Plaintiff v Defendants

1 On 12 August 2020, I made orders dismissing the application by Aura Energy Ltd (ACN 115 927 681) ('Aura') that the Court extend the time for the Aura Extraordinary General Meeting scheduled for 14 August 2020 ('EGM') ('Application').[1] The EGM was requisitioned on 23 June 2020 by David Peter O'Neil, the fourth defendant, on behalf of the first defendant, ASEAN Deep Value Fund, a Cayman Island Company (No 149267) ('ASEAN'), pursuant to s 249D of the Corporations Act 2001 (Cth) ('Act').

2 Having dismissed the application, I expressed my view that Aura, or alternatively such of the directors of Aura who were the driving force behind the Application, should pay the costs of the hearing on 12 August 2020 ('Hearing').[2] I made Orders on 12 August 2020, as varied on 19 August 2020 ('Orders'), including:

9. Subject to any order varying this order upon the parties making any submissions under orders 10 and 11, the Plaintiff pay the First to Fifth Defendants' costs of and incidental to the Interlocutory Process, including the hearing on 12 August 2020, so much of the affidavits that related only to the Interlocutory Process and the Originating Process insofar as it sought orders 1 and 2 described therein, and submissions.

3 The Defendants were given liberty to apply to vary order 9 of the Orders, including to seek costs orders against a non-party, and for an order that their costs be assessed immediately on a gross-sum basis. I ordered that any such costs applications be determined on the papers without the need for further appearances.

4 Applications were subsequently made by each of the first, fourth and fifth defendants, ASEAN, Mr O'Neil and David Eric Roes ('ASEAN Parties'), and by the second and third defendants, Pre-emptive Trading Pty Ltd (ASN 111 948 451) and John Leslie Bennett ('PET Parties') for personal costs orders against directors of Aura and orders that costs be assessed immediately and paid on a gross-sum basis.

5 The ASEAN Parties seek orders that Peter Desmond Reeve, the Executive Chairman of Aura who made the substantive affidavit on behalf of Aura in support of the Application, pay the defendants' costs on a gross-sum basis equal to 75% of the invoiced costs of the ASEAN Parties in defending the Application.

(a) an affidavit of David O'Neil filed on 21 August 2020 ('O'Neil Affidavit');

(b) an affidavit of Sophie Louise Inwood filed on 24 August 2020;

(d) the prior affidavits filed by Mr O'Neil in the proceeding.

7 The PET Parties seek orders that Mr Reeve and two other directors of Aura, Dr Robert Beeson and Julian Christopher Perkins, personally pay their costs assessed on a gross-sum basis.

(a) an affidavit of Paul Lee Gordon filed on 21 August 2020 ('Second Gordon Affidavit');

(c) prior affidavits filed by Mr Bennett and Mr Gordon in the proceeding.

9 The sixth defendant, Axel Sartingen, filed an affidavit on 27 August 2020 in support of a non-party costs order against Mr Reeve. I accept the submissions on behalf of Aura that the Sartingen affidavit should not be admitted into evidence. Mr Sartingen had not appeared in the proceeding prior to the hearing and determination of the Application. He played no part in and had no involvement in the Hearing.

10 The seventh defendant, Florian Hoertlehner, filed an affidavit on 31 August 2020, in support of a non-party costs order against Mr Reeve. Mr Hoertlehner appeared on his own behalf at the Hearing.

11 In response to these applications, Aura relies on submissions filed on 28 August 2020.

12 Aura submits that it would serve no purpose to make costs orders against any of the directors personally because the Aura Constitution contains an indemnity in their favour. Aura submits that there is no basis to make a gross-sum costs order. It submits that, if costs are assessed on a gross-sum or indemnity basis, it will have to pay more than it has been ordered to pay under order 9 of the Orders.

13 In response to the costs applications against them, the non-party directors, Mr Reeve, Dr Beeson and Mr Perkins filed submissions on 28 August 2020.

14 The directors submit there should be no order that they pay costs personally, and if they are ordered to pay costs, that the costs claimed are excessive. They further submit that if an order is made against any of them personally, costs should be assessed on a standard basis in the usual way.

15 Article 28.1 of the Constitution, approved by the Aura shareholders on 30 November 2017, provides:[3]

28.1 Liability to Third Parties

To the extent permitted by law, the Company:

(a) indemnifies and agrees to keep indemnified every Director, executive officer or Secretary of the Company; and

(b) may, by deed, indemnify or agree to indemnify an officer (other than a Director, executive officer or Secretary) of the Company,

against a liability to another person, other than the Company or a related body corporate of the Company, PROVIDED THAT:

(c) the provisions of the Corporations Act (including, but not limited to, Chapter 2E) are complied with in relation to the giving of the indemnity; and

(d) the liability does not arise in respect of conduct involving a lack of good faith on the part of the officer.

