Federal Court of Australia Australian Securities and Investments Commission v A One Multi Services Pty Ltd (No 4) [2024] FCA 1469 File number: QUD 338 of 2021 Judgment of: DERRINGTON J Date of judgment: 18 December 2024 Catchwords: CORPORATIONS – application by Court appointed receivers for approval of remuneration for past work – amount sought is reasonable – application granted CORPORATIONS – application by receivers for indemnity from Australian Securities and Investments Commission (ASIC) – where receivers already ordered to be indemnified out of assets over which they are appointed – no principled reason to require ASIC to indemnify receivers – application refused Legislation: Corporations Act 2001 (Cth) Federal Court of Australia Act 1976 (Cth) Cases cited: ASIC v A One Multi Services Pty Ltd (No 2) (2022) 166 ACSR 26 Australian Securities and Investments Commission v A One Multi Services Pty Ltd [2021] FCA 1297 Australian Securities and Investments Commission v Carey (No 5) (2006) 58 ACSR 6 Australian Securities and Investments Commission, Re Richstar Enterprises Pty Ltd v Marco (No 4) [2020] FCA 881 Australian Securities and Investments Commission; Re Richstar Enterprises Pty Ltd v Carey (No 12) (2007) 60 ASCR 597 Australian Securities Commission v Aust-Home Investments Pty Ltd (1993) 116 ALR 523 Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772 In re Universal Distributing Company Limited (in liquidation) (1933) 48 CLR 171 Rosanove v O'Rourke [1988] 1 Qd R 171 Division: General Division Registry: Queensland National Practice Area: Commercial and Corporations Sub-area: Regulator and Consumer Protection Number of paragraphs: 104 Date of hearing: 23 October 2023 and 8 March 2024 Counsel for the Plaintiff: Mr M Steele KC with Ms J Menzies (on 23 October 2023) and Mr M Steele KC (on 8 March 2024) Solicitor for the Plaintiff: Australian Securities and Investments Commission Counsel for the Defendant: The Defendant did not appear Solicitor for the Interested Persons: Mr P Betros of HopgoodGanim Lawyers ORDERS QUD 338 of 2021 BETWEEN: AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION Plaintiff AND: A ONE MULTI SERVICES PTY LTD (ACN 612 839 540) Defendant JOHN ROSS LINDHOLM AS RECEIVER & MANAGER OF THE DEFENDANTS Interested Person TIMOTHY JAMES MICHAEL AS RECEIVER & MANAGER OF THE DEFENDANTS Interested Person order made by: DERRINGTON J DATE OF ORDER: 18 December 2024 THE COURT NOTES THAT: A. In this Order, "Property" has the same meaning as that contained in the Orders made on 21 October 2021, as varied on 29 July 2022 and 1 March 2023. THE COURT ORDERS THAT: 1. Pursuant to r 14.24 of the Federal Court Rules 2011 (Cth) (Rules) and s 23 of the Federal Court of Australia Act 1976 (Cth) (Federal Court Act), the receivers' remuneration for the period from 1 June 2022 to 30 April 2023 inclusive, be: (a) fixed in the sum of $615,032.50 plus GST; and (b) approved for payment out of the Property of the defendant. 2. Pursuant to r 14.24 of the Rules and s 23 of the Federal Court Act, the part of the receivers' disbursements (excluding legal costs) for the period from 1 June 2022 to 30 April 2023 inclusive which is identified as requiring approval in the eleventh affidavit of Timothy James Michael filed 23 May 2023 at paragraph 116, be: (a) fixed in the sum of $29,551.23 plus GST; and (b) approved for payment out of the Property of the defendant. 3. The receivers' application filed on 19 May 2023 is otherwise dismissed. 4. The receivers are to pay the costs of the plaintiff, to be taxed or agreed. 5. The receivers are entitled to recover their costs of this application from the assets of the defendant. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011. REASONS FOR JUDGMENT DERRINGTON J: Introduction 1 This is an application brought by Mr John Lindholm and Mr Timothy Michael who, at the time the application was brought, were the receivers and managers of the property of A One Multi Services Pty Ltd (A One Multi), Mr Aryn Hala and Ms Heidi Walters. They have since been discharged from their role as receivers and, on 7 August 2024, A One Multi was wound up pursuant to s 461(1)(k) of the Corporations Act 2001 (Cth) (Corporations Act). By the present application which was dated 19 May 2023, they seek orders approving their remuneration, costs and expenses in relation to the receivership, and further, to the extent to which those amounts cannot be recovered from the property over which they had been appointed, an order that the Australian Securities and Investments Commission (ASIC) indemnify them for any shortfall. 2 In considering this application, it is important to note that the receivers had accepted their appointment on the basis of the Court making an order that they had rights of indemnity from the assets in respect of which they were appointed. Despite that, they now seek additional orders as it appears, contrary to their initial expectations, that there will be insufficient recovery from those assets to meet their claims. 3 As at the date of the hearing, they had recovered some $3,487,000 in the course of the receivership, although none of that has been paid to the investors in the scheme which ASIC alleged was improper and which was the catalyst for ASIC seeking the receivers' appointment. Rather, that money has been applied to the receivers' remuneration and costs, the payment of large sums to its solicitors, and payments to Mr Hala and Ms Walters (who were the second and third defendants in the proceeding) for their living expenses. 4 At all relevant times the receivers were aware of the nature of the Court's original orders to the effect that they were entitled to obtain their remuneration, expenses and disbursements from the property in respect of which they were appointed. At no time prior to the bringing of this application did they cavil with the appropriateness of those orders. Indeed, they took advantage of them and enforced their right of indemnity by making an application in this Court in 2022 for the payment of their past remuneration and disbursements. That application was allowed, resulting in them being paid $773,115 plus GST for their remuneration, and $5,830 plus GST for disbursements. It is apparent that they initially believed there to be substantial recoveries in the receivership, being in circumstances where some many millions of dollars had been obtained by the defendants by a means which ASIC alleged was unlawful. However, most of that money was converted into cryptocurrency and, although the receivers professed proficiency in recovering cryptocurrency, they were unable to do so save for a small amount. Despite it becoming rather apparent from an early stage that recovery of any further amounts from cryptocurrency would be difficult, the receivers thereafter expended substantially more time on the receivership, including pursuing actions and incurring expenses for which they now seek indemnity. 5 ASIC had little to say as to the veracity of the receivers' claim for remuneration. It did not oppose the orders sought in that regard and did not provide any assistance to the Court in relation to assessing the appropriateness of the quantum claimed. The focus of its submissions was that it should not be responsible for indemnifying the receivers in respect of any amount approved. 