu accepted, when she entered the facility agreement and mortgage on which Ms Ji relied: at [123]; that Ms Ji knew that this transaction was improvident: at [136]; that Ms Ji took advantage of Ms Gu, to her financial benefit: at 148]; and that Ms Ji had pressured Ms Gu, in order to assist Ms Zhou: at [153];

22. Ms Gu’s conduct before the litigation, does not in all those circumstances, assist Ms Ji. She not having established that it was Ms Gu’s lax conduct which effectively invited Ms Ji’s litigation: Oshlack at [69];

23. I also concluded in the July judgment that when the interest under the facility agreement fell into arrears, when Ms Ji advised Ms Gu to seek legal advice and place a caveat on Ms Zhou’s Wahroonga property, Ms Ji still did not disclose to Ms Gu the legal advice she had received. That the property was already so encumbered, that not even a further caveat could be lodged. That supporting the conclusion that the facility agreement and mortgage were unjust: at [234]-[235];

24. Ms Ji did not lead any evidence to establish that contrary to the advice she had received, Ms Gu could then have lodged such a caveat. Her failure to do so is thus in my view not relevant to the exercise of the costs discretion; and

25. In all the circumstances even if it were, that could not provide a just basis for depriving Ms Gu of the usual costs order, having succeeded in the proceedings as she did.

Orders

16. For these reasons I order that Ms Ji bear Ms Gu’s costs of Ms Ji’s claim and Ms Gu’s cross-claim, as agreed or assessed.

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