16 There has been no finding that the conduct of Mr Reeve, or of the other two directors against whom personal costs orders are sought, in bringing the Application, lacked good faith. Aura and the directors rely on the absence of such a finding as the basis for reliance on Article 28.1 of the Constitution. They contend that if any director is ordered to pay costs personally, that the Court will, in effect, be ordering that Aura itself pay those costs, rendering such an order nugatory.

17 No other submissions address the issue of the indemnity in Article 28.1 of the Constitution.

18 There is no dispute concerning either the power of the Court or the principles to be applied in the case of non-party costs orders. As submitted on behalf of the ASEAN Parties, the Court has broad power to make costs orders as appropriate. The sources of power include the inherent jurisdiction of the Court and s 24(1) of the Supreme Court Act 1986 (Vic). That section provides:

24 Costs to be in the discretion of Court

(1) Unless otherwise expressly provided by this or any other Act or by the Rules, the costs of and incidental to all matters in the Court, including the administration of estates and trusts, is in the discretion of the Court and the Court has full power to determine by whom and to what extent the costs are to be paid.

19 The PET Parties also refer to s 1335(2) of the Act. That section provides:

(2) The costs of any proceeding before a court under this Act are to be borne by such party to the proceeding as the court, in its discretion, directs.

20 The principles to be applied were identified by the High Court in Knight v F.P. Special Assets Limited, where Mason CJ and Deane J (Gaudron J agreeing) held:

For our part, we consider it appropriate to recognize a general category of case in which an order for costs should be made against a non-party and which would encompass the case of a receiver of a company who is not a party to the litigation. That category of case consists of circumstances where the party to the litigation is an insolvent person or man of straw, where the non-party has played an active part in the conduct of litigation and where the non-party, or some person on whose person he or she is acting or by whom he or she has been appointed, has an interest in the subject of litigation. Where the circumstances of a case fall within that category, an order for costs should be made against the non-party if the interests of justice require that it be made.[4]

21 In Carter v Caason Investments Pty Ltd, the Court of Appeal said:

Each case must depend upon its own particular facts. There are, however, a number of factors that are commonly taken into account in determining whether or not to exercise the judicial discretion in favour of making an order against a non-party. Such matters include: the financial position of any party against whom a costs order would be made; whether there have been orders made for security for costs; whether the non-party has a 'real interest' in the litigation, and if so, its extent; the amount of funding contributed by the non-party; and whether the non-party has agreed to provide an indemnity if an adverse costs order is made against a funded party.[5]

22 In Gdanski v Palms Court Management Pty Ltd,[6] the Court of Appeal referred to the Knight principles,[7] identified at first instance by Vickery J, including:

(a) Making a costs order against a non-party requires exceptional circumstances. In the vast majority of cases it would be unjust to make an award of costs against the non-party;

...

(d) A real, direct and material connection with the principle litigation must be established such that the non-party can be described as a 'real party' to the litigation. For this purpose, it is sufficient to establish an 'active role in the conduct of the litigation' if the non-party is sufficiently closely connected with the prosecution of the litigation and can be fairly described as a 'real party' in 'critical' or 'important' respects;

(e) For there to be an interest in the subject of the litigation, a direct financial interest is not required. It is not enough that the fruits of success in the litigation either belong to the non-party or were substantially within his gift;

(f) It may be appropriate to exercise the power against a person who may be characterised as no more than a real party to the litigation in 'critical' and 'important' respects, albeit not the only such party. It is not necessary to demonstrate that the relevant non-party exclusively control the conduct of the proceedings. It is enough if the role of the non-party is sufficiently closely connected with the prosecution of the litigation, so that the non-party may fairly be described as one of the actors 'important' and 'critical' respects;

(g) As the breadth of the concept confirms, there are numbers of factors which may be taken into account in determining whether the interests of justice call for an order to be made... They include:

(i) a recognition that there are two important principles at stake: on the one hand the proper ambit of liability, and on the other hand a facility to provide fair costs compensation for successful defendants. An application for security of costs at an early stage reconciles these imperatives;

...

(v) whether there are findings of fact at trial which may be relevant in considering the conduct of the non-party;

...[8]

23 The PET Parties' submissions rely upon the following passage from Dal Pont, quoted by Robson J in Re Chambeyron (No 2)[9] and by Croft J in Permark International Interiors Pty Ltd v Amoveo Pty Ltd:[10]

[T]he court will only make a non-party costs order where the interests of justice justify a departure from the general rule that only parties to proceedings may be subject to costs orders.[11] Expressed another way, a non-party costs order will be made 'when, in the circumstances of the particular case, it is just and equitable that a non-party pay the costs of a party to the litigation.'[12]

... Courts have cautioned that applications for costs orders against non-parties should be treated 'with considerable caution',[13] and granted only 'sparingly'[14] and 'when exceptional circumstances make such an order reasonable and just.'[15] But the 'exceptional' threshold should not be seen to fetter the curial discretion and may mean no more than 'outside the ordinary run of cases where parties pursue or defend claims for their own benefit and at their own expense.'[16]

...[17]

24 In Permark, after summarising the authorities, Croft J stated:

It is clear from the authorities that more is needed than findings and reasoning that because a director was the driving force in the company's litigation and that any benefit flowed to the director, the director should therefore be seen as being the real litigant. The actual conduct of the party to the proceeding is also important in deciding whether to exercise the discretion to award costs against a non-party.[18]

25 In support of non-party costs orders against the directors, the PET Parties rely by analogy on the approach of the courts to such orders in the context of trust disputes and oppression proceedings.