6 For the following reasons, the receivers' claim for remuneration, costs, and expenses should be approved, entitling them to payment. However, there is nothing in the material in this case which would justify imposing any obligation on ASIC to indemnify them to the extent to which the assets recovered in the receivership are insufficient to meet their claims. Background 7 The general background to this matter is set out in Australian Securities and Investments Commission v A One Multi Services Pty Ltd [2021] FCA 1297, which identifies the reasons for the making of orders appointing the receivers. 8 There is no need to set out in any great detail the facts concerning the background to, and the course of, the receivership, however, the following salient points should be noted. 9 The defendant, A One Multi, was a company of which Mr Hala (previously the second defendant) and Ms Walters (previously the third defendant) were each shareholders. As mentioned, A One Multi has since been ordered to be wound up. 10 The evidence adduced to this Court by ASIC revealed that Mr Hala and Ms Walters engaged in the practice of making representations to individuals as potential investors to the effect that Mr Hala was a successful investor through his company, A One Multi. 11 In particular, Mr Hala promoted his ability to earn substantial returns on investments, and made representations that he was able to generate returns of between 10% and 20% on investments and, on occasion, returns as high as 26%. The precise method by which Mr Hala would generate such returns was not made entirely clear. 12 Part of the practice adopted by Mr Hala and Ms Walters was to advise potential investors to establish their own self-managed superannuation funds (SMSFs) and to transfer money from their existing superannuation accounts in managed or industry superannuation funds, to their SMSFs. Once that had occurred they had the ability to invest in, or lend money to, A One Multi. It appeared from the material that Mr Hala and Ms Walters, through third parties, arranged the creation and documentation by which the SMSFs would be established for the investors. 13 On the transfer of the existing superannuation funds to the SMSFs, a loan agreement would be entered into with A One Multi. 14 A substantial amount of money was raised by the defendants in this manner and, on some of the evidence, it exceeded some $18 million. It is apparent that Mr Hala, Ms Walters and/or A One Multi caused much of that money to be put into the form of cryptocurrency though a not inconsiderable portion of it was spent for their personal benefit. 15 On 18 June 2021, ASIC commenced an investigation into the conduct of Mr Hala, Ms Walters and A One Multi in relation to suspected criminal acts and civil statutory contraventions. 16 On 14 October 2021, being prior to commencing proceedings in this Court, a meeting occurred between ASIC and the receivers, during which ASIC apparently identified that it had ascertained that a "CoinSpot Wallet" held by the defendants contained 375.99 Bitcoins. On that day, Mr Michael estimated the value of that cryptocurrency to be $27.5 million. 17 Prior to giving their consent to being appointed, the receivers made their own assessment of the likelihood of recovering sufficient funds from the assets to which they were to be appointed, to cover their remuneration, costs and expenses. 18 On 19 October 2021, ASIC emailed to the receivers an extract of the orders which they intended to obtain from the Court, together with a draft consent to act. The proposed orders included one to the effect that the receivers were entitled to indemnify themselves from the assets of the defendants. Mr Michael and Mr Lindholm signed the consent that day and returned it. 19 ASIC commenced its action against the defendants on 20 October 2021. 20 On 21 October 2021, the Court made ex parte orders in the form sought by ASIC, including orders appointing the receivers to the assets of the defendants "until further order, for the purpose of" undertaking the tasks prescribed in paragraph 5(a) to 5(f) therein (hereinafter, the "appointment orders"). At that time the evidence suggested that Mr Hala may have in his possession Bitcoin to a value of between $7 and 22 million, plus other funds in other cryptocurrency accounts. There was also evidence that the defendants had real property assets of a not inconsiderable value. 21 Armed with the Court's orders, the receivers and ASIC attended on the defendants on 22 October 2021, to secure the receivership property. At that time, Mr Hala indicated that he held somewhere between $30 million to $40 million in cryptocurrency, but that it was then controlled by third parties or subject to their rights. 22 From 22 October 2021, the receivers issued a number of requests for information and data to the defendants and third parties, including in relation to the cryptocurrency. 23 The orders appointing the receivers were continued subject to agreed amendments on 1 November 2021. 24 On 8 November 2021, Mr Hala was compulsorily examined by ASIC, during which he provided some further information about the nature and extent of the cryptocurrency which he held. 25 The receivers realised cryptocurrency for a value of $201,781.62 on 17 November 2021. That was, unfortunately, the totality of the cryptocurrency recovered by them. 26 On 10 December 2021, the receivers prepared a report to the Court concerning the receivership which set out some of the difficulties they were experiencing in obtaining information to allow them to recover the cryptocurrency. It also provided information in relation to other assets which were then being pursued. 27 From January to May 2022, the receivers issued additional requests for information to the defendants about the cryptocurrency and other assets. During that time, they set about realising the real property assets, and their investigations into the cryptocurrency revealed that certain vital information previously stored on the defendants' electronic equipment had been deleted, as had been certain text messages. It became clear, by the end of May 2022, that the defendants were reluctant and/or unable to provide additional information. 28 On 5 and 17 May 2022, Mr Hala was again compulsorily examined by ASIC. 29 In June 2022, the receivers, being in possession of additional information about the cryptocurrency, undertook further investigations for the purposes of ascertaining how they might recover them. They also undertook an analysis of the transactions in which the defendants had engaged in relation to those assets. 30 As at around 20 June 2022, the receivers had recovered funds totalling $1,294,858.99 and had made total payments of $837,083.61, including $269,605.46 for the receivers' legal fees and disbursements and $264,906.65 for the defendants' living expenses and legal fees. A total of $457,775.38 was held in a bank account. 31 In June and July 2022, the receivers undertook action to liquidate the defendants' real property and also made an application to the Court to obtain additional information for the purposes of access to the defendants' cryptocurrency. 