Department for Health and Ageing v Li

The Department for Health and Ageing (the Department) appealed to the Full Court of the Supreme Court of South Australia against a costs order made by a single judge. The dispute concerned the costs of an action brought by Ms Li against the Department, which had been dismissed by the primary judge. The Department sought to recover its costs of the entire action.

The central legal issue before the Full Court was whether the primary judge had erred in departing from the general rule that costs follow the event, by ordering that each party bear their own costs of the proceeding. The Court was required to consider the principles governing the exercise of discretion in awarding costs and the circumstances in which a departure from the usual rule is justified.

The Full Court held that the primary judge had misapplied the principles of costs discretion. While acknowledging that a judge has a broad discretion to depart from the general rule, the Court found that the reasons provided by the primary judge for ordering no order as to costs were insufficient and did not disclose a proper exercise of that discretion. The Court emphasised that the general rule reflects a fundamental principle of fairness and that any departure must be based on sound legal reasoning and demonstrated circumstances that warrant such a departure. The Court found that the reasons given by the primary judge did not meet this threshold.

Consequently, the Full Court allowed the appeal and ordered that Ms Li pay the Department's costs of the action, to be summarily assessed.