Trouton v Trouton[2025] QCA 128

SUPREME COURT OF QUEENSLAND

1. [1]
   THE COURT:  Mrs Patricia Trouton (the mother) was unsuccessful in her proceeding in the Trial Division against her son (the first respondent) and his wife (the second respondent) (the proceeding) in respect of Lot 7 at Harbut Street (the Harbut Street property) that was the subject of the decision given by the primary judge after a lengthy trial: Trouton v Trouton [2022] QSC 210 (the original decision).  The outcome of that proceeding was that the mother’s claim was dismissed, the caveats over the Harbut Street property were ordered to be removed, and the counterclaim of the first and second respondents (the respondents) was dismissed.  Provision was made in the original decision for the parties to be heard further on the appropriate orders and costs.  After the further hearing, the primary judge ordered the mother to pay the costs of the respondents calculated on the indemnity basis in respect of the mother’s claim, including reserved costs, and for each party to bear their own costs in respect of the counterclaim: Trouton v Trouton (No 2) [2023] QSC 29 (the original costs decision).
2. [2]
   The respondents by application filed on 31 October 2022 (the non-party application) sought an order that the appellant who is one of the daughters of the mother and a sister to the first respondent pay the respondents’ costs of the proceeding in respect of the mother’s claim on an indemnity basis.  For ease of reference, the other daughters of the mother who are sisters to the appellant and the first respondent will be identified by their first names: Deanne, Margo and Anna.  The respondents succeeded on the non-party application.  The primary judge ordered the appellant to pay the respondents’ costs calculated on the indemnity basis in respect of the plaintiff’s claim, including reserved costs: Trouton v Trouton (No 3) [2024] QSC 54 (the reasons).  This appeal is against that order made on 11 April 2024 and a further order made, by the consent of the parties, on 18 April 2024 that the appellant pay the respondents’ costs of the non-party application on the standard basis.
3. [3]
   After the notice of appeal was filed, the appellant applied to the primary judge for leave to appeal against the costs order made against the appellant in respect of the mother’s claim and the costs order made on the non-party application.  On 12 June 2024, the primary judge ordered that, conditionally upon the grant by the Court of Appeal of any necessary extension of time with respect to an appeal under r 748 of the Uniform Civil Procedure Rules 1999 (Qld), leave was granted for the purposes of s 64 of the Supreme Court of Queensland Act 1991 (Qld) in respect of the order dated 11 April 2024 and leave was granted for the purposes of s 63 and s 64 of that Act in respect of the order dated 18 April 2024.  The primary judge also ordered that the costs of the application for that leave were reserved to the Court of Appeal in this appeal.
4. [4]
   The original notice of appeal was filed within the requisite time period under r 748 of the UCPR, subject to the question of whether the leave from the primary judge was a mandatory requirement under s 64 of the Supreme Court of Queensland Act before the filing of the notice of appeal or whether it was sufficient for the leave to be obtained before the appeal was heard and determined.  Neither the appellant nor the respondents contend that an extension of time was required for the appellant to appeal.  Keane JA stated by way of obiter dictum in Morrison v Hudson [2006] 2 Qd R 465 at [18] that the language of the predecessor provision of s 64 was “arguably sufficiently broad to bear the construction that an order as to costs is not to be susceptible to effective challenge on appeal unless leave has been granted before the appeal is heard and determined”.  The same observation is apt for s 64.  There would be many applications for extension of time to appeal, if the leave of the primary judge or another judge of the Trial Division had to be obtained pursuant to s 64(1) for an appeal only in relation to costs before the notice of appeal was even filed in this Court and therefore within 28 days of the date of the order for costs.  This issue of construction of s 64 needs to be resolved for the purpose of this appeal.  The view of Keane JA should be accepted as the correct construction of s 64.  No extension of time was therefore required by the appellant to appeal, as the leave pursuant to s 64(1) from the primary judge was obtained prior to this appeal being heard.
5. [5]
   The respondents did not oppose leave being granted to the appellant to rely on the amended notice of appeal which was dated 26 November 2024.  Unless otherwise indicated, it is that notice of appeal that is referred to in what follows in these reasons.

The underlying dispute between the mother and the respondents

6. [6]
   The mother and her late husband Mr Colin Trouton were the owners of a property in Harbut Street as joint tenants that was referred to in the original decision as the Original Block.  In April 2000 the Original Block was subdivided into the Dagmar Street property and the Harbut Street property and the mother and Mr Trouton transferred the Dagmar Street property to the respondents.  Mr Trouton had appointed the mother, the first respondent and Deanne as his attorneys under an enduring power of attorney.  Mr Trouton died on 15 June 2007.  The respondents had prepared or caused to be prepared a transfer to convey the title to the Harbut Street property from the mother and Mr Trouton to the respondents.  The consideration recorded in the transfer was $525,000.  The mother met the respondents and their children at the office of Mortgage Choice at Garden City shopping centre on 19 June 2007 where there was a justice of the peace available to witness the signatures on the transfer.  The mother signed the transfer on 19 June 2007 on her own behalf and on behalf of Mr Trouton as one of his attorneys together with the first respondent as the other attorney (after Mr Trouton’s power of attorney had been revoked by operation of law on and from 15 June 2007).  When the mother returned home, she did not tell the appellant where she had been or what she had done.  The primary judge inferred (at [201] of the original decision) that the mother “was not full and frank” with the appellant, as the mother did not say truthfully where she had been and what she had done.
7. [7]
   The transfer was lodged for registration on 19 June 2007 and registered.  The execution of the transfer was defective as the power of attorney could not be used after Mr Trouton’s death.  The primary judge found (at [390] of the original decision) that the mother knew and understood the legal effect of the transfer at the time it was executed and knowingly and voluntarily signed it; and the mother and the respondents honestly thought the transfer was properly executed on behalf of Mr Trouton.
8. [8]
   The appellant commenced living with her mother from early 2017.  The mother lodged a caveat over the Harbut Street property on 10 April 2017.  The appellant gave instructions to solicitors Attwood Marshall to send the letter dated 12 April 2017 demanding payment of $1.75m from the respondents to the mother.  Following receipt of a statutory declaration by the mother regarding the circumstances relevant to the registration of the transfer, the Registrar of Titles lodged a Registrar’s caveat over the Harbut Street property on 6 July 2017.
9. [9]
   The proceeding was commenced by the mother in July 2017.  The mother alleged in her claim that the title to the Harbut Street property was procured by fraud within the meaning of s 184(3)(b) of the Land Title Act 1994 (Qld).  The mother had alleged in the proceeding that she did not know what she was signing on 19 June 2007 when she signed the transfer and she did not become aware that the title had been transferred until the appellant discovered that the title was no longer in the names of Mr Trouton and her.  The mother sought an order pursuant to s 187 of the Land Title Act cancelling the registration of the transfer in favour of the respondents and an order for recovery of possession of the Harbut Street property.
10. [10]
    The respondents successfully defended the proceeding on the basis of the findings made by the primary judge (at [407]-[408] of the original decision) that there was an oral agreement made in February 2007 as varied by further oral agreements in May 2007 and on 5 June 2007 in respect of which the primary judge found (at [409]) acts of part performance of the oral agreement that the mother and Mr Trouton would transfer the Harbut Street property to the respondents for the price of $500,000 and the respondents would be responsible for paying the RAMS facilities secured by mortgage over the Harbut Street property.  As part of that agreement, it was proposed the respondents would cause the existing dwelling on the Harbut Street property to be demolished and a new dwelling built for the respondents and their family which would include a granny flat in which the mother and Mr Trouton would live.  The respondents took possession of the Harbut Street property and demolished the existing house between 27 and 29 March 2007 and commenced the construction of the new dwelling in or about September 2007.  It was also proposed that when the new house on the Harbut Street property was completed to lock-up stage, the respondents would list the Dagmar Street property for sale and pay the purchase price for the Harbut Street property to the mother and Mr Trouton upon settlement of the sale of the Dagmar Street property.  The respondents commenced paying all outgoings in respect of the Harbut Street property from May 2007.  The RAMS facilities were in arrears in September 2008 and the payment by the respondents of the arrears of $7,148 was a part payment of the purchase price and thereafter payments by the respondents on account of the RAMS facilities on behalf of the mother were part payments of the purchase price.  Payments by the respondents at the request of the mother, including expenses of Scaasi, as part payments of the purchase price totalled $94,547.55 and payments made by the respondents on behalf of the mother in respect of the RAMS facilities totalled $531,726.18 as at 30 November 2021 and were part payments of the purchase price.
11. [11]
    A mediation held on 30 October 2018 was unsuccessful.  An offer to settle was made on 31 October 2018 by the respondents that was not accepted by the mother.  When that offer was made, the statement of claim was in the same form as it was for the trial.  Although the defence and counterclaim were subsequently amended, the key matters raised by the respondents were in the defence and counterclaim as it stood when the offer to settle was made.  The primary judge observed (at [87] of the original costs decision) that, while there were some changes to the pleading and further disclosure after the date of the expiry of the offer to settle, it was a case that ultimately turned on the mother’s knowledge at the relevant time and whether the mother’s evidence was accepted, so the mother was “in the perfect position” to assess the merits of the offer to settle.  The primary judge also observed (at [88]) that the offer to settle was more favourable to the mother than the practical net result of the orders in the judgment after the trial.  After the offer to settle, it took almost three years before the trial of the proceeding commenced.  Some of that delay was attributable to the proceedings in the Supreme Court by the mortgagee in respect of the RAMS facilities seeking to recover possession of the Harbut Street property and by the respondents seeking deferral of the payments owing under the RAMS facilities (referred to at [474] of the original decision).  The trial took 16 days between 13 and 30 September and on 6-7 and 16 December 2021.
12. [12]
    The primary judge made general findings about the mother’s evidence (at [127] of the original decision), including that the mother’s evidence was implausible in a number of respects and neither credible nor reliable and the primary judge did not accept the mother’s evidence, except where it was consistent with the evidence of the respondents or with contemporaneous documents.
13. [13]
    In deciding the costs of the proceeding, the primary judge made supplementary findings in respect of the mother’s evidence (at [84] of the original costs decision).  These findings (at [84](a)) were to the effect that, at all material times, the mother knew and understood the legal effect of the transfer, knowingly and voluntarily signed the transfer in both her personal capacity and as an attorney on behalf of Mr Trouton and knew that she had intended to transfer the Harbut Street property to the respondents.  In addition, the primary judge found (at [84](b)) that the mother commenced and continued the proceeding making allegations of fraud, knowing them to be false and in wilful disregard of known facts.

