//
© 2026 Zoe. All rights reserved.
Zoe is a legal information platform. Always consult the Federal Register of Legislation for authoritative text.
[2026] NSWSC 562
Supreme Court of NSW
2026-05-21
Nixon J
Original judgment source is linked above.
Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Bolton v Keybridge Capital Limited [2026] NSWSC 562
Hearing dates: 18 May 2026
Date of orders: 21 May 2026
Decision date: 21 May 2026
Jurisdiction: Equity - Commercial List
Before: Nixon J
Decision: 1. Declare that clause 3.1 of the Director’s Deed dated 2 January 2013 requires the Defendant to pay the Plaintiff’s costs (including any costs orders made against him) of defending: a. Supreme Court proceeding 2024/00065373 (Primary Proceeding); and b. Court of Milan proceedings RGAC 45476/2025 and RG 351/2026 and the proceeding initiated by a Deed of Foreclosure filed in the Tribunal of Como and dated 17 April 2026; as and when those costs are incurred, on the basis that the Defendant has a right to recover those payments from the Plaintiff in the event, and to the extent, that it is subsequently established that the Plaintiff is not entitled to indemnity in respect of such amounts. 2. Direct that the parties confer regarding orders to give effect to these reasons for judgment, including orders for the payments of the amounts found to be presently owing to Mr Bolton, and also to confer regarding any orders for interest and costs and that by 5.00pm on 25 May 2026, the parties are to provide to the Associate to Nixon J: a. any agreed form of proposed orders; or b. otherwise, their respective forms of proposed orders and any submissions (limited to three pages) in support of the proposed form of orders (following which directions will be made regarding the determination of any remaining issues).
Catchwords: CORPORATIONS – Directors – Indemnity for liabilities incurred as a director – where plaintiff is former director of defendant - where leave granted to shareholder of defendant to bring claim against plaintiff for breach of duties as director – where ancillary proceedings brought in Italy to protect prospective judgment in Australia – where plaintiff and defendant were parties to a deed – whether indemnity clause in deed applies to costs incurred by plaintiff in defending proceedings – whether defendant is obliged, pursuant to deed, to advance reasonable costs expected to be incurred in defending the proceedings
Legislation Cited: Corporations Act 2001 (Cth) ss 140, 199A, 206F, 249F
Cases Cited: Bentley Capital Ltd v Keybridge Capital Ltd (No 3) [2024] FCA 1139
Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12
Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7
Franklins Pty Ltd v Metcash Trading Ltd (2009) 76 NSWLR 603; [2009] NSWCA 407
In the matter of Keybridge Capital Limited [2024] NSWSC 1215
In the matter of Keybridge Capital Limited [2025] NSWSC 240
Jeffries v Indigenous Land Corporation [2015] NSWSC 1616
Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 276 CLR 500; [2023] HCA 6
Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37
Note Printing Australia Ltd v Leckenby (2015) 50 VR 44; [2015] VSCA 105
Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16
Talbot v NRMA Ltd (2000) 50 NSWLR 300; [2000] NSWSC 608
Tin-Tagel Majikk Pty Ltd v Hockey [2026] NSWCA 72
WAM Active Ltd v Keybridge Capital Ltd (No 2) [2024] NSWSC 1496
Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17
Texts Cited: Explanatory Memorandum to the Corporate Law Economic Reform Program Bill 1998
Category: Principal judgment
Parties: Nicholas Francis John Bolton (Plaintiff)
Keybridge Capital Limited (Defendant)
Representation: Counsel:
J Stoljar SC w T Goldberg (Plaintiff)
M R Pesman SC w D Krochmalik (Defendant))
Solicitors:
Speed and Stracey Lawyers (Plaintiff)
Gadens (Defendant)
File Number(s): 2026/163283
Publication restriction: Nil
The Plaintiff, Mr Nicholas Bolton, is a former director of the Defendant, Keybridge Capital Ltd.
Mr Bolton is currently being sued in this Court (proceeding 2024/00065373) for alleged breaches of his duties as a director of Keybridge (Primary Proceeding). The Primary Proceeding has been listed for final hearing from 23 to 26 June 2026.
In addition, Mr Bolton is a defendant in proceedings brought in the Court of Milan (RGAC 45476/2025 and RG 351/2026) and the Tribunal of Como. These Italian Proceedings relate to the Primary Proceeding, in that the Italian Proceedings were brought to obtain orders in the nature of precautionary seizure (“sequestro conservativo”) against Mr Bolton to protect a prospective judgment in the Primary Proceeding.
Mr Bolton has requested that Keybridge indemnify him for his costs of defending the Primary Proceeding and the Italian Proceedings. Keybridge has refused to do so.
By Summons filed on 21 April 2026, Mr Bolton seeks a declaration that Keybridge is required to pay his costs of defending the Primary Proceeding and the Italian Proceedings, as and when those costs are incurred, on the basis that Keybridge has a right to recover those payments from Mr Bolton in the event, and to the extent, that it is subsequently established that Mr Bolton was not entitled to be indemnified in respect of such costs. Mr Bolton contends that the requirement to pay his costs arises pursuant to the terms of a deed entitled “Director’s Deed” that was executed by Mr Bolton and Keybridge on 2 January 2013, or alternatively pursuant to r 10.2 of Keybridge’s Constitution, or alternatively at general law.
Mr Bolton also seeks a declaration that, pursuant to the Director’s Deed, Keybridge is required to advance to him the reasonable costs which he expects to be incurred in defending the Primary Proceeding and the Italian Proceedings.
In addition, Mr Bolton seeks judgment in the amounts of $226,030 and €131,892.28 for costs already incurred in defending, respectively, the Primary Proceeding and the Italian Proceedings, and an order that Keybridge advance to Mr Bolton an amount of $1.032m, which is said to be the reasonable further costs expected to be incurred by Mr Bolton in defending the Primary Proceeding, or such other amount as the Court considers appropriate.
Keybridge denies that Mr Bolton is entitled to any such relief.
Mr Bolton relied on an affidavit affirmed by him on 1 May 2026, and an affidavit of his solicitor, Mr Malcolm Stewart of the same date. Mr Stewart acts for Mr Bolton in this proceeding, but not in the Primary Proceeding. Mr Bolton is currently unrepresented in the Primary Proceeding. Neither Mr Bolton nor Mr Stewart was required for cross-examination, in circumstances where it was agreed between the parties’ respective counsel that no Browne v Dunn point would be taken.
The two principal issues which arise for determination are:
whether Mr Bolton has an entitlement, pursuant to the Director’s Deed or otherwise, to be paid by Keybridge his costs of defending the Primary Proceeding and the Italian Proceedings, as and when those costs are incurred, subject to Keybridge having a right to recover those payments in the event that it is subsequently established that Mr Bolton was not entitled to indemnity in respect of those costs; and
whether Mr Bolton has an entitlement, pursuant to the Director’s Deed, to be advanced the reasonable costs expected to be incurred in defending the Primary Proceeding (and, if so, the amount of such costs).
Before addressing those matters, I set out the factual background and relevant principles, which were largely uncontroversial.
The Constitution was adopted as the constitution of Keybridge by a resolution passed on 16 October 2008. No changes have been made to the Constitution since that date.
The Constitution has effect as a contract between Keybridge and each director, under which each person agrees to observe and perform the Constitution so far as it applies to that person: Corporations Act 2001 (Cth), s 140.
Rules 10.2 and 10.4 of the Constitution provide as follows:
“10.2 Indemnity
The company must indemnify each Officer on a full indemnity basis and to the full extent permitted by law against all losses, liabilities, costs, charges and expenses (Liabilities) incurred by the Officer as an officer of the company or of a related body corporate.
…
10.4 Extent of Indemnity
The indemnity in rule 10.2:
(a) is enforceable without the Officer having to first incur any expense or make any payment;
(b) is a continuing obligation and is enforceable by the Officer even though the Officer may have ceased to be an officer of the company or its related bodies corporate; and
(c) applies to Liabilities incurred both before and after the adoption of this constitution.”
Rule 10.1 of the Constitution provides, relevantly, that “each person who is or has been a director” of Keybridge is an “Officer” for the purposes of r 10.2.
Rule 10.7 of the Constitution provides that Keybridge “may enter into a deed with any Officer to give effect to the rights conferred by this rule 10 or the exercise of a discretion under this rule 10 on such terms as the directors think fit which are not inconsistent with this rule 10”.
