Knight v FP Special Assets Ltd: 25 Jun 1992

(High Court of Australia) Two orders for the payment of costs had been made against the receivers and managers of the claimant in the action, Forest Pty Ltd, and the defendant to a counterclaim brought by the defendants to the action, Howe Corporation Pty Ltd. An order for security for costs had been made against Forest but proved to be insufficient. Judgments were entered by the defendants against both Forest and Howe. The solicitors of record for both Forest and Howe were the solicitors who acted for the creditors secured by the charges under which the receivers and managers were appointed. The solicitors received their instructions in respect of the action and counterclaim from the banks and the receivers and managers. The Supreme court had held that the judges who made those orders had had jurisdiction to do so and, by a majority, that the discretion conferred by the relevant legislation had been properly exercised.
Held: The court considered that there was the jurisdiction to make an award.
Mason CJ : ‘Obviously, the prima facie general principle is that an order for costs is only made against a party to the litigation. As our discussion of the earlier authorities indicates, there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party. Thus, for example, there are several long-established categories of case in which equity recognized that it may be appropriate for such an order to be made.
For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.’


Mason CJ, Deane, Dawson, Gaudron JJ, and McHugh J (dissenting)


(1992) 174 CLR 178, [1992] HCA 28






AppliedAiden Shipping Co Ltd v Interbulk Ltd (The ‘Vimeira’) HL 1986
Wide Application of Costs Against Third Party
A claim had been made against charterers by the ship owners, and in turn by the charterers against their sub-charterers. Notice of motion were issued after arbitration awards were not accepted. When heard, costs awards were made, which were now . .

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CitedTravelers Insurance Company Ltd v XYZ SC 30-Oct-2019
Challenge to the making of a non-party costs order under section 51 of the Senior Courts Act 1981 against the product liability insurer of one of the defendants in litigation being managed under a Group Litigation Order (‘GLO’). Many of the . .
Lists of cited by and citing cases may be incomplete.


Updated: 04 May 2022; Ref: scu.252411