COSTS - Application for non-party costs order - Where r 63.23 of the Supreme Court (General Civil Procedure) Rules 2015 does not apply as non-party not a solicitor - Where non-party advised that a person can swear or affirm affidavit on behalf of another - Where non-party advised a grant of administration can be made to a person who lacks legal capacity - Where non-party's erroneous advice necessitated proceedings - Court's discretion to make a non-party costs order not enlivened - Supreme Court Act 1986, s 24(1) - Knight v FP Special Assets Ltd

1 Ali Safatli died intestate on 3 June 2020 at 30 years of age. Letters of administration on intestacy were granted to the deceased's father, the plaintiff in this proceeding, on 27 March 2023. Two years later on 17 March 2025, the Court ordered that the plaintiff be discharged as administrator of the deceased's estate and that the deceased's brother, Yousef Safatli,[1] be appointed in his place. It had become necessary for the plaintiff to be discharged as administrator because he is a person under a disability who is incapable of managing his financial affairs and acting as administrator of the deceased's estate. The plaintiff's application seeking his own removal as administrator was brought by Yousef in his capacity as the plaintiff's litigation guardian.

2 In addition to providing for the discharge of the plaintiff as administrator of the deceased's estate and the appointment of Yousef in his stead, the orders of 17 March 2025 listed the proceeding for hearing on 1 May 2025 in relation to costs. This was for the purpose of affording Mr Paul Shaba an opportunity to be heard in relation to whether the Court should make an order requiring him to pay the costs of the proceeding pursuant to r 63.23 of the Supreme Court (General Civil Procedure) Rules 2015. Mr Shaba was also ordered to appear at the hearing on 1 May 2025.

3 The occasion for further listing the proceeding in relation to costs and requiring Mr Shaba to appear before the Court arose because of Mr Shaba's involvement in the events which led to the grant of letters of administration on intestacy to the plaintiff. Yousef deposed to these matters in an affidavit filed on 9 December 2024 and they can be summarised as follows:

(a) Without having obtained any advice, in March and April 2022, Yousef made two attempts to obtain letters of administration of the deceased's estate in his own name. The applications were deficient in various ways and they were later discontinued.

(b) In September 2022, Yousef approached Mr Shaba of Property and Business Conveyancing Co. to assist with obtaining a grant of representation for the deceased's estate. Despite having been told by Yousef that the plaintiff was 85 years old and suffering from dementia, Mr Shaba advised Yousef that, with the authority of an enduring power of attorney held by Yousef for the plaintiff, Yousef could obtain a grant of representation on behalf of the plaintiff using the power of attorney.

(c) Between September and November 2022, Mr Shaba requested various documents from Yousef to prepare an application for a grant of letters of administration of the deceased's estate in the plaintiff's name. On 2 November 2022, Mr Shaba placed an advertisement on the Probate Online Advertising System giving notice that the plaintiff would apply for a grant of letters of administration within 14 days.

(d) On 7 December 2022, Yousef received an email from Mr Shaba attaching an unsigned affidavit of administrator in the name of the plaintiff. Mr Shaba told Yousef that he needed to take the affidavit to a pharmacy or police station, together with his driver's licence and the power of attorney, to 'get it signed/attested', and that he would then upload the affidavit to the portal and lodge it. Yousef responded to Mr Shaba by email as follows:

Thank you for this Paul.

I will have this done asap. I just have a question in relation to this, [sic]

My father is 83 years of age and suffers from a high level of dementia. He is unable to go to the police station and get sown in [sic]. I have a enduring power of attorney for him.

Is this something I can do on his behalf?

Mr Shaba then responded with the following email:

Yes just take the original POWER OF ATTORNEY with you and you should be able to sign on his behalf.

(e) A few days later on 12 December 2022, Yousef took the affidavit he had been provided by Mr Shaba, together with the power of attorney, and signed it before a justice of the peace. He then provided the signed affidavit to Mr Shaba who arranged for it to be lodged with the Probate Office in support of an application for letters of administration.

(f) On or about 23 January 2023, the Assistant Registrar of Probates issued a requisition in relation to the application for letters of administration. About a week later, Mr Shaba emailed Yousef an unsigned affidavit in response to the requisition. On 7 February 2023, Yousef signed a 'Supplementary Affidavit of Administrator' which purported to be made by the plaintiff. He then provided the affidavit to Mr Shaba and it was filed with the Probate Office.

4 The above communications between Yousef and Mr Shaba were by email. The signature panel in all of these emails from Mr Shaba was as follows:

Paul Shaba

Office Manager

(LL.B.)

5 In his communications with Yousef, Mr Shaba provided fundamentally wrong advice in at least two respects: that a grant of administration can be made to a person who lacks legal capacity and that a person can swear or affirm an affidavit on behalf of another. In circumstances where Mr Shaba represented to Yousef that he was legally qualified by using the post-nominal 'LLB', I determined that it was appropriate to consider whether any order should be made that Mr Shaba pay the costs of this proceeding pursuant to r 63.23 of the Rules.

6 Despite the order of the Court which required him to appear at the hearing in relation to costs on 1 May 2025, Mr Shaba did not appear.

