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[2026] NSWCA 142
procedural. Nicholas Francis John Bolton was ordered to pay Keybridge Capital Ltd’s costs of the proceedings at first instance.
2 cited instruments linked from this judgment.
Keybridge won the appeal on the main point about when its Deed required it to indemnify Mr Bolton for legal costs. The Court then decided that Mr Bolton should pay Keybridge’s costs at first instance. It rejected his arguments that Keybridge had won on a point it had not properly raised earlier and that costs should be divided because Keybridge had also run an unsuccessful argument. The Court considered the substance of Keybridge’s position at trial and on appeal to be the same. It also found no basis to treat the unsuccessful argument as generating significant, separate costs.
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2,043 words · generated 07/10/2026
This judgment concerns costs, not the underlying merits of the indemnity dispute. The Court of Appeal had already allowed Keybridge Capital Ltd’s appeal against declarations and orders made by Nixon J. This further decision determined who should bear the costs of the proceedings at first instance after that successful appeal.
The underlying dispute concerned a Deed between Keybridge and Nicholas Bolton, a former or current director during the relevant periods. Mr Bolton sought payment or indemnification for legal costs incurred defending the primary proceedings. The primary judge held that Keybridge was obliged under cl 3.1 of the Deed to indemnify him for those costs until, and unless, he was found liable to Keybridge in circumstances where the Corporations Act 2001 (Cth), s 199A(3), prevented indemnification. The primary judge did not determine Mr Bolton’s further argument based on r 10.2 of Keybridge’s Constitution. The judge rejected a separate argument that cl 3.3(a) required Keybridge to advance the expected costs, because that clause concerned “Relevant Proceedings” and did not cover the primary proceedings ([4]).
On appeal, Keybridge succeeded on its first ground. The Court held that an indemnity under cl 3.1 did not extend to the costs of the primary proceedings pending their outcome. Keybridge did not succeed on its second ground, which concerned the period of directorship covered by cl 3.1. The Court also rejected Mr Bolton’s notice-of-contention argument based on r 10.2 of the Constitution ([6]).
The costs question arose because the primary judge had ordered Keybridge to pay Mr Bolton’s costs at first instance. Mr Bolton argued that this order should not be disturbed, or alternatively that each party should bear its own first-instance costs. He said Keybridge had succeeded on appeal on a point that had not been properly argued at trial, and that Keybridge’s conduct had unnecessarily increased costs. His examples included Keybridge’s unsuccessful argument about the relevant period under cl 3.1 and its Chapter 2E contentions, which it abandoned towards the end of Mr Bolton’s opening submissions at first instance ([7]).
The Court rejected those arguments. It ordered Mr Bolton to pay Keybridge’s costs of the proceedings at first instance ([18]).
The Court addressed two principal matters: whether the successful appeal point was materially different from Keybridge’s first-instance case, and whether costs should be apportioned to account for unsuccessful arguments.
First, the Court examined the substance of Keybridge’s case at first instance. It referred to the primary judge’s description of Keybridge’s submission: s 199A(3) meant that no indemnity under cl 3.1 could be given for the costs of the primary proceedings until their outcome was known. Keybridge’s position was that cl 3.3, rather than cl 3.1, governed payments before the outcome, because cl 3.3 contained an advancement mechanism with a corresponding repayment obligation ([10]).
The Court also reviewed Keybridge’s written and oral submissions below. Those submissions included the proposition that s 199A(3) precluded indemnification under cl 3.1 or the Constitution, that the authorities relied on by Mr Bolton did not establish an entitlement to an indemnity without a reciprocal repayment obligation, and that cl 3.3 governed payments while the primary proceedings were ongoing ([11]–[13]). In oral argument, Keybridge’s counsel put its central position as being that Mr Bolton had “no present right to any payment from Keybridge” ([12]).
The Court accepted that the appellate arguments were more nuanced and detailed, and that some of the arguments about cl 3.3(d) had a different focus. But those differences did not alter the essential point. At first instance and on appeal, Keybridge’s primary contention was that cl 3.1 did not provide an indemnity while the primary proceedings remained unresolved ([14]). Mr Bolton’s argument that the successful point had not been properly raised at trial was therefore rejected.
