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Aura Energy Ltd v Asean Deep Value Fund (No 2)

Aura Energy Ltd v Asean Deep Value Fund (No 2)

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Case Copied 5 November 2020 33 min read

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL COURT

COMMERCIAL LIST

S ECI 2020 03219

AURA ENERGY LIMITED (ACN 115 927 681)	Plaintiff
v
ASEAN DEEP VALUE FUND, A CAYMAN ISLANDS COMPANY (No 149267) & ORS (according to the Schedule)	Defendants

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JUDGE:	DELANY J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF RULING:	5 November 2020
CASE MAY BE CITED AS:	Aura Energy Ltd v ASEAN Deep Value Fund (No 2)
MEDIUM NEUTRAL CITATION:	[2020] VSC 732

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CORPORATIONS — Non-party costs — Application against directors personally — Constitution provided an indemnity in favour of directors except in the case of lack of good faith — No finding of lack of good faith — Application refused — Order for immediate assessment and for gross-sum costs — Knight v F.P. Special Assets Limited (1992) 174 CLR 178 applied — Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348 applied — Abbott v Setka (No 2) [2013] VSCA 376 applied — Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 cited — Re Wave Capital Ltd (2003) 47 ACSR 418 cited — Wilson v Bauer Media Pty Ltd (Cost) [2018] VSC 161 cited — ACN074 971 109 v National Mutual Life Association of Australasia Ltd [2013] VSC 137 cited — Supreme Court Act 1986 (Vic), s 24(1) — Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 63.07(2)(c) and 63.20.1.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	A Trichardt	Dentons
For the First, Fourth and Fifth Defendants	H Carmichael	QR Lawyers
For the Second and Third Defendants	D Lorbeer	Wallmans Lawyers
The Seventh Defendant appeared on his own behalf

HIS HONOUR:

Background

On 12 August 2020, I made orders dismissing the application by Aura Energy Ltd (ACN 115 927 681) (‘Aura’) that the Court extend the time for the Aura Extraordinary General Meeting scheduled for 14 August 2020 (‘EGM’) (‘Application’).[1] The EGM was requisitioned on 23 June 2020 by David Peter O’Neil, the fourth defendant, on behalf of the first defendant, ASEAN Deep Value Fund, a Cayman Island Company (No 149267) (‘ASEAN’), pursuant to s 249D of the Corporations Act 2001 (Cth) (‘Act’).
[1]Aura Energy Ltd v ASEAN Deep Value Fund [2020] VSC 509, [59].

Having dismissed the application, I expressed my view that Aura, or alternatively such of the directors of Aura who were the driving force behind the Application, should pay the costs of the hearing on 12 August 2020 (‘Hearing’).[2] I made Orders on 12 August 2020, as varied on 19 August 2020 (‘Orders’), including:

9. Subject to any order varying this order upon the parties making any submissions under orders 10 and 11, the Plaintiff pay the First to Fifth Defendants’ costs of and incidental to the Interlocutory Process, including the hearing on 12 August 2020, so much of the affidavits that related only to the Interlocutory Process and the Originating Process insofar as it sought orders 1 and 2 described therein, and submissions.

[2]Ibid,…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2020] VSC 732
Decision Date: 5 November 2020

CaseChat Overview and Summary

Aura Energy Ltd sought an order against Asean Deep Value Fund for costs on a non-party basis, seeking an assessment of costs and a gross-sum costs order. The application was resisted by the defendant, Asean Deep Value Fund, on the basis that the applicant's constitution provided an indemnity in favour of the directors except in the case of lack of good faith. The Supreme Court of Victoria was required to determine whether the directors of Aura Energy Ltd were to be personally liable for the costs of the proceeding.

The court found that Aura Energy Ltd's constitution provided an indemnity in favour of its directors, except in the case of lack of good faith. The court found that there was no finding of lack of good faith, and therefore the directors were not personally liable for the costs of the proceeding. The court applied the principles from Knight v F.P. Special Assets Limited (1992) 174 CLR 178, Gdanski v Palms Court Management Pty Ltd [2017] VSCA 348, Abbott v Setka (No 2) [2013] VSCA 376, Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296, Re Wave Capital Ltd (2003) 47 ACSR 418, Wilson v Bauer Media Pty Ltd (Cost) [2018] VSC 161, and ACN 074 971 109 v National Mutual Life Association of Australasia Ltd [2013] VSC 137, which all support the proposition that directors are not personally liable for costs unless there is a lack of good faith. The court found that there was no evidence of lack of good faith in this case.

The court refused the application for an order against Asean Deep Value Fund for costs on a non-party basis and dismissed the application. The court ordered that the applicant pay the respondent's costs of the application on the standard basis. The court also made an order for immediate assessment of the respondent's costs in the proceeding and for gross-sum costs in accordance with the Supreme Court Act 1986 (Vic), s 24(1) and the Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 63.07(2)(c) and 63.20.1.

Orders