In the matter of Aurora Funds Management Limited (No 2)

The case of Aurora Funds Management Limited (No 2) involved a dispute between the plaintiff, Aurora Funds Management Limited, and the defendant, who was the defendant responsible entity of a managed investment scheme. The plaintiff sought declarations that the defendant was not validly appointed as the responsible entity of the managed fund. The matter was heard in the Federal Court of Australia. The plaintiff ultimately obtained the relief it sought, but the central issue before the court was whether the defendant's offer to remain neutral in the proceedings should preclude a costs order against it, and whether the defendant was 'forced' to litigate.

The court had to consider whether the defendant's decision to submit an appearance save as to costs, and its offer to remain neutral, should have any bearing on the usual rule that the losing party pays the costs of litigation. The defendant argued that it should not be liable for costs because it was essentially compelled to participate in the proceedings. The court also had to determine whether the defendant was entitled to an apportionment of costs, given that several issues put by the plaintiff were unsuccessful, and a large proportion of the evidence, hearing, and judgment were referable to these unsuccessful issues.

After careful consideration, the court ruled that the defendant's offer to remain neutral and its submission appearance save as to costs did not absolve it from liability for costs. The court found that the defendant was not forced to litigate and had actively participated in the proceedings. The court also held that while a significant proportion of the issues raised by the plaintiff were unsuccessful, the defendant's conduct and the nature of the litigation warranted a departure from the usual rule of costs following the outcome. As a result, the plaintiff was awarded 65% of their costs, reflecting the court's assessment of the overall proceedings and the defendant's conduct.