7 Mr Shaba did, however, file with the Court an affidavit dated 29 April 2025. In it he deposed that he had been served with the orders of the Court made on 17 March 2025, the originating motion and Yousef's affidavit dated 9 December 2024.[2] Notably, in the affidavit Mr Shaba did not take issue with any of the matters to which Yousef referred in his affidavit and which are set out above. Instead, Mr Shaba set out various reasons why he considered that it would be unfair for him to be ordered to pay the costs of the proceeding. As will become apparent, it is unnecessary to recount these reasons.

8 At the hearing in relation to costs on 1 May 2025, it became apparent that Mr Shaba's assumed status as a solicitor - conveyed by the nature of the advice which he provided Yousef in emails containing the post-nominal 'LLB' - was mistaken. In particular, in his affidavit, Mr Shaba described himself as a 'conveyancer' and his name does not appear on the Register of Lawyers maintained by the Victorian Legal Services Board and Commissioner. It was accordingly apparent, as counsel for the plaintiff acknowledged, that r 63.23, expressed as a source of power to require a 'solicitor' to pay costs, was incapable of being engaged in the circumstances of the case.

9 Despite the inapplicability of r 63.23 of the Rules, counsel for the plaintiff submitted that s 24(1) of the Supreme Court Act 1986 was a source of power to require a non-party such as Mr Shaba to pay the plaintiff's costs of and incidental to this proceeding. Section 24(1) provides:

Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

10 By reference to the decision of the High Court in Knight v FP Special Assets Ltd,[3] it was submitted that the power in s 24(1) extends to an order that a non-party pay the costs of the party when, in the circumstances of the case, it is just and equitable that a non-party pay the costs of the parties in the litigation.

11 It was submitted that the general principles relating to non-parties costs orders were set out by Elliott J in Bakers Investment Group (Australia) Pty Ltd v Caason Investments Pty Ltd[4] and may be summarised as follows:

(a) The making of orders against non-parties under s 24(1) is exceptional. However, 'exceptional' in this context does not impose a threshold that goes beyond the language of the statutory provision. The question is ultimately whether it is just to make the order in all the circumstances.[5]

(b) The discretion to be exercised is unfettered and there is no onus of proof.[6]

(c) Each case must depend upon its own facts, and no restriction ought to be placed upon the Court's discretion except that it is to be exercised judicially.[7]

12 The plaintiff submitted that the categories of cases in which costs can be assigned to a non-party are not closed.[8] In Bischof v Adams,[9] Gobbo J referred to the Court's 'wide untrammelled discretion'[10] to undertake a fact-specific inquiry in determining whether the power can be exercised. In doing so, the Court should take into take into account the connection between a non-party and the proceedings and the causal connection between the non-party and the costs in its exercise of discretion.[11]

13 The plaintiff also relied on Applicant NAGM of 2002 v Minister for Immigration & Multicultural & Indigenous Affairs,[12] in which the Full Court of the Federal Court addressed the issue of costs against a lay advocate, stating that: [13]

There is no reason in principle why the Court's jurisdiction to award costs against a non-party could not extend, in an appropriate case, to a non-lawyer who, without fee or reward, conducts legal proceedings, or takes steps in such proceedings, on behalf of a litigant.

14 It was submitted that in NAGM the Full Federal Court found that three matters should be borne in mind when determining whether to award costs against a lay advocate:

(a) That the jurisdiction is not punitive or disciplinary and the purpose of such a costs order is to reimburse a party for costs which that party has incurred by reason of the conduct of the non-party;

(b) An order for the payment of costs by a non-party is exceptional and any such application should be treated with caution, particularly where the non-party is providing voluntary assistance to a litigant who is not legally represented and who is unfamiliar with the legal system; and

(c) The fact that the non-party has been actively involved in preparing and presenting a hopeless case will not ordinarily justify a costs order against that person.

15 It was submitted that, in finding that the non-party had not contravened the prohibition on unqualified persons performing legal work, the Court placed weight on the finding that the non-party had neither sought nor received any reward for his services in assisting the relevant party to make a hopeless appeal.[14]

16 The plaintiff submitted that the following matters supported a finding that Mr Shaba should bear the costs of the proceeding:

(a) Mr Shaba's erroneous advice was the sole cause of the proceeding. This was not a case where Mr Shaba assisted the plaintiff with a proceeding he had already decided to bring, but a case where Yousef sought and obtained probate in his father's name because of Mr Shaba's advice, being the matter which necessitated the plaintiff's removal. Therefore, had Yousef been referred to a qualified practitioner, the proceeding (and related costs) would have been avoided.

(b) Mr Shaba advised Yousef that he could sign an affidavit as his father using a Power of Attorney. This went beyond being a clerical or formal error, or a mere error of judgment.

(c) Although Mr Shaba stated that he charged Yousef a 'nominal amount', he was not a volunteer, and sought and obtained remuneration of $1,925 for giving unqualified advice.

(d) It was open to the Court to find that Mr Shaba had contravened the prohibition against unqualified legal practice in s 10 of the Legal Profession Uniform Law Application Act 2014.