Mr Bolton was first appointed as a director of Keybridge on 30 December 2011. He continued to act as a director of Keybridge from that date until 9 October 2012 (the First Period).
There are no claims made in the Primary Proceeding regarding Mr Bolton’s conduct as a director of Keybridge in the First Period.
On 2 January 2013, Mr Bolton was, for the second time, appointed as a director of Keybridge. He continued to act as a director of Keybridge from that date until either 17 November or 17 December 2025 (the Second Period).
On the same date as Mr Bolton was appointed as a director of Keybridge for the second time, he (as “Director”) and Keybridge (as “Company”) executed the Director’s Deed.
The Recitals to the Director’s Deed state as follows:
“A The Constitution provides that the Company:
(1) must indemnify directors on a full indemnity basis and to the full extent permitted by law against all losses, liabilities, costs, charges and expenses incurred by the director as a director of the Company or a related body corporate (subject to certain specified exceptions);
(2) may, to the extent permitted by law:
(A) purchase and maintain insurance; or
(B) pay or agree to pay a premium for insurance,
for each director against any losses, liabilities, costs, charges and expenses incurred by the director as a director of the Company or of a related body corporate; and
(3) may enter into a deed with a director including;
(A) terms consistent with those set out in rule 10 (Indemnity and insurance) and rule 12 (Inspection of an[d] access to records) of the Constitution; and
(B) such other terms as the Company and director consider appropriate.
B. The Corporations Act provides that the Company must provide directors with access to certain Company documents.
C. The Director has been a director of the Company since the Appointment Date.
D. In accordance with the Constitution and the Corporations Act and in consideration of the Director agreeing to continue to act as a director of the Company, the Company has agreed to:
(1) provide access to Board Papers;
(2) indemnify the Director against liabilities incurred while acting as a director of the Company or a related body corporate; and
(3) maintain a D&O Policy in relation to the indemnity,
on the terms contained in this deed.”
“The Company must indemnify the Director, on a full indemnity basis and to the full extent permitted by law, against all losses, liabilities incurred by the Director as an officer of the Company or a related body corporate.”
The Director’s Deed defined “liability” as meaning “a liability of any kind including damages, costs, fees and expenses and any applicable taxes levied in respect of that liability”.
Clause 3.2 of the Director’s Deed was headed “Continued Indemnity” and provided as follows:
“The indemnity in clause 3.1 is an irrevocable, unconditional, continuing and principal obligation of the Company despite:
(a) the resignation or removal of the Director as a director of the Company;
(b) the settlement of any dispute between the Director and the Company or a third party; or
(c) the occurrence of any other thing,
and remains in full force and effect until released by the Director.”
“(a) The Company, on the Director's request, will advance to the Director reasonable costs incurred or expected to be incurred by the Director (whether legal or otherwise) in defending Relevant Proceedings. Any such advance will be interest free.
(b) The Director must furnish the Company with invoices or other relevant evidence of the costs incurred under clause 3.3(a).
(c) If the Company has advanced an amount for costs under clause 3.3(a), the amount of the advance will be in part satisfaction of the Company's obligation to indemnify the Director and will cease to be repayable unless it is subsequently found that the Director was not entitled to be indemnified for those costs.
(d) If the Company has paid an amount under clause 3.1 or advanced an amount for costs under clause 3.3(a) and it is subsequently found that the Director was not entitled to be indemnified for or advanced those costs, or where the amount advanced by the Company is in excess of the costs for which the Director is entitled to be indemnified, the Director must repay the amount of the payment, advance or part thereof (as applicable) to the Company within 90 days of a request by the Company.”
“in relation to a director:
1 any hearing, conference, dispute, inquiry or investigation of a court, arbitrator, mediator, tribunal or governmental or administrative body; and
2 any procedural step preceding or otherwise relating to such a hearing, conference, dispute, inquiry or investigation,
in which the director is involved:
3 as a party, witness or otherwise; and
4 because the director is or was a director of the Company (or a related body corporate) in the Relevant Period.”
Clause 1.1 of the Director’s Deed defined:
the “Relevant Period” as meaning:
“the period commencing on the Appointment Date and ending on the date the Director ceases to act as a director of the Company or a related body corporate (as applicable).”
“the date (whether before or after the date of this deed) on which the Director commenced acting as a director of the Company or a related body corporate (as applicable).”
On 6 October 2015, the Australian Securities and Investments Commission (ASIC) issued to Mr Bolton a notice of disqualification from managing corporations for a period of three years, pursuant to s 206F of the Corporations Act. The notice stated that the period of the disqualification commenced from the time of service of the notice.
The ASIC extract for Keybridge records 17 November 2015 as the date when Mr Bolton ceased to be a director. In addition, ASIC issued a media release in relation to Mr Bolton’s disqualification, which stated that the period of disqualification commenced on 17 November 2015 and would cease on 16 November 2018.
In this proceeding, Mr Bolton pleads that he ceased to be a director of Keybridge on 17 December 2015, and gave evidence to this effect in his affidavit. There was, in evidence, a document headed “Resignation of office” dated 17 December 2015 and signed by Mr Bolton, which stated that, from that date, he resigned his offices as director of Keybridge and various related bodies corporate.
It is unnecessary, for the purpose of the present proceeding, to determine precisely when Mr Bolton ceased to be a director of Keybridge for the second time, and therefore when the Second Period ended. The issues that arise in this case can be determined on the basis that, as is common ground, Mr Bolton had ceased to be a director of Keybridge by, at the latest, 17 December 2015.
There are no claims made in the Primary Proceeding regarding Mr Bolton’s conduct as a director of Keybridge in the Second Period.
Mr Bolton was appointed as a director of Keybridge, for the third time, on 13 October 2019 (almost four years after the Second Period ended).
No further deed of indemnity was entered around the time of this appointment or at any other time during the Third Period.
Mr Bolton remained a director of Keybridge from 13 October 2019 until 10 February 2025 (the Third Period), when he was removed as a result of a resolution passed at a meeting convened pursuant to s 249F of the Corporations Act: see In the matter of Keybridge Capital Limited [2025] NSWSC 240.
As outlined below, the claims brought in the Primary Proceeding solely relate to Mr Bolton’s conduct as a director of Keybridge in the Third Period.
In 2024, WAM Active Ltd, which is a shareholder in Keybridge, made an application in this Court seeking leave to bring a derivative action on behalf of Keybridge against Mr Bolton, two other directors of Keybridge, and Crotto del Nino S.r.l.. WAM alleged various breaches of duty by Mr Bolton as a director of Keybridge, including in respect of a transaction by which an amount of $4.75m was paid by Keybridge to Crotto.
Crotto is a company registered in Italy, and Mr Bolton is its sole shareholder. Crotto owns a property in Lake Como, which was allegedly purchased using, in part, the amount of $4.75m that it received from Keybridge pursuant to the impugned transaction.
On 20 September 2024, WAM obtained a freezing order from this Court in respect of Mr Bolton’s assets in Australia. In granting this relief, Black J found that WAM had “established a seriously arguable case, and potentially a strong case, available to Keybridge for breach of directors' duties or Ch 2E of the Corporations Act or both in respect of Mr Bolton's involvement in the relevant transaction”: In the matter of Keybridge Capital Limited [2024] NSWSC 1215 at [31].
On 27 November 2024, I granted leave to WAM to bring the derivative suit. In doing so, I found that there was a serious question to be tried as to whether the directors had breached their duties to Keybridge: WAM Active Ltd v Keybridge Capital Ltd (No 2) [2024] NSWSC 1496 at [229]-[241].
The derivative suit is the subject of the Primary Proceeding.
On 26 June 2025, Mr Bolton requested that Keybridge pay his incurred and future costs of defending the Primary Proceeding, pursuant to the Director’s Deed and the Constitution, and provided Keybridge with an estimate of those future costs, which had been prepared by his then solicitors, Hamilton Locke.
On 22 July 2025, Keybridge rejected Mr Bolton’s request for indemnity.
As noted at paragraph [3] above, the Italian Proceedings relate to the Primary Proceeding, in that Keybridge and WAM sought, in those proceedings, precautionary seizure orders against Mr Bolton and Crotto by reference to the prospective judgment in the Primary Proceeding.
At first instance, the Milan Tribunal rejected this application on 19 December 2025.
On 22 December 2025, Mr Bolton requested that Keybridge indemnify him in respect of his legal costs incurred in the Italian Proceedings. This request was rejected by Keybridge on 8 January 2026.