26 In Charlesworth Nominees Pty Ltd v Charlesworth, Croft J considered an application by a trustee for judicial advice concerning its role in a proceeding brought by a beneficiary ('the Objector').[19] The Objector and his two siblings were the only directors of the trustee. His two siblings were the only other two beneficiaries of the trust. The Objector alleged breaches of the trust based on wilful conduct by the other directors and sought the appointment of a new trustee. Croft J held that the proceeding was, in substance, a dispute between the beneficiaries,[20] that the trustee was not required to defend the proceeding and that if it did so, it would not be permitted to have recourse to assets of the trust to meet its costs.[21] His Honour expressed the preliminary view that neither the costs of the trustee nor the costs of the Objector of the application for judicial advice should be paid out of the trust estate, but instead should be borne by the two other directors of the trustee personally.[22]

27 In oppression proceedings, it may be oppressive for the majority shareholders to have recourse to company funds to defend an oppression suit brought by the minority. The PET Parties rely in that respect upon observations by Brereton J to that effect in Application of Uncle's Joint Pty Ltd.[23]

28 Opposing non-party costs orders, the directors rely on Popeye Bidco Pty Ltd v Intermediate Capital Asia Pacific 2008 GP Ltd (No 3).[24] In that case, despite the non-parties having a clear interest in the subject matter of the proceeding, and the parlous financial state of the company, Besanko J declined to make a personal costs order both because the matter was urgent and because the costs were incurred over a short time period.[25]

29 The ASEAN Parties submit that principles (a), (d), (e), (f), (g)(i) and (g)(v) from the passage in Gdanski,[26] as set out above, are engaged. They submit that the subject matter of the Application was itself exceptional, as was the delay in bringing the Application.

30 The ASEAN Parties submit that it was exceptional that Mr Reeve, as a director and chairman of Aura, should seek to set aside the requirements of the Act as to the time for calling an extraordinary general meeting upon requisition, where the subject matter of the resolutions involved a direct challenge to his position and that of the other directors. They submit that the Application lacked actionable subject matter, being an identified irregularity, deficiency or prejudice, which by order, the Court could remedy pursuant to s 1322(4)(d) of the Act, and to which the statutory conditions expressed in ss 1322(4)(d) and 1322(6)(c) of the Act could be applied. Further, that the failure by Aura, and in particular of Mr Reeve, to satisfy on evidence the statutory precondition expressed in s 1322(6)(c) of the Act, namely 'in every case - that no substantial injustice has been or is likely to be caused to any person', is significant and is evidence of exceptional circumstances in response to which the Court's discretion to make a non-party costs order is engaged.

31 The ASEAN Parties rely on the decision of French J (as his Honour then was), in Re Wave Capital Ltd, where his Honour determined that as the responsibility for the relevant error rested with the directors and/or the company secretary personally:

[I]t would be unfair and inappropriate for the newly raised capital of the company to be expended on this application and to the detriment, however minor, of the new shareholders. In the circumstances I propose to make an ancillary order that the costs of bringing this application not be paid out of company funds.[27]

32 They submit that the direct interest and connection of Mr Reeve in the proceeding means that he should personally bear the costs of the failed Application, and that an ordinary costs order against Aura would disproportionately adversely impact the ultimate interest of all members, yet protect the financial self-interest of Mr Reeve.

33 The PET Parties submit that, in the unique circumstances of this case, the responsibility for the costs, of what they say was an ill-fated and self-interested strategy devised by the directors, should be borne by those directors in the first instance. They accept that they must point to something that justifies an order having the effect of removing the protection from liability given to directors by company law.[28]

34 The PET Parties say that the directors had a real and direct connection to the Application, as they were each subject to a motion for removal at the EGM. Further, that there was a causal connection between each of the directors and the costs incurred by the PET Parties. The directors against whom costs are sought were actively involved in the decision to commence the Application; Mr Reeve filed several substantive affidavits in support of the Application, and the other directors filed affidavits in support of Mr Reeve's affidavits, expressing their shared concerns.[29]

Events after the determination of the Application

35 Separately, in support of their application for non-party costs orders, both the ASEAN and PET Parties seek to rely upon events that happened at the EGM held on 14 August 2020. The ASEAN Parties refer to the conduct of Mr Reeve at the EGM, subsequent to the determination by the Court of the Application, deposed to in the O'Neil Affidavit. At the EGM, Mr Reeve declared the votes of Axel Sartingen to be invalid.[30]

36 The ASEAN Parties submit that the consequence of the unannounced and unilateral invalidation by Mr Reeve of Mr Sartingen's votes at the commencement of the EGM, was effective to render the whole of the Application pointless, the dismissal nugatory and that it tended to undermine the integrity and authority of the proceedings and the pronouncement of Judgement. They relied upon these matters as significant matters going to the interests of justice.

