Federal Court of Australia

Malone v B&M Aboriginal Corporation (In Administration) [2025] FCAFC 24

ORDERS

THE COURT ORDERS THAT:

1.    Leave to appeal be granted.

2.    The appeal be allowed.

3.    Orders 2, 3, 5 and 6 of the orders of the Court made on 26 February 2024 in QUD 334 of 2018 be set aside.

4.    The interlocutory application dated 1 December 2023 filed on behalf of the respondent be dismissed.

5.    Paragraphs 3 to 7 of the interlocutory application dated 9 February 2024 filed on behalf of the applicants be remitted to the primary judge for further hearing and determination in accordance with the reasons of this Court.

6.    Within 14 days of the date of these orders, each party file and serve a written submission with respect to the costs of the appeal limited to 3 pages.

7.    The question of the costs of the appeal be determined on the papers.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

O’BRYAN AND HALLEY JJ:

Introduction

1    This proceeding is an application for leave to appeal and, if leave is granted, to appeal a judgment of the Court given on 26 February 2024 in QGC Pty Limited v Alberts (No 5) [2024] FCA 139 (the primary judgement or PJ).

2    The primary judgement concerns a dispute with respect to the entitlement to receive funds payable by QGC Pty Limited (QGC) pursuant to the terms of an Indigenous Land Use Agreement (ILUA) registered as QI2010/006 on 22 December 2010 on the Register of Indigenous Land Use Agreements under s 199B of the Native Title Act 1993 (Cth) (Native Title Act). The parties to the ILUA are QGC and “one representative of each of the Warner, Daylight, Bundi, Davis, Jerome, Darlo(w), Williams, Waddy, Queary (Cressbrook), Henry and Watcho/Barney families” (who are collectively referred to in the ILUA as the “Native Title Party”). The expression “Families” is defined in the ILUA to mean the afore-mentioned 11 families, and that definition is adopted in these reasons. More specifically, the dispute concerns that proportion of the funds payable for the benefit of the Daylight family (being one eleventh of the funds payable). The funds payable by QGC pursuant to the terms of the ILUA are defined as the “Financial Benefits” and that definition is also adopted in these reasons.

3    The applicants are individual members of the Daylight family and the Daylight United Aboriginal Corporation (ICN 10168) (DUAC). The respondent, B&M Aboriginal Corporation (ICN 9678) (BMAC), is a company originally established on 2 February 2022 under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act) as the “Nominated Entity” to hold, for the Daylight family, that proportion of the Financial Benefits payable under the ILUA for the benefit of the Daylight family. On 14 September 2023, BMAC was placed into voluntary administration prior to receipt of any Financial Benefits payable under the ILUA.

4    The dispute has a lengthy history, aspects of which are recorded in several judgments of Rares J: Conlon v QGC Pty Limited (No 2) [2017] FCA 1641; 359 ALR 460 (Conlon); QGC Pty Limited v Alberts [2020] FCA 1869 (QGC No 1); QGC Pty Limited v Alberts (No 2) [2021] FCA 540 (QGC No 2); QGC Pty Ltd v Alberts (No 3) [2022] FCA 141; 404 ALR 493 (QGC No 3); and QGC Pty Limited v Alberts (No 4) [2022] FCA 1590 (QGC No 4). In order to resolve the dispute, it will be necessary to trace the origins of the dispute through its history. Some aspects of the history, and the behaviour of individuals involved in the dispute, are troubling. The key events in that history can be summarised as follows:

(a)    In late 2010, the ILUA was registered and a company called BCJWY Aboriginal Society Limited (BCJWY) was designated as the Nominated Entity under the ILUA to hold and distribute the Financial Benefits payable by QGC under the ILUA for the benefit of the Families.

(b)    In about 2016, a dispute arose between the Families and BCJWY. As a result of that dispute, QGC commenced an interpleader proceeding under Part 18 of the Federal Court Rules 2011 (Cth) (Rules) to determine the persons or entities to whom the Financial Benefits payable under the ILUA should be paid. As an interim measure, QGC obtained orders to pay the Financial Benefits then due under the ILUA into Court. BCJWY subsequently went into administration and later liquidation. In QGC No 2, Rares J found that the ILUA permitted multiple Nominated Entities to hold and distribute the Financial Benefits payable by QGC for the Families and made orders facilitating the appointment of a Nominated Entity on behalf of each Family.

(c)    During 2022, BMAC was established as the Nominated Entity on behalf of the Daylight family. However, from February 2023, and before any Financial Benefits were distributed from the funds held in Court, a dispute arose between the directors of BMAC. Three of the directors (Ian Brown, Grace Munro and Sharmaine Dodd) purported to make decisions in the absence of three other directors (Margaret Hornagold, Christine Malone and Dorothy Daylight), and a dispute arose with respect to the control of BMAC’s bank account. Ian Brown, Grace Munro and Sharmaine Dodd purported to appoint Jovan Sarai of Safe Harbour Lawyers as the legal representative of BMAC. Mr Sarai, purporting to represent BMAC, applied to the Court for the distribution of the funds in Court held for the benefit of the Daylight family. A number of hearings occurred, first before Meagher J, and second before Rares J. On each occasion, the Court refused to release funds to BMAC by reason of the internal management dispute.

(d)    In September 2023, BMAC placed itself into voluntary administration, declaring that it was insolvent because it was unable to pay a debt it purportedly owed to Mr Sarai in the amount of approximately $60,000. Mr Gleeson of Jones Partners was appointed as administrator (the Administrator). After his appointment, the Administrator filed an interlocutory application in the Court seeking an order for the distribution of the funds held by the Court for the benefit of the Daylight family in his capacity as administrator of BMAC. Subsequently, the applicants filed an interlocutory application seeking the dismissal of the Administrator’s interlocutory application.

5    On 26 February 2024, the primary judge granted the Administrator’s application, dismissed the applicants’ application, and made an order that the funds held by the Court for the benefit of the Daylight family plus any interest accrued thereon be paid to the Administrator in his capacity as voluntary administrator of BMAC.

6    On 13 March 2024, the applicants filed an application for leave to appeal against that decision. The applicants also sought a stay of the orders made by the primary judge pending the hearing and determination of the application for leave to appeal and any appeal. The stay was granted by the Court on 18 March 2024: see Malone v B&M Aboriginal Corporation (in Administration) [2024] FCA 270 (Malone). At that time, the Court also made orders that the application for leave to appeal, and the appeal if leave is granted, be heard concurrently.

7    On 26 June 2024, the applicants applied for leave to amend their draft notice of appeal. That application was not opposed by the Administrator and leave was granted at the commencement of the hearing.

8    As observed by Logan J in Malone, the grounds of appeal are prolix and unnecessarily so. The central ground of appeal can be stated relatively simply. The applicants challenge the conclusion reached by the primary judge (at PJ [15]) that, by the time BMAC was placed in administration on 14 September 2023, its entitlement to receive payment of that proportion of the funds which had been paid into Court and was for the benefit of the Daylight family had crystallised and those funds were the property of BMAC. The applicants contend that no entitlement to receive the funds arose before BMAC was placed into administration, and no entitlement could arise after it was placed into administration.

9    At the commencement of the hearing of the appeal, counsel for BMAC complained that the appeal book contained evidence that, whilst filed in earlier applications in the proceeding, was not before the primary judge. It is unsatisfactory for a party to wait until the commencement of an appeal hearing before raising such a complaint. In the end, BMAC did not press any formal objection to the evidence that had been included in the appeal book. The Court informed the parties that it would treat the evidence in the appeal book as being evidence on the application for leave to appeal and on the appeal in so far as the evidence had been referred to in the parties’ submissions.

10    The parties’ submissions did not address the questions whether leave to appeal from the decision of the primary judge is required and, if it is, leave should be granted. BMAC did not oppose the grant of leave to appeal if leave is required. In those circumstances, it is unnecessary for the Court to delay on the issue of leave. We incline to the view that the decision of the primary judge was final in character, and therefore leave to appeal is not required. If we are wrong in that assessment and leave is required, we would grant leave for the reason that the decision raises an important question relating to the distribution of funds payable to a native title party under a registered indigenous land use agreement and the applicants have raised arguable grounds of appeal. We consider that substantial injustice would result if leave were refused, supposing the decision to be wrong. In the remainder of these reasons, we will refer to this proceeding as an appeal.

11    For the reasons explained below, the appeal should be allowed. Respectfully, and contrary to the conclusion reached by the primary judge, prior to being placed into administration BMAC never became entitled to receive payment of that proportion of the funds which had been paid into Court and was for the benefit of the Daylight family. After BMAC was placed into administration, BMAC was contractually prohibited from receiving payment of those funds.

12    The draft notice of appeal also challenges the decision of the primary judge on the ground that the applicants were denied procedural fairness. The applicants complain that, at the hearing before the primary judge, BMAC provided a court book to the primary judge which was not provided to the applicants (who were appearing at the hearing remotely). The applicants contend that the court book was not prepared in consultation with the applicants and did not contain all relevant material. The applicants submitted that, although they raised those matters before the primary judge, her Honour proceeded to hear the matter. As the appeal should be allowed on the central ground raised by the applicants, it is not necessary to decide the procedural fairness ground of appeal. It should also be recorded that, on the appeal, the applicants had not placed before this Court the required evidentiary materials to determine the procedural fairness ground. The Court would have required evidence of the procedural orders made on the applications below and the steps taken by the parties to prepare the applications for hearing. None of those materials were before the Court.