At around the same time, Keybridge filed an appeal against the Milan Tribunal’s decision and, in around early March 2026, the Court of Milan granted precautionary seizure orders against Mr Bolton and Crotto, and ordered that they pay WAM’s and Keybridge’s costs in an amount of €27,000.
On 17 April 2026, a proceeding was commenced in the Tribunal of Como by way of a Deed of Foreclosure in respect of the costs order made by the Court of Milan. Mr Bolton gave unchallenged evidence that the quantum of his costs liability has increased to €51,865.32 as a result of this enforcement action.
On 6 March 2026, Hamilton Locke ceased to act for Mr Bolton in the Primary Proceeding. Since then, Mr Bolton has been unrepresented in the Primary Proceeding.
In March 2026, Mr Bolton made further requests for indemnity, which were rejected by Keybridge in April 2026.
The Primary Proceeding is listed for hearing from 23 to 26 June 2026. In addition, orders have been made for a mediation, which is to occur on 26 May 2026.
In those circumstances, this matter has been brought on for hearing and determination on an expedited basis.
As a matter of general law, a director, as an agent and fiduciary, is entitled to be indemnified against losses and expenses properly incurred in the due performance of his or her office. In this regard, the position of directors is not dissimilar from that of trustees: Talbot v NRMA Ltd (2000) 50 NSWLR 300; [2000] NSWSC 608 at [20] (Hodgson CJ in Eq).
This is, of course, subject to any contrary provision in the Corporations Act. Relevantly, s 199A of the Corporations Act provides as follows:
When indemnity for liability (other than for legal costs) not allowed
(2) A company or a related body corporate must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against any of the following liabilities incurred as an officer or auditor of the company:
(a) a liability owed to the company or a related body corporate;
…
This subsection does not apply to a liability for legal costs.
When indemnity for legal costs not allowed
(3) A company or related body corporate must not indemnify a person (whether by agreement or by making a payment and whether directly or through an interposed entity) against legal costs incurred in defending an action for a liability incurred as an officer or auditor of the company if the costs are incurred:
(a) in defending or resisting proceedings in which the person is found to have a liability for which they could not be indemnified under subsection (2); …
…
Note 2: The company may be able to give the person a loan or advance in respect of the legal costs (see section 212).
As set out above, s 199A(3)(a) prohibits a company from indemnifying its officer against legal costs incurred in defending a proceeding in which the officer “is found to have a liability” for which he or she could not be indemnified under s 199A(2). One such liability is a liability owed to the company of which that person is a director: s 199A(2)(a).
The effect of this provision is that a company is prohibited from indemnifying an officer in respect of costs incurred in defending a proceeding brought by the company itself, if there is a finding in that proceeding that the officer is liable to the company. However, as observed by the Full Court of the Federal Court in Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16 at [41] (Jacobson, Siopis and Foster JJ), “for the prohibition to bite, there must be a finding to that effect and that finding must be made in the very proceedings in respect of which legal costs are being claimed by the officer under his or her indemnity” (emphasis added).
In Note Printing Australia Ltd v Leckenby (2015) 50 VR 44; [2015] VSCA 105, Tate JA (with whom Whelan and Ferguson JJA agreed) held (at [60]) that s 199(3)(b) – which prohibits a company from indemnifying an officer against legal costs incurred in defending or resisting criminal proceedings in which the officer is found guilty – does not prohibit or preclude a company from indemnifying its director against legal costs incurred in defending such proceedings up until, and unless, the officer is found guilty in those proceedings.
The decision in Leckenby concerned the prohibition in s 199A(3)(b), rather than the prohibition in s 199A(3)(a), but the two provisions are closely related and should be interpreted in a harmonious fashion: Leckenby at [50]-[51]. Further, the reasoning in Leckenby was applied to the prohibition in s 199A(3)(a) by Rein J in Jeffries v Indigenous Land Corporation [2015] NSWSC 1616.
In Leckenby at [54], Tate JA referred to paragraph [6.16] of the Explanatory Memorandum to the Corporate Law Economic Reform Program Bill 1998, which stated as follows:
“One of the concerns about the operation of the indemnity provisions has been that a person is not entitled to an indemnity until the outcome of the relevant proceedings is known. Substantial liability may be incurred (for example, on-going legal costs) during the course of a proceeding, which are unable to be paid to the indemnified officer, until the outcome of the proceedings is known. To address this, as indicated in Note 2 to proposed section 199A, the company may be able to give a person a loan or advance in respect of legal costs. Once the outcome of the proceedings is known, the person would be either obliged to pay back the loan or advance, if not entitled to an indemnity, or may retain the loan moneys as the indemnity to which the person is now entitled.”
“6.8 The draft provisions clarify the legal costs exception to the statutory prohibition on a company or related body corporate indemnifying or exempting an officer or auditor of the company, from liability incurred in that capacity.
6.9 It is proposed that the provisions concerning indemnification be rewritten to state all circumstances in which indemnification and exemption of officers or auditors is not permitted. As is currently the case, it is proposed that exemptions in respect of officers or auditors by the company, for a liability owed to a company, will not be permitted at all. Indemnification will be permitted in circumstances other than those expressly prohibited.”
Section 199A(3)(a) does not prohibit or preclude a company from making (and therefore a company is permitted to make) payments towards the legal costs incurred by a director in defending proceedings in which he or she is alleged to have a liability to the company, up until the point of time, and unless, the director is found to have such a liability. In order for any such arrangement to be consistent with s 199A(2)-(3), there must be an obligation on the director to refund the payments made by the company in respect of the defendant’s costs of defending the proceedings, in the event that the director is subsequently found to have a liability to the company in those proceedings. That is because, absent such an obligation, the company would be indemnifying the director for his or her costs – in the sense of holding the director harmless, or making good the director’s loss in respect of the costs of the relevant proceedings – despite the director being found liable to the company in those proceedings: see Leckenby at [61]-[69].
At first instance in Leckenby, the trial judge had expressed the view that an arrangement of this type was not a “true” indemnity (because of the contingent repayment obligation) and also was not a “loan” (because the obligation to repay does not become operative except in the event that the director is found to have a liability to the company in the relevant proceedings). Instead, the nature of such an arrangement was said to be no more than and no different to an agreement which provides for an advance and which requires repayment upon a finding of the requisite type being made: see Leckenby at [63]-[64]; similar comments were made by Banks-Smith J in Bentley Capital Ltd v Keybridge Capital Ltd (No 3) [2024] FCA 1139 at [50].
However, as Tate JA observed in Leckenby at [65], what is important is not the label given to such an arrangement, but whether the substance of the arrangement is consistent with the restrictions imposed by s 199A:
“Whatever particular label is given to this type of agreement is of little consequence; what is important is that a proper construction of s 199A(3)(b) demonstrates that payments can be made up until, and unless, a guilty verdict is reached providing that there is an obligation to repay any such payments in the event of a guilty verdict and that the Deed provides for just such an arrangement.”
The question that arises in the present case is not whether Keybridge was permitted to enter into an arrangement whereby it agreed to indemnify Mr Bolton in respect of his costs of defending proceedings in which he is alleged to have a liability to Keybridge, subject to an obligation to repay such amounts in the event that it is subsequently established that he was not entitled to be so indemnified. It is common ground that Keybridge was permitted to do so.
Instead, the question is whether the Director’s Deed establishes such an arrangement, and whether Keybridge is required to make such payments pursuant to that deed.
The Director’s Deed is to be interpreted according to the well-known principles regarding the construction of commercial contracts: Electricity Generation Corporation v Woodside Energy Ltd (2014) 251 CLR 640; [2014] HCA 7 at [35] (French CJ, Hayne, Crennan and Kiefel JJ); Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 at [46]-[52] (French CJ, Nettle and Gordon JJ); Ecosse Property Holdings Pty Ltd v Gee Dee Nominees Pty Ltd (2017) 261 CLR 544; [2017] HCA 12 at [16] (Kiefel, Bell and Gordon JJ); and Laundy Hotels (Quarry) Pty Ltd v Dyco Hotels Pty Ltd (2023) 276 CLR 500; [2023] HCA 6 at [27] (Kiefel CJ, Gageler, Gordon, Gleeson and Jagot JJ).
