EOFY Sale · Save up to $750 off your legals · Ends 30 June

Claim offer
Selected cases

Federal Court of Australia · [2026] FCA 266

Castel Electronics indemnity costs

A Federal Court commercial insolvency decision about indemnity deeds, novation, settlement payments, superannuation guarantee exposure and...

Federal Court of Australia13 Mar 2026

Plain-English explainers, not legal advice. Check the linked official source before you rely on a specific section, and get advice for your situation.

Get legal help

Start here

Quick read

  • Settlement deeds, indemnities and novations need to say exactly who carries the risk after a transaction.
  • A Federal Court commercial insolvency decision about indemnity deeds, novation, settlement payments, superannuation guarantee exposure and indemnity costs.

Use this to check

  • Indemnity clauses and novation documents should identify the responsible party without ambiguity.
  • Settlement amounts can trigger separate fights about defence costs, interest and statutory charges.
  • Calderbank offers can matter heavily if a party later refuses a commercially obvious position.

Decision snapshot

  1. 1

    What happened

    • The Commonwealth had brought proceedings connected with Castel Electronics Pty Ltd and a superannuation guarantee charge proof of debt.
    • Malcolm Howell and Liam Bellamy were receivers.
    • The later dispute was between the receivers, 1stCash and Thorn entities about who had to indemnify the receivers after a $900,000 settlement with the Commonwealth.
    • The Court had already resolved the main cross-claim issues in an earlier judgment.
  2. 2

    What the court had to decide

    • The Federal Court had to settle final declarations and costs after earlier findings about which party carried an indemnity obligation.
    • The issues included whether Thorn Australia or 1stCash was the indemnifying party, whether Thorn Australia should pay the $900,000 settlement plus interest, and whether indemnity costs and Sanderson costs orders should be made because of Thorn Australia's conduct.
  3. 3

    What the court decided

    • The Court declared Thorn Australia to be the indemnifying party and entered judgment for the receivers against Thorn Australia for $900,000 plus $120,982.19 in interest.
    • Thorn Australia was ordered to pay the receivers' relevant costs on an indemnity basis and to pay 1stCash's costs of the cross-claims on an indemnity basis, with costs to be fixed on a lump-sum basis.

Practical impact

Practical read

  • Settlement deeds, indemnities and novations need to say exactly who carries the risk after a transaction.
  • If the wording and surrounding conduct leave room for argument, a later claim can trigger indemnity costs, interest and multi-party cost orders.

Useful next steps

  • Indemnity clauses and novation documents should identify the responsible party without ambiguity.
  • Settlement amounts can trigger separate fights about defence costs, interest and statutory charges.
  • Calderbank offers can matter heavily if a party later refuses a commercially obvious position.
  • A Sanderson order can shift one party's costs to another party whose conduct made the extra dispute fair to allocate.
  • Insolvency and restructuring files should keep all transaction documents and settlement offers in one evidence trail.

Practical read

This case is a strong reminder that transaction documents do not stop mattering after completion. A deed of indemnity, a deed of novation and later settlement offers became central to who paid the commercial bill years later. The live dispute was not just whether the receivers could recover $900,000. It was also who had to pay the legal costs of defending the Commonwealth claim and fighting the cross-claims.

The Court found that Thorn Australia's position on the novation and estoppel issues was without merit and that it should have appreciated the risk from the outset. Calderbank offers had spelt out why Thorn Australia was exposed. Because of that conduct, the Court ordered indemnity costs and made a Sanderson order shifting 1stCash's costs to Thorn Australia rather than leaving the receivers to pay costs for having sued the wrong party in the alternative.

For business owners, this is the contract-administration lesson. If a sale, refinance, restructuring or settlement transfers liabilities, the documents need to name the responsible party cleanly. If a party later denies liability despite the documents and the commercial history pointing the other way, cost exposure can become much larger than the original disputed payment. Keep novations, indemnities, settlement offers and board approvals together so the risk trail is obvious before a dispute reaches Court.

Checks to run

Key points

  • Before signing a novation, list every liability that moves and every liability that stays behind.
  • Keep indemnity deeds, share-sale documents and restructuring correspondence together.
  • When receiving a settlement offer, assess the cost consequences as well as the headline dollar amount.
  • Do not defend a contractual position that the documents and commercial history cannot support.
  • In insolvency matters, check whether statutory charges or employee-related claims sit behind the settlement figure.

Key takeaways

  • Indemnity clauses and novation documents should identify the responsible party without ambiguity.
  • Settlement amounts can trigger separate fights about defence costs, interest and statutory charges.
  • Calderbank offers can matter heavily if a party later refuses a commercially obvious position.
  • A Sanderson order can shift one party's costs to another party whose conduct made the extra dispute fair to allocate.
  • Insolvency and restructuring files should keep all transaction documents and settlement offers in one evidence trail.

Related topics

How Sprintlaw can help