The hearing of the non-party application

14. [14]
    On the hearing of the non-party application, the respondents relied on those parts of the exhibits to the affidavit of their solicitor filed on 31 October 2022 that were referred to in the respondents’ amended non-party costs submissions and the affidavit of the second respondent filed on 12 October 2023 (the second respondent’s affidavit).  The second respondent was not cross-examined.  The respondents’ solicitors had prepared two volumes described as a book of evidence relied on by the respondents for the non-party application that were marked exhibits 1 and 2.  The book of evidence included selected exhibits from the trial of the proceeding and extracts from the transcript of the trial of evidence given by the mother, the appellant, Deanne and the first respondent.  The appellant relied on the affidavit of Mr Hansen sworn on 20 December 2022.  Mr Hansen was the principal of the firm of solicitors which acted for the mother in the proceeding.  He was not required for cross-examination which left his evidence unchallenged.  The appellant also relied on the affidavit of Margo affirmed on 13 November 2023.  Margo was required for cross-examination, appeared by telephone, and was extensively cross-examined at the hearing.
15. [15]
    The second respondent’s affidavit exhibited voicemail and text messages from the appellant to the respondents between 29 October and 26 November 2019.  The content of the messages from the appellant showed that she was endeavouring to follow up on the offer to settle made by the mother and was keen for the mother’s matter to settle.  On 13 November 2019, the appellant’s message to the first respondent included the following:

“If no settlement is reached within the next 14 days, we will be requesting for a speedy trial and no doubt this will be granted by the Court and set down at the end February to early March.

We hope this doesn’t have to happen for the sake of both parties.”

16. [16]
    A follow up message was sent on 14 November 2019 by the appellant:

“This matter is between you, Leanne, Mum and lawyers.

Leave everyone else out of this and if settlement is not reached as a matter of urgency, as I have previously said; Mums lawyers will be filing and requesting a speedy trial.

Mum has nothing to lose !!!”

17. [17]
    The message sent by the appellant on 22 November 2019 to the first respondent did not reflect well on her:

“Neil please just settle this! Please pay Mum! Given what we’ve found out, I’d hate to see this battled out in court as a fraud case & your beautiful children lose their parent in the jail system. Please just finalise it!! It’s not worth it! If this is not settled by Friday 29th Nov it will be filed first thing Monday.”

18. [18]
    There was a problem with some of the evidence relied on at the hearing of the non-party application during Margo’s cross-examination.  Part of the cross-examination was on recordings of telephone conversations between Margo and the first respondent that the respondents’ counsel asserted had taken place on 6 and 27 February, 1 March and 5 April 2019.  The respondents did not tender into evidence the recordings.  Parts of them were played during the hearing for the purpose of the cross-examination.  The respondents’ counsel would read from a transcript of the relevant conversation and question Margo about whether she recalled that part of the conversation.  Margo was being questioned about conversations that took place over four years previously and did not recall all the content of the conversations.  In respect of each part of each conversation put to Margo, the recording itself was played.  The evidence was the recording itself where Margo accepted that it was a conversation between the first respondent and her.
19. [19]
    After the hearing, the primary judge requested the Recording and Transcription Services to transcribe the audio recordings played during the hearing of the non-party application as part of the hearing transcript.  That service was unable to provide a transcript of the recordings that were played in court as one party was audible and the other was not clear.
20. [20]
    On being provided the email from Recording and Transcription Services, the respondents’ solicitor advised the primary judge’s associate that he and the respondents’ counsel were of the view that counsel “accurately read out the relevant parts of the telephone conversations, and that will be transcribed” so they believed there was no need for any further matching exercise.
21. [21]
    During the hearing of the appeal, the Court queried whether there was any impediment to the respondents’ reliance on recordings of the telephone calls between the first respondent and Margo, when it did not appear that Margo had consented to the recording of the conversations as she was unaware these conversations were being recorded.  The parties provided supplementary submissions on the implications arising from the Telecommunications (Interception and Access) Act 1979 (Cth) (Telecommunications Interception Act).
22. [22]
    No evidence was adduced as to the method of recording the conversations.  As the conversations were between a brother and sister, it is not unreasonable to assume that the recording of Margo’s end of the conversation was effected after the sounds were sent or transmitted and able to be heard by the first respondent.  Whether the recording was effected by a recording application on the first respondent’s phone or by a separate recording device used by the first respondent at his end of the telephone call, the recording of Margo’s side of the conversations was made after her speech passed over the telecommunications system.  Under s 6(1) of the Telecommunications Interception Act, “interception of a communication passing over a telecommunications system consists of listening to or recording, by any means, such a communication in its passage over that telecommunication system without the knowledge of the person making the communication”.  The respondents relied on authorities, including R v TB [2023] SASC 45 and R v Metcalfe (2018) 338 FLR 357, for the proposition that it was not interception in breach of the Telecommunications Interception Act when the communication had completed its passage over the telecommunication system at the time it was recorded.  There was therefore no interception by the first respondent of Margo’s communications which was proscribed by the Telecommunications Interception Act.  There was no impediment to the telephone calls being played to Margo for the purpose of the respondents’ cross-examination of her.
23. [23]
    It is of note that the conversations on which Margo was cross-examined and her responses in those conversations that were highlighted in the reasons were between 6 February and 5 April 2019 after the failed mediation and where the focus of the conversations was on the influence of the appellant on her mother in commencing the proceeding against the respondents and the influence of the appellant in supporting the mother in dealing with the mother’s lawyers.