37 The PET Parties rely on the fact that if Mr Reeve had not excluded Mr Sartingen's votes from consideration at the EGM, the motions to remove Mr Perkins and Dr Beeson would have been carried. The PET Parties rely upon evidence in the Second Gordon Affidavit, of events and communications after 12 August 2020.

38 In response, Aura objects to reliance upon evidence of events that took place after the Application was heard on 12 August 2020 and the Orders were made. Aura submits that matters subsequent to the determination of the Application should not be taken into account in the determination of the cost applications. Aura and the directors submit that those parts of the ASEAN and PET Parties' submissions and evidence should not be taken into account on the costs applications.

39 Aura further submits that the decision of Mr Reeve, and the resolutions passed at the EGM are valid and are the resolutions of Aura, until and only if, they are set aside after a review. Aura submits that there is currently no proceeding before a court for the review of Mr Reeve's decision nor of the resolutions.

40 I accept the submission on behalf of Aura that whatever occurred after the hearing and determination of the Application is not material to the separate question of whether non-party costs orders should be made against the directors, being costs relating to the Application.

41 There can be no doubt that Mr Reeve, the Executive Chairman of Aura, Dr Beeson, and Mr Perkins have a 'real interest' in the litigation, as identified by the Court of Appeal in Carter.[31] That a non-party has a 'real interest' in the litigation is a matter commonly taken into account in determining whether or not to exercise the judicial discretion in favour of making a non-party costs order.[32]

42 It is the case that each of the directors in question are sufficiently closely connected with the prosecution of the subject matter of the litigation, namely the application to adjourn the EGM, that those parties may fairly be described as 'real parties' in 'critical' or 'important' respects as discussed by Vickery J in Gdanski.[33] Each of them was actively engaged in the decision to bring the Application. Each swore affidavits in support of it. Mr Reeve, Dr Beeson and Mr Perkins each stood to be removed as directors if the vote on resolutions at the EGM went against them. Whilst the making of a costs order against a non-party requires exceptional circumstances, as the passage from Dal Pont set out above is careful to point out,[34] the 'exceptional' threshold should not be seen to fetter the Court's discretion. However, as the High Court observed in Knight, where such non-parties have an interest in the subject of litigation, the question to be addressed is whether or not the interests of justice require that an order for costs be made against that a non-party.[35]

43 This is not a case where the Court has made a finding that the conduct of any one or more of the three directors involved a lack of good faith which would cause those directors to lose the benefit of the indemnity in their favour in Article 28.1 of the Aura Constitution. It is not a case where the directors are alleged to have contravened an overarching obligation such that the power to make costs orders pursuant to s 29(1)(a) of the Civil Procedure Act 2010 (Vic) has application. Whilst that is so, it is the case that Mr Reeve and the other two directors were the 'driving force' behind the application. What is more, Aura, no doubt on instructions from the board, and in particular Mr Reeve, Dr Beeson and Mr Perkins, submitted that the EGM was not requisitioned in good faith and for a proper purpose. Those allegations were serious, they were not particularised and remained strongly contested by the defendants. As noted in the primary reasons, it was not possible to resolve the very significant factual contest that exists as between Aura and the defendants, of which this is but one aspect, on the hearing of the Application.[36]

44 Nevertheless, the present circumstances are analogous to those in Re Wave Capital Ltd.[37] There was urgency in the Application, but that was of Aura's directors' making. That did not justify the expenditure of Aura's funds on the Application. It is correct as submitted, that both the subject matter of the Application, namely directors seeking to defer a properly requisitioned and carried EGM, and the delay, constituted exceptional circumstances as discussed in Gdanski.[38] The fact that the Application was brought to seek to advance the interests of the directors, the respondents to the personal costs application, is material. The present facts are analogous to the circumstances discussed in Charlesworth Nominees.[39] That decision and the principles discussed by Brereton J in Uncle's Joint[40] support the making of non-party costs orders in this case.

45 However, the key consideration for the Court is to identify where the interests of justice lie. In dealing with the substantive application, I considered that the Court should be very reluctant to interfere with the statutory rights of the shareholders.[41] In the same way, when giving consideration to where the interests of justice lie, the Court should be reluctant to make personal costs orders against directors concerning a dispute between members where the constitution which binds the members provides an indemnity in favour of the directors unless the conduct of the directors in bringing the Application involved a lack of good faith on the part of that director. That is, so as to deprive the director of the benefit of the indemnity provided for in Article 28.1.

