Background
ASIC commenced enforcement proceedings against ALAMMC Developments Pty Ltd and related entities, obtaining freezing orders and ultimately appointing receivers to the property of multiple defendants. The 14th and 15th defendants — David George McWilliams and Laura Mary Fullarton, husband and wife — had receivers appointed to their personal property in October 2024. ASIC subsequently charged McWilliams with five counts of contempt for alleged breaches of freezing and disclosure orders, and charged Fullarton with one count of contempt for alleged breaches of the freezing orders relating to withdrawals from bank accounts.
Given the seriousness of the contempt charges, the Court had previously made funding orders requiring the receivers to pay money into Court from receivership proceeds to cover the defendants’ legal defence costs. Those orders, made in February and varied in March 2026, resulted in a total of $102,350 (inclusive of GST) being paid into Court — the amount against which solicitor and counsel fees were to be assessed by a Registrar at the relevant Federal Court scale.
On 21 May 2026, the defendants applied for a further $96,496.35 (inclusive of GST) from receivership proceeds and also sought leave for their solicitors, Stone Group Lawyers, to lodge a second interim bill of costs prior to the contempt hearing. The application was opposed by both ASIC and the receivers. The contempt hearing, originally listed for one day, had been relisted for 15 June 2026 with five days set aside following the vacation of earlier hearing dates and the filing of an amended statement of charge.
The Court’s Holding
O’Sullivan J dismissed both applications. The central flaw in the defendants’ case was that their interim bill of costs — totalling $89,306.25 (inclusive of GST) — had been calculated in accordance with the private costs agreement between McWilliams, Fullarton, and Stone Group Lawyers, not at the relevant Federal Court scale as expressly required by the Court’s orders of 24 March 2026. The Court accepted ASIC’s submission that when properly calculated at scale, those costs (including counsel fees) were likely to be in the order of $50,000 (inclusive of GST).
Applying the same scale-based analysis to the further costs anticipated, the Court reduced the defendants’ claimed additional solicitor fees from approximately $62,700 to roughly $30,000 (inclusive of GST) by discounting items unsupported by adequate explanation, removing amounts for contingencies that had not arisen, and recalibrating the estimate to a three-day (not five-day) hearing. Counsel’s additional fees were assessed at a midpoint of the quoted range and calculated over three days, yielding approximately $15,900 (inclusive of GST).
Adding the estimated future costs ($46,000 inclusive of GST) to the scale-assessed amount of the existing bill ($50,000 inclusive of GST) produced a total of approximately $96,000 — a figure that remained below the $102,350 already paid into Court by the receivers. Because the funds already held were sufficient to cover the properly assessed costs, there was no basis to order additional funding. The application for leave to file a second interim bill of costs prior to the hearing was likewise dismissed.
Key Takeaways
- Defendants in receivership who seek court-ordered funding for legal defence costs will have those costs assessed at the applicable court scale, not under any private costs agreement with their solicitors — and a bill prepared on the wrong basis will be discounted accordingly.
- Estimates for additional funding must be grounded in the realistic scope of the proceedings; the Court will scrutinise claimed items, disallow unsupported or speculative entries, and recalibrate to the actual expected hearing length.
- Where the funds already paid into Court are sufficient to cover properly scaled costs, a further funding order will be refused even if the defendants’ own cost agreements would generate a higher liability.
- The Court distinguished between the private contractual obligations between clients and their solicitors (governed by the costs agreement) and the amounts recoverable from receivership proceeds (governed by the court scale and court orders).
Why It Matters
This decision reinforces that court-ordered funding from receivership assets is tightly controlled and tied to court-scale rates, not the commercial rates that lawyers and clients freely negotiate. Practitioners acting for defendants in receivership must calculate and present bills in accordance with whatever basis the court has specified — submitting a bill on a different footing risks the entire estimate being recast at a lower figure, potentially undermining any further funding application.
The case also illustrates the practical tension between a defendant’s right to mount a proper defence to serious contempt charges and the interests of creditors whose recoveries are diminished by every dollar paid from receivership funds. Courts will scrutinise both the quantum and the basis of cost claims carefully before authorising further disbursements from those funds.