32 On 16 September 2022, the Court made orders that the receivers' remuneration for the period from 21 October 2021 to 31 May 2022 inclusive be fixed at $773,115 plus GST, payable from the property of the (then) first, second and third defendants. 33 In late 2022, Mr Michael deposed that he formed the view that, from around this time, the assets which were under the receivers' control would be insufficient to meet their approved remuneration, unapproved remuneration, and unpaid disbursements, that they were dependent upon the successful outcome of litigation to generate further funds, that it was not likely that there would be any funds for the benefit of investors, and that there were no longer any funds to pay the defendants' living expenses or legal costs. 34 On 3 November 2022, Mr Michael asked ASIC whether it would, among other things, provide an indemnity to the receivers in relation to any shortfall which the receivers might suffer. ASIC indicated that it would not do so. 35 In November and December 2022, the receivers sold additional real estate belonging to the defendants, commenced proceedings to recover debts from several entities, and indicated to ASIC that they did not have sufficient funds to incur any further significant indebtedness. 36 On 15 February 2023, the receivers prepared a "Receipts and Payments Summary" for the period from 14 November 2022 which recorded that they had received $1,647,643.35 during that time, had made total payments of $1,588,532.15 including the receivers' approved remuneration of $850,426.50 including GST and legal fees and disbursements of $179,942.22, and that they held $135,074.57 as cash at bank on 15 February 2023. At that point, they anticipated that there would be a shortfall of some $622,244 in respect of the funds needed to meet their fees and expenses, though there were expected to be further recoveries from litigation that was still on foot. 37 On 3 March 2023, ASIC discontinued the present proceedings against Ms Walters. 38 On 8 March 2023, in a letter to the receivers' solicitors, ASIC stated that it did not support any further investigations or expenditure by the receivers in view of there being no realistic prospect of recovery. 39 On 19 May 2023, the receivers filed the present application for the approval of their remuneration and for orders that they be indemnified by ASIC. 40 The application first came on for hearing on 23 October 2023, but following extensive cross-examination and addresses, it was required to be adjourned. It came on for further hearing on 8 March 2024. The application for remuneration 41 The receivers seek approval of their remuneration for the period of 1 June 2022 to 30 April 2023 inclusive. By their previous application, they obtained approval for their remuneration for the period of 21 October 2021 to 31 May 2022 inclusive. On that application, Downes J ordered that their remuneration be fixed in the amount of $773,115 plus GST (a total of $850,426.50), and approved payment of that sum out of the defendants' property. 42 The current application was served on the defendants which did not wish to be heard in relation to the orders sought. 43 The material before the Court in relation to the approval of the remuneration was relatively straightforward. Largely, it was contained in the affidavit of Mr Michael sworn 18 May 2023, who provided a detailed account of the work which had been undertaken during the second period of the receivership. Specifically, he set out at length the nature of the work done in the performance of the receivership which was of a standard kind and as might be expected. There is no need to recite it in detail. Consideration 44 The legal principles relevant to the giving of approval for a receiver's remuneration, costs and expenses were set out by Downes J in ASIC v A One Multi Services Pty Ltd (No 2) (2022) 166 ACSR 26, 29 – 32 [15] – [23], being the reasons given for the receivers' first remuneration application. I gratefully adopt her Honour's concise and helpful summary which should be applied on the current application. Each of the matters identified by her Honour are addressed in the following paragraphs. 45 It is apparent that the receivers seek approval in relation to the work done in the discharge of their ordinary duties. That is self-evident. 46 In the context of the current application, it can be accepted that the relevant work was reasonably undertaken, in the sense that it was generally for the purposes of the receivership. It can be accepted that the amount sought is a fair and reasonable reward for this work, and will fairly compensate the receivers for their time and trouble in performing their duties and responsibilities. 47 It has been demonstrated that the remuneration is claimed on the basis of the hourly rates adopted by the receivers and their staff who undertook the work; those being the rates which ASIC approved prior to the receivers' appointment. 48 The evidence details the work broken down into individual components in an appropriate spreadsheet which records the time allegedly taken to complete the tasks identified by the relevant persons, and it does so with an adequate level of particularity. 49 The receivers have also given evidence, which has not been contradicted, that Mr Michael has: (a) reviewed the narrations in the spreadsheet and assessed the appropriateness of time taken for individual tasks, and written off time where he considered it necessary; (b) confirmed that the tasks identified were undertaken by an appropriate staff member and, where that was not the case, that he has made an adjustment to the relevant time entry; (c) confirmed that the staff members who attended relevant meetings have been consistent in the recording of their time for the tasks; and (d) amended descriptions where necessary to ensure that they appropriately describe the task undertaken. 50 Following the above review, Mr Michael allegedly made write-downs and gave discounts, such that the claim for the remuneration done during the second period is $615,032.50 plus GST. 51 In relation to the calculation of the amount claimed, Mr Michael has sworn that the relevant charge out rates are reasonable in light of the factors relevant to that task. 52 Mr Michael also identified the nature and complexity of the circumstances of the receiverships and asserted that they involved more complex undertakings than might usually be required. There was no contradictory evidence in that respect. 53 Mr Michael also indicated that the receivership involved a high level of risk and a high level of responsibility. In the absence of contradictory evidence, that must also be accepted. 54 It was submitted that the amount claimed as remuneration was proportionate to the size and complexity of the receiverships, taking into account that: (a) the receiverships involved 92 investors and 60 SMSFs which had originally advanced some $18.3 million to A One Multi as investor funds; (b) the first amount of remuneration in the sum of $850,426.50 plus GST was approved and has been paid to the receivers; (c) the total amount of recoveries achieved by the receivers has been $3,487,481.00; (d) the receivers have been attempting to pursue further recoveries in relation to the cryptocurrency and other claims of the defendants; (e) the attempts to recover funds have been difficult with the potential results being unclear. It was said that this makes it inappropriate to consider proportionality through the lens of the known returns after they had been recovered; and (f) much of the work involved in the receiverships has been complex and labour intensive. 