In the matter of Keybridge Capital Limited (No 3)

The case before the Court involved multiple defendants and a plaintiff, Keybridge Capital Limited. The plaintiff sought a substantial amount of damages for breach of fiduciary duties and other related causes of action. The defendants, numbering five, responded variously, with some taking a neutral stance and others actively defending the claims. The Court of Appeal was tasked with determining several critical issues, including the appropriate allocation of costs among the parties, the reasonableness of the Second Defendant's conduct in the litigation, and the implications of the Fifth Defendant's submitting appearance on cost recovery.

The primary legal issues revolved around the distribution of costs in light of the plaintiff's overall success and the defendants' varying degrees of participation in the proceedings. Specifically, the Court needed to decide whether costs should be apportioned in relation to any issues on which the plaintiff did not prevail, and whether the Second Defendant's conduct warranted any restriction on its entitlement to indemnity from the First Defendant. Additionally, the Court had to consider whether the costs incurred by the Fifth Defendant, who entered a submitting appearance, should be borne by the other defendants.

The Court held that the plaintiff was entitled to costs on an indemnity basis, reflecting their substantial success. The Second Defendant's conduct was deemed unreasonable, particularly in its failure to adopt a neutral position and its active defence against the plaintiff's claims. Consequently, the Court made orders denying and restricting the Second Defendant's entitlement to be indemnified by the First Defendant for the costs of the proceeding. Furthermore, the Court ruled that the costs of the Fifth Defendant should be met by the other defendants, given the submitting appearance did not absolve the other parties of responsibility for the litigation costs.