The reasons

24. [24]
    There is no challenge to the primary judge’s determination (at [21] of the reasons) that the findings in the original decision and the original costs decision could be used for the non-party application, subject to relevance, context and any limitations apparent from the nature and content of the findings or evidence.  In the original decision, the trial judge accepted (at [133]) the evidence of the respondents as credible and reliable and also accepted the evidence of Deanne.  The trial judge found (at [134] of the original decision) that the appellant’s evidence was neither reliable nor credible in respect of the key areas relevant to the issues in dispute and found her account of how she first realised that the Harbut Street property had been transferred to the respondents was implausible.
25. [25]
    The question to be decided on the non-party application was whether the Court’s discretionary power to award costs against a non-party should be exercised to make a costs order against the appellant.  The respondents submitted that the appellant was within that class of non-party described as “the person who has caused the action” referred to in Symphony Group Plc v Hodgson [1994] QB 179 at 191-192.  The primary judge recognised (at [33] of the reasons) that all the circumstances had to be considered to see whether it was just and equitable that a non-party pay the costs of a party to the litigation and that the factors, criteria and the “classes” identified were not to be applied inflexibly.  The primary judge then stated (at [34]) it was helpful to start with a consideration of the three criteria identified in Knight v FP Special Assets Ltd (1992) 174 CLR 178 at 192-193 by Mason CJ and Deane J (with whom Gaudron J agreed):

“For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of the litigation and where the non-party, or some person on whose behalf he or she is acting or by whom he or she has been appointed, has an interest in the subject of the litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.”

26. [26]
    In dealing with the first criterion of whether the mother was insolvent or a person of straw, the primary judge concluded (at [37] of the reasons) that on the basis the mother had been on the aged pension since September 2007 and had no assets of any value and the acceptance by the appellant that the mother had little or no resources to meet the order for costs made against her, that was a sufficient basis to be satisfied that the mother could be characterised as “a person of straw”.
27. [27]
    In considering the second criterion from Knight of whether the non-party played an active part in the litigation, the primary judge relied (at [39] of the reasons) on the observations in Ipex ITG Pty Ltd (in Liq) v Victoria [2014] VSCA 315 at [42] taken from Kebaro Pty Ltd v Saunders [2003] FCAFC 5 at [113]-[114] (which emphasised that it was not necessary to demonstrate that the non-party exclusively controlled the conduct of the proceeding but it was enough if the conduct of the non-party was “sufficiently closely connected with the prosecution of the litigation, so that the non-party may fairly be described as ‘a real party’ in ‘critical’ and ‘important’ respects”).  The primary judge then summarised the submissions in evidence in relation to the role the appellant played in the mother’s litigation.  It was in this section of the judgment that the primary judge dealt at length with the evidence adduced at the hearing of the application for the costs order against the appellant from Margo.  The primary judge’s conclusion (at [92]) was that the primary judge did not generally accept the evidence of Margo set out in her affidavit particularly in relation to the appellant’s involvement and that her oral evidence was largely unreliable and not credible and only accepted the evidence of Margo to the extent it was consistent with the statements made by her in 2019 and with contemporaneous documents or other contemporaneous evidence or was contrary to the interests of the mother and the appellant.
28. [28]
    The primary judge set out (at [94]-[104] of the reasons) the respective contentions of the parties on the third criterion from Knight of whether the non-party had an interest in the subject of the litigation.
29. [29]
    While noting they were not prerequisites, the primary judge considered (at [106]-[108]) additional factors, including that the mother was the unsuccessful party to the proceeding and the moving party, the source of the funds for the litigation (other than the identified expenses) was not the appellant, and the mother’s conduct of the litigation was “unreasonable or improper”.  The primary judge referred (at [109]-[111]) to submissions made by the appellant and (at [112]) that the appellant relied on Mr Hansen’s evidence that she did not give instructions on the pleadings and had no involvement in the mediation.
30. [30]
    The primary judge then considered (at [113]-[121] of the reasons) the parties’ submissions on whether it was in the interests of justice that a costs order should be made against the appellant.  The primary judge noted (at [115]) that the appellant was not warned by the respondents that an application for non-party costs would be made against her if the mother’s claim failed.  The primary judge recorded (at [121] of the reasons) the submission made by the appellant that no prior notice had been given to her of the application when the manner of her cross-examination at the trial was consistent with the respondents at that time suspecting that the appellant had a substantial role in the mother’s proceeding.
31. [31]
    The primary judge noted (at [122]-[129]) the further evidence relied on by the respondents including the second respondent’s affidavit and the respective submissions made by the respondents and the appellant on the further evidence.  The following contention of the respondents in relation to the further evidence was set out at [125] of the reasons:

“The [respondents] contend that inferences can be drawn from the evidence that as at October and November 2019:

1. The [appellant] was the ‘principal protagonist in trying to force [the respondents] into a settlement of the proceedings acceptable to her.’

2. The repeated demands of the [appellant], including threats to the [respondents] that it was ‘imperative for them to settle’ the proceeding:

1. ‘were not in fact because she was interested in obtaining a settlement for the benefit of her aging mother but rather to benefit herself, namely to obtain ‘the pot of gold’ without the risks of her wrongful conduct being exposed at a trial and the associated delays which would result from the case going to trial’; and

2. ‘confirmed that, contrary to her contentions otherwise, [the appellant] had a central role in providing the instructions to [the mother’s] lawyers either directly or alternatively indirectly’.

3. As revealed by the words ‘[the mother] has nothing to lose’, from ‘the [appellant’s] perspective, based on her experience in other litigation and putting to one side the cost of her mother’s lawyers, there was no real risk of her mother going to trial if a settlement was not forthcoming. That was because if her mother lost the case and was ordered to pay costs, [the appellant] knew it was highly improbable that any adverse costs order would be able to be enforced against/satisfied by [the mother] as her mother had no assets.’” (footnotes omitted)

32. [32]
    The primary judge set out (at [132]) the findings based on the evidence and findings in the original decision and the original costs decision and the further evidence in respect of the non-party application.
33. [33]
    The following conclusions were reached by the primary judge:

    1. the acceptance by the appellant for the sole purpose of the non-party application that the mother had little or no resources to meet the order for costs against her and the evidence that the mother had been on the aged pension since September 2007 and had no assets of any value meant that the mother could be characterised as “a person of straw” ([35]-[37] and [132](c) of the reasons);
    2. the appellant was not the source of funds for the proceeding, other than $7,000 for a psychiatric report in relation to her father at the request of the mother, the amount she paid Law in Order for the trial bundle and the total sum of $1,265 she paid for valuations of real property ([51](b) and (d), [107] and [132](f));
    3. the appellant played an active part and was involved in the proceeding in the sense of counselling and encouraging and otherwise influencing the mother and the specific steps she took in the proceeding, even though the appellant “did not exclusively control the conduct of the proceeding” ([132](d));
    4. the appellant had no direct interest in the litigation but had made the initial demand for a payment of $1.75m (which she maintained) which gave a motive for the appellant for the proceeding being pursued (by the mother) ([132](g));
    5. the appellant “caused” the proceeding in that it was her alleged discovery of something that led ultimately to the mother’s commencing the proceeding ([132](h));
    6. the failure of the respondents to warn the appellant that a costs order may be sought against her was only one factor to be weighed up in the exercise of the Court’s discretion ([133]).
34. [34]
    The primary judge found, in effect, that the three criteria identified in Knight were established.  There was no analysis undertaken by the primary judge of the circumstances in which the respondents had not given the appellant prior notice of their intention to apply for a non-party costs order against her.  The significance of the failure was therefore not assessed in the context of all the circumstances relating to the mother’s proceeding.  It cannot be “weighed up” unless its significance for the particular case has been assessed.  It is implicit in the primary judge’s treatment of the respondents’ failure to warn the appellant during the proceeding that a non-party costs order may be sought against her as a relevant factor in determining whether it was in the interests of justice to make the order that the circumstances were such that the warning should have been given by the respondents to the appellant.  Notwithstanding the respondents’ failure to warn the appellant that a costs order may be sought against her, the primary judge concluded (at [135] of the reasons) that it was just and equitable to depart from the general rule that only parties to a proceeding were subject to costs orders and it was in the interests of justice that an order be made that the appellant pay the respondents’ costs of the mother’s claim.
35. [35]
    The primary judge set out (at [142] of the reasons) further conclusions from the evidence and findings that were then considered on whether the costs ordered against the appellant should be on the indemnity or standard basis.  One of those findings (at [142](g)) was that very serious allegations of fraud were made against the respondents.  The primary judge noted (at [142](g)(i)) that it was the mother with actual knowledge of some of the discussions and events which transpired between the respondents and her and that the mother had on at least one occasion not been full and frank with the appellant and it was open to conclude that the appellant may not actually have known the allegations of fraud were false.
36. [36]
    It is of note that the conclusion favourable to the appellant that she may not actually have known the allegations of fraud were false, because of the lack of disclosure by the mother to the appellant about the occasion when the mother signed the transfer of the Harbut Street property was relied on by the primary judge only in considering whether the costs against the appellant should be indemnity rather than standard costs.  That was a relevant circumstance as to whether a non-party costs order should be made at all.
37. [37]
    The primary judge concluded (at [142](g)(ii) of the reasons) that the appellant counselled and encouraged, and otherwise influenced, the mother at least to continue the proceeding making the serious fraud allegations with at least reckless disregard by the appellant to the known facts.  The reference to “known facts” was footnoted as a reference to the outline by the first respondent of the respondents’ position, including circumstances ultimately relied upon by the respondents at the trial.  The finding set out (at [142](h)) was that the appellant “at least counselled and encouraged, and otherwise influenced, the [mother] to commence and/or continue the proceeding for the [appellant’s] improper motive in respect of the [respondents], namely to get a negotiated settlement of a payment of $1.75 million from the [respondents]”.  That finding was footnoted to the circumstances “where the [respondents’] position, as ultimately found at trial, had been outlined to the [mother] and the [appellant]”.  Ultimately the primary judge concluded (at [151]) that it was appropriate to order the appellant to pay the respondents’ costs on the indemnity basis in respect of the mother’s claim.

Grounds of appeal

38. [38]
    The grounds of appeal are lengthy but it is not necessary to set them out in full.  Ground 1 is to the effect that the primary judge erred in exercising the discretion to order the appellant to pay the respondents’ costs of the mother’s claim by failing to take into account, or adequately take into account by giving sufficient weight to factors that are then set out, or by making findings as relevant or giving excessive weight to other matters that are then set out, or by making other findings that are characterised in the grounds as erroneous.
39. [39]
    One of the factors relied upon by the appellant to assert an error in the primary judge’s discretion to award costs against the appellant that was the focus of the submissions on the hearing of the appeal was paragraph (a) of ground 1:

“failing to take into account, or adequately take into account by giving insufficient weight to:

1. the lack of any warning by the respondents that an application for non-party costs would be made against the appellant;

2. the conduct of the respondents in connection with their not warning the appellant that an application for non-party costs would be made against her; and

3. the likely effect that such a warning would have had on the appellant’s conduct if one had been given;”

The jurisdiction to award costs against a non-party

40. [40]
    There was no issue between the parties on the appeal that the Supreme Court has jurisdiction to award costs against the appellant as a non-party.  The passage in Knight (at 192-193) set out above had been prefaced by the observations (at 192) that the prima facie general principle was that an order for costs is only made against a party to the litigation but “there are, however, a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an order for costs against a non-party”.  The ultimate test applied in Knight (at 193) was whether it was in the interests of justice to make the costs order against the non-party where the circumstances fell within the category of case identified at 192-193.  Mason CJ and Deane J had earlier explained (at 185) that “the court will and should develop principles governing the exercise of the discretion which will ensure that the jurisdiction is not exercised in such a way as to give rise to abuse”.  A survey undertaken by Mason CJ and Deane J of cases where costs had been awarded against non-parties attracted the observation (at 188):

“The cases awarding costs against non-parties are more readily explicable on the footing that there was 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.”

41. [41]
    Mason CJ and Deane J referred in Knight (at 191) to the decision of the House of Lords in Aiden Shipping Ltd v Interbulk Ltd [1986] AC 965 as providing support for the conclusion they had reached about the jurisdiction to order payment of costs against a non-party.  Subsequent to Aiden, the Court of Appeal in England in Symphony (at 191-192) summarised the categories of cases in which courts had been prepared to order a non-party to pay the costs of proceedings.  It was observed (at 192) by Balcombe LJ (with whom Staughton and Waite LJJ agreed) that those categories were “neither rigid nor closed” and indicated “the sorts of connection” which had led courts to entertain a claim for costs against a non-party.  Balcombe LJ then proceeded (at 192-193) to set out material considerations to be taken into account by way of guidance as to when a costs order should be made against a non-party.  Relevant to this appeal were the observations that it would be “even more exceptional for an order for the payment of costs to be made against a non-party, where the applicant has a cause of action against the non-party and could have joined him as a party to the original proceedings” which was then followed by this consideration:

“Even if the applicant can provide a good reason for not joining the non-party against whom he has a valid cause of action, he should warn the non-party at the earliest opportunity of the possibility that he may seek to apply for costs against him.  At the very least this will give the non-party an opportunity to apply to be joined as a party to the action …”

42. [42]
    The only question before the High Court in Knight was whether the Supreme Court had jurisdiction to make an order for costs against the receivers and managers of companies which were the unsuccessful parties in proceedings where the receivers themselves were not parties to those proceedings.  Orders had been made against the receivers at first instance on the ground that the receivers had instituted, maintained and defended proceedings in the names of the relevant companies.  The receivers’ appeals to the Full Court against the costs orders were dismissed.  The appeal to the High Court on the existence of jurisdiction to order costs against the non-parties was also dismissed.  No consideration was therefore given by the High Court in Knight to the relevance in the exercise of the discretion to order costs against a non-party of whether notice of intention to seek that order had been given to the non-party when that step was in contemplation.
43. [43]
    The constraints on the exercise of the jurisdiction to award costs against a non-party recognised in Knight have been frequently applied.  The criteria listed by Mason CJ and Deane J in the passage in Knight (at 192-193) are apt for circumstances that are akin to those that resulted in the costs orders against the receivers in that case.  There has never been a departure in the authorities subsequent to Knight from the ultimate test of what the interests of justice require.  The criteria applied in a particular case to ascertain whether the interests of justice require that a costs order be made against a non-party depend on the circumstances of the case.  As observed by the Full Court of the Federal Court in Kebaro at [69], “this is a fact-specific jurisdiction”.  As a result, there are many authorities where more general statements have been made about the circumstances that may give rise to the exercise of the jurisdiction to award costs against a non-party but those statements must be considered in the context of the nature of the proceeding for which costs are sought against a non-party, the facts of the particular case, and the factors relevant to the application of the ultimate test in that case.
44. [44]
    The Full Court in Vestris v Cashman (1998) 72 SASR 449 dismissed an appeal from a District Court judge’s refusal to order costs against the non-parties who were the directors and shareholders of the company and beneficiaries of the trust of which the company was trustee and financed the company’s unsuccessful civil action (when the company was insolvent at all material times) on the basis there was no jurisdiction to make such an order.  Vestris had sold a business to the company and the company’s claim was for damages in respect of an alleged misrepresentation relating to the sale of the business.  No interlocutory application had been made by Vestris for an order for security for costs.  For about a year prior to the dismissal of the company’s claim, Vestris knew of the company’s parlous financial situation.  Two of the members of the Court made observations about the requirement for notice of the intention to make a claim for costs against the non-party, if there had been jurisdiction, and the third member of the Court (Doyle CJ) agreed with both judgments in that regard.  Olsson J stated at 458:

“… common fairness dictates that a defendant seeking to place a non-party at risk of an order for costs must, either by bringing a timely application for security or, alternatively, at least by letter advising the defendant’s intention, place the non-party on notice of that risk, so that the non-party will not, in effect, be lulled into a false sense of security and ambushed, when it is too late for it to reflect as contemplated in Yates Property Corporation Pty Ltd v Bolan[d] …”

The reference to Yates was to a statement by Branson J in that case reported at (1997) 147 ALR 685 at 695 to the effect that if an application for security for costs against the plaintiff company was brought, those who stood behind the company may then decide as to whether to make the financial commitment necessary to allow the litigation to proceed.  Vestris’ appeal challenged the District Court judge’s focus on the failure to take some timely earlier action in relation to protecting itself from the inability of the company to meet a costs order as the dominant consideration for the District Court judge’s decision.  Olsson J concluded (at 459) that the District Court judge had not ignored other facts in exercising the discretion but that “in the final analysis, the question of a failure to raise the issue of a potential personal liability by the respondents for costs, in a timely manner, clearly became the dominant factor in the events which had transpired”.

45. [45]
    Lander J in Vestris referred (at 467-468) to Symphony and that in exercising the discretion to award costs against a non-party regard would be had to whether the non-party had any warning that an application for costs against that party would be made.  Lander J observed (at 472) that if an application for security for costs had been bound to fail “then the defendant would advise the plaintiff and those the defendant knows to be backing the plaintiff and interested in the litigation that in the event that the plaintiff’s action fails they would be seeking an order for costs”.
46. [46]
    Branson J’s decision in Yates was upheld on appeal in Yates v Boland [2000] FCA 1895.  The company Yates Property Corporation Pty Ltd had unsuccessfully sued its lawyers for professional negligence.  Mr Yates was one of two directors and a majority shareholder and he gave all significant instructions on behalf of the company concerning the proceeding.  The company did not have the means to pay the respondents’ costs.  Branson J had ordered that Mr Yates was jointly and severally liable with the company to pay the indemnity costs of the respondents.  Branson J found that the respondents did not know of the parlous state of the company’s finances until after the end of the trial.  One of the grounds of appeal by Mr Yates was that he was not warned that he may be made liable for costs and the failure to warn was a material consideration to which Branson J failed to have regard and the discretion thereby miscarried.  On the basis that the respondents were not in a position to warn the appellant during the trial as they were unaware of the state of the company’s finances, the Court (at [39]) held that the failure to give a warning which was a material consideration in Symphony and Vestris was not a material consideration in the subject case.  The Court stated (at [34]):

“The discussion concerning Symphony and Vestris in pars 18 to 32 of these reasons shows that the question of warning has been treated as a material consideration in certain circumstances.  Whether such a requirement arises in a particular case depends on the facts and circumstances of the individual case.  The necessity to warn a non-party of an intention to claim costs is not a principle applicable in every case in which costs are sought against a non-party.  Rather it may be a material consideration depending on the situation disclosed in the case under consideration.”

