Knight v FP Special Assets Ltd

The High Court of Australia considered an appeal from a decision of the Supreme Court of Queensland concerning an award of costs against a non-party. The dispute arose from litigation conducted by a receiver and manager through an insolvent company. The core issue was whether the Supreme Court had the jurisdiction to order a non-party, the receiver and manager, to pay the costs of the proceedings.

The High Court was required to determine the scope of the Supreme Court's power to award costs against a non-party, specifically in circumstances where a receiver and manager was controlling litigation on behalf of an insolvent company. This involved an examination of the relevant Supreme Court rules and legislation governing the award of costs.

The Court held that the Supreme Court possessed the inherent jurisdiction to make orders for costs against a non-party in exceptional circumstances. This jurisdiction is not limited by the fact that the non-party is a receiver and manager acting in that capacity. The Court reasoned that where a receiver and manager, by their conduct, has brought about a situation where it is just and equitable to make them personally liable for costs, such an order can be made. This is particularly so when the company is insolvent and the receiver and manager has effectively controlled the litigation. The Court affirmed that the power to award costs is a fundamental aspect of the court's jurisdiction to manage its own proceedings and ensure fairness.

The High Court allowed the appeal, setting aside the order for costs made against the receiver and manager.