Case: Gore v Justice Corp Pty Ltd (2002) 119 FCR 429
Outcome: followed
as a general rule costs are not awarded against a stranger to litigation, as I have already indicated it is well-settled that the Court has a discretion pursuant to s 43 of the Federal Court Act to order costs against a non-party in appropriate circumstances ( Knight [1992] HCA 28 ; (1992) 174 CLR 178 , Caboolture Park [1993] FCA 471 ; (1993) 45 FCR 224 , Gore v Justice Corp Pty Ltd (2002) 119 FCR 429, Kebaro Pty Ltd v Saunders [2003] FCAFC 5 , Life Therapeutics Ltd v Bell IXL Investments Ltd (No 2) [2008] FCAFC 158 ; (2008) 170 FCR 595). The exercise of such discretion is approached with caution indeed it has been described as "rare and exceptional" ( Vestris v Cashman (1998) 72 SASR 449 at 467, Kebaro [2003] FCAFC 5 at [103] ) and depends on the circumstances of each case as it is a "fact-specific jurisdiction" ( Kebaro [2003] FCAFC 5 at [69] ). Principles guiding the approach of the Court to the exercise of the include the following: Significantly, and by analogy with the principles of maintenance and champerty, the courts have also recognised that not only may legitimate financial support in litigation be provided by family members, but that in the event of the failure of the relevant litigation costs will not as a general proposition be awarded against those supporting family members. The rationale for such recognition appears to be that such social or family ties justify the support of the litigation (cf for example Neville v London Express Newspaper Ltd [1919] AC 368). This principle was discussed by the Full Court in Gore (2002) 119 FCR 429, where their Honours in turn referred to the decision of the Court of Appeal in Condliffe v Hislop [1996] 1 WLR 753 and observations of Longmore J in McFarlane v EE Caledonia Ltd (No 2) [1995] 1 WLR 366 at 373. That is not to say, of course, that non-party costs will not be awarded against a spouse or other family member should the circumstances warrant for example Thistleton v Hendricks (1992) 32 Con LR 123 , Locabail (UK) Ltd v Bayfield Properties Ltd [1999] 20 LS GazR 39. It cannot be correct that the circumstances described in Knight [1992] HCA 28 ; (1992) 174 CLR 178 constitute necessary pre-conditions to the exercise of the Court's discretion to award non-party costs pursuant to s 43 as submitted by the applicants. While obviously the comments of Mason CJ and Deane J would be an appropriate guide to the exercise of discretion in an appropriate case, they were clearly obiter (see observations of the Full Court in Yates v Boland [2000] FCA 1895). As the exercise of the discretion in s 43 is unfettered, other than the requirement that it be exercised judicially ( Knight [1992] HCA 28 ; (1992) 174 CLR 178 at [192] ; Gore (2002) 119 FCR 429 at 447-448), it follows that the comments in Knight [1992] HCA 28 ; (1992) 174 CLR 178 could not prescribe prerequisites to the exercise of discretion to award costs against a non-party. Inevitably, as the Full Court pointed out in Gore (2002) 119 FCR 429 at 437: ...there is no reason to suppose that the remarks of the members of the High Court in Knight have closed the door to the categories of third parties who may be made liable for the costs of litigation nor that the circumstances that were identified by their Honours were exhaustive. ... and later ...the learned trial judge erred when he regarded the passage in Knight as laying down three principles, each of which must be present before a stranger to the litigation could be made liable for costs. (at 451) First, Mrs Tracy was never a director or shareholder of either the first or third applicants. In light of the dominant role played by the second applicant in the affairs of all applicants and the clear professional and financial stake of the second applicant in the businesses of the first and third applicants particularly as director and shareholder, it is clear that the failure of the proceedings would have had a much greater impact on the fortunes of the second applicant than on those of Mrs Tracy. I consider that it is likely that any financial support provided by Mrs Tracy to the applicants' case was motivated by Mrs Tracy's natural affection for the second applicant (cf Jackson v Thakrar [2007] EWHC 626 ; [2008] 1 All ER 601 at 609) rather than any financial interest she may have had in the outcome of the proceedings. In my view this is an important distinction between the supportive role played by Mrs Tracy of the applicants, and the motivation of such entities as the third party in Gore (2002) 119 FCR 429.