47. [47]
    In Gore v Justice Corporation Pty Ltd (2002) 119 FCR 429, a mining company (Montague) had succeeded in proving the liability of the Gore parties (Gore) for professional negligence.  Montague entered into a litigation agreement with Justice Corporation Pty Ltd (the respondent) for financial assistance to Montague in litigating the assessment of its damages against Gore.  In return, the respondent was to receive, effectively, eight per cent of any award of damages that Montague might obtain.  The existence of the litigation agreement was disclosed by Montague’s solicitors to the solicitors for Gore soon after it was made.  The recitals recorded that the respondent had agreed to pay necessary litigation costs in relation to the claim on the terms set out in the litigation agreement.  It was a provision of the litigation agreement that Montague was to retain control of the litigation.  When Gore’s request that the respondent provide security for Gore’s costs of the assessment of quantum was refused, Gore applied unsuccessfully to the Court for an order for security for those costs.
48. [48]
    Montague obtained judgment on the assessment against Gore in an amount that was less than an offer to settle made by Gore soon after the decision on the question of liability.  The costs order in favour of Montague was therefore limited to the costs incurred up to the date when Montague rejected Gore’s offer to settle but there was no order that Montague pay any of Gore’s costs.  Both Montague and Gore appealed against the quantum and costs decision.  The appeal by Gore was successful, Montague was awarded nominal damages of only $20, and Montague was ordered to pay Gore’s costs from the date that Montague had rejected the settlement offer.  Three days before the hearing of the appeal Montague and the respondent had executed a new agreement which was called the loan agreement that purported to assert that the litigation agreement was “void ab initio and of no effect”.  As a result of the parties making the litigation agreement void, Montague and the respondent then agreed that the moneys provided by the respondent to Montague had been lent to Montague to prosecute the litigation.  After the publication of the Full Court’s reasons, Gore called upon the respondent to pay their costs because of the provision in the litigation agreement that the respondent would pay Montague’s costs and Gore’s costs.  It was then that Montague and the respondent informed Gore that the litigation agreement had been cancelled and replaced with the loan agreement.
49. [49]
    When the respondent refused to pay Gore’s costs pursuant to the order, Gore applied for an order that the respondent (as a non-party) pay their costs.  That application was unsuccessful and that resulted in the appeal in Gore.  The Court in Gore referred (at [46]-[47]) to Symphony and Vestris as cases that suggest an applicant for a costs order against a non-party may be unsuccessful if no prior notice of an intention to claim costs has been given to the non-party.  The Court noted (at [48]) that it was not necessary for it to express a view on the need to give notice in the terms suggested by Olsson J in Vestris, as Gore had put the respondent on notice when it unsuccessfully sought security from it for Gore’s costs and Montague’s solicitors had provided Gore with a copy of the litigation agreement between Montague and the respondent from which Gore would have read of the respondent’s commitment to Montague to pay any costs that Montague might be ordered to pay to Gore.  The Court refused (at [63]) to allow the respondent to rely on the cancellation of the litigation agreement as it was reasonable to infer that Gore relied upon its content.  The Court noted (at [64]) that the respondent had a direct financial interest in the outcome of the quantum assessment, even though it did not control the litigation.  The Court concluded (at [64]) that in return for the chance of obtaining eight per cent of the judgment debt and recoupment of much of its outlay for costs, the respondent should be expected to incur the risk of a costs order in the event of Gore being the successful party.  The appeal was allowed in part and the respondent was ordered to pay a specified portion of Gore’s costs.
50. [50]
    The non-party in Kebaro was unsuccessful in its appeal to the Full Court in showing error in the primary judge’s exercise of discretion to order the non-party to pay the costs of some of the respondents in the proceeding.  It was complex litigation and the involvement of the non-party with the applicants in the proceeding was substantial, as found by the primary judge and summarised in Kebaro at [37].  The financier of the property that was the subject of the proceeding had entered into a deed with the non-party and some of the applicants to the proceeding and, relevantly, the parties to the deed recognised the potential for the respondents to seek security for the costs of the proceeding and potentially a non-party costs order against the financier should the proceeding fail.  The non-party agreed to indemnify the financier in respect of any amount for which it was required either to give security or to pay costs to the respondents in the proceeding.  One of the grounds of appeal (set out at [47]) was that the failure of the respondents to give notice of their intention to claim costs against the non-party should disentitle the respondents to any costs order against the non-party.  The primary judge had rejected that defence for the reasons summarised in Kebaro (at [42]-[46]) primarily because the primary judge was not satisfied that the respondents were equipped with sufficient information about the non-party’s interest in the litigation to have realised that its role in the litigation brought it into the category of case of a person liable for a non-party costs order.  The Full Court rejected (at [140]) the contention that the absence of a warning deprived the respondents of the non-party costs order in the factual context of that litigation.
51. [51]
    The respondents who were successful in Citrus Queensland Pty Ltd v Sunstate Orchards Pty Ltd (No 10) [2009] FCA 498 in defending the applicants’ claim were unsuccessful in seeking the award of costs against the non-party who was the wife of the second applicant.  The factors relied on by the respondents included the following.  The first applicant had granted a charge over its assets to the non-party who had borrowed funds secured over her house property to advance loans to the first and third applicants to purchase the orchard properties from the respondents.  The non-party had assisted in providing security for costs that the applicants had been ordered to pay and was a beneficiary of the trust of which the first applicant was the trustee.  The first and second respondents had given notice of intention to seek costs of the proceeding against the non-party.  Contrary factors relied on by the non-party included that any benefits the non-party would have received, if the applicants’ claim had been successful, would accrue only by virtue of her securities and not by virtue of any action by her concerning the proceeding.  It was apparent during the proceeding that the second applicant played a pivotal role in all matters concerning the applicants and the actual authority to make all decisions with respect to the conduct of the litigation remained with the second applicant.
52. [52]
    Collier J set out (at [20]) the principles in Knight and those developed or applied in the Federal Court subsequent to Knight as guidance to the exercise of the jurisdiction to award costs against a stranger to the litigation.  The first principle that is listed that there must be “a real link between the non-party and the proceedings, which is material to the issue of costs” is then qualified by the subsequent principles including that the mere fact a person may benefit from litigation will not, without more, suffice to justify an award of costs against a non-party.
53. [53]
    Collier J made a finding (at [29]) that any financial support provided by the non-party to the applicants’ case was motivated by her natural affection for the second applicant rather than any financial interest she may have had in the outcome of the proceedings.  Collier J inferred (at [31]) that the regular attendance by the non-party at the trial was, not unreasonably, to support the second applicant because the outcome of the trial was important to him.  In relation to the assistance of the non-party in providing security for costs which the applicants were ordered to pay, Collier J considered (at [32]) that was explicable “by the natural inclination of a wife to support her husband in litigation to which he is a party and does not constitute an active part played by [the non-party] in the conduct of the litigation”.  In addition, Collier J was not persuaded (at [33]) that financial arrangements of the non-party resulted in her having a “real link” with the applicants’ proceedings which was material to the issue of costs.
54. [54]
    The test to be applied on an application for a costs order against a non-party was expressed in general terms in Court House Capital Ltd v RP Data Pty Limited [2023] FCAFC 192 at [10] as whether a non-party has a “connection to the litigation” which is sufficient to warrant the exercise of the power to order costs against the non-party.  An order for costs had been made against the non-party litigation funder Court House which appealed against the order.  Under the funding agreement, Court House agreed to provide funding for the applicants’ solicitors, senior and junior counsel and disbursements and could provide further funding pursuant to a further funding agreement which could include agreement to fund adverse costs orders but Court House was under no obligation to provide any further funding or indemnity.  No-win no-fee arrangements with the solicitors and junior counsel reduced the potential funding.  In the event the applicants received an amount by way of judgment or settlement, they were required to repay the entire funding provided by Court House together with an additional sum calculated as 15 per cent of the gross settlement or judgment amount.  Even though the solicitors for the applicants were to continue to be instructed by the applicants relating to the proceeding, the applicants were required to consult with Court House on any issues arising from the conduct or progress of the proceeding and could not compromise the claim without prior consultation with, and consent from, Court House.  The appeal was unsuccessful.  The Court rejected (at [37]) the submission that the proceeding could have been funded in any event without Court House’s funding of senior counsel.  The Court concluded (at [38]) that Court House did “facilitate” the litigation for its own personal gain: it agreed to fund the litigation and funded senior counsel’s fees; the applicants were required to consult with it on the conduct of the proceeding and could not compromise the claim without its consent; and it attended the mediation.
55. [55]
    In MC Wholesaling Pty Ltd v Zheng [2024] VSCA 248, the first and second applicants (the applicants) were in the business of distributing milk powder products.  The third applicant (who was referred to as Andy) was their sole director.  The first respondent (who was referred to as Rocky) was the director and shareholder of the second respondent which provided delivery services to the first applicant.  In June 2020 the applicants applied ex parte for, and obtained, a freezing order against Rocky and other parties alleging their involvement in a fraudulent scheme through which they had profited at the applicants’ expense.  The minimum amount of assets that Rocky and the others were each required to retain under the freezing order was $402,887.  The applicants commenced the proceeding against Rocky and his alleged co-conspirators for breach of contractual and/or fiduciary duties.  There were two unsuccessful mediations (in September 2020 and April 2021) and the applicants rejected a Calderbank offer made in February 2021 from Rocky to settle the claim on the basis that each party walk away and bear their own costs.  Six requests for the freezing order to be discharged were refused by the applicants.  In April 2022, the applicants conceded their claim against Rocky and the second respondent did not exceed $60,000.  Ultimately the applicants discontinued the proceeding against the respondents in November 2022.  The applicants were ordered to pay the respondents’ costs of the proceeding on an indemnity basis and Andy was also ordered to pay the costs of Rocky and the second respondent on an indemnity basis.  Andy’s appeal against the non-party costs order was dismissed.
56. [56]
    The primary judge had based the decision to make the non-party costs order on the finding that Andy was the “driving force” behind the litigation and the unfounded claims of fraud and serious misconduct and whether the applicants would choose to meet very substantial adverse costs orders depended on Andy (the control finding).  Macaulay JA emphasised (at [89]-[90]) “that pronouncements by previous courts of factors that have or have not been taken into account in the exercise of the discretion are not to be treated as some sort of fixed list of ‘ingredients’ or prohibited factors”.  Macaulay JA concluded (at [94]) that the non-party costs order was the result of the proper exercise of a judicial discretion.  Matters not in dispute were set out by Macaulay JA (at [101]) that Andy:

1. “(a)
   gave all instructions on behalf of the applicant companies in relation to the proceeding;

2. swore the initial affidavits upon which the freezing orders were obtained;

3. attended the hearings and mediations;

4. instructed the applicant companies’ solicitors to refuse the Calderbank offer;

5. gave instructions not to release or modify the freezing order in response to the six letters from Rocky’s solicitors requesting that the applicant companies do so; and

6. ultimately, gave instructions to abandon the claims that he had caused to be instituted.”

In addition, Andy gave the undertaking as to damages upon which the freezing orders were obtained.  There was no evidence that Andy himself funded the proceeding.  The second applicant had a net deficiency of assets.  The first applicant had more than sufficient funds to meet the estimated costs.