Second, the Court considered whether it should apportion costs because Keybridge had lost on its argument about the relevant period covered by cl 3.1. The Court referred to the principle that issue-based costs orders tend to be made where the costs are severable: they must be readily identifiable and independent of the balance of the costs ([15]). It found that the temporal-scope argument arose from the same Deed as the successful argument, involved no additional evidence, and occupied no significant discrete part of the written or oral submissions. Nor was there evidence that it had caused significant additional costs ([16]).
On those facts, the Court applied the general rule in Uniform Civil Procedure Rules 2005 (NSW), r 42.1, that costs follow the event. Mr Bolton’s claim was ultimately dismissed, so he was ordered to pay Keybridge’s first-instance costs ([16]–[18]).
The judgment does not purport to change the law on costs or on directors’ indemnities. It applies the general costs rule in UCPR r 42.1 to the circumstances of this case ([16]). The dispute before the Court was not whether that rule exists, but whether the particular procedural history justified departing from it.
The judgment’s treatment of an appellate point that was said to be new is fact-sensitive. Mr Bolton relied on authorities for the proposition that costs may not follow the event where the successful point on appeal was not raised at first instance or where the appellate arguments were sufficiently different ([8]). The Court did not reject that possibility as a general proposition. Instead, it concluded that the point on which Keybridge succeeded was, in substance, already central to its case below ([10]–[14]).
The decision also illustrates the Court’s approach to apportionment. A party’s failure on one contention does not, by itself, produce an issue-based costs order. The Court looked for costs that were separable, readily identifiable, and independent of the costs associated with the rest of the case. It found no such basis here because the arguments arose from the same instrument and did not generate significant distinct work ([15]–[16]).
The judgment summarises the parties’ arguments and the outcome of the earlier indemnity appeal, but it does not set out a new general rule about the operation of s 199A(3) or the construction of indemnity clauses. The operative issue in this decision was allocation of first-instance costs, and the Court resolved that issue by applying the costs principles it cited.
At [10], the Court describes Keybridge’s central first-instance argument. It said that no indemnity under cl 3.1 could be given until the primary proceedings had ended, because s 199A(3) might prohibit an indemnity if Mr Bolton were found liable. It contrasted that with cl 3.3, which Keybridge said provided for advances subject to repayment. In plain English, Keybridge’s trial position was that Mr Bolton could not receive a present payment under cl 3.1 while the underlying case remained unresolved.
At [12], Keybridge’s counsel described the central position as Mr Bolton having “no present right to any payment from Keybridge.” The Court included that submission as evidence of what Keybridge had argued before the primary judge. Its significance was not that the phrase itself decided the costs issue, but that it supported the Court’s conclusion that the essential appeal argument had already been advanced.
At [14], the Court said that, although the appeal submissions were “perhaps more nuanced and detailed”, the primary contention was apparent both below and on appeal: no cl 3.1 indemnity was available pending the outcome of the primary proceedings. This is the key answer to Mr Bolton’s claim that the successful appeal point had not been properly raised at trial. The Court focused on substance rather than whether the arguments were expressed with identical detail.
At [15], the Court explained when issue-based costs orders tend to be made: where costs are “severable”, meaning readily identifiable and independent of the balance of the costs. Put simply, a court needs a practical basis for isolating the costs caused by a particular issue before apportionment is appropriate.
At [16], the Court applied that test. It found that the unsuccessful argument about the period covered by cl 3.1 required no extra evidence, did not take up a significant separate part of the submissions, and was not shown to have caused significant extra costs. The Court therefore declined to divide the costs by issue and applied r 42.1.
The decision is most relevant to costs disputes following an appeal where the successful appellate argument is said to be new. The Court’s approach indicates that the comparison is not limited to whether the arguments were expressed in exactly the same words or with the same degree of detail. Here, it examined the substance of the case advanced before the primary judge and compared it with the successful appeal contention ([10]–[14]).
The decision is also relevant where a party asks for costs to be apportioned because the successful party lost on another issue. The Court’s analysis turns on whether the costs attributable to that other issue can be isolated and whether they are genuinely independent of the balance of the case ([15]–[16]). The features supporting no apportionment here were that the issues arose from the same contractual instrument, required no extra evidence, occupied no significant discrete part of the submissions, and were not shown to cause significant additional costs.
