KSMC Holdings Pty Ltd v Bowden (No 3)

In *KSMC Holdings Pty Ltd v Bowden (No 3)*, the Court of Appeal of the Supreme Court of New South Wales considered an application for a third-party costs order. The applicants sought to recover costs from the parents of the successful defendants in underlying defamation proceedings.

The central legal issue before the Court was whether the parents of the successful defendants had a sufficient interest in the litigation to justify making them liable for the costs incurred by the unsuccessful party. Specifically, the Court had to determine if the parents' provision of funds to their son to conduct the litigation, coupled with their desire for his success, constituted a sufficient interest for the purposes of a third-party costs order under section 98 of the *Civil Procedure Act 2005* (NSW).

The Court applied the principles established in *Knight v FP Special Assets Ltd* and *FPM Constructions v Council of the City of the Blue Mountains*, which require a third party to have a substantial, direct, and proprietary interest in the subject matter of the litigation for a third-party costs order to be made. The Court found that while the parents had provided financial assistance and had a natural interest in their son's success, this did not amount to the requisite proprietary or direct interest in the litigation itself. Their involvement was characterised as that of a funder and a concerned parent, rather than a party with a direct stake in the outcome of the defamation proceedings.

Consequently, the Court dismissed the application for a third-party costs order and ordered the applicants to pay the costs of the respondents to the motion.