Ruling deems it inappropriate to litigate substantive merits via cost issue
Australia’s Federal Court has found it appropriate to grant leave to discontinue a proceeding and directed the parties to bear their own costs upon seeing nothing unreasonable in the applicant’s commencement, maintenance, or discontinuance of the proceeding.
In Kimberley Land Council Aboriginal Corporation v Ngarrawanji Aboriginal Corporation RNTBC [2026] FCA 2, the parties had a retainer contract.
The applicant requested declarations and an injunction through an originating application dated 29 May 2025. Specifically, the applicant alleged that the respondent:
The applicant argued that the retainer subsisted, insofar as it related to entrenched matters. The requested injunction sought to prevent the respondent from engaging Eagle & Partners to provide legal services on entrenched matters without authorisation from the native title holders.
On 22 November 2025, at a meeting of common law holders for Ngarrawanji Determinations A and B, a resolution passed – the native title holders authorised Ngarrawanji PBC to engage lawyers selected by its board to act on their behalf for future entrenched matters.
On 27 November 2025, the judge’s chambers learned that a trial was not necessary because certain events had overtaken the proceeding.
The applicant did not concede the validity of the outcome of the 22 November 2025 meeting. However, the applicant requested leave to discontinue the proceeding. It sought no cost order.
The respondent did not oppose a discontinuance. However, it sought cost orders against the applicant.
The Federal Court of Australia gave the applicant leave to discontinue the proceeding and ordered the parties to bear their own costs.
The court rejected the respondent’s submissions and saw no basis to depart from the general rule in s 85A(1) of the Native Title Act for three reasons.
First, the court found it reasonable for the applicant to discontinue a proceeding due to events that had overtaken the relevant facts. The court noted that the applicant made its intention clear that it sought no relief against the respondent or Eagle & Partners when seeking a discontinuance.
Second, the court ruled that the applicant did not, by any unreasonable act or omission, make the respondent incur costs concerning instituting or conducting the proceeding.
The court noted that the applicant offered to help with holding a meeting of common law holders six times between March 2024 and March 2025, before initiating proceedings in May 2025. The applicant mailed out notices for the 22 November 2025 meeting.
The court pointed out that the respondent ignored all the applicant’s offers and caused the costs of the proceeding through its prolonged refusal to hold a meeting.
Third, the court deemed it inappropriate to try to litigate the substantive dispute’s merits through the question of costs in circumstances where the parties had agreed to a discontinuance due to events superseding the substantive issue.
The court noted that the respondent’s submissions regarding the applicant’s manner of preparing the documents addressed the underlying dispute’s merits.
The court added that the respondent, bound by a direction from the native title holders, could have called for a meeting to resolve any doubts about the direction’s validity, as the respondent ultimately did after the commencement of the proceedings.