The ILUA

13    The terms of the ILUA have been the subject of consideration in the earlier decisions of Rares J referred to above: Conlon, QGC No 1, QGC No 2, QGC No 3 and QGC No 4. It will be convenient to refer to certain of the findings made by Rares J in those earlier decisions, which are not in dispute.

14    As stated earlier, the parties to the ILUA are identified as QGC and one representative of each of the Warner, Daylight, Bundi, Davis, Jerome, Darlo(w), Williams, Waddy, Queary (Cressbrook), Henry and Watcho/Barney families. The recitals to the ILUA state that QGC is an explorer and producer of petroleum in Queensland.

15    In Conlon (at [4]), Rares J described the purpose of the ILUA in the following terms:

The ILUA had the purpose of enabling QGC to pursue, among others, its project to develop gas fields and associated infrastructure in the area of land and waters that it covered (the ILUA area), while conferring substantial financial benefits on persons who claimed to hold native title in that area.

16    Rares J noted (Conlon (at [16])) that it was common ground that the ILUA was:

(a)    made at an authorisation meeting in Toowoomba on 13 March 2010;

(b)    lodged for registration on 30 November 2010; and

(c)    registered on 22 December 2010.

17    His Honour further observed that it was common ground that the ILUA was an area agreement covered by Div 3 of Pt 2 of the Native Title Act. An area agreement is an indigenous land use agreement where there is no registered native title body corporate in respect of the area the subject of the agreement (see s 24CC). In respect of such an agreement, s 24CD(1) stipulates that all members of the “native title group” (which expression is defined in subss (2) and (3)) in relation to the relevant area must be parties to the agreement. Subsection 24CD(2) applies if there is a registered native title claimant or a registered native title body corporate in relation to the relevant area, and subs 24CD(3) otherwise applies. Under subs 24CD(3), the native title group consists of any person who claims to hold native title in relation to the relevant area and any representative Aboriginal/Torres Strait Islander body for the relevant area.

18    Section 24EA is titled “Contractual effect of registered agreement” and states, in subs (1):

While details of an agreement are entered on the Register of Indigenous Land Use Agreements, the agreement has effect, in addition to any effect that it may have apart from this subsection, as if:

(a)     it were a contract among the parties to the agreement; and

(b)     all persons holding native title in relation to any of the land or waters in the area covered by the agreement, who are not already parties to the agreement, were bound by the agreement in the same way as the registered native title bodies corporate, or the native title group, as the case may be.

19    In its recitals and operative provisions, the ILUA refers to the Native Title Party and also to the “Native Title Group”. The latter expression is defined as “those people who hold or may hold Native Title in the ILUA Area”. Many of the provisions of the ILUA are stated to apply to both the Native Title Party and the Native Title Group. We infer that, in so far as the parties seek to bind members of the Native Title Group who are not within the definition of Native Title Party, reliance is placed on the effect of s 24EA.

20    Under cl 5 of the ILUA, the Native Title Party and the Native Title Group consent to the doing of certain specified acts by or on behalf of QGC within the ILUA Area in relation to the Project, which is defined as the exploration, planning, construction, operation, maintenance and ultimate decommissioning and rehabilitation of identified gas fields. Under cl 7, QGC and the Native Title Party agree to work cooperatively for the conduct of the Project.

21    Under cl 9(1) of the ILUA, QGC agreed to provide the Benefits, which are defined to mean the Financial Benefits and other benefits set out in Annexure 3 and Annexure 4. The expression “Financial Benefits” is separately defined to mean the benefits set out in Annexure 3.

22    Clause 9(b) of the ILUA stipulates that:

The Native Title Party agrees, on their behalf and on behalf of the Native Title Group, that the Benefits provided under this Agreement are:

(i)    in full and final satisfaction of any entitlement to Compensation; and

(ii)    for the benefit of the Native Title Party and members of the Native Title Group.

23    The expression “Compensation” is defined to mean any compensation (monetary or otherwise) payable to the Native Title Party and the Native Title Group and arising from the Project Rights. “Project Rights” is defined to mean any grant, variation, extension or renewal of any Tenements, authorisation, lease, licence, permit, approval, certificate, consent, direction or notice which is necessary or desirable for the undertaking of the Project.

24    Annexure 3 to the ILUA is titled “Financial Benefits”. It contains three clauses. Clauses 1 and 2 concern the nomination of an entity to hold the Financial Benefits provided for the Families under the ILUA. Clause 3 concerns the quantum of the Financial Benefits to be paid by QGC. It is necessary to refer to the detail of cll 1 and 2, which are as follows:

1     Nominated Entity

1.1     The Parties agree to establish the Nominated Entity to be used for the purposes of holding the Financial Benefits provided under this Agreement for the Families.

1.2     The Nominated Entity must be an entity created at law and must be either:

(a)    an incorporated body:

(i)    whose membership or shareholding is restricted by its constitution to members of the Families;

(ii)    which is not in administration, receivership or liquidation under any laws applicable to the incorporated body;

(iii)    which the Native Title Party has agreed is a Nominated Entity for the purposes of this Agreement; and

(iv)     which exists at the date of this Agreement or is established by the Families for the purposes of this Agreement; or for the benefit of the Families, whether as a fixed trust or charitable trust;

(b)    a trust:

(i)    for the benefit of the Families, whether as a fixed trust or charitable trust;

(ii)    the trustee of which, as a natural person, is not an undischarged bankrupt, or, as an incorporated body:

(A)     is not in administration, receivership or liquidation under any applicable laws; and

(B)     whose membership or shareholding is restricted by its constitution to members of the Families;

(iii)     which the Native Title Party have agreed is a Nominated Entity for the purposes of this Agreement; and

(iv)     which exists at the date of this Agreement or is established by the Families for the purposes of this Agreement.

2     Nomination of the Nominated Entity

2.1     As soon as practicable after the later of:

(a)     the Authorisation Date; or

(b)     the establishment of the Nominated Entity, if there is no Nominated Entity at the Authorisation Date;

the Native Title Party, on behalf of the Families, must notify QGC in writing of the name and address of the Nominated Entity.

2.2     Once the Nominated Entity has been established and all signatories to this Agreement have provided written notice and direction to transfer the Benefits to the Nominated Entity, QGC will transfer the Benefits to the Nominated Entity in accordance with this Annexure and this Agreement.

2.3     In the event that the Nominated Entity has not been established by 31 December 2010 and provided the Registration Date has passed by that date, the Parties agree that the Financial Benefits will be transferred to Gadens Lawyers’ trust account to be held on trust in accordance with the terms of this Agreement.

25    Relevantly, cl 3.1 of Annexure 3 stipulated that QGC would pay the following amounts:

(a)    $1 million on the Authorisation Date (defined to mean the date of authorisation and execution by the last of the parties to the ILUA);

(b)    $1 million on the Registration Date (defined to mean the date of registration of the ILUA); and

(c)    ten annual payments of $350,000, with the first payment to be made on the QCLNG Commissioning Date (defined to mean the date on which gas from QCLNG (the Queensland Curtis liquefied natural gas (LNG) project) is first shipped from the LNG facility on Curtis Island) and subsequent payments to be made on the anniversary of that date.

Payments of the Financial Benefits into Court and replacement of the Nominated Entity

26    It is not in dispute that, following the registration of the ILUA, the Native Title Party nominated BCJWY to be the Nominated Entity pursuant to cl 2.1 of Annexure 3 to the ILUA and that QGC paid to BCJWY the initial Financial Benefit of $2 million and the first and second annual payments (being in respect of the 2015 and 2016 years).

27    On 22 June 2018, QGC commenced an interpleader proceeding by way of originating application issued under Part 18 of the Rules. An interpleader is a procedure by which a person, faced with conflicting claims in respect of a debt or personal property not claimed to be owned by them, can be protected from the uncertainty and expense of dealing with separate legal proceedings brought by the respective claimants by asking the Court to resolve, as between the claimants, their entitlement to payment or to the property: see Grogan v Orr [2001] NSWCA 114 at [27]. By its originating application, QGC sought an order that unpaid and future Financial Benefits payable by QGC under the ILUA be paid into Court.

28    The interpleader proceeding was given the file number QUD334/2018 and is the proceeding from which the current appeal has been made.

29    On 25 June 2018, Rares J made an order that unpaid and future Financial Benefits payable by QGC under the ILUA be paid into Court pursuant to rr 18.01 and 18.03 of the Rules. Shortly thereafter, QGC paid the third, fourth and fifth annual payments (being in respect of the 2017, 2018 and 2019 years) into Court.

30    On 29 April 2021, Rares J delivered an initial judgment in the interpleader proceeding in QGC No 2. In that judgment, his Honour summarised the background to the proceeding as follows (at [12]):

In 2011, the native title party nominated the twelfth respondent, BCJWY Aboriginal Society Ltd (now in liquidation), as the “nominated entity” under the ILUA. The nominated entity was to receive from QGC and distribute over the course of 10 years substantial amounts of compensation. However, BCJWY does not appear always to have acted in a financially transparent or appropriate way, and eventually lost the confidence of, at least, a majority of the families. It was placed in administration on 2 March 2019, and on 5 July 2019 in liquidation. That left QGC in the quandary of having no person to whom the ILUA authorised it to pay the annual compensation benefits, resulting in it commencing this proceeding and paying what will shortly total over $1.5 million into Court in an interpleader action.

