In the matter of Keybridge Capital Limited [2025] NSWSC 8

Supreme Court New South Wales

Medium Neutral Citation: In the matter of Keybridge Capital Limited [2025] NSWSC 8 Hearing dates: Last submissions 21 January 2025 Date of orders: 29 January 2025 Decision date: 29 January 2025 Jurisdiction: Equity - Corporations List Before: Black J Decision: The Defendant pay the Plaintiff's costs of and incidental to Prayers 6 and 10 of the Originating Process filed on 12 December 2024 as agreed or as assessed. Catchwords: PROCEDURE – costs – general rule that costs follow the event – where orders made by consent. Legislation Cited: - Civil Procedure Act 2005 (NSW), s 98 - Corporations Act 2001 (Cth), ss 173, 250BD, 250R, 250V Cases Cited: - Nadilo v Eagleton [2021] NSWCA 232 - Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681 - One.Tel Ltd v Cmr of Taxation (2000) 101 FCR 548; (2000) 171 ALR 227; [2000] FCA 270 - Oshlack v Richmond River Council (1998) 193 CLR 72; (1998) 152 ALR 83; [1998] HCA 11 - Re Minister for Immigration & Ethic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 Category: Costs Parties: WAM Active Limited (Plaintiff) Keybridge Capital Limited (Defendant) Representation: Counsel: J Emmett SC

Solicitors: Mills Oakley (Plaintiff) Gadens (Defendant) File Number(s): 2024/462647

Judgment

Background and applicable principles 1. The Plaintiff, WAM Active Ltd ("WAM") seeks its costs in respect of an application for orders that Keybridge Capital Ltd ("Keybridge") produce a copy of its register of members and as to the result of a "spill" resolution put at Keybridge's annual general meeting ("AGM"), which would determine whether Keybridge was required to hold a meeting under s 250V of the Corporations Act 2001 (Cth) within 90 days of that AGM. The dispute in respect of those issues was resolved when, at the hearing on 16 December 2024, the Court noted Keybidge's undertaking to the Court that, on a without admission basis, it would: "6. Forthwith deliver to [WAM], care of its solicitors, a complete copy of [Keybridge's] register of members in electronic format correct as at 27 November 2024; 7. Within 90 days of 27 November 2024, hold a spill meeting within the meaning of s 250V of the Corporations Act on the basis that the spill resolution put to the vote at the Annual General Meeting on 29 November 2024 was passed by a majority of the members entitled to vote." 1. I now set out the applicable principles in respect of the application for costs, before turning to the parties' submissions. The Court has power to make an order as to costs under s 98 of the Civil Procedure Act 2005 (NSW) and I bear in mind that a successful party has a "reasonable expectation" of being awarded costs against an unsuccessful party, unless there is good reason for that presumption to be displaced: Oshlack v Richmond River Council (1998) 193 CLR 72; (1998) 152 ALR 83; [1998] HCA 11 at [22], [134]. I recognise that there has here been no determination of WAM's claim on its merits. 2. In Re Minister for Immigration & Ethic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6 ("Lai Qin"), McHugh J in turn observed that: "In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. 1. Keybridge, by its solicitors' submissions, acknowledges that exceptions to that general principle may arise if a party capitulated or acted unreasonably, but submits that such a finding can only be made if that categorisation of the conduct is obvious and based on undisputed facts. In One.Tel Ltd v Cmr of Taxation (2000) 101 FCR 548; (2000) 171 ALR 227; [2000] FCA 270, Burchett J observed where a party effectively surrenders to the other party, and that qualification was noted with approval by the Court of Appeal in Nadilo v Eagleton [2021] NSWCA 232 at [9]. Mr Emmett, who appears for WAM, in turn submits and I accept that: "The Court may make a costs order, even though there has not been a determination on the merits, if the Court is satisfied that one party has effectively surrendered or capitulated: see generally FCA US LLC v Mahindra Automotive Australia P/L [2021] FCA 1091 at [35], followed eg in Franpina Developments P/L v John Anthony Arena P/L [2022] NSWSC 57 at [23]. As was recognised there and the cases cited therein, it is not necessary to find that a party has acted in a manner that can be characterised as unreasonable, if in substance they capitulated or surrendered. A party does not have to achieve complete success in order to establish that the other party effectively surrendered or capitulated; it is enough to demonstrate that the outcome secured sufficiently achieves the party's purpose in bringing the proceedings." 1. Keybridge also refers to Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681 at 683-684, where Basten JA observed that: "… although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon."

