Northern Territory v Sangare

The High Court of Australia considered an appeal by the Northern Territory against a decision of the Northern Territory Court of Appeal concerning costs in defamation proceedings. The respondent, Mr. Sangare, had commenced defamation proceedings against the Northern Territory, alleging that a briefing note prepared by the Department of Infrastructure contained defamatory material. The Northern Territory was wholly successful in the proceedings, both at first instance in the Supreme Court of the Northern Territory and on appeal to the Court of Appeal. Despite this success, the Court of Appeal made no order as to costs, citing Mr. Sangare's impecuniosity as a likely reason why any costs order would be futile. The Northern Territory sought an order that Mr. Sangare pay its costs.

The central legal issue before the High Court was whether the impecuniosity of an unsuccessful party, on its own, could justify a court's decision to deny a wholly successful party its costs. The High Court was required to determine if the Court of Appeal had properly exercised its discretion in making no order as to costs, or if its reasoning was flawed.

The High Court reasoned that the courts have consistently rejected the notion that an order for costs should not be made against an impecunious party simply because it might be futile to do so. The existence of a debt created by a costs order is considered a benefit to the successful party, regardless of the immediate enforceability. It cannot be assumed that an unsuccessful party will never have the means to pay the debt, or that the debt might not be turned to valuable account in other ways. The Court held that the respondent's impecuniosity was not a relevant consideration for the proper exercise of the Court of Appeal's discretion as to costs and that the Court of Appeal's decision could not be supported as an exception to the general principle that a wholly successful party should be entitled to an order for costs.

Accordingly, the High Court allowed the appeal. It ordered that the respondent pay the appellant's costs of and incidental to the proceedings in the Supreme Court of the Northern Territory and the Court of Appeal of the Northern Territory, as well as the appellant's costs of the appeal to the High Court.