31    As found by Rares J in the above passage, BCJWY was placed into administration on 2 March 2019. In evidence before his Honour was a list of creditors of BCJWY as at 29 March 2019, totalling $383,000. The largest creditor was Ian Brown (a member of the Daylight family) who claimed to be owed $245,000 in respect of wages.

32    In QGC No 2, Rares J concluded (at [66]-[67]) that the ILUA contained an implied term governing the circumstance that the Nominated Entity ceased to be capable of acting in accordance with cl 1.2 of Annexure 3. His Honour formulated the implied term as the addition of the following words at the end of cl 2.1(b) of Annexure 3:

…or, if at any time thereafter, the nominated entity for any reason has ceased to be capable of acting in accordance with clause 1.2.

33    In concluding that such a term should be implied, Rares J explained (at [65]):

Here, the parties could not have intended a construction of the ILUA that resulted in it being impossible to replace an existing corporate or trustee nominated entity where it ceased to have the attributes prescribed for it in cl 1.2 of annexure 3. Rather, the intention of the parties was that there be at all times a nominated entity, being either a corporation or trust, that would be able to distribute the financial benefits, that QGC had agreed to pay over the term of 10 years, to, or for the benefit of, the families, because that is what cl 1.1 of annexure 3 provides.

34    His Honour also accepted an argument advanced by QGC that, upon its proper construction, the ILUA permitted the nomination of more than one Nominated Entity, and specifically permitted each of the Families to nominate an entity to receive and hold their proportionate share of the Financial Benefits payable under the ILUA. In that connection, his Honour observed (at [73]):

The importance of allowing all of the persons within the definition of “families” to participate in the process for establishment of the nominated entity, as evinced in annexure 3 of the ILUA, cannot be understated. It prevents particular persons who have other powers under the ILUA dominating that process or constituting a company that will be used ultimately to cause money paid by QGC for the benefit of the families to be paid to a narrower class. It is well-known in the area of native title that, not infrequently, persons obtain positions of power in a claim group, through ILUAs or prescribed bodies corporate, and then misuse that power to siphon off for their own benefit large amounts of money intended for, or to benefit, members of claim groups as a whole. Indeed, one of the issues with the demise of BCJWY was whether such impropriety, in fact, happened in its case. There is some suggestion that there may have been individuals, including ones with no apparent connection to the families or the claim groups, acting in that way, but it is not necessary to make any findings about that possibility in these reasons.

35    On delivering judgment on 29 April 2021, Rares J made two orders. The first was a declaration concerning the implied term of the ILUA set out above. The second order required the parties to formulate orders to facilitate meetings of the Families for the purpose of establishing one or more Nominated Entities under Annexure 3 to the ILUA to replace BCJWY.

36    It is also relevant to note that, in his judgment in QGC No 2, Rares J explained the basis on which the Court was holding the monies that had been paid into Court by QGC (at [80]):

In my opinion, the money currently held in the Court is held on trust for the person or persons that the Court finds beneficially entitled to receive it based on the outcome of the proceeding (cf Harmer v Federal Commissioner of Taxation 173 CLR 264 at 272–273, per Mason CJ, Deane, Dawson, Toohey and McHugh JJ). Once that occurs, the money will need to be paid ultimately to, or at the direction of, the persons beneficially entitled, which are likely to be the families as provided in cl 1.1 of the ILUA. …

37    On 28 May 2021, Rares J made further orders including, relevantly:

(a)    that the sixth and seventh annual payments (being for the 2020 and 2021 years) payable by QGC under clause 3.1(c) of Annexure 3 of the ILUA be paid into Court pursuant to rr 18.01 and 18.03 of the Rules;

(b)    the proceeding be referred to the National Native Title Tribunal (NNTT) for the purpose of the NNTT and Queensland South Native Title Services Limited (QSNTS) assisting the Families to establish one or more Nominated Entities under Annexure 3 of the ILUA to replace BCJWY; and

(c)    that the process for the Families to establish one or more Nominated Entities include the steps set out in the annexure to the order.

38    The annexure to the order set out a series of steps to be taken by each Family to convene meetings of the members of each Family and to prepare relevant documentation and establish a Nominated Entity for each Family. It also included steps for QGC and the Native Title Party to convene meetings of the Native Title Party, or request a written notification from the Native Title Party, for the purpose of notifying the names and addresses of the Nominated Entities and for all ILUA signatories to provide written notice and direction for the transfer of Financial Benefits to each Nominated Entity.

39    The orders made on 28 May 2021 came to be called the “entity establishment orders”.

40    The entity establishment orders were varied by Rares J on a number of occasions, including on 27 July 2021, 26 August 2021, 30 August 2021 and 20 September 2021.

41    On 18 September 2021, a representative of the NNTT facilitated the conduct of a meeting of the Daylight family. The meeting was conducted in two locations, Brisbane and Gympie, which reflected two sections of the family. At the meeting, all resolutions were passed, including that:

(a)    the Daylight family would nominate an entity for the purposes of receiving and managing the benefits payable under the ILUA;

(b)    the entity would be a company incorporated under the CATSI Act whose membership is restricted by its constitution to members of the Family; and

(c)    the Daylight family nominated the following 6 persons to prepare the necessary documentation to establish the entity and to be the initial directors (and if necessary, members) of the entity: Ian Brown, Grace Munro, Sharmaine Dodd, Margaret Hornagold, Christine Malone and Dorothy Daylight.

42    On 2 February 2022, BMAC was registered with the above-named persons as its initial directors.

43    On 3 February 2022, Rares J resolved a dispute concerning the validity of a meeting of the Williams family convened to approve a Nominated Entity, declaring that the meeting was invalid: QGC No 3.

44    A further hearing was conducted before Rares J in July 2022, with his Honour delivering judgment on 23 December 2022 in QGC No 4. In that judgment, his Honour resolved four issues (summarised at [15]) that had arisen for determination including, relevantly, whether each of the 11 Families had complied with the entity establishment orders. On that issue, his Honour concluded (at 34]):

At the time of the hearing, eight of the nominated entities had yet to give QGC details of any bank account to enable it to pay directly to such an account their shares of the amounts held in Court or due in the future. That was because most of those nominated entities had not then established a bank account. Once each nominated entity gives QGC the bank account details, all of the nominated entities will have complied with the entity establishment orders.

45    It is apparent from the foregoing that his Honour considered that a Family would not have complied with the entity establishment orders made by his Honour until the Family’s Nominated Entity had given QGC its bank account details for the payment of funds out of Court.

46    On 23 December 2022, Rares J made an order requiring the parties to confer with respect to the orders that should be made consequent upon his Honour’s decision in QGC No 4.

47    Following the conferral, Rares J made the following orders on 3 February 2023 (which will be referred to as the “distribution orders”):

1.     It be declared that Trevor Hauff Lawyers has an equitable right to be paid the sum of $299,384.18 out of the funds paid into Court by the applicant before any other distribution of those funds, being for solicitor/client costs as certified in the certificate of taxation issued by the Registrar on 25 July 2022.

2.     The applicant pay the 2022 and 2023 annual payment required under clause 3.1(c) of the Indigenous Land Use Agreement included on the register of the National Native Title Tribunal as QI2010/006 (ILUA) into Court on or before 8 February 2023.

3.     The funds paid into Court by the applicant plus any interest accrued from the funds being held by the Court be distributed by the Court through the process set out in Order 4 to the entities noted below as follows:

a)     first, $299,384.18 be paid to Trevor Hauff Lawyers, being for solicitor/client costs as certified in the certificate of taxation issued by the Registrar on 25 July 2022; and

b)     secondly, the balance be distributed by payment in 11 equal shares to each of the following entities:

…

iv)     B&M Aboriginal Corporation ICN 9678;

…

4.     The distribution of funds pursuant to order 3 occur:

a)     on 14 February 2023 for each entity that has provided the Court with written notice of its bank account details prior to that date; or

b)     within 3 days of any entity notifying the Court of its bank account details if such details are not otherwise notified to the Court in writing prior to 14 February 2023.

5.     Subject to each entity listed in order 3(b) continuing to meet the requirements for being a Nominated Entity in accordance with the ILUA, the remaining payments to be made by the applicant in accordance with the terms of the ILUA, be paid by the applicant in 11 equal shares to the respective bank accounts of those entities as notified to the applicant as and when they become due.

48    Four aspects of the distribution orders are significant to the disposition of this appeal.

49    First, order 2 required QGC to pay into Court the 2022 and 2023 annual payments due under the ILUA, being payments eight and nine (of the ten annual payments agreed to be made by QGC under the ILUA). On compliance with that order, the payments into Court comprised the third to ninth annual payments, and only the tenth annual payment was outstanding.

50    Second, order 3 required the funds paid into Court by QGC (being the third to ninth annual payments) plus any interest accrued on the funds to be distributed by the Court in 11 equal shares to the 11 Nominated Entities listed in the order through the process set out in order 4. One of those entities was BMAC.

51    Third, order 4 stipulated that the distribution of funds would occur on 14 February 2023 for each entity that had provided the Court with written notice of its bank account details prior to that date. Otherwise, distribution would occur within 3 days of an entity notifying the Court of its bank account details.

52    Fourth, order 5 stipulated that the remaining payments to be made by QGC under the ILUA (which, as at that date, was the tenth annual payment) would be paid in 11 equal shares directly to the bank accounts of the 11 Nominated Entities, provided each entity continued to meet the requirements for being a Nominated Entity in accordance with the ILUA.