The parties' further submissions and determination 1. Mr Emmett here submits that the Court should conclude that Keybridge effectively capitulated and (to the extent that it is necessary to determine) acted unreasonably by conduct that effectively forced WAM to approach the Court for relief. He submits that WAM was entitled to receive a copy of Keybridge's members' register under s 173 of the Corporations Act and points to Keybridge's undertaking given to the Court to provide a copy of that register of members to WAM on a "without admission" basis. Mr Emmett submits that Keybridge had wrongfully refused access to the members' register, since 5 December 2024, notwithstanding the requirements of s 173 of the Corporations Act, and points to the matters raised by Keybridge's managing director, Mr Bolton, in declining to make that members' register available. Mr Emmett also points to matters concerning voting by Keybridge's directors on a resolution at Keybridge's annual general meeting held on 29 November 2024 and submits that votes associated with at least one Keybridge director must have been counted at Keybridge's AGM, contrary to ss 250BD and 250R of the Corporations Act, so as to reach the result at that meeting that a spill meeting would not be held. Mr Emmett points out that, after Keybridge provided its undertaking to this Court on 16 December 2024, it purportedly "corrected" the AGM results had previously announced to Australian Securities Exchange ("ASX") and advised that it would hold a spill meeting required under s 250V of the Corporations Act. Mr Emmett, submits, on this basis, that Keybridge capitulated in relation to prayers 6 and 10 in WAM's Originating Process and, if it were necessary to decide, Keybridge's conduct in respect of the application was also unreasonable. 2. In response, Keybridge addresses other aspects of the proceedings between the parties which do not seem to me to advance the question of whether it should be ordered to pay WAM's costs of the proceedings. It points to the undertakings which I have noted above and submits that costs orders should be made only after the proceedings are fully determined. I do not accept that submission. First, the orders made by the Court on 16 December 2024, after Keybridge was given an opportunity to be heard, provided for the determination of the question of costs of these matters now. Second, the dispute as to these matters has been resolved by the undertakings offered by Keybridge and there is no utility in deferring a determination of the costs of them. 3. Keybridge responds that its conduct in seeking to resolve "satellite issues" by the orders made on 16 December was appropriate. I do not consider that these matters are properly characterised as "satellite issues", where each raised questions of non-compliance with mandatory obligations of the Corporations Act, which would potentially have significant adverse effects upon Keybridge's shareholders. Had Keybridge not given the relevant undertakings it is likely that the Court would have found that Keybridge had failed to comply with s 173 of the Corporations Act as to providing a copy of its members register, where the section does not contain a requirement for payment by cleared funds on which Mr Bolton, a director of Keybridge, had relied to refuse or delay compliance with that section. The Court would also likely have found (and Keybridge would likely have been obliged to concede) that Keybridge was required to call to call a spill meeting under s 250V of the Corporations Act, where it acknowledged that matter to ASX shortly after the hearing on 16 December 2024. The fact that Keybridge put WAM to the costs of bringing the proceedings in respect of these issues and then capitulated to the orders sought by WAM by giving the relevant undertakings, albeit without admission, is sufficient to support an order for costs where the Court can readily see the likely result as to these issues. 4. Second, Keybridge submits that it should not be "punished" by the making of a costs order for "compromising" part of the proceeding. I reject that submission. An order for costs does not have a punitive character and is compensatory as to the costs to which Keybridge put WAM in respect of these claims. Further, Keybridge did not "compromise" any part of the proceeding but capitulated in respect of the relief sought by WAM, although it did so on a "without admissions" basis. 5. Third, Keybridge submits that it is "inappropriate" to determine the merits on making a costs order. However, I approach the question of costs in accordance with the principles identified in Lai Qin and the case law to which I have referred above. Keybridge submits that it has available to it "large swaths" of evidence that would displace the likelihood that the Court would have reached the findings noted above but that proposition does not rise beyond bare assertion. I do not accept Keybridge's further submission that any issues of fact of law raised by the relief which it has now conceded prevent the determination of a costs application in these circumstances. Mr Emmett responds in reply and I accept that: "Keybridge has articulated no basis, even weakly arguable, on which it was entitled to resist the relief sought by WAM in prayers 6 and 10 of the originating application. WAM was forced to approach the Court for relief in relation to those matters and Keybridge's capitulation should have the usual cost consequences." 1. Keybridge then returns to its previous submission that costs orders should only be made at the conclusion of the proceedings. Mr Emmett responds that: "… the parties agreed that the Court should deal with costs on the papers on the basis of this exchange of written submissions: see order 5 made on 16 December 2024. The final relief sought in prayers 6 and 10 is readily severable from the other relief sought. There is no reason to delay dealing with the costs of those prayers." 1. I do not accept Keybridge's submission that the question of costs should not now be determined for the reasons noted above in dealing with the previous submission.

Orders 1. For these reasons, I order that the Defendant pay the Plaintiff's costs of and incidental to Prayers 6 and 10 of the Originating Process filed on 12 December 2024 as agreed or as assessed.

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