They were incorrect, demanding silver to end hostilities is okay, and even allowed to large sums of money, dependant on the actual size of a faction affected and the total wealth of it and it's leaders. If a noob loses a war, less then 5 silver is a reasonable settlement. When the owner of an empire loses a war, I don't see 300 silver being a problem, the precedent was set by Osai.
300 silver for a truce should not be too much to cough up for an empire, and if you lose a war, you lose one and should face up to that fact.
In the future, make your suggestion or reference more clear, there was not a single mention of your argonia vs. auxillian in the first post so I just had to guess what it was about. Any mix up with your ban apeal is your fault.