53    The evidence showed that, as at 7 February 2023 and following the payment into Court of the 2022 and 2023 annual payments, the amounts paid into Court totalled $2,708,069.81. After deducting the amount of $299,384.18 payable to Trevor Hauff Lawyers, the amount payable to each of the 11 Families from the funds in Court was $218,971.42.

54    It is relevant to note one further matter arising from the reasons of Rares J in QGC No 4. At [14], his Honour stated that the parties had adduced evidence of compliance with the entity establishment orders by each of the 11 Families and that: “As at the date of the next hearing on 27 July 2022, the position of each family’s compliance with the entity establishment orders was as set out in the table below”. The table that followed that sentence identified for each of the 11 Families:

(a)    the relevant signatory to the ILUA that represented the Family;

(b)    the name of the entity that had been established to be the Nominated Entity for the Family;

(c)    whether the Family had complied with the step in the entity establishment orders of nominating the entity; and

(d)    whether the Nominated Entity for each Family had complied with the step in the entity establishment orders of providing bank account details for the payment of funds out of Court.

55    The table showed that all Families except one had complied with the step in the entity establishment orders of nominating an entity, and that 6 out of 11 Nominated Entities (including BMAC) had complied with the step in the entity establishment orders of providing bank account details for the payment of funds out of Court. However, later in the reasons at [34] (in the passage set out earlier), Rares J found that, as at the date of the hearing, 8 of the Nominated Entities had yet to give QGC details of any bank account. At the hearing of the appeal, there was some dispute between the parties whether BMAC had ever provided bank account details for payment of the funds out of Court. Counsel for BMAC accepted that there was an apparent inconsistency between [14] and [34] of the reasons of Rares J in QGC No 4. Reading the two paragraphs together, it seems likely that, at [14], his Honour was merely recording the position put by the parties to the proceeding, whereas at [34], his Honour was making a finding. The upshot is that there is no clear finding in that decision that BMAC had provided bank account details to QGC (or to the Court). Certainly, on the appeal, BMAC did not point to any documentary evidence establishing that that step had been taken by BMAC.

BMAC internal management dispute

BMAC Rule Book

56    The internal governance rules applicable to BMAC are contained in its Rule Book.

57    Section 3 of the Rule Book concerns the membership of BMAC and relevantly stipulates as follows:

(a)    (r 3.1) A member must be at least 18 years old and an Aboriginal person who is a descendant of the family of Billy Daylight or Matilda Daylight from within the defined area of the ILUA.

(b)    (r 3.7) A person stops being a member if: they resign in writing; they pass away; or their membership is cancelled in accordance with rr 3.8 or 3.9.

(c)    (r 3.8) A person’s membership can be cancelled by members passing a special resolution at a general meeting if the member: can’t be contacted for two years; misbehaves; or is not an Aboriginal or Torres Strait Islander person (if this is a requirement for membership).

(d)    (r 3.9) A person’s membership can be cancelled by the directors passing a resolution at a directors’ meeting if the member is not or stops being eligible for membership as set out in r 3.1. To do this, the directors must: write to the member to tell them the directors are going to cancel their membership and the member has 14 days to object to the planned cancellation; and allow the member 14 days to object in writing to the intended cancellation. If the member does not object, the directors must cancel the membership by passing a resolution at a directors’ meeting. If the member objects, the directors cannot cancel the membership. The membership can only be cancelled by members passing a resolution at a general meeting.

58    Section 5 of the Rule Book concerns the directors of BMAC and relevantly stipulates that:

(a)    (r 5.1) The directors oversee the running of the corporation on behalf of all members and make decisions about the affairs of the corporation. The directors may exercise all the powers of the corporation except any that the CATSI Act or the Rule Book requires the corporation to exercise in a general meeting.

(b)    (r 5.2) The number of directors is 6 and, to change the number of directors, members need to pass a special resolution at a general meeting or AGM to change the Rule Book.

(c)    (r 5.5) The corporation can appoint a director by the members passing a resolution at a general meeting or AGM. However, if there is a casual vacancy in a directorship, the other directors can pass a resolution in a directors’ meeting to fill the vacancy.

(d)    (r 5.8) The directors can appoint a person as a director to fill a casual vacancy. A casual vacancy is where a person stops being a director before their term of appointment expires (see r 5.9) and so the position of that director is vacant.

(e)    (r 5.9) A person stops being a director if: the director passes away; the director resigns in writing; the director’s term of appointment expires; the director is removed as a director by the members or the other directors; the director is disqualified from managing a corporation; or the director ceases to be a member, but was a member when they became a director.

(f)    (r 5.10) A director can be removed by a resolution of the members in a general meeting provided a notice of the proposed resolution is given to the corporation at least 21 days before the next general meeting and the corporation gives the notice to the director as soon as possible. A director can also be removed by the other directors, but only if: the director fails to attend three or more consecutive directors’ meetings without a reasonable excuse; the directors give the director a notice in writing and 14 days to object in writing; and the director does not object.

(g)    (r 5.16) All directors must be given reasonable notice of a directors’ meeting.

(h)    (r 5.17) A quorum for meetings of directors is a majority of the directors, who must be present at all times during the meeting (but directors can attend meetings via electronic means).

(i)    (r 5.20) Directors pass a resolution at a directors’ meeting by a majority of the votes, in respect of which each director has one vote and the chairperson of the meeting also has a casting vote (if required). Directors can pass a resolution without a directors’ meeting if all directors sign a statement saying that they are in favour of it. Circulating resolutions can be endorsed via email if all directors provide their approval within the body of the email.

Disputes with respect to the signatories to BMAC’s bank account and governance of BMAC

59    The evidence indicates that significant governance disputes emerged within BMAC in early February 2023 and continued thereafter. The following section of the reasons summarises the evidence relating to the key aspects of the disputes because it is relevant to the orders which were subsequently made by the Court with respect to the Daylight family’s share of the ILUA payments. The disputes have not been the subject of any judicial determination.

60    In her affidavit dated 1 March 2023, Margaret Hornagold deposed that, on 26 April 2022, the directors of BMAC resolved to establish a bank account the signatories to which would be Margaret Hornagold, Grace Munro and Sharmaine Dodd. Ms Hornagold said that, in May 2022, she attended the Westpac Bank Springfield Branch to become a signatory to the BMAC bank account. Ms Hornagold further deposed that, in early February 2023, she was contacted by a Registrar of the Court to provide the BMAC bank details in order to receive the share of funds payable to the Daylight family. She said that, following further communications, she understood that the Court required confirmation of the bank account details from Westpac Bank and she attended the Springfield Branch for that purpose. She learned at that time that she was no longer a signatory to the account.

61    In his affidavit dated 1 March 2023, Ian Brown deposed that BMAC operates a single bank account which has three signatories with Mr Brown being one of them. Mr Brown’s affidavit does not refer to the directors’ resolution passed on 26 April 2022 or when or how he became a signatory to the account.

62    Ian Brown further deposed that, on or about 10 February 2023, Grace Munro, Sharmaine Dodd and he held a meeting of directors during which they purported to appoint Mr Sarai of Safe Harbour Lawyers to act on behalf of BMAC in various matters including the interpleader proceeding. A purported minute of that meeting shows that it was only attended by Grace Munro, Sharmaine Dodd and Ian Brown (and not by Margaret Hornagold, Dorothy Daylight or Christine Malone). Mr Brown’s affidavit does not explain how three out of the six directors of BMAC were lawfully entitled to hold a meeting and pass resolutions of the directors. As noted above, r 5.17 of the Rule Book of BMAC, addressing the quorum required for a directors’ meeting, stipulates that a majority of the directors must be present at all times during a meeting. A majority of directors is four. The minute also records that Grace Munro, Sharmaine Dodd and Ian Brown doubted the eligibility of Margaret Hornagold, Dorothy Daylight and Christine Malone to be members of BMAC. That is a surprising matter given that Margaret Hornagold, Dorothy Daylight and Christine Malone were approved as directors of BMAC at the Daylight family meeting held on 18 September 2021.

Hearing before Meagher J on 2 March 2023

63    A hearing was held before Meagher J on 2 March 2023. At that time, the Court had not released any funds to BMAC or the Daylight family. As the transcript of that hearing records, there was no formal application before her Honour. However, Mr Sarai appeared, purportedly on behalf of BMAC, to seek an order from the Court that the funds in Court held for the benefit of the Daylight family be paid into BMAC’s Westpac bank account.

64    The capacity in which Mr Sarai appeared at the hearing was contested by Mr Hauff who appeared on behalf of Margaret Hornagold, Dorothy Daylight and Christine Malone. When he announced his appearance, Mr Sarai stated that he acted on behalf of BMAC “as appointed by three directors”. Mr Sarai submitted that directors of the company were entitled to appoint legal representatives and there was no requirement for legal representatives to be appointed at a meeting of directors. That submission ignored the requirements of BMAC’s Rule Book which vested the power of management of the company in the directors and required that decisions of the directors be made by resolution passed by a majority at a directors’ meeting. The evidence shows that Mr Sarai had not been duly appointed in that manner.