Those principles were recently summarised as follows in Tin-Tagel Majikk Pty Ltd v Hockey [2026] NSWCA 72 at [85]-[88] per Price AJA (with Kirk and Adamson JJA agreeing):
“[85] In Electricity Generation, the plurality stated at [35] (French CJ, Hayne, Crennan and Kiefel JJ):
‘The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean. That approach is not unfamiliar. As reaffirmed, it will require consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. Appreciation of the commercial purpose or objects is facilitated by an understanding “of the genesis of the transaction, the background, the context [and] the market in which the parties are operating”. As Arden LJ observed in [Re Golden Key Ltd (in rec) [2009] EWCA Civ 636 at [28]], unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption “that the parties … intended to produce a commercial result”. A commercial contract is to be construed so as to avoid it “making commercial nonsense or working commercial inconvenience”.’ (footnotes omitted)
[86] Recently, the relevant principles of construction of commercial contracts were conveniently summarised by Meagher and Kirk JJA in J & P Marlow (No 2) Pty Ltd v Hayes & McCabe (2023) 112 NSWLR 29; [2023] NSWCA 117 at [89]-[90]:
‘[89] Four members of the High Court summarised the core principles of construction of commercial contracts as follows in [Electricity Generation] at [35]:
(1) The meaning of the terms of a commercial contract is to be determined by what a reasonable businessperson would have understood those terms to mean.
(2) That requires consideration of the language used by the parties, the surrounding circumstances known to them and the commercial purpose or objects to be secured by the contract. That, in turn, is facilitated by an understanding of the genesis of the transaction, the background, the context and the market in which the parties are operating.
(3) Unless a contrary intention is indicated, a court is entitled to approach the task of giving a commercial contract a businesslike interpretation on the assumption that the parties intended to produce a commercial result. The contract is to be construed so as to avoid it making commercial nonsense or working commercial inconvenience.
[90] Put simply, as Gageler, Nettle and Gordon JJ stated in Simic v New South Wales Land and Housing Corporation (2016) 260 CLR 85; [2016] HCA 47 at [78], the “proper construction of [a contract] is to be determined objectively by reference to its text, context and purpose” (footnote omitted). Inherent in recognition of the importance of context and purpose is that the construction adopted may depart from the literal or ordinary meaning of the words employed. Gibbs J, for example, indicated as much in Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109; [1973] HCA 36 (ABC v APRA):
“if the language is open to two constructions, that will be preferred which will avoid consequences which appear to be capricious, unreasonable, inconvenient or unjust, ‘even though the construction adopted is not the most obvious, or the most grammatically accurate’ … Further, it will be permissible to depart from the ordinary meaning of the words of one provision so far as is necessary to avoid an inconsistency between that provision and the rest of the instrument.” …’
[87] Although courts must strive to give commercial contracts ‘a commercial and business-like interpretation’, their ability to do so is constrained by the language used by the parties: Jireh International Pty Ltd t/as Gloria Jean’s Coffee v Western Exports Services Inc [2011] NSWCA 137 at [55] (Macfarlan JA, Young JA and Tobias AJA agreeing) (‘Jireh’); Newey v Westpac Banking Corporation [2014] NSWCA 319 at [91] (Gleeson JA, Basten and Meagher JJA agreeing) (‘Newey’). If, after considering the contract as a whole and the relevant surrounding circumstances known to both parties, the Court concludes that the language of a contract is unambiguous, then the Court must give effect to that language unless to do so would give the contract an absurd operation: Jireh at [55]; Newey at [91]; Cherry v Steele-Park (2017) 96 NSWLR 548; [2017] NSWCA 295 at [73]-[75] (Leeming JA, Gleeson and White JJA agreeing). It should also be borne in mind that courts ‘have no mandate to rewrite agreements, so as to depart from the language used by the parties, merely to give a provision an operation which, as it appears to the court, might make more commercial sense’: Miwa Pty Ltd v Siantan Properties Pte Ltd [2011] NSWCA 297; (2011) 15 BPR 29,545 at [18] (Basten JA, McColl and Campbell JJA agreeing); Willis Australia Ltd v AMP Capital Investors Ltd (2023) 113 NSWLR 1; [2023] NSWCA 158 at [53] (Ward P, Beech-Jones JA and Griffiths AJA); Zhong v Guan (2024) 116 NSWLR 258; [2024] NSWCA 300 at [35]-[38] (Kirk JA, Payne JA and Price AJA agreeing).
[88] It is well-known that a commercial contract must be read as a whole having regard to the words used in every clause, ‘so as to render them all harmonious one with another’ and that courts should construe commercial contracts ‘fairly and broadly, without being too astute or subtle in finding defects’: Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99 at 109-110 (Gibbs J); [1973] HCA 36, citing Hillas & Co Ltd v Arcos Ltd [1932] All ER 494; (1932) 147 LT 503 at 514 (Lord Wright); see also Lepcanfin Pty Ltd v Lepfin Pty Ltd (2020) 102 NSWLR 627; [2020] NSWCA 155 at [78]-[94] (Bell P, Payne and McCallum JJA agreeing). Preference is given to a construction supplying a congruent operation to the various components of the whole and as to avoid it making commercial nonsense or even commercial inconvenience: Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [16] (Gleeson CJ, McHugh, Gummow and Kirby JJ); Zhu v Treasurer of the State of New South Wales (2004) 218 CLR 530; [2004] HCA 56 at [82] (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ).”
By cl 3.1 of the Director’s Deed, Keybridge is obliged to “indemnify” Mr Bolton “on a full indemnity basis and to the full extent permitted by law” against, relevantly, “all … liabilities” (including “costs”) “incurred by [Mr Bolton] as an officer of [Keybridge]”.
The terms of this indemnity reflect the terms of r 10.2 of the Constitution.
The effect of this indemnity being stipulated to apply “to the full extent permitted by law”, is, relevantly, to pick up the preclusion in s 199A(3)(a): namely, the preclusion of the provision of indemnity by a company in favour of a director for legal costs incurred in respect of claims made against the director by the company itself, if the director has been found liable to the company in the proceedings in which the company seeks to establish that liability: Rickus at [84].
As matters stand, there has been no such finding against Mr Bolton in the Primary Proceeding.
However, having regard to the allegations which are made against Mr Bolton in the Primary Proceeding, such a finding may be made in the future. Given that is so, Keybridge is only permitted to make payments to Mr Bolton in respect of his costs of defending the Primary Proceeding, insofar as there is a reciprocal obligation on Mr Bolton to repay such amounts to Keybridge in the event that he is subsequently found to be liable to Keybridge in the Primary Proceeding (which would mean that he is not entitled to be indemnified for the costs of defending that proceeding): see Leckenby at [61]-[69].
Mr Bolton contended that this issue was addressed by cl 3.3(d) of the Director’s Deed, which provides, relevantly, that if Keybridge “has paid any amount under clause 3.1”, and “it is subsequently found that [Mr Bolton] was not entitled to be indemnified for … those costs”, Mr Bolton “must repay the amount of the payment … to [Keybridge] within 90 days of a request by [Keybridge]”.
In response, Keybridge submitted that:
the Director’s Deed distinguishes between the obligation to “indemnify” Mr Bolton (cl 3.1) and the obligation to “advance” to Mr Bolton “reasonable costs incurred or expected to be incurred” (cl 3.3);
insofar as Mr Bolton claims that Keybridge is required to “advance” the amount of his costs of defending the Primary Proceeding, he must ground such a claim on the terms of cl 3.3(a) (and cl 3.3(a) cannot apply to the Primary Proceeding because it is not a “Relevant Proceeding”); and
the reference in cl 3.3(d) to an amount which Keybridge “has paid under clause 3.1” has no work to do because Keybridge has not paid any amount under that clause.
I will address separately below Keybridge’s contention that cl 3.3(a) does not apply to the Primary Proceeding because it is not a “Relevant Proceeding”.
So far as the construction of cl 3.1 is concerned, the thrust of Keybridge’s submission is that cll 3.1 and 3.3 must be read together, and are serving distinct functions in the Director’s Deed. In short, Keybridge contended as follows.
Clause 3.1 reflects the terms of r 10.2 of the Constitution and obliges Keybridge to “indemnify” Mr Bolton, in the sense of holding him harmless in respect of liabilities incurred by him as a director. Given the terms of s 199A(3), no such indemnity can be given in respect of Mr Bolton’s costs of defending the Primary Proceeding until the outcome of that proceeding is known, because Keybridge is prohibited from giving any such indemnity in the event that Mr Bolton is found to be liable to Keybridge in the Primary Proceeding.
