More than four years after the FEG Recovery Division (FEG) unpinned the grenade it had prepared for the receivers of Castel Electronics Pty Ltd (Castel), the now ex-receivers have obtained court-sanctioned indemnification from their appointor’s parent.
In Department of Employment and Workplace Relations v Howell, in the matter of Castel Electronics Pty Ltd (No 3) [2026] FCA 266 Federal Court judge Shaun McElwaine this week ordered Thorn Australia Pty Ltd to pay $900,000, plus more than $120,000 in interest to Malcolm Howell and Liam Bellamy.
The $900,000 is equivalent to the amount Howell and Bellamy as Castel’s former receivers paid to settle claims brought against them by FEG in 2022 after they incorrectly applied proceeds from circulating asset recoveries to the security holder’s debt.
Howell and Bellamy were members of Jirsch Sutherland’s Victorian practice when Castel defaulted on its obligations to lender 1stCash Pty Ltd, a subsidiary of Thorn Australia, in 2018.
Howell and Bellamy were appointed as receivers. Hall Chadwick’s Richard Lawrence and David Ross were appointed as the company’s liquidators.
But FEG, which paid out more than $600,000 to cover entitlements owed to Castel’s employees, concluded that by paying proceeds of circulating asset realisations to their appointor, Howell and Bellamy were in breach of their obligations to the priority creditor and commenced proceedings to recover what it was owed.
It took several years and a settlement involving payment to the Commonwealth of $900,000 for Howell and Bellamy to get FEG off their backs.
Naturally they then sought recompense from their indemnifier, which opened a new front as 1stCash and Thorn each sought to lay liability at the feet of the other.
It was only late last year that Justice McElwaine affirmed that Thorn Australia rather than 1stCash was the true indemnifier, pursuant to a Deed of Indemnity dated 25 January 2018.
Even then the parties couldn’t agree on the appropriate form of orders necessary to give effect to his honour’s findings, precipitating this week’s orders and reasons as to costs.
Further reading:
FEG gunning for receivers’ fees and secured’s divvie
FEG commences delayed action against ex receivers
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