65    The principal submission advanced by Mr Sarai, toward the conclusion of the hearing, was that Rares J had made final orders on 3 February 2023 which required the distribution of funds to the BMAC bank account and that those orders should be fulfilled (by the payment of funds out of Court). That submission was not accepted by Meagher J. Her Honour concluded that an internal dispute had arisen between the directors of BMAC in relation to the payment of funds held by the Court for the benefit of the Daylight family. To break the impasse, her Honour made the following two orders on 2 March 2023:

1.     The entity [BMAC] provide a resolution in accordance with its rule book notifying the Court of its bank account details.

2.     To the extent that Order 3 and Order 4 of the Court’s orders of 3 February 2023 relate to the entity, these orders are suspended pending receipt of the resolution referred to in Order 1.

66    The effect of those orders was to impose an additional condition before the Court would release the funds held for the benefit of the Daylight family. The condition required BMAC to pass a resolution of its directors in accordance with its Rule Book notifying the Court of its bank account (into which the funds held by the Court would then be paid). The obvious purpose of that order was to ensure that the bank account into which the funds were to be paid was an account authorised by a majority of the directors of BMAC.

67    No appeal was made against those orders and they remained operative until the decision of the primary judge that is the subject of this appeal.

Purported cancellation of memberships

68    As far as the evidence discloses, a meeting of the directors of BMAC was not convened as contemplated by the orders of Meagher J made on 2 March 2023. Instead, on 12 March 2023, Mr Sarai wrote a letter to each of Ms Hornagold and Ms Malone. The letters were in materially identical terms. The letters stated that Mr Sarai acted for BMAC “on instructions from Ian Patrick Brown, Sharmaine Dodd and Grace Munro”. The letters asserted that Ms Hornagold and Ms Malone were not lineal descendants of either Billy or Matilda Daylight, and therefore were not entitled to be a member of BMAC pursuant to r 3.1 of the Rule Book, and were not entitled to be a director of BMAC pursuant to r 5.3 of the Rule Book. The letters purported to activate the provisions of BMAC’s Rule Book governing cancellation of membership, but the letters misstated those provisions in material respects.

69    First, the letters purported to rely on r 3.8 of the Rule Book, but that clause relates to the cancellation of membership effected by members passing a special resolution at a general meeting. It appears that Mr Sarai was intending to refer to r 3.9 of the Rule Book which provides the directors with a limited right to cancel membership.

70    Second, the letters misstated the requirements of r 3.9. The letters stated that:

You are hereby given 14 days to provide to the directors of the Corporation sufficient evidence proving your alleged eligibility for membership in the Corporation (which is denied).

We are instructed to bring to your attention that should you fail to respond within 14 days, refuse or ignore the above request, the directors intend to issue resolution under Rule 3.8 of the Rule Book and commence the process of cancellation of your membership and in turn directorship in the Corporation.

71    Rule 3.9 of the Rule Book provided as follows:

3.9     Directors’ limited right to cancel membership

For grounds not covered by rule 3.8, a person’s membership can be cancelled by the directors passing a resolution at a directors’ meeting if the member is not or stops being eligible for membership as set out in rule 3.1.

To do this, the directors must:

•    write to the member to tell them:

•    the directors are going to cancel their membership

•    the member has 14 days to object to the planned cancellation

•    if the member objects, they must write to the corporation to say so

•    allow the member 14 days to object in writing to the intended cancellation.

If the member does not object, the directors must cancel the membership by passing a resolution at a directors’ meeting. Then give the former member a copy of the resolution.

If the member objects, the directors cannot cancel the membership. The membership can only be cancelled by members passing a resolution at a general meeting.

72    It can be seen that the process under r 3.9 requires the directors to inform the member that the member has 14 days in which to object to the planned cancellation. If the member objects, the directors must not cancel the membership. It is not necessary for the member to provide evidence to the directors of their eligibility for membership.

73    It follows that Mr Sarai’s letters did not satisfy the requirements of r 3.9. The letters failed to inform Ms Hornagold and Ms Malone that they had 14 days in which to object to the cancellation; instead, the letters demanded that they provide to the directors evidence proving their eligibility for membership within 14 days.

74    Further and in any event, there is a serious question whether the letters issued by Mr Sarai were duly authorised by the directors. It is implicit in r 3.9 that action to cancel a membership cannot be taken unless a majority of the directors have passed a resolution to do so in a duly convened meeting of BMAC. The letters asserted that the decision to cancel the memberships was taken at the meeting held on 10 February 2023 which was only attended by Ian Brown, Grace Munro and Sharmaine Dodd. Leaving aside questions about whether all directors were duly notified of that meeting in accordance with the Rule Book, the meeting lacked a quorum under r 5.17 of the Rule Book. Mr Sarai’s letter attempted to overcome that problem by asserting that each of Ms Hornagold and Ms Malone would have had a conflict of interest at the meeting and, therefore, they “were neither invited nor permitted to vote on that meeting of directors”. The letter also asserted that “the decision to question and examine your eligibility was made by the majority of directors permitted to vote on the motion”. Those assertions have numerous difficulties. First, the existence of a conflict of interest does not prevent a director from being given notice of a meeting, and yet Mr Sarai’s letter admits that neither Ms Hornagold nor Ms Malone were given notice of the meeting. Second, the minutes of the meeting reveal that the meeting included other items, such as the appointment of Mr Sarai as BMAC’s legal representative. Ms Hornagold and Ms Malone were entitled to vote on that decision. Third, Mr Sarai’s letter is silent about the position of Dorothy Daylight who was also absent from the meeting.

75    The evidence included what purported to be a subsequent email from Grace Munro to each of Margaret Hornagold and Christine Malone dated 26 March 2023. However, the document in evidence was only the body of the email, and did not contain the addressee details. In any event, the email purported to be a notice that the three directors, Ian Brown, Grace Munro and Sharmaine Dodd, would cancel the memberships of Margaret Hornagold and Christine Malone unless they objected within 14 days.

76    On 12 April 2023, Ian Brown, Grace Munro and Sharmaine Dodd each signed two documents that purported to be a “circulating resolution”. The first document purported to effect a resolution cancelling the membership of Margaret Hornagold. The “attendees” were stated to be Ian Brown, Grace Munro, Sharmaine Dodd, Dorothy Daylight and Christine Malone. However, a copy of the resolution was only signed by Ian Brown, Grace Munro and Sharmaine Dodd. The second document purported to effect a resolution cancelling the membership of Christine Malone. The “attendees” were stated to be Ian Brown, Grace Munro, Sharmaine Dodd, Dorothy Daylight and Margaret Hornagold. However, a copy of the resolution was only signed by Ian Brown, Grace Munro and Sharmaine Dodd. As noted above, r 5.20 of BMAC’s Rule Book stipulates that directors can pass a resolution without a directors’ meeting if all directors sign a statement saying that they are in favour of it, and circulating resolutions can be endorsed via email if all directors provide their approval within the body of the email. Neither of the circulating resolutions purporting to cancel the membership of Margaret Hornagold and Christine Malone complied with r 5.20 because only three directors signed the resolutions.

77    On 27 April 2023, Grace Munro certified and filed a “Notification of a change to corporate officers’ details” form with the Office of the Registrar of Indigenous Corporations (ORIC). The form stated that Margaret Hornagold and Christine Malone ceased to be directors of BMAC on 12 April 2023, and that Dion Munro (the son of Grace Munro) and Ian Brown Jnr (the son of Ian Brown) had been appointed to fill a casual vacancy.

78    In the course of the ongoing proceeding, each of Margaret Hornagold and Christine Malone swore affidavits that deposed to their membership of the Daylight family. In her affidavit sworn 14 August 2023, Margaret Hornagold deposed that she is the daughter of Elaine Patricia Daylight, who was the daughter of James Ronald Daylight Snr and Ellen Jess Brown. In her affidavit sworn 7 February 2024, Christine Malone deposed that she is a direct descendant of Billy Daylight who was a Jarowair man, and that her grandfather is James Daylight Senior and her father is James Daylight Junior. Ms Malone further deposed that her brother, Darren Daylight, was a signatory to the ILUA.

Hearing before Rares J on 28 April 2023

79    A further hearing was held before Rares J on 28 April 2023. Again, as the transcript of that hearing records, there was no formal application before his Honour. However, Mr Sarai appeared, purportedly on behalf of BMAC, to again seek an order that the funds in Court that were held for the benefit of the Daylight family be paid into BMAC’s Westpac bank account. The capacity in which Mr Sarai appeared at the hearing was again contested by Mr Hauff who appeared on behalf of Margaret Hornagold, Dorothy Daylight and Christine Malone.

80    Justice Rares refused to make any order that the funds in Court held for the benefit of the Daylight family be paid out. In the course of the hearing, his Honour observed that Mr Sarai did not have authority to act on behalf of BMAC, having only been appointed by three directors. In response to Mr Sarai’s submission that not every decision of a company needed to be made by directors’ resolution, Rares J observed that the board of BMAC had not delegated management authority to a chief executive or equivalent and, accordingly, management authority was vested in the board which was required to make decisions in accordance with the Rule Book. His Honour concluded that the orders made by Meagher J on 2 March 2023 had not been complied with, the board was in dispute and currently deadlocked and the Court would not order the funds in Court to be distributed in those circumstances.

Hearing before Rares J on 17 August 2023

81    On 19 July 2023, Mr Sarai filed an interlocutory application, purportedly on behalf of BMAC, again seeking an order that the funds in Court that were held for the benefit of the Daylight family be paid into BMAC’s Westpac bank account.

