Costs recovery restrictions under the UCPR

14/09/2010

The attention of practitioners is drawn to recent amendments to the UCPR (Uniform Civil Procedure Rules (Amendment No 36) 2010) which introduce new restrictions on recovery of costs. The new rules introduce a two stage approach to the discretion to award costs where the amount recovered is less than the specified monetary amount.

The first stage requires the court to ask whether a costs order should be made in the plaintiff’s favour having regard to the “unless” criteria in the sub-rule (2) of both UCPR 42.34 and UCPR 42.35; and� if so, the second stage will require the court to consider what order for costs should be made.

The new rules do not limit the courts’ existing discretionary jurisdiction to make costs orders in all or in any case.

In relation to proceedings in the Supreme Court (UCPR 42.34), the effect of the “unless” criterion is akin to a presumption against the award of costs to the plaintiff where the amount recovered on judgment is less than $500,000, unless the successful plaintiff can satisfy the court the proceedings were properly commenced and thereafter maintained in the Supreme Court, rather than in the District Court. The new rules are likely to affect mainly common law claims, as equity claims may more readily satisfy the test.

In relation to proceedings in the District Court (UCPR 42.35), there will be a similar ‘presumption’ against the award of costs to the plaintiff where the amount recovered on judgment is less than $40,000, unless the successful plaintiff can satisfy the court the proceedings were properly commenced and thereafter maintained in the District Court, rather than in the Local Court.

**14 September 2010 **