55 ASIC claimed that it reviewed the remuneration claim made by the receivers and did not identify any areas of concern regarding the manner and calculation of the remuneration claimed. As ASIC is in a far better position to ascertain that which was reasonable and necessary for the assessment of the receivers' remuneration, the Court is entitled to put some store in that evidence. 56 Although the receivers engaged in work seeking to recover cryptocurrency which was unsuccessful, Mr Michael claimed that it was reasonably undertaken in an effort to recover what might have been substantial amounts. Again, this can be accepted — but only in the context of the actions which the receivers should have undertaken for the purposes of the question of approval of their fees and expenses. It says nothing of whether it was reasonable in the context of attempting to sheet home liability for the costs of doing so to ASIC. Conclusion in relation to right to recover remuneration, costs and expenses 57 The foregoing identification of the matters relevant to the approval of the receivers' application, as were identified by Downes J, are sufficient to conclude that this is an appropriate case in which approval should be given. The work done for the purposes of the receivership was within the scope of what is fair and reasonable, insofar as it was work which could be characterised as being done for the purpose of attempting to recover and realise the assets over which the receivers were appointed. That was, after all, part of the purpose of the receiverships. If there were available assets from which the receivers' claims could be met, it would be appropriate that they recover the amounts expended by them and any remuneration from those assets. 58 It must be mentioned that a small part of the receivers' fees and charges incurred in the period from 1 June 2022 to 30 April 2023 include a profit element that requires specific approval. There is no difficulty with that in the circumstances of the present case, and that part is dealt with specifically in the orders. 59 Further, the amount claimed as remuneration also contains a risk component, and that too is appropriate. It is common knowledge that receiverships are, in this respect, similar to liquidations and it occasionally happens that there are insufficient funds to fully indemnify the insolvency professional for their costs and expenses. No doubt, the risk component is included for this purpose. 60 Overall, it is appropriate to make the orders approving the remuneration as they appear at the commencement of these reasons. The claimed right of indemnity 61 Significantly, by their application the receivers also sought orders that ASIC provide an indemnity for any costs and expenses which they are unable to recover from the assets held by them. This was the substance of the dispute between the parties during the hearing of the application. The relevant principles 62 This Court has power under s 23 of the Federal Court of Australia Act 1976 (Cth) "to make orders of such kinds, including interlocutory orders, and to issue, or direct the issue of, writs of such kinds, as the Court thinks appropriate". It has been said that this power, together with s 1323 of the Corporations Act, enables the Court to impose a liability on a person to pay the remuneration and expenses of receivers appointed under the Corporations Act: Australian Securities and Investments Commission v Carey (No 5) (2006) 58 ACSR 6, 12 [20] (Carey (No 5)); Australian Securities and Investments Commission, Re Richstar Enterprises Pty Ltd v Marco (No 4) [2020] FCA 881 [27] – [30]. ASIC did not dispute the existence of such a power and, without endorsing the correctness of that view, it may be accepted for present purposes. 63 It can also be accepted that, in the usual course, when a receiver is appointed by the court in the exercise of its equitable jurisdiction, their entitlement to recover their costs, expenses and remuneration is by recourse to the assets to which they have been appointed: Rosanove v O'Rourke [1988] 1 Qd R 171, 174. 64 However, where the appointment is made under the Corporations Act, the position may well be different. In Carey (No 5), French J observed the following at 13 [22]: … In my opinion the position of a receiver appointed in the exercise of equitable jurisdiction differs from that of a receiver appointed in the exercise of the statutory power conferred by s 1323. There is no entitlement, that goes with the appointment, to recover remuneration from the assets of the relevant person. The appointment under s 1323 when made on the application of ASIC and based on an ongoing investigation, aids the public regulatory and protective functions conferred upon ASIC by the Corporations Act and by the Australian Securities and Investments Commission Act 2001 (Cth). That is a foundation for such an appointment which differs from that which underpins the private equitable remedy. 65 Those observations should be accepted, and it follows that it may not always be the case that the party over whose assets a receiver has been appointed should be required to bear the costs of the receivership, and that is particularly so where the evidence against that party is not strong. That reticence is not particularly relevant in the present case where the evidence before the Court on ASIC's application was particularly cogent and persuasive. Leaving aside issues of any possible criminality or misleading or deceptive conduct, the evidence strongly indicated that certain statutory requirements for the provision of advice or services to the "investors" had not been met. On the hearing of that application it was clear that ASIC had spent a considerable amount of time obtaining evidential support for the allegations on which it relied and the material before the Court established that it had a strong case. For this reason alone, it was appropriate to make the orders permitting the receivers to recover their costs, expenses and remuneration from the assets in respect of which they were appointed. 66 The receivers relied on a number of authorities relating to the appropriateness of making orders that receivers are entitled to be indemnified from the assets to which they are appointed when orders are made on an interim basis. They included Carey (No 5), Australian Securities and Investments Commission; Re Richstar Enterprises Pty Ltd v Carey (No 12) (2007) 60 ASCR 597, Australian Securities Commission v Berona Investments Pty Ltd (1995) 18 ACSR 772 and Australian Securities Commission v Aust-Home Investments Pty Ltd (1993) 116 ALR 523. In Carey (No 5), French J expressed the view (at 13 [24]) that he should not make an order that the receivers be entitled to take their costs, expenses and remuneration from the assets over which they were appointed at that initial stage, and before any determination could be made in relation to liability. His Honour went on to identify that an application could be made by ASIC at a later stage for an order that it be indemnified out of the assets of the defendants for any payments made by it to the receivers in relation to the discharge of their functions. 