The decision does not establish that costs must always follow the event in those circumstances, nor does it specify what evidence would be sufficient in another case to show that costs are severable. It records the Court’s conclusion on the facts presented in the submissions and judgment. A fact pattern involving extensive separate evidence or clearly identifiable work on an unsuccessful issue is not addressed here.
The judgment provides no information about how later courts have treated this decision. It is dated 21 July 2026, and the text contains no subsequent judicial consideration of its reasoning. Accordingly, no claim about later application, approval, distinction, or criticism can be made on the basis of this source.
The judgment itself refers to other authorities when explaining costs principles. It cites Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) at [15] as an example relevant to apportionment principles. It also quotes Hunt Leather Pty Ltd v Transport for NSW for the explanation that issue-based costs orders tend to be made where costs are severable, readily identifiable, and independent of the remaining costs ([15]).
Mr Bolton relied on Siminton v Australian Prudential Regulation Authority and BCR16 v Minister for Immigration and Border Protection (No 2) in support of his argument about successful appeal points not raised, or sufficiently different, at first instance ([8]). Keybridge relied on Bondi Beachside Pty Ltd v Chief Commissioner of State Revenue (No 2) for its contention that a construction issue on appeal may not justify departing from the usual costs order ([9]). The Court’s decision rests on its assessment of what Keybridge had argued below and whether the unsuccessful contention generated separately identifiable costs, rather than on a broad discussion of those authorities.
The judgment leaves open how much difference in formulation or detail between trial and appeal would make an appellate contention “sufficiently different” to affect costs. It found that the arguments here were more nuanced on appeal but remained the same in substance ([14]). It does not define a threshold for other cases.
It also does not identify what evidence would establish that costs associated with an unsuccessful issue are severable. The Court found the evidence and submissions in this matter did not show significant additional costs or a significant discrete portion of the work ([16]). The judgment does not address how a court might assess apportionment where separate evidence, witness examinations, or distinct written submissions can be attributed to a particular issue.
Finally, although the judgment summarises the underlying appeal and refers to s 199A(3), it does not provide a comprehensive account of the application of that statutory provision to directors’ indemnities. The costs ruling should therefore be read for its treatment of costs and appellate arguments, rather than as a full statement of the law governing statutory indemnification.
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Source: NSW Caselaw (www.caselaw.nsw.gov.au). Converted to plain text by ZoeLaw. Not the official version.
Medium Neutral Citation: Keybridge Capital Ltd v Bolton (No 3) [2026] NSWCA 142
Hearing dates: On the papers
Date of orders: 21 July 2026
Decision date: 21 July 2026
Before: Stern JA; Ball JA; Free JA
Decision: Nicholas Francis John Bolton pay Keybridge Capital Ltd’s costs of the proceedings at first instance.
Catchwords: COSTS — costs of proceedings at first instance — where appellant successful — where primary contention advanced on appeal the same as that at first instance — whether apportionment of costs appropriate — where general rule applied
Legislation Cited: Corporations Act 2001 (Cth), s 199A(3), Chapter 2E
Uniform Civil Procedure Rules 2005 (NSW), r 42.1
Cases Cited: BCR16 v Minister for Immigration and Border Protection (No 2) [2017] FCAFC 120
Bolton v Keybridge Capital Limited [2026] NSWSC 562
Bolton v Keybridge Capital Limited (No 2) [2026] NSWSC 604
Bondi Beachside Pty Ltd v Chief Commissioner of State Revenue (No 2) [2014] NSWCA 128
Hunt Leather Pty Ltd v Transport for NSW [2026] NSWCA 129
Keybridge Capital Ltd v Bolton (No 2) [2026] NSWCA 119
Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274
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; (2010) 265 ALR 112
Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129; [2006] FCAFC 118
Category: Costs
Parties: Keybridge Capital Ltd (Appellant)
Nicholas Francis John Bolton (Respondent)
Representation: Counsel:
P Wood with D Krochmalik (Appellant)
J Stoljar SC with T Goldberg (Respondent)
Solicitors:
Gadens (Appellant)
Speed & Stracey Lawyers (Respondent)
File Number(s): 2026/223425
Publication restriction: Nil
THE COURT: On 18 June 2026 this Court made orders allowing an appeal by Keybridge Capital Limited against declarations and orders of Nixon J on 21 and 29 May 2026: Bolton v Keybridge Capital Limited [2026] NSWSC 562 (Bolton (No 1)) and Bolton v Keybridge Capital Limited (No 2) [2026] NSWSC 604 (Bolton (No 2)): Keybridge Capital Ltd v Bolton (No 2) [2026] NSWCA 119 (Appeal Judgment). Reasons for making those orders were published on 23 June 2026.