82    On 15 August 2023, Mr Hauff filed an interlocutory application on behalf of Margaret Hornagold, Dorothy Daylight and Christine Malone seeking orders under the CATSI Act which included:

(a)    reinstating Margaret Hornagold and Christine Malone as directors and members of BMAC;

(b)    removing Ian Brown, Grace Munro, Sharmaine Dodds, Dion Munro and Ian Brown Jnr as directors of BMAC;

(c)    reinstating some 13 persons as members of BMAC who had been removed from the members list registered with ORIC; and

(d)    convening a general meeting to elect new directors to replace Ian Brown, Grace Munro and Sharmaine Dodds.

83    An affidavit sworn by Margaret Hornagold on 14 August 2023 gave evidence of the fact that, between 10 February 2023 and 4 May 2023, members of BMAC had been removed from the members list registered with ORIC.

84    Both interlocutory applications were heard by Rares J on 17 August 2023. His Honour dismissed both applications, making the following orders:

1.     The interlocutory applications filed on 19 July 2023 and 15 August 2023 be dismissed on the basis that they raise issues that are not properly the subject of this proceeding but require determination in a proceeding under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) in order to resolve the identity of the members of the B & M Aboriginal Corporation and its members, so that the Court will be in a position to determine whether any proper direction has been given by the Corporation for the payment out of moneys held in Court in respect of the Daylight family’s entitlement under the Indigenous Land Use Agreement the subject of this proceeding.

2.     The parties be granted liberty to re-list this proceeding once the issue of who the proper person is to make an application for payment out of the moneys held in Court has been resolved by agreement or an order of a competent court.

85    In the course of the hearing, Rares J explained that he considered that the dispute concerning the internal management of BMAC had to be determined in a substantive proceeding under the CATSI Act, and that the present proceeding (being the interpleader proceeding) was not the appropriate proceeding for that to occur. Mr Sarai informed the Court that his clients did not consent to a mediation of the internal management dispute. Justice Rares stated that, in those circumstances, Mr Hauff’s clients would need to start a new proceeding under the CATSI Act and Mr Hauff informed his Honour that his clients would do so.

Voluntary administration

86    Before Margaret Hornagold, Christine Malone and Dorothy Daylight were able to commence a proceeding under the CATSI Act, those acting as the directors of BMAC placed the company into voluntary administration.

87    The evidence shows that Mr Sarai was involved as a legal adviser in connection with the decision, by those acting as the directors of BMAC, to place the company into voluntary administration.

88    On 14 September 2023, resolutions were passed by Ian Brown, Grace Munro, Sharmaine Dodds, Dion Munro and Ian Brown Jnr (purportedly as the directors of BMAC) that:

(a)    in their opinion, BMAC was insolvent or likely to become insolvent at some future time; and

(b)    BMAC appointed Bruce Gleeson as Administrator pursuant to s 436A of the Corporations Act 2001 (Cth) (Corporations Act) and s 521-1 of the CATSI Act.

89    The minutes of the meeting record that the basis for appointing an administrator was that there was a concern over the insolvency of BMAC because Mr Sarai’s firm, Safe Harbour Lawyers, had issued invoices to BMAC for legal fees in an amount of approximately $60,000, with a further amount of $20,000 to be invoiced. It appears from the evidence that Mr Sarai acted as a legal adviser in relation to the decision to place BMAC into voluntary administration notwithstanding that Mr Sarai was the sole purported creditor of BMAC and it was the debt purportedly owing by BMAC to him which was the catalyst for the decision to place the company into voluntary administration.

90    On 20 September 2023, Mr Gleeson wrote a letter to the Court stating that he had been appointed Administrator of BMAC. The letter asserted that BMAC “is one of the parties which is entitled to 1/11th equal share of the balance of the funds held by the Court and as Administrator I am able to recover such funds”. The letter requested payment of the monies held by the Court into BMAC’s bank account. It does not appear that Mr Gleeson’s letter was copied to the other parties to the proceeding or their legal representatives, including Mr Hauff.

91    On 26 September 2023, a first meeting of the creditors of BMAC was conducted. The minutes of that meeting record that the only creditor of BMAC was Safe Harbour Lawyers who claimed an amount of approximately $60,000 for legal fees purportedly rendered to BMAC.

92    On 12 October 2023, a Judicial Registrar of the Court replied to Mr Gleeson’s letter, copying other relevant parties, and requesting that Mr Gleeson ensure that future correspondence be copied to the active parties. The letter informed Mr Gleeson that:

Your letter refers to the orders made on 3 February 2023. However, I also draw your attention to the orders made on 2 March 2023 and 17 August 2023. These orders are publicly available on the Commonwealth Court's Portal.

There is currently no application before the Court in this proceeding. The administrator may make an application, if necessary.

93    On 13 October 2023, Mr Hauff wrote to the Administrator stating that the entry of BMAC into administration would disqualify the company from receiving funds under the ILUA.

94    On 1 December 2023, the Administrator filed an originating process in the New South Wales Registry of the Court seeking, in the alternative:

(a)    a declaration pursuant to s 447C(2) of the Corporations Act or s 576-15(6) of the CATSI Act that Mr Gleeson was validly appointed as voluntary administrator of BMAC on 14 September 2023;

(b)    an order pursuant to s 447A(1) of the Corporations Act (by operation of s 521-1(1) of the CATSI Act) that Part 5.3 of the Corporations Act is to operate in relation to BMAC as though Mr Gleeson was validly appointed as voluntary administrator on 14 September 2023.

95    On 15 December 2023, Halley J made the latter order. His Honour also ordered that Mr Gleeson’s costs of and incidental to the application be costs in the administration of BMAC.

96    Since being placed into administration, BMAC has incurred substantial expenses comprising fees charged by the Administrator and the Administrator’s legal representatives. Information provided to this Court in the course of the hearing of the appeal indicates that the aggregate amount of the fees charged by Mr Sarai to BMAC and the fees charged by the Administrator and the Administrator’s legal representatives are broadly equivalent to the amount of the funds held by the Court for the benefit of the Daylight family. For the reasons set out earlier, there is considerable doubt whether Mr Sarai was ever properly engaged to represent BMAC and, therefore, whether his fees are payable by BMAC or the persons who engaged him (Ian Brown, Grace Munro and Sharmaine Dodds). Even assuming Mr Sarai’s fees are not payable by BMAC, the information provided to the Court indicates that the fees charged by the Administrator and the Administrator’s legal representatives to BMAC constitute a very large proportion of the amount of the funds held by the Court for the benefit of the Daylight family.

Daylight United Aboriginal Corporation

97    Following BMAC being placed into voluntary administration, Margaret Hornagold, Christine Malone, Dorothy Daylight and other members of the Daylight family, with the assistance of QSNTS, convened a meeting of the members of the Daylight family for the purpose of establishing a new corporation to receive the funds payable to the Daylight family under the ILUA.

98    The Daylight family meeting took place on 30 October 2023 with Tim Wishart, Chief Executive Officer of QSNTS, as the meeting facilitator. The meeting resolved to establish the Daylight United Aboriginal Corporation (DUAC) for that purpose.

99    The evidence shows that the tenth annual payment due under the ILUA (being the payment in respect of 2024) has been paid to DUAC.

Further applications to the Court

100    On 1 December 2023, BMAC, under the control of the Administrator, filed an interlocutory application seeking orders that (relevantly):

(a)    orders 1 and 2 of the orders made by Meagher J on 2 March 2023 be set aside;

(b)    the funds held by the Court “on behalf BMAC” pursuant to orders 3 and 5 made by Rares J on 3 February 2023, plus any interest accrued from the funds being held by the Court, be paid to Mr Gleeson in his capacity as voluntary administrator of BMAC; and

(c)    the costs of the application be costs in the administration of BMAC.

101    On 9 February 2024, Mr Hauff filed an interlocutory application on behalf of Margaret Hornagold, Christine Malone, Dorothy Daylight, Brent Daylight, Chereta Daylight and DUAC seeking the following orders:

(a)    the applicants be joined as interested parties;

(b)    the interlocutory application filed on behalf of BMAC be struck out;

(c)    order 3(b)(iv) of the orders made on 3 February 2023 be amended to replace BMAC with DUAC or, in the alternative, that the funds in Court held for the benefit of the Daylight family be paid to DUAC; and

(d)    the Administrator pay the costs of Mr Hauff in relation to the application.

102    Those competing applications were the subject of the determination by the primary judge.

Decision and reasons of the primary judge

103    The primary judge heard the competing applications on 26 February 2024 and delivered judgment on the same day. Her Honour relevantly made the following orders (with the applicants being referred to as the “Daylight Interested Parties”):

1.     Pursuant to r 9.05 of the Federal Court Rules 2011 (Cth), Margaret Hornagold, Christine Malone, Dorothy Daylight, Brent Daylight, Chereta Daylight and the Daylight United Aboriginal Corporation (ICN 10168) be joined as interested parties (the Daylight Interested Parties).

2.     Orders 1 and 2 of the Orders of the Court made on 2 March 2023 be set aside.

3.     The funds held by the Court on behalf of B&M Aboriginal Corporation (ICN 9678) pursuant to Orders 3 and 5 made by the Court on 3 February 2023, plus any interest accrued from the funds being held by the Court, be paid to Bruce Gleeson in his capacity as voluntary administrator of B&M Aboriginal Corporation (ICN 9678).