67 On the basis of the above cases, the receivers submitted that the "starting point" for receivers appointed under s 1323 of the Corporations Act is that ASIC should bear responsibility for their remuneration and disbursements. That should be rejected. It is not a submission supported by either principle or authority. There is no established "starting point" as the receivers submitted. Although, in some of those cases, the Court considered it appropriate to make the appointee liable for the receiver's costs, that was for a number of different reasons. In other cases the Courts have considered it appropriate that the expenses be borne out of the assets of the person or company in receivership. Separately, it is important to note that certain of the authorities relied upon concerned receivers appointed on an interim basis. 68 In any case, the appointment orders of 21 October 2021 were made on an interlocutory and not interim basis. The evidence before the Court was substantial and cogent, and there was a sufficient degree of comfort for orders to be made to the effect that the receivers' reasonable costs and expenses should be payable out of the defendants' assets. The defendants were at liberty to apply to set aside or vary the orders made, though they did not do so. Given the force of the evidence which had been amassed by ASIC in support of its application, that was far from surprising. Indeed, it is noted that in the weeks following the making of the initial orders, ASIC and the defendants agreed to a number of consent orders which had the effect of varying the original orders, but no attempt was made to vary the order permitting the receivers to meet their costs and expenses from the assets under their control. 69 It is also worthy of remark that at no time did the receivers seek any variation to the orders which had been made with their knowledge and agreement. If they were at all concerned about their position they ought to have made such an application prior to incurring the expenses during the receivership. In this context, their current submission that a cause of their present predicament is ASIC's failure to inform the Court of the impact of the orders which were originally made in relation to indemnity, is severely undermined. If it was a matter with which they had difficulties prior to them becoming aware of the shortfall, one wonders why they made no application to alter the terms of the order. The evidence before the Court is sufficient to support the inference that, given the value of the assets which might have been available, they perceived that the receivership would be very profitable for them. It can be assumed that they were content with their right of indemnity from the defendants' assets whilst they seemed to be sufficient to satisfy their claims. It was only after a shortfall arose that they expressed their concerns that, perhaps, the order giving them a right of indemnification should not have been made. 70 As mentioned, the authorities referred to were concerned with interim orders and not interlocutory orders and, as such, are not relevant to the facts of the current matter. To that it might be added that, regardless of those authorities, the simple fact is that the appointment order was not to the effect that ASIC should indemnify the receivers pending the making of further orders, or that it should pay their costs in the first instance. It was that the receivers were entitled to be indemnified from the assets of the defendants. Much of the receivers' submissions were directed to obliquely asserting that the initial indemnity orders should not have been made but, even if that were so, it is inevitable that ASIC would have subsequently sought a variation so that the current form of the order would be in place and, on the material, it is undoubted that it would have been made. 71 Ultimately, the parties seemed to progress the matter on the basis that, whether the Court should now make an order that ASIC indemnify the receivers was dependent upon the circumstances of the case. That, of itself, was not helpful and is an approach which would lead to unprincipled decision-making. No presumption in favour of an appointor's indemnity 72 Contrary to the receivers' submissions, there is nothing in the authorities which supports the proposition that the mere fact that a person seeks the appointment of a receiver to assets of a third party carries with it an implied obligation to indemnify the receiver in respect of their remuneration, costs and expenses. Receivers, like other external controllers of corporations, are professional persons who are entitled to accept or reject any offer of appointment as they see fit. They are not forced to accept it, though they can do so on any terms which they might negotiate with the person seeking their appointment. If they require an indemnity in respect of the costs or liabilities that they might incur, they are entitled to negotiate it if they can. The same applies to liquidators or administrators. 73 It follows that the Court should not commence with any predisposition in favour of ordering an indemnity. Rather, the contrary appears to be true. One can expect that where a person is put into a position to generate a sum of money by realising assets for the benefit of others, whether that be for secured creditors or for a regulator acting in the interests of members of the public, they will be usually be entitled to take their costs and expenses of doing so from the fund so created before those who will have the benefit of it will receive anything: In re Universal Distributing Company Limited (in liquidation) (1933) 48 CLR 171, 174 – 175. On that basis, it might be expected that receivers accepting appointments by public regulators will expect that, in the first instance, their rights of indemnity will be from the fund which they create by realisation of the assets over which they are appointed. For the Court to depart from that general proposition, one might expect the receivers or other external controller to establish some basis for doing so. 74 The courts can assume that, in the ordinary course of the appointment of receivers to advance the purposes of regulators, the appointees are capable of looking after their own interests. They will invariably be professionally qualified persons engaged in the business of providing services, and it can be assumed that they are readily capable of making determinations as to whether or not accepting an appointment will be financially viable for them. No doubt much the same analysis applies to liquidators. 75 It can also be assumed that receivers factor into the fees which they charge an element for risk in relation to the receivership. That would include the risk that they will not be fully remunerated in the conduct of a receivership. Indeed, such was the case here, where Mr Michael indicated that the receivership involved a high level of risk and that his claim for remuneration factored in that element. 