In contrast, cl 3.3(a) provides a mechanism whereby Keybridge is required to “advance” to Mr Bolton his reasonable costs incurred or expected to be incurred in defending a “Relevant Proceeding”, prior to the outcome of the proceeding being known, with a corresponding obligation on Mr Bolton to repay the amounts advanced by Keybridge in the event that it is subsequently established that he is not entitled to indemnity in respect of such costs. It follows that Mr Bolton’s rights to any payments for his costs in the Primary Proceeding, prior to the resolution of that proceeding, are governed solely by cl 3.3(a).
The terms of cl 3.3(d) are directly inconsistent with Keybridge’s submission that it is not obliged to pay any amount to Mr Bolton in respect of costs under cl 3.1 until it is known (by reason of the outcome of the proceedings) whether he is entitled to be indemnified for those costs.
Clause 3.3(d) of the Director’s Deed provides that Mr Bolton may be required to repay amounts that have been paid to him by Keybridge not only where Keybridge has “advanced an amount for costs under clause 3.3(a)”, but also where Keybridge has “paid an amount under clause 3.1”, and it is “subsequently found that [Mr Bolton] was not entitled to be indemnified … for those costs” (emphasis added).
Keybridge’s submission that cl 3.3(d) is of no relevance because Keybridge has not in fact paid any amount under cl 3.1 confuses the issue of performance with the issue of construction. It may be accepted that one of the conditions for performance under cl 3.3(d) is, relevantly, an amount having been paid by Keybridge under cl 3.1, and this has not occurred. However, the question presently before the Court is not one regarding compliance with the obligation in cl 3.3(d), but one regarding the scope of the obligation in cl 3.1. In particular, the issue that arises for determination is whether Keybridge has an obligation, pursuant to cl 3.1, to pay any amount to Mr Bolton in respect of the costs incurred by him in defending a proceeding in which it is alleged that he is liable to Keybridge for breach of his duties as a director and, if so, when that obligation arises.
In respect of that issue of construction, it is a relevant and important matter that cl 3.3(d) contemplates that Keybridge may be required, pursuant to its obligation in cl 3.1 to “indemnify” Mr Bolton, to make payments in respect of “costs” incurred in defending a proceeding, in advance of it being established, as a result of the outcome of that proceeding, that he is “not entitled to be indemnified … for those costs”.
In Jeffries, the relevant agreement between the company and its director contained two distinct provisions:
the first (cl 6.2) provided that the company “indemnifies” the director for costs in defending an action for a liability incurred as a director, providing that such costs were not incurred in, among other things, defending proceedings in which the director is found to have a liability for which he could not be indemnified by the company; and
the second (cl 6.3) provided that, to the extent that the director “is not presently entitled to be indemnified” in respect of legal costs pursuant to cl 6.2, the company was obliged to “advance” to the director amounts “expended or to be expended” by him, provided that certain conditions were met.
The company contended that, having regard to the terms of cll 6.2 and 6.3, the indemnity in cl 6.2 should not be interpreted as obliging the company to pay any amount to the director in respect of his legal costs of defending proceedings in which he might be found to have a liability to the company, prior to the outcome of those proceedings being known, and that the director’s right to be advanced any amount in respect of costs, prior to the determination of those proceedings, was governed by cl 6.3: see Jeffries at [10], [32].
Rein J rejected this argument. His Honour held that, pursuant to cl 6.2 (and consistently with s 199A(3) of the Corporations Act), the director was entitled to an indemnity in respect of his costs “until such time as the director is found to have a liability for which he could not be indemnified” (at [35]). His Honour noted that, if such a finding were made, then cl 6.6(c) of the deed provided that the director would be required to repay any money received under the indemnity in cl 6.2 within 30 days (ibid.).
In light of the obligation in cl 6.6(c) to repay amounts paid under the indemnity in cl 6.2, Rein J rejected the company’s contention that, by the use of the phrase “indemnified” in cl 6.2 (in contrast to the word “advance” in clause 6.3), “the parties must have intended what is normally understood by indemnity, that is a payment which cannot be recovered from the recipient” (at [49]-[50]). His Honour observed (at [50]) that “[a] promise to indemnify subject to a condition subsequent is still, in my view, a promise to indemnify and I do not think that cl 6.2 can be treated as using ‘indemnified’ without regard to another clause of the Deed”. His Honour added that the fact that the indemnity was described (as in the present case: see paragraph [24] above) as “irrevocable” meant “that the indemnity (with its attendant qualifications) could not be revoked and I do not think that repayment in accordance with the terms of the indemnity amounts to revocation of the indemnity”.
It would have been apparent to a reasonable person in the position of Keybridge or Mr Bolton, at the time of entering into the Director’s Deed that, in the event that a proceeding was brought against Mr Bolton which alleged that he owed a liability to Keybridge, then, unless there was an agreement for his ongoing legal costs to be paid prior to any such finding, Mr Bolton could incur significant liability for those costs in a manner that could potentially compromise his defence of that proceeding. In Leckenby at [66], Tate JA made similar observations regarding the deed at issue in that case. In doing so, her Honour referred to the following statements made by Callinan J in Wilkie v Gordian Runoff Ltd (2005) 221 CLR 522; [2005] HCA 17 at [52], which were made in the context of construing an exclusion in an insurance policy (that indemnified a director of a company against loss arising from a claim by reason of a wrongful act) as limited only to those circumstances where there was an admission of misconduct, or a curial finding of misconduct:
“… the adoption of the construction for which the respondents contend would mean that in a real and practical sense they would become the final arbiters of the extent of their obligations because their insureds will frequently lack the means to defend themselves adequately against the charges levelled against them unless they are put in funds to do so. It would not have been a difficult matter for the respondents to have insisted upon a policy that put beyond doubt their right to postpone payment of defence costs until the outcome is known had they so wished.”
In Jeffries, Rein J referred to these observations by Tate JA and Callinan J in concluding that the indemnity in cl 6.2 of the relevant agreement did not operate only after there has been a hearing in which the director obtains a positive finding in his favour, but rather that the director was entitled to indemnity unless and until there was a finding that he was not entitled to be indemnified (at [46]-[47]), in which case the obligation to repay those amounts would be engaged (at [50]).
In the present case, it is plain, having regard to the terms of cll 3.1 and 3.3(d) of the Director’s Deed, that the parties intended to ensure that Mr Bolton would be fully indemnified by Keybridge for “all … liabilities” incurred by him as an officer of Keybridge (including legal costs of defending a proceeding brought by Keybridge regarding his conduct as a director), “to the full extent permitted by law”, and therefore up until and unless he was found in such a proceeding to have a liability to Keybridge for which he could not be indemnified (in which case he would no longer be entitled to be indemnified in respect of those costs, and would be required, under cl 3.3(d), to repay all amounts paid to him pursuant to cl 3.1).
In oral address, Keybridge submitted that the indemnity in cl 3.1 could only apply to a liability which arose from Mr Bolton’s conduct as a director of Keybridge in the Second Period, and not from his conduct as a director in the Third Period.
However, Keybridge did not identify – in its pleading or in its written or oral submissions – anything in the language of the Director’s Deed which would support this conclusion, other than the defined term “Relevant Period”. I deal with the definition of this term below. However, for present purposes, it is sufficient to observe this term is not used in cl 3.1. Nor is it used in any other term of the Director’s Deed which conditions, qualifies or limits the operation of cl 3.1. Instead, the term “Relevant Period” is used in the Director’s Deed solely as an element in the definition of “Relevant Proceeding” (which is, in turn, used solely in specifying the scope of the obligation under cl 3.3(a) to “advance” legal costs).
Keybridge did not plead, or advance any submission, that the Director’s Deed was terminated, in whole or in part, by reason of Mr Bolton’s ceasing to be a director of Keybridge at the end of 2015.
Clause 3.2 expressly provides that the obligation under cl 3.1 is a “continuing” obligation of Keybridge “despite the resignation or removal of [Mr Bolton] as a director of [Keybridge]”.
Further, Recital D to the Director’s Deed records that the parties intended to “indemnify [Mr Bolton] against liabilities incurred while acting as a director of the Company or a related body corporate” (emphasis added). This is, as Mr Bolton submitted, consistent with an intention to indemnify Mr Bolton for liabilities incurred by him whenever acting as a director of Keybridge. The conclusion that cl 3.1 of the Director’s Deed was intended to operate in this way is supported by the fact that this clause is in substantially the same terms as r 10.2 of the Constitution, which applies whenever a person is acting as a director of Keybridge (and is not limited to any particular “period” of so acting).