46 In Grimaldi v Chameleon Mining NL (No 2), the Full Federal Court held that a director was not entitled to rely on an indemnity in the constitution in his favour because his liability arose out of conduct which was not conduct in good faith.[42] In Hall v Poolman, Palmer J considered the meaning of 'good faith' in the constitution of Reynolds Wines Limited of which Mr Irving was chairman of directors. For the purpose of the constitution, his Honour interpreted 'good faith' to mean 'honestly'.[43] In that case, his Honour concluded the conduct of the director was an error of judgment - a serious error, but not a dishonest one, and therefore did not find the director's liability arose out of conduct which was not in good faith.[44]

47 The parties and non-party directors against whom costs were sought did not identify any decision where there has been an indemnity in the constitution of a company in favour of a director, operating unless the conduct of the director has been other than in good faith, where the court has nevertheless ordered the director to pay costs personally. The cases to which I have referred do not support the making of a non-party costs order in favour of the directors unless there has first been a finding of a lack of good faith on the part of the relevant director.

48 In the circumstances of the present case, Article 28.1 of the Constitution, which binds the members, would entitle any director against whom personal costs orders might be made to an indemnity, should such an order be made. For that reason, even though I would otherwise have been minded to make the non-party costs orders sought against Mr Reeve, Dr Beeson and Mr Perkins, as there has been no finding of lack of good faith, it is not appropriate that a non-party costs order be made against Mr Reeve or the other directors. To make such an order would result in a hollow outcome and any such order would be of no practical effect.

49 The interests of justice cannot be served by the making of such an order.

50 An application for an order that costs be assessed immediately may be made under Rule 63.20.1 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) ('the Rules'). In Abbott v Setka (No 2), Warren CJ, Ashley and Whelan JJA said:

[I]t has been held, depending upon the circumstances of the particular matter, that the default position may be upset where - (1) there is prospect of considerable delay in completion of the proceeding; (2) the issue the subject of the interlocutory order was discrete from what will finally require determinations; (3) the party against whom the substantive order was made was guilty of unsatisfactory conduct - described variously as 'unreasonable' or 'reprehensible', or as involving a want of 'competence and diligence'.[45]

51 The present case is one where an immediate assessment of costs is appropriate. The issue upon which the Court heard argument on the urgent Application on 12 August 2020 was a discrete issue. It concerned a meeting to be held on 14 August 2020. To quote the Court of Appeal in Abbott, 'the issue the subject of the interlocutory order was discrete from what will finally require determinations'.[46]

52 I will order the immediate assessment of the costs of the ASEAN Parties and PET Parties, such costs to be paid by Aura.

53 Applications for a gross-sum costs order may be made under Rule 63.07(2)(c) of the Rules. The PET Parties rely on Nine Films & Television Pty Ltd v Ninox Television Ltd, where Tamberlin J held that the discretion to make such an order is 'broad and unfettered by any specified considerations'.[47] They also rely on Beach Petroleum NL v Johnson (No 2), where von Doussa J said that 'The purpose of the rule is to avoid the expense, delay and aggravation involved in protracted litigation arising out of taxation'.[48]

54 Opposing the making of such an order, Aura relies on Wilson v Bauer Media Pty Ltd (Cost), where, following a lengthy trial, Dixon J held:

An award of a gross sum is a 'rare event'.[49] It is an exception to the usual process that gives an unsuccessful party the opportunity to participate in the taxation process. Taking what is a less precise approach must clearly be justified in the circumstances. I must be confident that a proper gross sum can be assessed on the material available by a logical and reasonable approach that is fair.[50]

55 Aura also relies on the references to Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3)[51] and National Mutual Life,[52] cited with approval in Wilson.[53] Sunland Waterfront,[54] like Wilson,[55] was a decision on costs following a long, complex and hotly contested trial.

56 Dixon J, in Wilson, referred with approval to the observations by Wood AsJ in National Mutual Life:

1. In The Argo Unit Trust case, Wood AsJ discerned further propositions from the cases, and pertinently added:

It is a given that the quantification of costs is invariably the result of a full taxation if the parties do not resolve the matter. A precise figure that represents the liability of the losing party is then arrived at in the taxation process. A gross sum is, just that. It is not arrived at with the same rigour and precision. It is a rare event when an unsuccessful party is not afforded the opportunity to participate in a full taxation. As the cases make clear there needs to be sufficient justification for the less precise option to be adopted, and the application of arbitrary discounts is not permitted if a gross sum exercise is selected as the option of quantification.[56]