…

5.     The Daylight Interested Parties’ application for orders sought in paragraphs 2 – 6 of their interlocutory application lodged on 9 February 2024 be dismissed.

6.     B&M Aboriginal Corporation (ICN 9678) and the Daylight Interested Parties bear their own costs of the interlocutory applications lodged on 1 December 2023 and 9 February 2023 respectively.

104    The reasoning of the primary judge was brief. The core finding made by the primary judge, which was the basis for her Honour’s decision, was that, as at 3 February 2023, BMAC’s entitlement to the funds paid into Court on behalf of the Daylight family had “crystallised” and those funds were the property of BMAC. Her Honour concluded (at [15]):

Order 3(b) required the present funds to be distributed to the 11 entities listed in Order 3(b), which included B & M, in 11 equal shares. There is no dispute that, as at the date of the Rares J orders, B & M was a Nominated Entity and had not yet entered administration. The voluntary administration commenced on 14 September 2023. By that point, the entitlement to those funds had crystallised. It was the property of B & M, and due performance of the administrator’s duties to the company in administration requires the interests of creditors in any such property to be taken into account (Australian Securities and Investments Commission (ASIC) v Bettles [2023] FCA 975 at [431], quoting Hausmann v Smith (2006) 24 ACLC 688 at [12]). The administrator also deposed in his affidavit lodged 1 December 2023 in the proceeding NSD1460/2023, at [54], that, “provided the funds held in Court … are paid” to B & M, he intended on recommending that the voluntary administration should end. B & M, through its administrator, has standing to seek an order giving effect to Order 3(b) of the Rares J Orders.

105    Her Honour rejected a submission that the foregoing conclusion would be contrary to the decision of Rares J in QGC No 2 concerning the requirement in cl 1.2(a)(ii) of Annexure 3 of the ILUA that a Nominated Entity not be in administration, receivership or liquidation. Her Honour reasoned (at [17]):

… As noted previously, there is no dispute that a company in administration cannot be a Nominated Entity. The question Rares J was dealing with in QGC (No 2) was determining the consequences of the sole Nominated Entity going into liquidation where payments from QGC to the Nominated Entity were pending. That is not the same issue that is before this Court. In the present case, there are extant, albeit suspended, Orders that payment out of Court be made to B & M, which was, at the time of those Orders, neither in administration nor insolvent, and was entitled to those funds as its property.

Alleged errors on the face of the record

106    On this appeal the applicants contend that there are errors on the face of the record, in that the primary judge’s orders and reasons both contain an error. BMAC conceded the errors.

107    With respect to her Honour’s orders, the parties were agreed that her Honour was in error to include in order 3 (requiring payment of the funds held by the Court for the benefit of the Daylight family to the Administrator) a reference to order 5 of the distribution orders. Order 5 of the distribution orders concerned the tenth annual payment under the ILUA which, at the time of the distribution orders, was not due and payable. Order 5 did not require the tenth annual payment to be paid into Court. Rather, it required the payment to be made directly to each entity listed in order 3(b) of the distribution orders, but that order was expressly subject to the condition that the entity continued to meet the requirements for being a Nominated Entity in accordance with the ILUA.

108    It is clear from the primary judge’s reasons that her Honour understood that the payment referred to in order 5 of the distribution orders was not payable to BMAC (because BMAC was in administration). Her Honor stated (at [16], having previously defined the payment referred to in order 5 of the distribution orders as the “future funds”):

The future funds were to be paid out to the 11 entities only in so far as those entities continued to meet the requirements of cl 1.2(a)(ii). It is not disputed that B & M no longer meets those requirements as a company in administration. It makes no claim to the future funds.

109    As accepted by the parties, the reference to order 5 of the distribution orders in order 3 of the primary judge’s orders does not reflect her Honour’s intention, and can be described as a slip which requires correction.

110    With respect to the primary judge’s reasons, there appears to have been a misunderstanding on the part of her Honour concerning the extent of the funds held by the Court which were the subject of order 3(b) of the distribution orders. The primary judge described those funds as the “present funds” which her Honour understood were the funds referred to in order 2 of the distribution orders (being the eighth and ninth annual payments under the ILUA) (at [14] and [15]). In fact, the funds that were the subject of order 3(b) of the distribution orders were all of the funds that had been paid into Court, which were the third to ninth annual payments.

111    BMAC accepted that the primary judge’s reasons display a misunderstanding with respect to the extent of the funds held by the Court which were the subject of order 3(b) of the distribution orders, but submitted that the error was not material to her Honour’s decision concerning the release of the funds to BMAC. That submission should be accepted. Her Honour decided that the funds held by the Court should be released to BMAC because, in her Honour’s view, BMAC had an “entitlement” to the funds held in Court which had “crystallised”, prior to BMAC entering into administration. There is no reason to believe that her Honour’s decision would have differed if her Honour understood that the funds held in Court comprised the third to ninth annual payments rather than the eighth and ninth annual payments.

112    The central issue raised by the appeal is, therefore, whether the primary judge was correct to conclude that, prior to entering administration, BMAC had an “entitlement” to the funds held in Court which had “crystallised”, such that the funds were the property of BMAC, and that in those circumstances the Court should order the release of the funds to BMAC notwithstanding that it was in administration. These reasons now turn to that question.

Consideration of the central ground of appeal

113    Respectfully, the reasons of the primary judge do not clearly explain what her Honour meant by the conclusion that, prior to entering administration, BMAC had an “entitlement” to be paid the funds in Court which had “crystallised” and that the funds were the property of BMAC. Nor do her Honour’s reasons address the question of the basis on which the funds were being held in Court, the previous orders that had been made with respect to the release of the funds, and the interaction of those orders with the terms of the ILUA.

114    BMAC submitted that, as at 3 February 2023, it had been established in accordance with the entity establishment orders made on 28 May 2021. That submission can be accepted. BMAC further submitted that the Native Title Party had given a valid direction to QGC nominating BMAC as the Nominated Entity for the Daylight family. That fact was found by the primary judge (at [12]) and is not the subject of appeal. On the basis of the foregoing facts, BMAC submitted that, as at 3 February 2023, it met the requirements for being a Nominated Entity under the ILUA and therefore it had an entitlement to receive the funds in Court held for the benefit of the Daylight family. It is that third submission that cannot be accepted. It overlooks the condition imposed by order 4 of the distribution orders. Order 4 stipulated that the distribution of funds pursuant to order 3 would only occur once the Nominated Entity had provided the Court with written notice of its bank account details. Order 4 was a protective order made by the Court to ensure that the funds held by the Court would be released to an account that was properly under the control of the Nominated Entity.

115    The evidence reveals that, in February 2023, an internal management dispute had arisen within BMAC, including a dispute with respect to the control of a Westpac bank account in the name of BMAC. The dispute came before Meagher J on 2 March 2023, at which time her Honour suspended the distribution orders in so far as they related to BMAC. It is implicit in Meagher J’s decision that her Honour did not consider that BMAC had an entitlement to be paid the funds held in Court which had crystallised. Her Honour refused BMAC’s application to have the funds released to it. No appeal was brought against the suspension of the distribution orders.

116    BMAC submitted that the purpose of suspending the distribution orders was to allow BMAC to undertake the required internal steps to provide a resolution in accordance with its Rule Book notifying the Court of its bank account details, given the apparent impasse that had arisen. That submission can be accepted. The orders made by Meagher J expressly provided that the distribution orders were suspended until BMAC provided the Court with a resolution in accordance with its Rule Book notifying the Court of its bank account details. BMAC further submitted that the appointment of the Administrator broke the internal impasse as the Administrator had the appropriate authority to act on behalf of BMAC and notify the Court of the relevant bank account details so that payment could be made. BMAC’s submission is to the effect that the appointment of the Administrator was an alternative means of satisfying Meagher J’s order and having the funds released to BMAC. That submission cannot be accepted. In the hearing before Meagher J, there was no suggestion that the internal management dispute might be solved by placing BMAC into administration, and there is no indication that such a course was within the contemplation of her Honour when making the orders of 2 March 2023. Placing BMAC into administration is not merely a step that resolves an internal management dispute. It is a step that takes control of the entity away from its directors. Further, as discussed below, it is a step that is contrary to the conditions imposed by the ILUA governing the payment of the Financial Benefits under that agreement.

117    Respectfully, for the following reasons, the primary judge erred in concluding that, prior to entering administration, BMAC had an entitlement to be paid the funds held by the Court for the benefit of the Daylight family which had crystallised, that the funds were the property of BMAC, and that, notwithstanding it was now in administration, the funds should be released to BMAC.

118    The payment of Financial Benefits by QGC under the ILUA is governed by the terms of Annexure 3. Significantly, cl 1.1 of Annexure 3 stipulates that the parties agreed to establish the Nominated Entity to be used for the purposes of holding the Financial Benefits provided under the ILUA for the Families. It can be seen that the intended beneficiaries (using that expression in a broad sense) of the Financial Benefits is each of the 11 Families identified in the ILUA. The terms of Annexure 3 were the subject of detailed consideration by Rares J in QGC No 2. His Honour made two relevant findings. First, the ILUA contained an implied term governing the circumstance that a Nominated Entity ceased to be capable of acting in accordance with cl 1.2 of Annexure 3 (for example, by going into administration or liquidation). If that occurred, cl 2.1 of Annexure 3 would operate to permit the Native Title Party to nominate a new entity to receive payments under Annexure 3. Second, the ILUA permitted the nomination of more than one Nominated Entity, and specifically permitted each of the Families to nominate an entity to receive and hold their proportionate share of the Financial Benefits payable under the ILUA.

