Case: Knight v FP Special Assets Ltd [1992] HCA 28 ; (1992) 174 CLR 178
Outcome: considered
The courts have recognised that there is no absence of jurisdiction to order costs against non-parties in the strict sense and that the jurisdiction could be exercised against persons who were considered to be the "real parties" to the litigation, such as where a party to the litigation is insolvent, and a non-party has played an active part in the conduct of litigation and has an interest in the subject of the litigation: Mason CJ and Deane J (Gaudron J agreeing) in Knight v FP Special Assets Ltd [1992] HCA 28 ; (1992) 174 CLR 178 at 188 and 193. This does not mean however that the categories of third parties who may be made liable for the costs of litigation are limited to those articulated by their Honours in Knight : Gore v Justice Corporation [2002] FCA 354 ; (2002) 119 FCR 429 at 437. 40 The order sought by the Kabi Kabi #2 Applicant in this case may be distinguished however from such cases as Knight [1992] HCA 28 ; 174 CLR 178 and Gore [2002] FCA 354 ; 119 FCR 429 in that, in this case, costs are sought by a non-party against a party to the litigation. While claims by non-parties seeking costs in their favour against parties to litigation are rare, they are not unknown: for example Re Pan Pharmaceuticals; Selim v McGrath [2004] NSWSC 129 and O'Keefe v Hayes Knight GTO Pty Ltd [2005] FCA 1559. In O'Keefe [2005] FCA 1559 Nicholson J said in the context of such claims in the Federal Court: "17 The jurisdiction of the Court to award costs is found in s 43 of the Federal Court of Australia 1976 (Cth) ('the Act '). It follows from the terms of that section that the jurisdiction is conditioned by there being 'costs' and those costs being in 'proceedings before the Court'. Section 4 of the Act defines 'proceeding' to mean 'a proceeding in a court, whether between parties or not, and includes an incidental proceeding in the course of, or in connexion with, a proceeding...'. In Knight v FP Special Assets Limited [1992] HCA 28 ; (1992) 174 CLR 178 it was held by Mason CJ, Deane, Dawson and Gaudron JJ, McHugh J dissenting, that the discretion to award costs under O 91 r 1 of the Rules of the Supreme Court of Queensland was not confined to the parties in the proceedings. That rule provided for the costs of and incidental to all proceedings in the court to be in the discretion of the court or judge. Gaudron J at 205 stated that it was contrary to long-established principle and wholly inappropriate that a grant of power to a court should be construed as subject to a limitation not appearing in the words of the grant; that is, the words used should be given their full meaning unless there is something to indicate to the contrary. Therefore, her Honour stated the necessity for the power to be exercised judicially tends in favour of the most liberal construction. 18 In O'Keeffe Nominees Pty Ltd v BP Australia Ltd (1995) 55 FCR 591 at 597 Spender J stated that, in the absence of any express restriction on the orders for costs that may be made concerning intervention or associated with it, the unfettered discretion conferred on the Federal Court by s 43 of the Act applied in the context of awarding costs in favour of a non-party intervener. 19 In King v GIO Australia Holdings Limited [2001] FCA 1773 ; (2001) 116 FCR 509 at 515, after referring to what was stated by Spender J in O'Keeffe , Moore J said he was prepared to assume that s 43 of the Act is cast in sufficiently wide terms as to enable the Court to make an order for costs in the proceeding for the benefit of a non-party. 20 This line of authority, although not greatly developed, would support a conclusion that there is power in the Court pursuant to s 43 to make an order for costs in favour of a non-party."