New South Wales taxpayers are likely to pay the $150,000 legal cost for Pauline Hanson's failed challenge to the state election result.

In the NSW Supreme Court this morning, Justice Peter McClellan recommended the state pick up the tab, and that the Attorney-General investigate the case.

The One Nation founder challenged the March election result based on emails claiming 1,200 votes for her were not properly counted.

Ms Hanson missed out on a seat in the state's Upper House by 1,300 votes.

But her challenge fell spectacularly apart earlier this month when the man who provided the emails, Sean Castle, admitted the allegations in them were not true.

The 35-year-old school teacher communicated with Ms Hanson using an alias, Michael Rattner.

One of the successful election candidates named in Ms Hanson's challenge, Greens MP Jeremy Buckingham, says Ms Hanson should be forced to pay.

"This lack of judgement shows she's unfit for public office. She shouldn't have brought this to court without ever even meeting the witness," Mr Buckingham said.

Ms Hanson was not in court today, but she welcomed the judge's decision when contacted by the ABC.

"I did come very close and I believe that I lost the seat also on the basis that a lot of people were confused with the voting," Ms Hanson said.

"A lot of people voted for me below the line and only put a one beside my name. Will I stand again? Well, we'll see what the future holds."

Her lawyer, David Leamey, was also pleased.

"She was a victim from the start. Justice has been served," Mr Leamey said.

Attorney-General Greg Smith says Mr Castle may be prosecuted.

"It sounds to me like it is more of a police matter, than (a matter for) me, because it does sound as though there may have been a criminal offence committed, or at least potentially," Mr Smith said.

"Anyone that fabricates documents that are put before a court would be liable to investigation for offences dealing with interfering with court proceedings."