57. [57]
    Macaulay JA found (at [111]) that the primary judge was justified in finding that whether the first applicant had the financial capacity to pay the costs ordered against it came down to Andy’s choice.  Macaulay JA therefore concluded (at [115]) that there was no error by the primary judge in considering that it was in the interests of justice to make an order that Andy pay the costs of Rocky and the second respondent, having regard to the role Andy played in the litigation, the unlikely prospect that the first applicant could pay the adverse costs order without Andy choosing to put in funds, and the cause for doubt that he would do so.
58. [58]
    Lyons and Orr JJA agreed with Macaulay JA that the appeal by Andy against the non-party costs order should be dismissed.  Lyons JA (at [137] did not agree with the control finding made by the primary judge without a finding that Andy would deal with the assets of the first applicant in a way to defeat the rights of Rocky and the second respondent as judgment creditors as to their costs.  Both Lyons and Orr JJA considered (respectively at [134] and [155]-[156]) that the primary judge was entitled to make the non-party costs order against Andy on the basis he was the driving force behind the institution and maintenance of claims of fraud and serious misconduct.
59. [59]
    Even though not necessary for the decision in MC Wholesaling, Lyons JA observed (at [146]):

“Although it was not relied upon in the proposed grounds of appeal, I consider it desirable that a party who may seek a costs order against a non-party associated with a party to a proceeding should put that non-party on notice as soon as reasonably practicable. In my view, providing such notice serves two purposes. First, it ensures fairness to the non-party. Second, such notice is likely to cause the non-party to review his or her role in the proceeding and/or may make a real difference as to how that non-party conducts the litigation.”

60. [60]
    In practical terms, the prospects of the opposing party being able to pay an adverse costs order and the anticipated costs of remaining a party to litigation are important considerations for any party on whether to endeavour to compromise the litigation.  Even though (as the above survey of authorities shows) there are many different circumstances in which the jurisdiction to order costs against a non-party has been exercised, the dominant reason for that jurisdiction is to ensure that the non-party who is the real litigant or for whose benefit the litigation is being conducted (and therefore facilitated the commencement and/or continuance of the litigation for that purpose) is also vulnerable to an adverse costs order.  If the non-party is truly controlling or influencing the actual party with whom the non-party is associated, the prospect of a costs order against the non-party may be the incentive to the non-party to exercise that control or influence, so that the party considers whether to compromise or otherwise bring the proceeding to an end.  As observed by Lyons JA in MC Wholesaling, the giving of the warning by the party who may eventually seek a non-party costs order, if successful in the litigation, is a matter of procedural fairness to the non-party.  What is relevant is the opportunity that is given by the warning to the non-party to consider the non-party’s position in relation to the relevant proceeding and the non-party’s support of, or influence over, the party with the whom the non-party is associated.  The issue is not whether the non-party would take up the opportunity to exercise the influence over the party with whom they are associated.  If the warning is not given and costs are subsequently sought against the non-party, it may raise an argument that the successful party failed to mitigate its costs of the litigation for the benefit of the non-party.
61. [61]
    Where the circumstances were patent to all connected to the litigation (including the non-party) that the non-party is the real litigant or the driving force for the litigation (as was the case in MC Wholesaling) or for whose benefit the litigation was being conducted (as in Knight) or for other reasons which made the giving of a warning of the intention to seek a non-party costs order unnecessary (as in Gore), the failure by a party to give a warning on the intention to seek a non-party costs order may have no consequences for the application.  Where it is marginal (or not so obvious) as to whether a non-party would be liable for an order to pay the successful party’s costs of the proceeding, a warning to the non-party of the intention to hold them liable for the costs of the proceeding (if the party with whom they are associated is unsuccessful) has much greater significance.  It is not merely a factor to be considered in those circumstances on an application for a non-party costs order, but it is a factor which may, in an appropriate case, determine whether it is in the interests of justice for a costs order to be made against the non-party.

Was it obvious during the mother’s proceeding that the respondents may seek a non-party costs order against the appellant?

62. [62]
    The relief that the mother sought in her proceeding to have the transfer of the Harbut Street property to the respondents set aside which would result in the title to the property returning to the mother was in respect of a claim that alleged fraud which the mother only could pursue.  The appellant supported the mother in prosecuting that claim.
63. [63]
    The submissions made by the respondents on the hearing of the non-party application disclosed the reason why it was essential for the respondents to have given notice to the appellant of their proposal to seek a non-party costs order.  Their submission (set out at [31] above) in reliance on the text message from the appellant on 13 November 2019 to the second respondent that “Mum has nothing to lose!!!” was set out at [125](c) of the reasons that the mother would go to trial if a settlement was not forthcoming “because if [the mother] lost the case and was ordered to pay costs, [the appellant] knew it was highly improbable that any adverse costs order would be able to be enforced/satisfied by the mother as she had no assets”.  It was therefore apparent to the respondents from November 2019 that the assertion by the appellant that the mother had nothing to lose in going to trial (if a satisfactory settlement was not forthcoming) meant that the appellant did not contemplate that she was exposed as a non-party to a costs order, if the respondents were to succeed in defending the proceeding.
64. [64]
    That made it critical and a matter of fairness for the respondents to forewarn the appellant of their intention to seek a non-party costs order against her.  A warning would have clarified that there was something for the appellant to lose if the matter did not resolve and would have been a positive step towards the respondents’ endeavouring to mitigate their legal expenses incurred in defending the proceeding.  As the appellant had considerable influence over the mother in respect of the proceeding, as found by the primary judge, the opportunity should have been given to the appellant to exercise that influence at the risk of an adverse costs order being sought against the appellant, if the mother did not succeed in her claim against the respondents.  In fact, the emphasis in the respondents’ submissions on the influence of the appellant over the mother which was adopted by the primary judge in the reasons amplified the significance of forewarning the appellant about the risk of an adverse costs order being sought against her.
65. [65]
    Even though the appellant’s real property searches in March 2017 precipitated the mother’s proceeding, the proceeding was commenced by the mother when she knew the circumstances in which she had signed the transfer of the Harbut Street property and was defended by the respondents on the basis of oral agreements to which the mother was a party and, as the primary judge had observed (at [87] of the original costs decision), was “in the perfect position” to assess the merits of the respondents’ offer to settle.  The proceeding between the mother and the respondents was therefore not an obvious case for the appellant to appreciate (without a warning) that she may become the target of an application to pay the respondents’ costs of the proceeding, if the mother’s claim was dismissed.

Did the primary judge err in the approach to the failure to warn?

66. [66]
    Even though Knight was the seminal case in Australia for exercising the jurisdiction to make an order for costs against a non-party, the decision in Knight made clear that the criteria identified (at 192-193) for making such a costs order were appropriate for that type of case but there were “a variety of circumstances in which considerations of justice may, in accordance with general principles relating to awards of costs, support an award for costs against a non-party”.  The primary judge’s approach in the reasons of focusing mainly on the three criteria in Knight and then dealing briefly with other relevant factors when considering whether the interests of justice required that an order for costs be made against the appellant distorted the identification, and weighing up, of the factors that were relevant to the exercise of the discretion in the circumstances of this particular case.
67. [67]
    Based on relevant findings made by the primary judge, the factors to be taken into account in deciding whether to make the non-party costs order against the appellant were:

    1. it was the appellant’s real property searches of the Dagmar Street property and the Harbut Street property in March 2017 that precipitated the letter of demand dated 12 April 2017 sent by the appellant’s solicitors on behalf of the mother to the respondents that led to the mother’s commencing the proceeding ([132](h) and (j) of the reasons);
    2. the appellant at the initial stage and at various stages in the proceeding had considerable influence over the mother ([132](a), (b), (i) and (o));
    3. the mother, to the appellant’s knowledge, had no assets to meet any costs order, if the mother was unsuccessful in the proceeding ([132](c));
    4. the appellant was involved in discussions with the first respondent who outlined that the Harbut Street property had been transferred to the respondents intentionally by the mother ([142](d));
    5. the appellant may not actually have known that the mother’s allegations of fraud against the respondents were false, as the mother had on at least one occasion not been full and frank with the appellant ([142](g)(i));
    6. the conduct of the litigation by the mother was unreasonable and improper ([132](e)) (but this factor must be qualified by the factor identified at [142](g)(i));
    7. the appellant counselled and encouraged or otherwise influenced the mother to continue the proceeding making the serious fraud allegations with at least reckless disregard by the appellant to the matters which had been outlined to her by the respondents ([142](g)(ii)) (but this factor must also be qualified by the factor identified at [142](g)(i));
    8. the appellant made a minimal contribution to the legal costs and outlays incurred by the mother in respect of the proceeding and was otherwise not the source of the funds for the litigation ([51](b) and (d)(i), [107] and [132](f));
    9. the appellant had no direct interest in the proceeding but her conduct in making the initial demand for a payment of $1.75m, being involved in negotiations and maintaining that initial demand “tended” to support the conclusion that she had an “agenda” or “motive” in the litigation being pursued which was for her mother to get a negotiated settlement of $1.75m from the respondents ([132](g) and [142](h));
    10. there was no warning by the respondents to the appellant during the course of proceeding before the parties to the proceeding embarked on a trial that took 16 days of the respondents’ intention to seek a non-party costs order against the appellant, if the respondents succeeded in defending the mother’s proceeding ([133]);
    11. the appellant played an active part in the proceeding but did not exclusively control the conduct of the proceeding and the specific examples given by the primary judge of the appellant’s involvement were the investigations and demands on behalf of the mother prior to the commencement of the proceeding, her influence over the mother in settlement negotiations, giving “at least to some extent” instructions to the mother’s lawyers, and in pressing the respondents to settle with the mother in October/November 2019 ([132](d), (j), (k), (l) and (m) and [142](c)).
68. [68]
    There were factors in favour of and against making the non-party costs order against the appellant.
69. [69]
    The primary judge did not address directly the undisputed evidence given by Mr Hansen that all instructions were given to him by the mother but Margo’s evidence supported the inference that the appellant influenced the instructions which the mother did give to her lawyers.  The appellant’s text messages in October/November 2019 showed how the appellant aligned herself with the mother’s interests in the proceeding (at least at that stage).
70. [70]
    It is notable that the primary judge’s findings about the appellant’s involvement focused on the conduct that precipitated the proceeding and the appellant’s role in pursuing a settlement for the mother of a significant payment from the respondents at least up until November 2019.  It was significant that almost all the funds for the mother’s conduct of the litigation came from sources other than the appellant.  It was a significant finding made by the primary judge (at [201] of the original decision) that the mother was not full and frank with the appellant when she returned home after signing the transfer in favour of the respondents on 19 June 2007 which resulted in the conclusion of the primary judge (at [142](g)(i) of the reasons) that the appellant may not actually have known the mother’s allegations of fraud against the respondents were false.  That finding was mitigated by the additional finding (at [142](g)(ii)) that the appellant counselled and encouraged or otherwise influenced the mother to continue the proceeding with reckless disregard to the matters which had been outlined to her by the respondents (but which had to be considered in the context of the mother’s lack of frankness with the appellant about the circumstances of the mother’s execution of the transfer).
71. [71]
    When (to the respondents’ knowledge) it was not apparent to the appellant when she made the threat to the respondents in November 2019 that the mother had nothing to lose by continuing with the proceeding that the appellant herself may be at risk of a non-party costs order in favour of the respondents on their successful defence of the mother’s claim, the failure of the respondents to warn the appellant at any time thereafter up to at least the commencement of the trial of the respondents’ intention to seek a non-party costs order against the appellant was a critical factor in whether the non-party costs order should be made against the appellant.
72. [72]
    As explained at [34] above, despite the primary judge’s listing the failure to warn (at [133] of the reasons) as a relevant factor in deciding whether to make the non-party costs order, there was no assessment of the significance of the respondents’ failure to warn the appellant in the circumstances of the case.  If that had been undertaken, there was only one conclusion which could be reached.  The failure to warn the appellant was a determinative factor in the circumstances of this otherwise marginal case for making the non-party costs order where it was not obvious before the trial of the proceeding that such an order would ultimately be sought against the appellant.  The primary judge’s reasons show that there was no real consideration of the significance of the failure to warn.
73. [73]
    The appellant succeeds on ground 1(a) in showing that the primary judge erred in exercising the discretion to make the non-party costs order against the appellant by failing to assess the significance of, and therefore take into account in a meaningful way, the lack of any warning by the respondents that such an order would be sought against the appellant.  That failure is sufficient to dispose of the appeal.

Outstanding applications

74. [74]
    The appellant filed an application on 26 November 2024 seeking leave to adduce, first, the evidence of an audio file of the recording of a phone call on Anna’s phone that took place on 22 November 2023 between Deanne, Anna and Margo during which Deanne played a recording of an earlier telephone call between the first respondent and herself and, second, and an email chain between Deanne and Margo dated 28 March 2017.  The appellant had the audio file transcribed and sought to rely on the transcript.  The application to adduce that evidence was supported by affidavits of the appellant and Anna sworn on 26 September 2024, the affidavit of Margo sworn on 14 October 2024 and the affidavit of the person who transcribed the audio file.
75. [75]
    The respondents opposed leave being given to the appellant to adduce the further evidence on the basis that neither the recording of the telephone conversation nor the email chain was fresh evidence.  That is clearly the case.  Even if Anna did not provide the audio file to the appellant until April 2024, it was for the appellant to ascertain from her sisters prior to the hearing of the non-party application as to whether they had any material that was relevant to her response to that application.  Even though the email dated 28 March 2017 was not adduced at the trial of the proceeding, reference had been made by the appellant in her evidence at the trial to her belief that there was an email recording Deanne’s problem with the ink used on the enduring power of attorney.  This is the subject matter of the email that was sought to be adduced.  The application should be refused with costs.
76. [76]
    The appellant applied to further amend the notice of appeal by the inclusion of a new paragraph (k) in ground 1 and re-lettering the existing paragraph (k) with consequential amendments as paragraph (l) in ground 1.  The amendment was opposed by the respondents.  The proposed new paragraph (k) was:

“erroneously making the findings at [132(d)], [142(a)], [142(c)], and [145] as to the Appellant’s conduct and role in the conception, commencement, maintenance, development, involvement and control of the mediation and primary proceedings.”

77. [77]
    That was a significant amendment proposed to the notice of appeal on the eve of the hearing of the appeal that was related to the additional evidence that was sought to be adduced but would have required a different analysis of the evidence considered on the non-party application and the primary judge’s reasons than the analysis required by the existing grounds in the notice of appeal.  As the appellant has been unsuccessful in obtaining leave to adduce the additional evidence, the application for leave to file the further amended notice of appeal dated 3 February 2025 should also be refused with costs.

Orders

78. [78]
    Subject to the indication by the Court to the parties during the hearing about unnecessary expense incurred in preparing the second and third versions of the supplementary record book which therefore cannot be recovered by the appellant as part of her costs of the appeal, the costs of the appeal should otherwise follow the event.  As the appellant has succeeded in overturning the orders made by the primary judge on the non-party application, the appellant should also recover the costs of the non-party application from the respondents.
79. [79]
    The orders which should be made are:

1. Application filed on 26 November 2024 for leave to adduce evidence refused with costs.
2. Application for leave to file the further amended notice of appeal dated 3 February 2025 refused with costs.
3. Appeal allowed.
4. Orders made by the primary judge on 11 and 18 April 2024 are set aside.
5. Application filed by the respondents in the Trial Division on 31 October 2022 (the non-party application) is dismissed.
6. Subject to orders 1 and 2, the respondents must pay the appellant’s costs of the appeal (excluding the costs of the preparation of the second and third versions of the supplementary record books), the appellant’s costs of the non-party application and the costs reserved in the order of the primary judge made on 12 June 2024.