The defendants rely on the fact that the litigation was long and complex. The plaintiffs submit that the issues identified that would have to be resolved in a taxation are matters that commonly arise. This is true, and the taxation process is able to accommodate these issues by the production of an itemised bill, and if necessary a full taxation. The issues identified above could make the assessment of any gross sum a complex and problematic exercise that would be much less accurate than a taxation. Resolution of most of these dilemmas would be in large part identified and resolved by the production of an itemised bill.[57]

1. An award of a gross sum is a 'rare event'.[58] It is an exception to the usual process that gives an unsuccessful party the opportunity to participate in the taxation process. Taking what is a less precise approach must clearly be justified in the circumstances. I must be confident that a proper gross sum can be assessed on the material available by a logical and reasonable approach that is fair.[59]

57 The observations of Wood AsJ set out above are both entirely appropriate and accurate. They have specific application to the costs of trials and will also apply to the costs of interlocutory applications in many circumstances. Here, however, the situation is different, namely an urgent interlocutory hearing with a discrete subject matter. Upon the determination of that Application, the subject matter has been dealt with. It is in the past, indeed, the EGM sought to be delayed was held two days later.

58 Referring to Harrison v Schipp,[61] the PET Parties submit that the Court can be confident that it can make any award on a gross-sum basis fairly between the parties and can arrive at an appropriate sum on the materials available. They say further that to order a gross-sum for costs does not deprive the other party of an opportunity to participate in the taxation process in any reasonable sense, as their evidence can be considered by Aura and about which it can make submissions. Indeed, that is what Aura and the directors have done.

59 On behalf of the ASEAN Parties, Mr O'Neil gives evidence that the gross-sum claimed is 75% of $60,752.10, the invoiced costs of Quinert Rodda. That firm was retained following service of the urgent interlocutory process on Saturday morning, 8 August 2020. The costs in question are from that time up to and including the hearing of the application and the making of orders dismissing that Application on 12 August 2020. The invoice for $60,752.10 is exhibited to the affidavit of Ms Inwood. It describes in general terms the work performed by the solicitors in the period deposed to by Mr O'Neil. It records as a disbursement, counsel's fees of Mr Carmichael who appeared on the application.

60 I reject the submission that the costs claimed by the ASEAN Parties are excessive. I accept that those costs were legitimately incurred by the ASEAN Parties in responding, successfully, to the Application at very short notice. No doubt a very large amount of work was required on the part of both solicitors and counsel to get across the material, noted in the solicitor's bill to be approximately 500 pages, to formulate evidence, a chronology and identify and collate authorities on an urgent basis. I consider the claim for 75% of those costs to be a fair and reasonable estimate of the difference between indemnity costs and standard costs. On an application required to be attended to at short notice such as the present, there is very little time for extraneous communications between solicitors and client or solicitors, client and counsel.

61 The PET Parties submit that they ought be awarded 80% of the costs described in the Second Gordon Affidavit insofar as they relate to preparation for and attendance at the hearing (which they say amounts to $10,454.40) and 100% of the costs of their application for costs (which they say amounts to $7,202.25). They submit an order should be made for their costs in the amount of $17,656.65.

62 Aura submits that the evidence put before the Court is inadequate and cannot justify a gross-sum assessment. For example, Aura says that the deductions applied to the costs set out in the respective submissions are arbitrary and unjustified. Aura points to the fact of the vast discrepancy between the gross-sum costs claimed by the ASEAN Parties, and the PET Parties respectively.

63 Amongst other matters, Aura submits that the defendants have failed to provide itemised bills, submitting that if such itemised bills had been presented, there is a likelihood that agreement could have been reached on the quantum of costs.

64 The directors submit that the costs claimed are excessive, and effectively amount to indemnity costs, as the quantum of costs claimed is the actual costs incurred. The directors note that parts of the claims for costs, but not all, are reduced and that it might be inferred that these reductions are offered in respect of what is often a gap between indemnity and standard costs. They submit that the difficulty therefore is that this Court is being asked to assess the costs and to decide whether the offered reductions are appropriate, particularly in circumstances where they say that the submissions are less than clear as to the manner in which costs and disbursements have been calculated.

65 The directors submit that issues with the evidence, such as the lump sum bill relied on by the ASEAN Parties, which is not itemised and does not disclose the charge out rates applied, to which they take particular objection, can be dealt with by the Costs Court and the costs associated with such a process would not be disproportionately high.

66 The present case is both an appropriate case for the assessment immediately of the costs and for payment of 75% of the ASEAN Parties' costs by Aura. I do not accept the proposition that a taxing officer of the Court would be in a better position to assess costs or that to require itemised bills and taxation of the costs of this discrete application is consistent with the objectives and the overarching obligations in the Civil Procedure Act 2010 (Vic). There is also the practical consideration of the costs of taxation and the burden imposed upon the parties and the Court of that process. In light of the evidence that is available and the familiarity that I have as the judicial officer who determined the application, it is appropriate that an order be made in both cases for the immediate payment of costs by Aura and that they be assessed on a gross-sum basis.