76 Additionally, it is necessarily the receivers who become acutely aware of the nature of the assets under their control and of the liabilities which might have to be met in relation to them. They will have greater and more accurate knowledge than anyone else as to whether it is appropriate to take any further step in the receivership, or whether the taking of any such step will involve the incurring of expenses and costs which might not be recovered. In this respect, it is the receivers who have the power to prevent the incurring of expenditure in respect of which there will be insufficient recoveries to satisfy it. If an occasion arises in which that risk exists, they can seek an indemnity from the person who sought their appointment to continue the receivership or, if that is not forthcoming, seek to be released from it. 77 The aim of receiverships being conducted with appropriate fiscal rectitude also favours the denial of a blanket indemnity for receivers. The existence of a limitation on the fund from which expenses might be indemnified provides an appropriate restraint on a receiver's expenditure. A receiver should always maintain a clear understanding of the available assets against which the indemnity might be available and the expenditure that is intended to be incurred. That can provide a very useful comparator for assessing whether any expenditure is proportionate. Conversely, if the Court were to grant an indemnity, especially as here where the expenses have already been incurred, it is likely to encourage spending which is unwarranted or is associated with unnecessary risk. 78 The receivers further submitted that the Court should, for the purposes of the present application, act on the same principles as it does when considering whether a receiver should be denied their right of indemnity. However, there is no basis for that proposition, either as a matter of authority or principle. The question to be decided in this case is whether a right exists in the first place, not whether an extant right should be denied. 79 Given the foregoing discussion, there are several matters which suggest that there should be a predisposition against making an order requiring the appointor of a receiver to give an indemnity in relation to their remuneration, costs or expenses. That is especially so where the indemnity is sought after the relevant liabilities have been incurred. However, whether that is correct or not is not relevant in this matter because, regardless of whether a predisposition is adopted or the power is exercised merely as a general discretion, taking into account the "relevant circumstances", the result in this case will be the same. The circumstances in which the power is to be exercised 80 The matters referred to in the above discussion are relevant to the exercise of the discretionary power. The receivers, as experienced insolvency practitioners, are capable of looking after their own interests. They can consider appointments offered to them, assay the circumstances, assess the risks involved, and bring to mind the commercial considerations of accepting them. They have the power to accept or reject any offered appointment and are capable of negotiating the terms of their appointment. If that is to include an indemnity from the appointor, they can so require it as a condition. Here, that did not occur. The receivers were aware of the terms of the appointment and of the orders which ASIC intended to seek in relation to the indemnity from the defendants' assets, and they agreed to the appointment on that basis. They were aware of the risks inherent in the appointment and also of the likelihood, as the receivership progressed, that they would be unable to realise sufficient assets to cover their expenses. At no time prior to incurring any of the relevant expenses did they seek any variation or addition to the orders concerning their indemnity. All this, by itself, weighs heavily against the making of an order that ASIC now provide the indemnity sought. 81 It should be undoubted that both Mr Lindholm and Mr Michael are experienced receivers. The evidence showed that the latter has been a registered liquidator since 2005, and has over 33 years' experience in corporate insolvency and restructuring. No doubt it is likely that he was approached by ASIC for this particular receivership by reason of his long experience. It is also not unfair to conclude that Mr Michael and Mr Lindholm were appointed by ASIC as receivers because of their claimed expertise with cryptocurrency, and that KPMG had a technological team which also had expertise in such matters. In communications with Ms Jessica Latimer of ASIC prior to their appointment, either Mr Michael or Mr Lindholm indicated that KPMG had forensic IT support and expertise in dealing with cryptocurrency assets in liquidations and receiverships. Such matters reveal that the receivers were more than capable of looking after their own interests in relation to the subject receivership, and if they were at all concerned about their ability to recover their expenses from the assets under their control, they were capable of negotiating additional security. It is also inconceivable that they would have relied upon the opinions of others when ascertaining the viability of the receiverships for their firm. 82 There was some oblique suggestion by the receivers that they were misled by information provided to them by ASIC, such that they believed that there were substantially more assets available in the receivership than it transpired there were. It was said by the receivers in their submissions that: the financial state of the receiverships is now parlous and bears little resemblance to [the] position which [was] conveyed to the Court (and accorded with the parties' expectations) at the time that the Appointment Orders were made. … 83 To the extent that this submission suggests that ASIC engaged in misleading conduct, there is no substance to it whatsoever. At the time of the receivers' appointment, ASIC was entirely transparent as to the nature of the assets over which the appointment was sought. That included cryptocurrency and it was self-evident that recovering it might be difficult. If that were not apparent to the receivers, as it seems to be now suggested, they were insufficiently skilled for the receiverships and they ought not have accepted the appointment. In truth, the evidence shows that they were provided with the information which ASIC had and, had it been possible to recover all the cryptocurrency that was known about, it would have provided more than sufficient returns. Mr Michael estimated that it would have been $27.5 million. In substance, and assuming that the receivers had the experience which they claimed to have had, it was they who were in the best position to be aware of the processes, the risks, and the costs involved in recovering cryptocurrency. 