(e) Unlike in NAGM, Mr Shaba was a conveyancer and not unfamiliar with the legal system. The inclusion of 'LLB' in his email signature demonstrated that he held himself out as someone with legal knowledge.

(f) Costs awards, including against non-parties, are compensatory in nature; it would be unfair for the plaintiff to bear the costs of Mr Shaba's errors.

17 It was further submitted that the impropriety of Mr Shaba's conduct merited an award of costs on an indemnity basis.

18 The principles relevant to the making of non-party costs orders were recently considered by the Court of Appeal in Kyne v Gerard Brandrick & Associates Pty Ltd.[15] After observing that a non-party costs order is not ordinarily made,[16] the Court of Appeal continued as follows:[17]

In Knight, Mason CJ and Deane J explained that there were several long-established categories of case in which equity had recognised that it may be appropriate to make an order against a non-party. They then stated:

For our part, we consider it appropriate to recognise 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 role 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_._[18]

The cases therefore establish a long-asserted jurisdiction to award costs in appropriate cases against a person who is not a party to the proceedings where that person is the effective litigant standing behind an actual party or where there has been a contempt or abuse of the process of the court.[19]

In Gdanski v Palms Court Management Pty Ltd[20] ('Gdanski'), this Court described the informing principle which enlivens the 'Knight discretion' as follows:

[I]f a party to litigation is liable to pay the costs of the successful party but is unable because of insolvency to do so, justice may require the costs to be paid by a non-party if it can be shown that the non-party played an active part in conducting the litigation and stood to benefit from a successful outcome.[21]

Decisions since Knight have drawn on the language used in the joint judgment, as well as that of Dawson J, to describe the twin requirements that the non-party have an active role in the litigation and an interest in its subject matter as a single requirement that the non-party be 'a real party' to the litigation in 'critical' and 'important' respects. This formulation was approved by the Full Court of the Federal Court in Keboro Pty Ltd v Saunders, in passages cited with approval by this Court in Ipex ITG Pty Ltd (in liq) v Victoria. It may therefore be convenient to describe the threshold issue as being whether the non-party is 'a real party' to the litigation. Whether or not that language is apt to describe every situation in which the Knight discretion is attracted need not be explored in this case, as the parties accepted the formulation for the purposes of the present appeal.[22]

19 After further discussing Gdanski, the Court of Appeal reached the following conclusion of determinative significance to this proceeding:[23]

The decision in Gdanski has been applied in a number of decisions, which have accepted that there is in effect a threshold requirement for the Knight discretion to be enlivened, namely, that the non-party be a 'real party'.[24] We also consider the approach identified in Gdanski to be correct, consistent with the language used in the joint judgment, as well as that of Dawson J in Knight.

20 It is apparent that this threshold requirement is not satisfied in the present matter: there is no suggestion that Mr Shaba was the 'real party' in the proceeding.

21 The plaintiff's reliance upon NAGM also does not provide a proper basis for the making of a costs order against Mr Shaba. In that case, the Full Court recognised that there was no impediment in principle to the award of costs against a non-party who was a not a lawyer and who was conducting legal proceedings on behalf of a litigant. That is not this case. Although Mr Shaba was the author of the circumstances which necessitated this proceeding being brought, he has had no involvement in the proceeding.

22 For the above reasons, the discretion to make a non-party costs order against Mr Shaba is not enlivened.

23 These reasons for judgment will, however, be provided to the Victorian Legal Services Commissioner for consideration as to whether there has been any contravention by Mr Shaba of relevant professional standards including the prohibition on engaging in legal practice without holding a practising certificate contained in s 10 of the Legal Profession Uniform Law Application Act 2014.

[1] To avoid confusion and without intending any disrespect, in these reasons I refer to Yousef Safatli by his first name.

[2] He also stated that he would make an appearance at Court on 1 May 2025; as I have noted, he did not appear before the Court that day.

[3] (1992) 174 CLR 178, 189-90, 192-3 ('Knight').

[4] [2015] VSC 644 at [12]- [16] ('Bakers').

[5] Ibid [12] quoting Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2004] 1 WLR 2807, 2815 D .

[8] Gore (t/as Clayton Utz) v Justice Corporation Pty Ltd [2002] FCA 354 [23].

[9] [1992] VicRp 61; [1992] 2 VR 198.

[12] [2002] FCAFC 396 ('NAGM').

[15] [2025] VSCA 17 ('Kyne').

[20] [2017] VSCA 348.

[21] Ibid [66] (Maxwell P, McLeish JA and Keogh AJA).

[24] See, e.g. Imam Ali Islamic Centre v Imam Ali Islamic Centre Inc (No 2) [2020] VSC 136 [24], [71], [84]-[90] (McMillan J); Linchi Group Pty Ltd v Wen Yong Wang & Anor [2018] VSC 482 [49]-[50], [120] (Matthews JR); GVE Hampton Pty Ltd v Shangri-La Construction Pty Ltd [2018] VCC 1806 [26] (Judge Cosgrave). See also PM Works Pty Ltd v Management Services Australia Pty Ltd [2018] NSWCA 168 [29] (Leeming JA, McColl JA agreeing at [1], Basten JA agreeing at [2]).