The Primary Proceeding is brought against Mr Bolton on the basis of alleged conduct on his part while acting as a director of Keybridge. It follows that the costs incurred by Mr Bolton in defending the Primary Proceeding are, within the terms of cl 3.1, “liabilities” which have been “incurred by” Mr Bolton in his capacity “as an officer of” Keybridge; and that Keybridge must, pursuant to cl 3.1 of the Director’s Deed, “indemnify” Mr Bolton for such costs “on a full indemnity basis and to the full extent permitted by law” (emphasis added).
The “extent” to which such an indemnity is “permitted by law” is up until, and unless, there is a finding in the Primary Proceeding that Mr Bolton has a liability to Keybridge. If such a finding is made, then Keybridge will be prohibited from indemnifying Mr Bolton in respect of such liability (s 199A(2)(a)) and from indemnifying him in respect of the costs of the Primary Proceeding (s 199A(3)(a)). In that event, Mr Bolton will be obliged, pursuant to cl 3.3(d), to return the amounts paid to him in respect of his legal costs, these being amounts “paid … under clause 3.1”, for which “it is subsequently found that [Mr Bolton] was not entitled to be indemnified”. In this way, the Director’s Deed operates consistently with the parties’ expressed intention that Mr Bolton be indemnified, “to the full extent permitted by law”, in respect of all liabilities incurred by him as an officer of Keybridge.
Further, the fact that Keybridge must, pursuant to cl 3.1, indemnify Mr Bolton for such liabilities “on a full indemnity basis” means that, unlike under cl 3.3(a), there is no basis for reducing the extent of the indemnity under cl 3.1 in respect of legal costs “incurred by” Mr Bolton by reference to some assessment as to whether such costs have been “reasonably” incurred.
Keybridge’s obligation to indemnify Mr Bolton pursuant to cl 3.1 arises as and when liabilities have in fact been “incurred” by him as an officer of Keybridge. It follows that there is no obligation under cl 3.1 for Keybridge:
to make any payment to Mr Bolton in respect of future costs which are expected to be incurred (with any such obligation arising, if at all, under cl 3.3, which deals with “advances” for “reasonable costs … expected to be incurred”); or
to make any payment to any other person related to Mr Bolton (such as Crotto) in respect of its costs.
Mr Bolton exhibited to his affidavit copies of a number of invoices issued by his former solicitors in respect of the Primary Proceeding. Each of those invoices identifies that it relates to the Primary Proceeding, and itemises the work undertaken in connection with the Primary Proceeding that is the subject of the particular invoice.
With two exceptions, each of those invoices is addressed to Mr Bolton.
The first exception is an invoice in the amount of $72,364.48 issued by Hamiton Locke on 24 December 2025, which is issued to both Mr Bolton and Crotto. The work itemised in this invoice relates generally to the defence of the Primary Proceeding, including the preparation of Mr Bolton’s evidence in the Primary Proceeding. I accept Mr Bolton’s submission that, in circumstances where the invoice is addressed to him and he appears to be jointly liable for payment of it, this invoice establishes that costs have been incurred by Mr Bolton as an officer of Keybridge in the amount specified in the invoice.
The second exception is an invoice in the amount of $10,000 issued by Hamiton Locke on 2 April 2026, which is addressed only to Crotto (and not to Mr Bolton). The itemised narratives included in this invoice refer to, inter alia, reviewing a “Crotto defence”, amending that defence, conferences with counsel regarding that defence, and work relating to “Crotto notice of motion”, including the preparation of a supporting affidavit. Having regard to those matters, I am not satisfied that this invoice evidences a cost “incurred by [Mr Bolton] as an officer of [Keybridge] or a related body corporate”, within the meaning of cl 3.1 of the Director’s Deed.
There was an element of double-counting in the table set out in Mr Bolton’s affidavit which calculated the total amount of costs incurred by him in the Primary Proceeding. This arose because Mr Bolton included an invoice from Hamilton Locke dated 28 May 2025 in the amount of $10,739.30 and another invoice from Hamilton Locke dated 30 June 2025 in the amount of $9,963.00. Each of these two invoices related (according to the narrative set out in each invoice) to precisely the same work by the same individuals on the same dates. The reason for the discrepancy between the total amount of each invoice appears to be that the first invoice was issued to Mr Bolton at an address in Victoria and included GST on all fees and disbursements, while the second was issued to Mr Bolton at an address in Italy and did not include GST on the solicitors’ fees (but the amount specified for counsel’s fees appears to include the amount of GST which was presumably charged by counsel to his instructing solicitors).
The second invoice appears to record that an “adjustment” has been “applied” in the amount of the first invoice, likely reflecting that the first invoice was cancelled when the second was issued.
After excluding the first invoice of Hamilton Locke which was cancelled (dated 28 May 2025 and in the amount of $10,739.30), and excluding the last invoice of Hamilton Locke which was issued solely to Crotto (dated 2 April 2026 and in the amount of $10,000), the total amount of the costs which Mr Bolton has incurred to date in the Primary Proceeding, as established by the remaining invoices, is $251,290.70.
After allowing for the amount of $46,000 which, according to Mr Bolton’s affidavit, has previously been paid by or on behalf of Keybridge in respect of his costs of the Primary Proceeding (being payments made while he was a director of Keybridge or its related body corporate, Yowie Group Limited), the total amount that is outstanding in respect of the costs presently incurred by Mr Bolton in respect of the Primary Proceeding to date is $205,290.70.
Mr Bolton is entitled to be paid that amount, pursuant to cl 3.1 of the Director’s Deed, subject to Keybridge having a right to recover this amount, pursuant to cl 3.3(d), in the event that it is subsequently established in the Primary Proceeding that Mr Bolton has a liability to Keybridge, such that he is not entitled to indemnity in respect of those costs.
There is also evidence that, in the Italian Proceedings, Mr Bolton has incurred liability for the following amounts:
an amount of €40,560.00 which was invoiced to him by an Italian law firm, DWF LLP Studio Legale Associato, on 14 January 2026; and
an amount of €39,466.96 which was invoiced to him by DWF on 18 March 2026.
Mr Bolton is also liable for an amount of €51,865.32 in respect of the costs order made against him in the Italian Proceedings (see paragraph [48] above).
Accordingly, the total amount of the liabilities which Mr Bolton has incurred in the Italian Proceedings – including for his own costs and for the adverse costs order – is €131,892.28.
It was common ground that the Italian Proceedings relate to the Primary Proceeding (see paragraph [3] above).
Nonetheless, Keybridge submitted that, even if Mr Bolton established an entitlement to indemnity in respect of his costs of the Primary Proceeding pursuant to cl 3.1 of the Director's Deed, he was not entitled to be paid any amount in respect of the costs incurred in the Italian Proceedings “because he and Crotto were unsuccessful in those proceedings and a costs order was made against him in favour of Keybridge and WAM Active”, such that “the Italian courts” have “found that Mr Bolton owed a liability to Keybridge for the purposes of s 199A(2)(a), so as unequivocally to trigger the disentitlement to costs by reason of s 199A(3)(a)”.
I do not accept this submission.
First, although the Court of Milan has found that Mr Bolton is liable to pay the costs of Keybridge and WAM in the Italian Proceedings, s 199A(2) expressly provides that “a liability for legal costs” is not “a liability owed to the company” for the purposes of that provision. It follows that, as matters stand, the Italian Proceedings are not, within the meaning of s 199A(3), “proceedings in which [Mr Bolton has been] found to have a liability for which [he] could not be indemnified under subsection (2)”.