84 It was also not doubted — indeed it was admitted by the receivers — that it was their inability to recover the cryptocurrency which has resulted in the lack of financial success of the receivership. This was not a case where the assets over which the appointment was made were in doubt or misstated. The cryptocurrency acquired by the defendants existed, but one of the difficulties was that the defendants had ceded control of it to third parties. This, of itself, rendered recovery problematic. In this context, it is relevant that shortly after their appointment, the receivers were informed that the defendants were only able to access a couple of hundred thousand dollars' worth of cryptocurrency at that time, and that the rest of the cryptocurrency was with third parties under commercial agreements. The receivers were aware that this meant that there would be a significant risk that the cryptocurrency would be impossible to recover. That was exacerbated by reason of the fact that the third parties were located in foreign jurisdictions, and were known or believed to be persons who engaged in "scamming" activities in relation to Bitcoin. The receivers were also aware by then that information which was critical to recovering the cryptocurrency had been deleted from the defendants' electronic devices. That ought to have raised additional concerns for the receivers that there may be difficulties in recovering a substantial portion of the cryptocurrency. 85 These matters were confirmed in Mr Michael's third affidavit of 9 June 2022, where he deposed to the difficulties he had encountered in seeking to recover the cryptocurrency following a lack of cooperation by the defendants. He had, however, identified that as at 2 June 2022, cryptocurrency which the defendants previously held and which was valued at $38.06 million had been transferred to unknown third party or external "cryptocurrency wallets". 86 On the basis of the above, by June 2022, there was more than a real chance that the receivers would not be able to recover the cryptocurrency which had been acquired by the defendants and it is likely that they were cognisant of that. Despite that, and without warning ASIC of the risks, they continued to incur expenses and costs in the pursuit of the cryptocurrency. From mid-2022, they engaged in what they said was "particularly complex, technical and time consuming" work, including reconstructing certain cryptocurrency exchange accounts by investigating some 27,000 transactions. They did this, in part, by using "specialist cryptocurrency software to trace transactions through exchanges". Indeed, the evidence indicates that in the period between June 2022 and April 2023, they incurred costs in the sum of $123,176 on work accessing the defendants' devices and accounts, reviewing them and attempting to recover cryptocurrency. This is some of the expenses in respect of which they now seek an indemnity from ASIC. 87 It is to be accepted that Mr Michael and Mr Lindholm were not required to believe what they were told by the defendants about the accessibility of the cryptocurrency. Indeed, their role requires them to be sceptical about such matters. They were correct to take those steps which were reasonably available to them to satisfy themselves about the recoverability of assets. These matters were the subject of Mr Michael's cross-examination in the course of the hearing. In that respect, the steps taken by the receivers until mid-2022 were appropriate and reasonable for the purposes of ascertaining the availability of assets. Indeed, vis-à -vis the defendants, the steps taken after mid-2022 were also reasonable, in that the defendants were not forthcoming with information, and from this distance, it seems that they were doing their best not to assist the receivers in any substantial way. There is no reason why the receivers should not have been persistent in their pursuit of the assets acquired with the funds obtained from those who invested in the defendants' schemes. 88 However, in the context of whether there is any justification for imposing the costs of so doing on ASIC, necessarily different considerations apply. In this respect, it is sufficiently clear that the receivers were aware, or should have been aware, from at least mid-2022, that there was a real risk that the recoveries from the receivership would be limited compared to the total amount of their costs, expenses and remuneration. Certainly, it was possible that they could have recovered a sufficient amount to cover their expenses, as there were outstanding recoveries to be pursued which were not cryptocurrency. That included the realisation of real property and the pursuit of debts through litigation. However, those steps were not certain to generate any, or any substantial, returns to the receivership. Ultimately, it was the receivers who were best positioned to evaluate the risk of there being a shortfall in respect of any expenses they incurred and they were able to take what action they considered appropriate. 89 It can be safely concluded that the receivers were sufficiently aware by mid-2022 of the perils of proceeding further with the receiverships. They were aware of the nature and scope of the property under their control and, in relation to the cryptocurrency, they were aware that almost all of it had been transferred to third parties or, at least, that it was under the control of third parties. They were also aware that cryptocurrency can be easily transferred and that the ability to recover it can be very limited unless one is possessed of all the necessary information. Further, they were aware of the risk that there might be a shortfall in recoveries to meet their expenses. Despite all of that, they were prepared to continue to incur substantial costs and expenses. Importantly, prior to doing so, they did not ask for, or obtain, any indemnity in respect of any shortfall in the recoveries. It was not until November 2022 that they asked ASIC whether it would provide an indemnity in respect of any shortfall. Again, these matters strongly weigh against requiring ASIC to indemnify them in respect of any shortfall. 90 Of course, in circumstances such as the present, the receivers might find themselves in a position whereby they are effectively continuing the receivership for the purposes of hoping to secure the recovery of funds for meeting their own expenses. As ASIC submitted, the evidence in this matter supports the inference that from, at least, November 2022, much of the receivers' work was directed to that objective. From then until April 2023, work in progress of approximately $130,474 accrued on: preparing the present application for remuneration and an indemnity; an application filed by the receivers in December 2022 seeking an order for them to have priority in relation to the realisation of assets; responding to ASIC's concerns about the existence of any benefit for the aggrieved investors in continuing the receiverships; and, finally, on asset recovery. 91 The legal fees and disbursements incurred between late October 2021 and April 2023 were in the order of $600,000. On 1 March 2023, the receivers conceded that the recovery proceedings were then being pursued to create a fund to meet their remuneration, costs and expenses. Again, it is counterintuitive to suggest that ASIC should bear the costs incurred by the receivers in protecting their own interests. 