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

Aura Energy Limited sought an order for costs from Asean Deep Value Fund, which had been determined in a previous case. Asean argued that the directors of Aura were personally liable for the costs, as they had been involved in the litigation. The application was heard in the Supreme Court of Victoria. The central issue was whether the directors could be held personally liable for the costs of the proceeding despite the company's constitution providing an indemnity to the directors, except in cases of lack of good faith. The court had to determine if there was sufficient evidence of lack of good faith on the part of the directors to override the constitutional indemnity.

The court examined the evidence and found no indication of bad faith on the part of the directors. The constitutional indemnity was not overridden as there was no evidence that the directors had acted in bad faith. The court applied the principles from previous cases such as Knight v F.P. Special Assets Limited, Gdanski v Palms Court Management Pty Ltd, Abbott v Setka, Grimaldi v Chameleon Mining NL, Re Wave Capital Ltd, and Wilson v Bauer Media Pty Ltd. These cases established that an indemnity in a company's constitution could protect directors from personal liability for costs, unless there was a demonstration of bad faith. The court concluded that Asean's application for costs against the directors personally should be dismissed, and ordered that the costs be assessed immediately and awarded in a gross sum. This decision was in line with the statutory provisions and rules of the Supreme Court Act 1986 and the Supreme Court (General Civil Procedure) Rules 2015.