Secondly, the Court of Milan has not otherwise found that Mr Bolton owes any liability to Keybridge. It appears from the judgment of the Court of Milan that, in order to obtain precautionary seizure orders, it is necessary to show “the fumus boni iuris, i.e. the existence of a prima facie case”. The Court of Milan noted in its judgment of 2 March 2026 that Italian company law was not applicable to the underlying dispute, “as the events took place in Australia between Australia[n] parties not having any connection with Italy”, and that therefore the “Italian Court lacks jurisdiction regarding … the existence of a prima facie case”. In those circumstances, the Court of Milan noted that this Court, when granting leave to bring the derivative action and “applying the company law in force in [Australia]”, found that a prima facie case was duly established “subject to further investigations to be conducted in the [Primary Proceeding] on the questions of fact”. Accordingly, the relief in the nature of precautionary seizure that was granted by the Court of Milan was not premised on any finding that a liability was owed by Mr Bolton to Keybridge. The effect of such relief was described by the Court of Milan as being “to extend the preventive measure granted through the freezing order authorised by the Australian court during the proceedings on questions of fact, in the clear belief that a danger for the security for the credit does exist”, with “the credit to be protected, which is the subject of the compensatory suit, amount[ing] to 4.7[m] Australian dollars” (being the amount for which Mr Bolton is alleged to be liable to Keybridge in the Primary Proceeding).
Given those matters, I am satisfied that the liabilities which Mr Bolton has incurred in the Italian Proceedings, should be treated in the same way as the liabilities which Mr Bolton has incurred in respect of the Primary Proceeding (including costs in respect of applications in the Primary Proceeding concerning the freezing orders made by this Court). Both sets of liabilities are liabilities incurred by Mr Bolton as an officer of Keybridge.
It follows that, pursuant to cl 3.1 of the Director’s Deed, Mr Bolton is entitled to be paid the amount of €131,892.28, representing the total amount of such liabilities presently incurred in the Italian Proceedings, subject to Keybridge having a right to recover this amount, pursuant to cl 3.3(d), in the event that it is subsequently established that Mr Bolton is not entitled to indemnity in respect of those costs.
Mr Bolton seeks a declaration that cl 3.3(a) of the Director’s Deed requires Keybridge to advance to him the amount of reasonable costs he expects to be incurred in defending the Primary Proceeding and the Italian Proceedings.
At the outset, it is important to note a number of important differences between cl 3.1 and cl 3.3(a).
First, whereas cl 3.2 provides that the indemnity under cl 3.1 “is an irrevocable, unconditional, continuing and principal obligation of the Company”, there is no such corresponding stipulation in respect of the obligation under cl 3.3.
Secondly, whereas the obligation pursuant to cl 3.1 to “indemnify” Mr Bolton arises as and when liabilities are “incurred”, the obligation to advance moneys pursuant to cl 3.3(a) arises only “on the Director’s request”.
Thirdly, whereas cl 3.1 provides that Keybridge must indemnify Mr Bolton “on a full indemnity basis”, Keybridge’s obligation to advance funds pursuant to cl 3.3(a) applies only in respect of “reasonable costs”.
Fourthly, whereas cl 3.1 applies only to liabilities “incurred by the Director”, cl 3.3(a) extends to reasonable costs “expected to be incurred by the Director”.
Finally, and importantly, whereas cl 3.1 applies to “all” liabilities (including “all” costs) “incurred by the Director as an officer of the Company”, cl 3.3 is limited to costs incurred or expected to be incurred “in defending Relevant Proceedings”.
Accordingly, in order for Keybridge to be required to advance any amount to Mr Bolton in respect of his expected future costs of defending the Primary Proceeding, it must be established that the Primary Proceeding falls within the definition of a “Relevant Proceeding” (see paragraph [26] above).
There is no dispute that the Primary Proceeding meets the first three of the four numbered elements of that definition, which refer (relevantly) to (1) “any hearing … of a court”, or (2) “any procedural step preceding or otherwise relating to such a hearing”, (3) “in which the director is involved … as a party”.
The dispute concerns the fourth element, namely, whether Mr Bolton is involved as a party in the Primary Proceeding “because [he] is or was a director of [Keybridge] (or a related body corporate) in the Relevant Period”.
This element of the definition of “Relevant Proceedings” refers to a singular “Relevant Period”. That is, the definition does not refer to “any Relevant Period”, but “the Relevant Period”.
Similarly, the definition of the “Relevant Period” is framed in the singular as “the period” between two specified dates (each of which is also described in the singular): namely, “the period commencing on the Appointment Date and ending on the date the Director ceases to act as a director of the Company (or a related body corporate) as applicable” (emphasis added).
The use of the words “as applicable” recognises that there may be a number of distinct “Relevant Periods”, in that there may be a separate “Relevant Period” in respect of Keybridge and any related body corporate to which Mr Bolton was appointed as a director, and that these distinct “Relevant Periods” may or may not be coextensive. However, for each such corporate entity, there is a singular “Relevant Period” which is determined as “the period” between the (singular) Appointment Date for that particular entity and the (singular) date on which Mr Bolton ceased to be a director of that particular entity.
The “Appointment Date” is likewise defined in the singular, as “the date (whether before or after the date of this deed) on which [Mr Bolton] commenced acting as a director of the Company or a related body corporate (as applicable)” (emphasis added).
As noted above, the Director’s Deed was executed on 2 January 2013, being the same date as Mr Bolton was, for a second time, appointed as a director of Keybridge. He remained a director until late 2015, when he was disqualified by ASIC from managing corporations for a period of three years.
The allegations in the Primary Proceeding relate solely to the Third Period in which Mr Bolton acted as a director of Keybridge, which commenced when he was reappointed in October 2019 (around one year after the banning order ceased to have effect).
Mr Bolton contended that his conduct in the Third Period came within the “Relevant Period”, on the basis that the Relevant Period extended from the date when he originally commenced acting as a director of Keybridge (being the start of the First Period), through to the date when he finally ceased to act as a director of Keybridge (being the end of the Third Period). The submission was put as follows in oral address (emphasis added):
“So our short point is that there is no need to read words into this. It should be read as it appears, that time starts to run from the original appointment and ends when the director finally ceases to hold any office as a director. If there is an inter‑regnum that doesn't matter, because whatever conduct is engaged in during the inter‑regnum is not and cannot be, by definition, that of the director in his or her capacity as director. It is only when the director resumes his or her office that the liability can, as it were, come into play.”
The difficulty with this submission is that it does precisely what it says there is no need to do, namely, it reads words into the definition of “Relevant Period”, by describing that period as running from the “original” Appointment Date to the date when the director “finally” ceases to hold any such office.
It is unlikely that the parties intended the “Appointment Date” to mean the date when Mr Bolton “originally” commenced acting as a director of Keybridge (being the start of the First Period), rather than the date when Mr Bolton was reappointed and the Director’s Deed was executed (being the start of the Second Period). Recital C to the Director’s Deed states that Mr Bolton “has been a director of the Company since the Appointment Date”. That statement was only true if “Appointment Date” had the latter meaning rather than the former meaning.
In any case, it is unnecessary to determine whether the Appointment Date extends to the date of Mr Bolton’s first appointment as a director of Keybridge, rather than being confined to the date when he was appointed for a second time and the Director’s Deed was executed. The critical question is whether, as Keybridge contended, the “Relevant Period” came to an end when Mr Bolton ceased to be a director of Keybridge following the making of a disqualification order in late 2015 (being the end of the Second Period), or whether, as Mr Bolton contended, it lasted until the point in time when Mr Bolton “finally” ceased to be a director (being the end of the Third Period).
The definition of “Relevant Period” does not contain any reference to Mr Bolton “finally” ceasing to be a director. There is nothing in that definition which indicates that the parties intended that, in the event that Mr Bolton ceased to be a director of Keybridge, and was subsequently reappointed at some unknown time in the future, the “Relevant Period” would extend to comprise not only each individual period in which he held office, but also any “inter-regnum” period in-between those periods of appointment.
There would be an evident difficulty with an interpretation of “Relevant Period” which required an identification of when Mr Bolton “finally” ceased to be a director of Keybridge. That is because, at any given point in time, it would not be possible to know whether or not Mr Bolton had “finally” ceased to hold that office, given that the prospect of reappointment would depend on the future membership and future circumstances of the company (which would themselves be unknown).
Mr Bolton submitted that his interpretation of “Relevant Period” was supported by the provisions of the Director’s Deed concerning the “Access Period”. In particular, cll 2.1-2.2 provide that, “during the Access Period”, Keybridge must keep a complete set of Board Papers and must allow Mr Bolton to inspect and copy such material. The “Access Period” is defined in cl 1.1 as meaning:
“the period commencing on the Appointment Date and ending on the later of:
1 the date which is 7 years after the Director ceases to hold office as a director of the Company or a related body corporate (as applicable); and
2 the date any Relevant Proceedings commenced during the period specified in Item 1 have been finally resolved.”
