Australian Securities and Investments Commission v Merlin Diamonds Limited (No 4)

The Australian Securities and Investments Commission (ASIC) brought proceedings against Merlin Diamonds Limited, seeking its winding up. Opposing Shareholders and Interested Parties intervened in the proceeding, making submissions in both the interlocutory and substantive hearings. ASIC was successful in its proceedings. ASIC sought orders for reimbursement of its costs from Merlin and for the Opposing Shareholders and Interested Parties to indemnify Merlin for the costs incurred by ASIC. The Federal Court was required to determine whether the Opposing Shareholders and Interested Parties should be ordered to indemnify Merlin for the additional costs incurred by ASIC as a result of their participation in the proceeding.

The court held that the Opposing Shareholders and Interested Parties did not seek to advance their individual interests, but rather, their arguments were for the benefit of members and creditors generally. The court was not persuaded that the circumstances of the case justified an order for the Opposing Shareholders and Interested Parties to indemnify Merlin for ASIC’s additional costs. The court held that ASIC’s taxed costs should be reimbursed out of the property of Merlin in accordance with s 466(2) of the Corporations Act 2001 (Cth).

The orders of the court were that ASIC’s taxed costs of the proceeding be reimbursed out of the property of Merlin in accordance with s 466(2) of the Corporations Act 2001 (Cth). The court did not make any order for the Opposing Shareholders and Interested Parties to indemnify Merlin for ASIC’s additional costs.