67 I accept that it is appropriate to assess the gross-sum costs of the PET Parties at 80% of the costs described in the Second Gordon Affidavit. The solicitors' invoice shows that the solicitors were first engaged on 10 August 2020, as was counsel. The solicitors' fees of $5,880 plus GST are modest for the amount of work involved. The same must be said of counsel's fees, noting that counsel agreed to cap his fees at two days' work, even though three days' work was involved. The total of the solicitors' bill, $6,468, and counsel's fees, $6,600 is $13,068. I accept the submission on behalf of the PET Parties that it is appropriate to allow 80% of those costs and to fix those costs at $10,454.40.

68 The discrepancy between the amount of the legal costs of the ASEAN and PET Parties is explained by the differences in the dates on which solicitors and counsel for each of the relevant defendant parties was engaged and the different role taken by the two groups of defendants in relation to the Hearing. The cap on counsels' fees in the case of counsel for the PET Parties also goes a small way to explain the discrepancy. The discrepancy is not such in all the circumstances as to warrant a discounting of the costs claimed by the ASEAN Parties. I accept the submission on behalf of the ASEAN Parties that it is appropriate to allow 75% of their costs and to fix those costs at $45,564.

69 I have determined that it is not appropriate in the circumstances of this case to make a non-party costs order against Mr Reeve or the other two directors, Dr Beeson and Mr Perkins. I determined that it was not appropriate to do so because of the indemnity in Article 28.1 of the Aura Constitution which would operate in favour of any director against whom such an order was made. I accept in those circumstances the argument on behalf of Aura that there would be no utility in making such an order and that the interests of justice would accordingly not be served by doing so. However, I do not accept the proposition that the costs of this costs application should be paid by the Aura parties or by the PET Parties as submitted on behalf of both Aura and the directors.

70 Reliance upon the constitutional provisions arose only in reply submissions made on behalf of Aura and on behalf of the directors. Were it not for the existence of the indemnity, I would have ordered that the directors personally pay the costs of the application in place of the order made against Aura for the payment of those costs.

71 In the circumstances, the appropriate order for the costs of this application is that each party and non-party pay their own costs.

[1] Aura Energy Ltd v ASEAN Deep Value Fund [2020] VSC 509, [59].

[3] Plaintiff, Affidavit of Peter Desmond Reeve, dated 7 August 2020, exhibit PDR-1, 173 - 4.

[4] [1992] HCA 28; (1992) 174 CLR 178, 192 - 193 ('Knight').

[5] [2016] VSCA 236; (2016) 341 ALR 154, [13] (Weinberg, Ferguson and Kaye JJA) (citations omitted) ('Carter').

[6] [2017] VSCA 348.

[7] [1992] HCA 28; (1992) 174 CLR 178.

[8] [2017] VSCA 348, [33].

[9] [2017] VSC 410, [91].

[10] [2013] VSC 563, [26] ('Permark').

[11] Naomi Marble and Granite Pty Ltd v FAI General Insurance Company Ltd (No 2) [1998] QSC 18; [1999] 1 Qd R 518, 544 (Shepherdson J).

[12] Vestris v Cashman (1998) 72 SASR 449, 468 (Lander J).

[13] Symphony Group plc v Hodgson [1994] QB 179, 193 (Balcombe LJ); Metalloy Supplies Ltd (in liq) v MAK (UK) Ltd [1996] EWCA Civ 671; [1997] 1 All ER 418, 422 (Waller LJ).

[14] Marriage of McAlpin [1993] FamCA 71; (1993) 16 Fam LR 888, 896 (Nicholson CJ and Maxwell J); Arundel Chiropractic Centre Pty Ltd v Deputy Commissioner of Taxation [2001] HCA 32; (2001) 179 ALR 406, 413 (Callinan J). See also Marriage of Pagliarella (No 3) [1994] FamCA 16; (1994) 122 FLR 443, 447 (Hannon J).

[15] Murphy v Young & Co's Brewery plc [1996] EWCA Civ 1000; [1997] 1 All ER 518, 531 (Phillips LJ). See also Re Land and Property Trust Co Ltd plc [1991] 1 WLR 601, 604 (Nicholls LJ); Knight v FP Special Assets Ltd (1992) 174 CLR 178, 203 (Dawson J); Carborundum Abrasives Ltd v Bank of New Zealand (No 2) [1992] 3 NZLR 757, 764 (Tompkins J) (HC); Separate Representative v J H E and G A W [1993] FamCA 40; (1993) 16 Fam LR 485, 508 (Nicholson CJ and Fogarty J (FC)); O'Neill v De Leo [1993] TASSC 162; (1993) 2 Tas R 225, 230 (Green CJ); Metalloy Supplies Ltd (in liq) v MA (UK) Ltd [1996] EWCA Civ 671; [1997] 1 All ER 418, 424 (Millett LJ); Re JJT [1998] HCA 44; (1998) 195 CLR 184, 189 (Gaudron J); Flinn v Flinn [199] 3 VR 712, 760 (the court); Naomi Marble and Granite Pty Ltd v FAI General Insurance Company Ltd (No 2) [1998] QSC 18; [1999] 1 Qd R 518, 544 (Shepherdson J); FPM Constructions Pty Ltd v Council of the City of Blue Mountains [2005] NSWSCA 340, [214] (Basten JA, with whom Beazley and Giles JJA concurred); Sanelli v Acee Victoria Pty Ltd (No 2) [2012] VSC 190, [5] (Mukhtar AsJ).