“… an important protection, and that is obviously intended to endure for the benefit of the director throughout the period [in] which he or she is a director, regardless of whether the director has stepped down from the board for a period of time and stepped back in.”
I do not consider that the definition of “Access Period” supports Mr Bolton’s interpretation of “Relevant Period”.
As a starting point, I accept that the reference in the definition of “Access Period” to the point of time at which “the Director ceases to hold office as a director of the Company or a related body corporate (as applicable)” should be interpreted consistently with the similar phrase in the definition of “Relevant Period” (particularly since “Relevant Period” is an element in the definition of “Relevant Proceedings”, and “Relevant Proceedings” is an element in the definition of “Access Period”).
However, if the construction for which Mr Bolton contends were adopted, and the notion of having “ceased” to hold office were interpreted as meaning having “finally ceased”, there would be significant uncertainty about the Access Period for which the relevant documents were required to be maintained by Keybridge.
In order to illustrate this point, let it be assumed that, after ceasing to be a director in late 2015, Mr Bolton was not reappointed until late 2024, some nine years later. In such circumstances, Keybridge might have concluded, during 2023 and 2024, that there was no need to keep the materials specified in cl 2.1, because more than seven years had passed since Mr Bolton had ceased to be a director (in late 2015). However, on Mr Bolton’s reappointment in late 2024, the result would be (on Mr Bolton’s interpretation) that the Access Period was now extended, such that it continued, unbroken, from the time of his first appointment as a director of Keybridge in 2011 and would only conclude on whatever date he “ceased” to be a director following his reappointment. In this scenario, if Keybridge had discarded such material in 2023 or 2024, it would (upon Mr Bolton’s reappointment) be in breach of its obligation under cl 2.1 of the Director’s Deed – because it had not maintained a complete set of such material during the “Access Period” (which would have been retrospectively extended).
Having regard to those matters, I find that the “Relevant Period” specified in the Director’s Deed extended up until late 2015, being “the date” when Mr Bolton “cease[d] to act as a director of the Company”. It was not (retrospectively) extended to cover the whole of the period up to 10 February 2025, by reason that Mr Bolton was subsequently reappointed and served as a director for the Third Period.
It follows that:
the Primary Proceeding is not a proceeding in which Mr Bolton is “involved … as a party … because [he] is or was a director of [Keybridge] … in the Relevant Period”, such that it is not a “Relevant Proceeding”; and
cl 3.3(a) of the Director’s Deed can therefore have no application to the “reasonable costs … expected to be incurred” by Mr Bolton in defending the Primary Proceeding.
While this interpretation leads to cl 3.3(a) of the Director’s Deed having a more limited operation than cl 3.1, that result is consistent with the fact that:
whereas cl 3.1 is intended to reflect the broadly worded indemnity granted under r 10.2 of the Constitution, which applies whenever a person is acting as a director of the company, cl 3.3(a) conferred an additional right on Mr Bolton, which was granted in consideration for his agreeing to act as a director of Keybridge at the beginning of the Second Period; and
whereas the indemnity in cl 3.1 is expressed to be “an irrevocable, unconditional, continuing and principal obligation” of Keybridge, which applies in respect of “all liabilities incurred” by Mr Bolton as an officer of Keybridge on a “full indemnity basis” and “to the fullest extent permitted by law”, the right conferred on Mr Bolton by cl 3.3(a) is expressly confined in its operation to his reasonable costs in respect of proceedings of a specific type relating to a specified defined period of time (which, I have determined, concluded at the end of the Second Period).
Given the findings set out above, it is unnecessary to determine whether there is a sufficient evidentiary basis to determine the amount of the “reasonable costs … expected to be incurred” by Mr Bolton in defending the Primary Proceeding.
If that issue had arisen for determination, I would have had significant reservations about the adequacy of the evidence relied upon in support of Mr Bolton’s claim to be advanced an amount of $1.032m in respect of his defence costs. That estimate was based upon a table prepared by his solicitor, Mr Stewart, containing estimates for various workstreams. However, there was no evidence of the rates applied, or the hours of work estimated for each stream, or the basis on which such estimates were made by Mr Stewart.
I do not doubt that Mr Stewart is a solicitor of considerable experience, who has likely prepared a number of such estimates in the past. However, Mr Stewart is not retained to act for Mr Bolton in the Primary Proceeding. There is no evidence that Mr Stewart has reviewed any lay evidence or expert reports served in the Primary Proceeding, or has any information regarding the scope of the documentary evidence or of the materials which have been produced by way of discovery or other compulsory processes.
In those circumstances, it is difficult to understand the basis on which Mr Stewart arrived at, for example, an estimate of $450,000 for the costs of preparing for the hearing in the Primary Proceeding. This estimate was given as a global figure, without any breakdown or explanation. It appeared that this figure was taken, without any adjustment, from an estimate prepared by Hamilton Locke around a year ago. However, the basis for Hamilton Locke’s estimate was likewise not identified, and the scope of the proceeding (which will start in just over a month) is presumably much clearer now than it was a year ago. Accordingly, that estimate could not be given any significant weight.
For the reasons given above, I will grant the declaratory relief sought by Mr Bolton regarding his entitlement, pursuant to cl 3.1 of the Director’s Deed, to be paid his costs of defending the Primary Proceeding and the Italian Proceedings as and when they are incurred, on the basis that Keybridge has a right to recover those payments in the event, and to the extent, that it is subsequently established that Mr Bolton is not entitled to indemnity in respect of those costs.
I will not, however, grant the declaratory relief sought in respect of the operation of cl 3.3(a) of the Director’s Deed, as I have found that this clause has no application to the Primary Proceeding or the Italian Proceedings.
Mr Bolton also sought judgment in his favour in the amount of his presently incurred costs in defending the Primary Proceeding and the Italian Proceedings which have not been paid by Keybridge.
A potential difficulty with giving judgment in those sums is that Mr Bolton’s entitlement to those sums pursuant to cl 3.1 will thereupon merge in the judgment. Given that is so, there could potentially be an issue whether amounts which are subsequently paid by Keybridge in satisfaction of any such judgment are amounts which Keybridge “has paid … under clause 3.1” (and which therefore are liable to be repaid under cl 3.3(d) in the event that “it is subsequently found that [Mr Bolton] was not entitled to be indemnified for … those costs”). For those reasons, I will not give judgment in the amounts which I have found that Mr Bolton is entitled to be paid pursuant to cl 3.1, but will instead make orders for those amounts to be paid, together with orders providing for those amounts to be repaid in the event that it is subsequently established that Mr Bolton is not entitled to be indemnified for those costs. I will direct the parties to confer regarding the proposed form of orders to give effect to these reasons for judgment.
In addition, I will direct the parties to confer as to interest and costs. In the course of oral address, Senior Counsel for Mr Bolton suggested that these matters should be addressed following the determination of his client’s other claims for relief, and Senior Counsel for Keybridge did not disagree with this course.
Accordingly, I make the following orders:
Declare that cl 3.1 of the Director’s Deed dated 2 January 2013 requires the Defendant to pay the Plaintiff’s costs (including any costs orders made against him) of defending:
(a) Supreme Court proceeding 2024/00065373 (Primary Proceeding); and (b) Court of Milan proceedings RGAC 45476/2025 and RG 351/2026 and the proceeding initiated by a Deed of Foreclosure filed in the Tribunal of Como and dated 17 April 2026;
as and when those costs are incurred, on the basis that the Defendant has a right to recover those payments from the Plaintiff in the event, and to the extent, that it is subsequently established that the Plaintiff is not entitled to indemnity in respect of such amounts.
(a) any agreed form of proposed orders; or (b) otherwise, their respective forms of proposed orders and any submissions (limited to three pages) in support of such orders (following which directions will be made regarding the determination of any remaining issues).
**********
Bolton
Keybridge Capital Limited
[2015] VSCA 105
(2017) 261 CLR 544
(2014) 251 CLR 640
(2009) 76 NSWLR 603
(2023) 276 CLR 500
(2015) 256 CLR 104
(2015) 50 VR 44
(2000) 50 NSWLR 300
(2005) 221 CLR 522
(2023) 112 NSWLR 29
(2016) 260 CLR 85
(1973) 129 CLR 99
(2017) 96 NSWLR 548
(2023) 113 NSWLR 1
(2024) 116 NSWLR 258
(2020) 102 NSWLR 627
(2004) 218 CLR 530