92 Whilst in December 2022, Mr Michael deposed that, for reasons which he identified, the receivers had concluded in the past eight weeks that they "cannot reasonably take into account the prospect of recovering any further Cryptocurrency Assets when considering the financial position of the Receivership", for the reasons identified above it is likely that they were aware of the risks well prior to that and, at least, as early as mid-2022. 93 The receivers suggested that there was some delay in the conduct of investigations by ASIC and that contributed to the increased cost of the receiverships. There is, in fact, no relevant evidence to support that proposition. Whilst it may be that some time was taken for ASIC to gather sufficient information for the purposes of passing it to the prosecuting authorities, that had very little, if anything, to do with the receivers' obligations to gather in the defendants' assets. In addition, when ASIC indicated to the receivers that it intended to finalise the current proceedings by seeking the winding up of A One Multi, they indicated their opposition to that course until such time as the recovery proceedings brought in the name of the company had been completed. Clearly, that stance was solely for the purposes of affording them the opportunity to complete proceedings which might provide them with funds with which to meet their claim for remuneration, costs and expenses. 94 The refusal of the Court to make an order requiring ASIC to indemnify the receivers will not have any chilling effect on the ability of ASIC, or any other regulator, to secure consents from insolvency practitioners to act as receivers. There has been no accepted right to an indemnity to date, and neither the evidence nor experience suggests any general reluctance by practitioners to take appointments as receivers. Indeed, the receivers did so in this case, being aware of the terms of their appointment and despite the absence of any indemnity from ASIC. 95 The evidence also showed that ASIC does not offer indemnities to the receivers whom they seek to appoint, and has not done so previously. Mr Hugh Copley, a long-standing ASIC officer who is well known and well regarded by the Court, deposed to his experience as to the absence of indemnities provided by ASIC and that it did not offer or agree to them, even in cases where it was apparent that there would likely be a shortfall of assets to meet the receivers' costs. It would be surprising if it were not the case that insolvency practitioners will undertake appointments where there is a risk that they will not recover all their expenses as part of developing goodwill. One expects that it is part of the business model of insolvency practitioners that any unrecovered expenses will be made up by the profit derived from other appointments. Experience reveals this to be the case in relation to liquidations. 96 It should also be noted that this is not a case where there were few assets in the receivership. The evidence shows that the receivers have realised almost $3.5 million from the assets under their control. From that they have paid $718,458 to secured creditors, $600,778 in respect of their legal fees and disbursements, and $850,427 to themselves in fees. It may be that there will be a shortfall, but that does not arise from the mere absence of assets under their control. It arises from the amount which they have expended in the course of the receiverships, and the manner in which they have been conducted. Whether the original order was properly made 97 As has been mentioned, the receivers often obliquely suggested that the original order for indemnity was not properly made. Though they were reluctant to advance that submission directly, that was frequently the necessarily tacit allegation. An example of this appears in their submissions to the effect that, as ASIC will no longer pursue the defendants civilly, it has not been established that the original order concerned such serious conduct that the indemnity should have been from the defendants' assets. 98 Submissions of that nature are misguided. In the first instance, the evidence before the Court at the time of the making of the initial orders was substantial and revealed serious wrongdoing on the part of the defendants. That has not changed and, it should be observed, at no time did the defendants seek to challenge any of the evidence on which the original orders were made, despite being entitled to do so. The fact that ASIC will not undertake litigation which is most unlikely to bear any fruit for the benefit of the investors, does not suggest that the allegations about the defendants' conduct were not valid. Rather it is indicative of prudence on ASIC's part in not expending substantial sums pursuing claims which, though they are likely to be successful before the Court, will be pyrrhic in any event. The initial orders made stand, and no attempt has been made to vary them or set them aside. They were made on the cogent and substantial material before the Court which justified their making. There is not a skerrick of evidence that counters the existing evidence which reveals the seriousness of the defendants' conduct, and there is no reason why the original orders should be revisited. 99 Though the receivers suggested that the course adopted by ASIC would have the result that the recovery of their remuneration, costs and expenses would be contingent upon ASIC establishing improper conduct on the part of the defendants, that is not the case. Their right of indemnity exists under the appointment orders and are unaffected by ASIC's pursuit or otherwise of action against the defendants. The receivers did not point to any assets from which the defendants would satisfy any judgment were they to be successfully sued by ASIC. Conclusion on the indemnity 100 There is no warrant for the Court to impose upon ASIC an obligation to indemnify the receivers in relation to any remuneration, costs or expenses which they are not able to recover from the realisation of the assets under their control. The foregoing analysis strongly reveals that the circumstances of this case all point away from that conclusion. In fact, there was no relevant consideration that warrants the making of the order sought by the receivers. All considerations point inexorably to the receivers being left to the indemnity with which they were originally provided. 101 It follows that the application for an order that ASIC provide an indemnity to the receivers should be dismissed. Costs 102 A substantial part of the application's hearing was taken up with the question of whether ASIC should provide an indemnity to the receivers. ASIC did not oppose their application for orders for approval of their costs, expenses and remuneration, and it was only lightly touched upon in the course of oral addresses. 103 In the circumstances, the "event" — being the issue of whether an indemnity should be provided — went in ASIC's favour, and there is no reason why the receivers should not pay its costs of the application. 104 In the ordinary course, the receivers are entitled to recover their costs of this application from the assets of the defendant. I certify that the preceding one hundred and four (104) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Derrington. Associate: Dated: 18 December 2024