[16] Dymocks Franchise Systems (NSW) Pty Ltd v Todd [2005] 4 All ER 195; [2004] UKPC 39, [25] (Lord Brown). See also Globe Equities Ltd v Globe Legal Services Ltd [1999] EWCA Civ 3023; [1999] BLR 232, 239-40 (Morritt LJ) (who considered that an exceptional case in this context 'is one to be recognised by comparison with the ordinary run of cases not defined in advance by reference to any further characteristic' at 240); Europeans Ltd v Revenue and Customs [2011 BCC 527; [2011] EWHC 948 (Ch), [15] (Proudman J). Yu v Cao (2015) 91 NSWLR 190; [2015] NSWCA 276, [139] (per McColl JA, with whom Sackville AJA and Adamson J concurred); Housemaker Services Ltd v Cole [2017] 3 Costs LR 417; [2017] EWHC 924 (Ch), [10] (per Paul Matthews HHJ).

[17] G. E. Dal Pont, Law of Costs (4th ed, LexisNexis Butterworths, 2018), [22.17].

[18] [2013] VSC 563, [33].

[19] [2017] VSC 445; (2017) 54 VR 155 ('Charlesworth Nominees').

[23] [2014] NSWSC 321; (2014) 12 ASTLR 487, [31] ('Uncle's Joint').

[24] [2018] FCA 1597.

[26] [2017] VSCA 348, [33].

[27] [2003] FCA 969; (2003) 47 ACSR 418, [32].

[28] Second and Third Defendants, Second and Third Defendants' Submissions on Costs, dated 21 August 2020, [20] - [22].

[30] O'Neil Affidavit, [5], [12] - [41].

[31] [2016] VSCA 236; (2016) 341 ALR 154, [13] (Weinberg, Ferguson and Kaye JJA).

[32] Permark International Interiors Pty Ltd v Amoveo Pty Ltd [2013] VSC 563, [33].

[33] [2017] VSCA 348, [33].

[34] G. E. Dal Pont, Law of Costs (4th ed, LexisNexis Butterworths, 2018), [22.17].

[35] [1992] HCA 28; (1992) 174 CLR 178, 192 - 193.

[36] Aura Energy Ltd v ASEAN Depp Value Fund [2020] VSC 509, [35].

[37] [2003] FCA 969; (2003) 47 ACSR 418.

[38] [2017] VSCA 348.

[39] [2017] VSC 445; (2017) 54 VR 155.

[40] [2014] NSWSC 321; (2014) 12 ASTLR 487, [31].

[41] Aura Energy Ltd v ASEAN Deep Value Fund [2020] VSC 509, [45]. Referring to Hume Ltd v Unity APA Ltd (in liq) [1987] VR 469, 471 - 2; Pacific Dairies Ltd v Orican Pty Ltd [2019] VSC 647, [38].

[42] [2012] FCAFC 6; (2012) 200 FCR 296, [652] - [656].

[43] [2007] NSWSC 1330; (2007) 215 FLR 243, [412].

[45] [2013] VSCA 376, [27] ('Abbott'), referring to Dale v Clayton Utz (No 3) [2013] VSC 593, [58] - [71], [80] - [82].

[47] [2006] FCA 1046, [3].

[48] (1995) 57 FCR 119, 120F.

[49] ACN 074 971 109 v National Mutual Life Association of Australasia Ltd [2013] VSC 137 ('National Mutual Life').

[50] [2018] VSC 161, [13] ('Wilson').

[51] [2012] VSC 399, [84] (Croft J) ('Sunland Waterfront').

[52] [2013] VSC 137, [15], [40] (Wood AsJ).

[53] [2018] VSC 161, [10], [12].

[54] [2012] VSC 399, [84] (Croft J).

[55] [2018] VSC 161.

[56] ACN 074 971 109 v National Mutual Life Association of Australasia Ltd [2013] VSC 137, [15].

[59] Harrison v Schipp [2002] NSWCA 213; (2002) 54 NSWLR 738, [22].

[60] [2018] VSC 161, [11]-[13]. In Wilson, Dixon J referred to National Mutual Life as The Argo Unit Trust Case.

[61] [2002] NSWCA 213; (2002) 54 NSWLR 738 [22], (Giles JA).