Knight & Anor v FP Special Assets

In the High Court of Australia, Desmond William Knight and William Gerard Malone (the appellants) appealed against FP Special Assets Limited, Keen Bay Pty Ltd, and Maindollar (the respondents). The dispute concerned the power of the court to order a receiver to pay the costs of an action carried on by them after a company had been compulsorily wound up.

The primary legal issue before the High Court was whether section 50 of the relevant legislation was sufficiently wide to empower the court to order a receiver, who had continued litigation after a company's winding up, to pay the costs of that litigation. A related question was whether the existence of provisions enabling security for costs militated against the existence of such a power to order a receiver to pay costs personally.

The appellants referred to the decision in *Bacal Contracting Company Limited v Modern Engineering (Bristol) Ltd*, where it was held that a court had the power to order a receiver to pay costs. The reasoning in *Bacal* suggested that the receiver was the "real plaintiff" and the company a "nominee plaintiff," and that the power under section 50 was broad enough to cover such circumstances, unless cut down by provisions relating to security for costs. The court in *Bacal* also considered the potential for manifest injustice and the emptiness of an order if the receiver were not personally liable. The appellants also drew attention to observations in *S & M Hotels Ltd v Family Housing Association* which appeared to support the court's power to make such an order against a receiver. The High Court considered whether it was necessary to join the receiver as a party to the original proceeding to seek an order for costs against them.