In Bolton (No 2) the primary judge had ordered that Keybridge pay the costs of Nicholas Bolton, the successful applicant at first instance, and the unsuccessful respondent on appeal. In those circumstances, on 23 June 2026 this Court also made orders for the filing of submissions as to what orders should be made as to the costs of the proceedings at first instance and for that issue to be determined on the papers.
These reasons assume familiarity with, and use terms defined in, the Appeal Judgment.
The primary judge found that Keybridge was obliged to indemnify Mr Bolton under cl 3.1 of the Deed (entered into between Mr Bolton and Keybridge) in respect of legal costs incurred by him in defending the primary proceedings until, and unless, he was found to have a liability to Keybridge for which he could not be indemnified under the Corporations Act 2001 (Cth), s 199A(3). In these circumstances, the primary judge did not determine Mr Bolton’s further contention that Keybridge was required under r 10.2 of its Constitution to provide such indemnity. The primary judge rejected an alternative contention of Mr Bolton that Keybridge was required to advance to him, on request, the amount of reasonable costs he expected to incur in the primary proceedings under cl 3.3(a) of the Deed. This was because the obligation under cl 3.3(a) only arose as regards “Relevant Proceedings”, defined in the Deed in terms which did not encompass the primary proceedings.
As the primary judge recorded, the thrust of Keybridge’s submission before him was that no indemnity could be given in respect of Mr Bolton’s legal costs under cl 3.1 of the Deed until the outcome of the primary proceedings was known, because Keybridge was prohibited under s 199A(3) of the Corporations Act from giving such indemnity in the event that Mr Bolton is found liable in the primary proceedings. Keybridge made a further contention that cl 3.1 of the Deed did not provide an indemnity in respect of the third period during which Mr Bolton was a director of Keybridge, between 13 October 2019 and 10 February 2025 (which was when the conduct the subject of the primary proceedings occurred).
Mr Bolton contends that this Court should not disturb the primary judge’s order as to costs or, in the alternative, should order that each party bear its own costs of the proceedings at first instance. These contentions are premised, first, upon Mr Bolton’s submission that Keybridge succeeded on appeal on a ground “that was not a point properly argued” in the proceedings at first instance. Second, Mr Bolton contends that Keybridge’s conduct unnecessarily increased the costs of the proceedings at first instance and on appeal. Mr Bolton relies on two examples of such conduct: first, Keybridge maintaining both at first instance and on appeal that its obligations to Mr Bolton under cl 3.1 of the Director’s Deed only related to conduct during limited periods; second, Keybridge advancing contentions relying upon Chapter 2E of the Corporations Act which were abandoned by Keybridge towards the conclusion of Mr Bolton’s submissions in chief at first instance.
As to the first of these contentions, Mr Bolton submits that Keybridge had “little to say on clause 3.1 in writing or in oral argument” and “did not articulate” what was raised before this Court in Keybridge’s successful first ground of appeal. He contends that, in these circumstances, the primary judge did not make an error on the arguments raised before him. As he contends, it is recognised that costs may not follow the event where a successful contention on appeal was not raised at first instance: Siminton v Australian Prudential Regulation Authority (2006) 152 FCR 129; [2006] FCAFC 118 at [82] or where the arguments on appeal are “sufficiently different” from those advanced at first instance: BCR16 v Minister for Immigration and Border Protection (No 2) [2017] FCAFC 120 at [12].
