Background
Keybridge Capital Limited is an ASX-listed public company whose trading was suspended from before February 2025 and which was under voluntary administration from February to May 2025. Nicholas Bolton served as a director of Keybridge across three separate periods between 2011 and 2025. In 2024, WAM Active Limited — Keybridge’s largest shareholder — obtained leave under s 237 of the Corporations Act 2001 (Cth) to bring a derivative action in Keybridge’s name against Bolton and fellow directors. The claim centred on a $4.75 million payment Keybridge made to an Italian company associated with Bolton, Crotto del Nino S.r.l., which enabled Bolton to acquire a Lake Como property. Freezing orders were made against Bolton’s Australian assets up to $4.75 million and later extended until further order; corresponding precautionary seizure orders were subsequently obtained in Italy.
Bolton held a Director’s Deed dated 2 January 2013 containing a broad indemnity clause (cl 3.1) requiring Keybridge to indemnify him on a full indemnity basis against all losses and liabilities incurred as an officer, subject to the limits in s 199A of the Corporations Act. He also had the benefit of cl 3.3(a), which obliged Keybridge to advance reasonable defence costs on request. After Keybridge refused Bolton’s repeated demands to fund his defence of both the NSW derivative proceedings and related Italian proceedings, Bolton commenced proceedings before Nixon J in the NSW Supreme Court Commercial Equity List. Nixon J heard the matter on 18 May 2026 and, acting with expedition in light of a NSW trial fixed for 23 June 2026, delivered judgment on 21 May 2026 (Bolton (No 1) [2026] NSWSC 562) and made final orders on 29 May 2026 (Bolton (No 2) [2026] NSWSC 604). Those orders required Keybridge to transfer approximately AUD $210,839.38 and €80,026.96 to Bolton’s solicitors’ trust account within days, to continue paying invoiced costs on short turnaround times, and to pay Bolton’s costs of the proceedings.
Keybridge filed an appeal on 30 May 2026 contesting Nixon J’s construction of cl 3.1 and its interaction with s 199A(2)–(3) of the Corporations Act. It simultaneously moved for a stay of the payment orders (orders 3, 5 and 7) pending the appeal’s final determination, offering the usual undertaking as to damages. The Court of Appeal Registrar granted a temporary stay until 9 June 2026, when Stern JA heard the motion on the merits.
The Court’s Holding
Stern JA granted a stay of order 3 — the immediate lump-sum payment of AUD $210,839.38 and €80,026.96 — pending final determination of the appeal, conditional on Keybridge providing the usual undertaking as to damages. The application to stay orders 5 (ongoing future payments) and 7 (costs of the proceedings below) was dismissed. The appeal was simultaneously expedited and listed for half a day on 18 June 2026, with a tight submissions timetable imposed on both parties.
Applying the settled stay principles from Michael Hill Jeweller (Australia) Pty Ltd v Gispac Pty Ltd [2024] NSWCA 128, Stern JA found that Keybridge’s grounds of appeal were at least reasonably arguable — particularly its contention that Nixon J erred in concluding that cl 3.1 of the Director’s Deed obliged Keybridge to indemnify Bolton for costs of proceedings in which Bolton faced liability to the company itself, a matter directly engaged by ss 199A(2)–(3) of the Corporations Act. The balance of convenience favoured a stay of order 3: Bolton had deposed he had no cash and no ability to obtain cash; freezing orders rendered any Australian assets inaccessible; Crotto’s Italian mortgagee had flagged repayment defaults; and any recovery by Keybridge following a successful appeal would be subject to uncertain delay. Against this, Stern JA was satisfied the stay would cause Bolton no material prejudice in relation to his legal representation, finding on the evidence that Hamilton Locke had withdrawn from the NSW proceedings because of a perceived conflict of interest — not for want of payment — and that Bolton had in any event secured counsel for both the stay hearing and the appeal.
Stern JA rejected Bolton’s contention that Keybridge’s solvency was at risk, declining to draw adverse inferences from the absence of recent ASIC-lodged financial statements in circumstances where there was no direct evidence of current insolvency. She also rejected his argument that the court should resist a stay to vindicate the contractual rights Nixon J had recognised, noting that preserving the status quo while an arguable appeal is determined is itself an important interest of justice. Costs of the motion were ordered to be costs in the appeal.
Key Takeaways
- A stay of a monetary order pending appeal will be granted where the appeal raises seriously arguable grounds and there is a real risk that the money cannot be repaid — or can only be repaid with difficulty or delay — if the appeal succeeds; the freezing of a respondent’s own assets in related litigation can itself constitute that risk.
- A director’s deed indemnity clause requiring a company to pay costs “as an officer” may not extend to proceedings in which the director faces liability owed to the company itself; the interaction with s 199A(2)–(3) of the Corporations Act 2001 (Cth) on this point remains a live and arguable question.
- Courts will scrutinise claimed prejudice to a stay respondent closely: unsupported assertions as to asset values, or claims that a stay will deprive a party of legal representation when the actual reason for that loss of representation is a conflict of interest, will be given little weight.
- Expedition of the appeal is an important tool available to a court granting a stay, allowing it to balance the appellant’s need for interim protection against the respondent’s interest in timely vindication of a judgment in their favour.
Why It Matters
This decision is a practical illustration of how Australian appellate courts calibrate the competing interests at stake when a company resists paying a director under a deed of indemnity and appeals the underlying ruling. The case highlights a genuine tension in corporate law: Director deeds routinely promise broad indemnification, yet the Corporations Act prohibits indemnifying an officer against liabilities owed to the company, and the question of whether advance-of-costs obligations survive that prohibition during live proceedings is far from settled. Attorneys advising on director deeds or corporate governance disputes should note that the interaction between contractual indemnity provisions and s 199A remains actively litigated.
More broadly, the decision reinforces the “usual practice” articulated in Woolworths Ltd v Strong (No 2) (2011) 80 NSWLR 445 of staying monetary judgments pending appeal where repayment is at risk. It also illustrates the limits of that principle: only the immediately payable lump-sum order was stayed, not the prospective ongoing-payment or costs orders, underscoring that stays are tailored to the demonstrated risk of irremediable prejudice rather than granted as a blanket response to the filing of an appeal.