Keybridge says that there is no reason why Mr Bolton, whose claim was ultimately dismissed, should not pay Keybridge’s costs of the proceedings at first instance. It makes four contentions: the proper construction of the Deed is a question of law for the Court to determine; Keybridge did expressly rely before the primary judge on the contention that succeeded on appeal; where an appeal turns on a matter of construction it may not be appropriate to depart from the usual order as to costs even if the successful contention was not made at first instance: Bondi Beachside Pty Ltd v Chief Commissioner of State Revenue (No 2) [2014] NSWCA 128 at [29]; and Keybridge’s ultimately unsuccessful contention, about the period of time during which the indemnity under cl 3.1 was effective, was merely incidental to its other contentions before the primary judge and on appeal and did not lead to Mr Bolton incurring additional costs.
(1) 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.
(2) 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).
Consistent with this, in its written submissions before the primary judge Keybridge contended that:
s 199A(3) of the Corporations Act would preclude any indemnity being given under cl 3.1 of the Deed or r 10.2 of Keybridge’s Constitution in respect of Mr Bolton’s legal costs of defending the primary proceedings;
the cases of Rickus v Motor Trades Association of Australia Superannuation Fund Pty Ltd [2010] FCAFC 16; (2010) 265 ALR 112 and Note Printing Australia Ltd v Leckenby (2015) 50 VR 44; [2015] VSCA 105 do not stand for the proposition that an entitlement to an indemnity arises absent a reciprocal obligation to repay in the future; and
whilst the primary proceedings were “on foot” it was cl 3.3, not cl 3.1, of the Deed that provided for payments to Mr Bolton in respect of his legal costs.
Further, senior counsel for Keybridge submitted to the primary judge that:
If I could reduce the matters the defendant relies on to a sentence, but I don’t propose to limit myself to that sentence, it is that whatever rights Mr Bolton has under the various heads identified in his submissions or his pleading, he has no present right to any payment from Keybridge.
As regards cl 3.1 of the Deed, this was because it contained no repayment obligation, and in these circumstances, cl 3.1 could not apply to Mr Bolton’s costs of the primary proceedings without offending s 199A(3)(a) of the Corporations Act. This was because an indemnity could only be lawful under s 199A(3)(a) of the Corporations Act to the extent there is a repayment obligation.
Whilst the contentions advanced on appeal as regards the proper construction of the Deed in the legislative context of s 199A of the Corporations Act were perhaps more nuanced and detailed than those advanced before the primary judge, and the contentions advanced as regards cl 3.3(d) of the Deed had a different focus, it is readily apparent that both before the primary judge and on appeal, Keybridge’s primary contention was that no indemnity is available under cl 3.1 of the Deed pending the outcome of the primary proceedings being known. Mr Bolton’s first contention should be rejected.
As to Mr Bolton’s second contention, we are not satisfied that this is a case in which it is appropriate to apportion the costs of the proceedings at first instance as between the various contentions advanced: as to the relevant principles, see for example Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd (No 2) [2024] NSWCA 274 at [18]-[22]. As explained in Hunt Leather Pty Ltd v Transport for NSW [2026] NSWCA 129 at [101], “issues based costs orders tend to be made when the costs are ‘severable’, which is to say, readily identifiable, and independent of the balance of the costs”.
Here, the submissions in support of Keybridge’s contention as to the period during which the indemnity under cl 3.1 of the Deed was available arose from the same Deed which was the subject of the contentions described above. Those submissions thus did not involve any additional evidence and they did not occupy any significant discrete proportion of either the written or oral submissions below or on appeal. Nor is there anything to suggest that any significant additional cost was occasioned by those submissions either at first instance or on appeal. In these circumstances, we are satisfied that the general rule should apply. The costs of the proceedings at first instance should follow the event: Uniform Civil Procedure Rules 2005 (NSW), r 42.1.
It follows that Mr Bolton’s contention, that he should not be ordered to pay the costs at first instance, is rejected.
We order that Nicholas Francis John Bolton pay Keybridge Capital Ltd’s costs of the proceedings at first instance.
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Keybridge Capital Ltd
Bolton (No 3)
[2026] NSWSC 562
[2026] NSWSC 604
[2026] NSWCA 129
[2026] NSWCA 119
[2015] VSCA 105
(2015) 50 VR 44
(2010) 265 ALR 112
(2006) 152 FCR 129
Nicholas Francis John Bolton was ordered to pay Keybridge Capital Ltd’s costs of the proceedings at first instance.