119    In QGC No 2, Rares J explained the importance of ensuring that an entity that is nominated to receive compensation payments under the ILUA is properly representative of the interests of the Family entitled to receive those payments. In the circumstances of this case, the following statements of his Honour (at [73]), which have been reproduced earlier, are worthy of repetition:

The importance of allowing all of the persons within the definition of “families” to participate in the process for establishment of the nominated entity, as evinced in annexure 3 of the ILUA, cannot be understated. It prevents particular persons who have other powers under the ILUA dominating that process or constituting a company that will be used ultimately to cause money paid by QGC for the benefit of the families to be paid to a narrower class. It is well-known in the area of native title that, not infrequently, persons obtain positions of power in a claim group, through ILUAs or prescribed bodies corporate, and then misuse that power to siphon off for their own benefit large amounts of money intended for, or to benefit, members of claim groups as a whole. …

120    Following the commencement of the interpleader proceeding, the annual payments due under the ILUA were paid into Court under Part 18 of the Rules and, by that process, came under the supervision of the Court. In QGC No 2, Rares J also explained the basis on which the Court was holding the monies that had been paid into Court by QGC. His Honour said (at [80]) that the monies were held on trust for the person or persons that the Court finds beneficially entitled to receive it based on the outcome of the proceeding, referring to Harmer v Federal Commissioner of Taxation (1991) 173 CLR 264 (Harmer) at 272–273. In the passage of Harmer cited by his Honour, the High Court discussed the different circumstances in which monies may be paid into court. Relevantly, the High Court observed that, if monies paid into court are the subject of a contractual dispute, none of the claimants in the dispute have a beneficial entitlement to the monies. The court holds the funds as “trust monies” in the sense that the court is not beneficially entitled to the funds. The claimants in the dispute acquire an interest in the monies only in the sense that they are entitled to insist that the monies be properly administered. Ultimately, the monies are to be applied in accordance with the orders made by the court.

121    It follows that none of the Nominated Entities (or any other person) could acquire an entitlement to or property in the monies that had been paid into Court prior to the making of final orders of the Court requiring payment of the funds to the Nominated Entity. Contrary to the submission of BMAC, that did not occur under the distribution orders. Those orders required, as a condition of the distribution of funds to a Nominated Entity, that the Nominated Entity had provided the Court with written notice of its bank account details. Justice Rares’ reasons in QGC No 4 explained that, until that step had been taken, the Nominated Entity would not have fully complied with the earlier entity establishment orders (at [34]).

122    When the matter came before Meagher J on 2 March 2023, some 4 weeks after the making of the distribution orders, her Honour implicitly found that, at that point in time, BMAC was not entitled to receive payment of the funds in Court held for the benefit of the Daylight family. By reason of the internal management dispute, her Honour required, as a condition of any payment being made to BMAC, that the directors pass a resolution in accordance with the Rule Book notifying the Court of its bank account details. As noted earlier, no appeal was made from those orders, and the primary judge did not find any error in Meagher’s J decision. It follows that BMAC had no entitlement to be paid the funds held for the benefit of the Daylight family as at 2 March 2023, and would have no such entitlement unless and until it complied with the orders made by Meagher J.

123    When the matter came back before Rares J on 28 April 2023, no challenge was made to the orders made by Meagher J. Justice Rares concluded that the orders made by Meagher J had not been complied with, the board of BMAC was in dispute and currently deadlocked and the Court would not order the funds in Court to be distributed in those circumstances. In the course of the hearing, his Honour also observed that Mr Sarai did not have authority to act on behalf of BMAC, having only been appointed by three directors.

124    When the matter again came back before Rares J on 17 August 2023, his Honour effectively reached the same conclusion. His Honour explained that the dispute concerning the internal management of BMAC had to be determined in a substantive proceeding under the CATSI Act, and Mr Hauff informed his Honour that the applicants would commence such a proceeding.

125    The three directors in effective control of BMAC, Ian Brown, Grace Munro and Sharmaine Dodds, circumvented the commencement of a proceeding under the CATSI Act by resolving, on 14 September 2023, to place BMAC into voluntary administration. The basis on which they did so, that BMAC was indebted to Mr Sarai in an amount of $60,000 and likely insolvent, is highly questionable. As discussed earlier in these reasons and as far as the evidence reveals, Mr Sarai had never been appointed as a legal representative of BMAC by a resolution of the directors of BMAC passed in accordance with its Rule Book.

126    The end result is that, prior to being placed into administration, BMAC did not have an entitlement to be paid the funds in Court held for the benefit of the Daylight family, and those funds were not the property of BMAC. The funds continued to be held by the Court for the benefit of the Daylight family, governed by the terms of Annexure 3 of the ILUA. Respectfully, the primary judge erred when reaching the contrary conclusion.

127    The final question that should be answered is whether, having been placed into Administration, BMAC was then lawfully entitled to provide its bank account details to the Court and thereby become entitled to payment of the funds held by the Court for the benefit of the Daylight family. That question should be answered in the negative. Upon being placed into administration, BMAC ceased to be eligible to receive payment of Financial Benefits under the ILUA. Clause 1.2(a)(ii) of Annexure 3 of the ILUA stipulates that, where a Nominated Entity is an incorporated body, it must not be in administration. In QGC No 2, Rares J concluded that, once a Nominated Entity was placed into administration or liquidation, it was no longer entitled to receive payment of the Financial Benefits under the ILUA and would need to be replaced.

128    In conclusion, BMAC never became entitled to receive payment of the funds held by the Court for the benefit of the Daylight family and those funds were never the property of BMAC. Respectfully, the primary judge erred in concluding to the contrary. Furthermore, having entered administration, BMAC was barred by the terms of the ILUA from receiving those funds.

Conclusion and orders

129    It follows from the foregoing that the appeal should be allowed. It also follows that the following orders made by the primary judge on 26 February 2024 should be set aside:

(a)    order 2, which set aside the orders made by Meagher J on 2 March 2023;

(b)    order 3, which required payment of the funds in Court held for the benefit of the Daylight family, plus interest, to the Administrator;

(c)    order 5, which dismissed the applicants’ application dated 9 February 2024; and

(d)    order 6, which required each party to bear their own costs.

130    The question that then arises is: what further orders should be made by this Court with respect to the resolution of the dispute concerning the funds in Court held for the benefit of the Daylight family?

131    By their application dated 9 February 2024, the applicants sought orders to the effect that:

(a)    BMAC’s application dated 1 December 2023 (seeking payment of the funds in Court) be dismissed;

(b)    the funds in Court held for the benefit of the Daylight family, plus interest, be paid to DUAC as the Nominated Entity for the Daylight family; and

(c)    the Administrator pay the costs of the applicants of the hearing before the primary judge and the application for leave to appeal and appeal.

132    Given the findings made above, it is appropriate to make an order dismissing BMAC’s application dated 1 December 2023.

133    At the hearing of the appeal, the parties did not advance substantive arguments concerning the entity to which the funds in Court should be paid if the applicants were successful on the appeal. Indeed, counsel for the applicants stated that the applicants were not seeking an order from this Court that the funds in Court held for the benefit of the Daylight family, plus interest, be paid to DUAC as the Nominated Entity for the Daylight family. The applicants accepted that the final determination of the entity to which the funds in Court should be paid should be remitted to the primary judge. In circumstances where neither party has fully addressed that question, that is the appropriate course. It can be observed, however, that after BMAC entered administration, DUAC was established to act as the Nominated Entity for the Daylight family and has received the tenth annual payment in that capacity. Subject to any matters raised with respect to DUAC on remitter, it may be that the matter can be resolved on a final basis by orders requiring the payment of the relevant funds to DUAC.

134    As the matter will need to be remitted to the primary judge, it is appropriate for the primary judge to reconsider the appropriate orders as to the costs of the hearing before the primary judge on the basis that the Administrator was unsuccessful on the application brought by him and the applicants have been successful on their application.

135    The parties did not advance submissions with respect to the costs of the appeal. In the circumstances, it is appropriate to give the parties an opportunity to provide the Court with short written submissions on that question.

136    It is noted that, before the primary judge, the applicants submitted that the proceeding is one to which s 85A of the Native Title Act is applicable (at [20]). Section 85A provides as follows:

Costs

(1)     Unless the Federal Court orders otherwise, each party to a proceeding must bear his or her own costs.

Unreasonable conduct

(2)     Without limiting the Court’s power to make orders under subsection (1), if the Federal Court is satisfied that a party to a proceeding has, by any unreasonable act or omission, caused another party to incur costs in connection with the institution or conduct of the proceeding, the Court may order the first‑mentioned party to pay some or all of those costs.

137    There is reason to doubt whether s 85A is applicable to an interpleader proceeding under Part 18 of the Rules concerning contractual rights and entitlements under an ILUA. The reference to “a proceeding” in s 85A is a reference to a proceeding as defined in s 80 which provides that Pt 4 of the Native Title Act applies in relation to proceedings in relation to applications filed in the Federal Court that relate to native title. Whilst the language of s 80 is broadly framed, decisions of the Court indicate that the word “proceeding” is intended to be confined to proceedings in respect of applications made under Pt 3 of the Native Title Act: see for example Lardil Peoples v State of Queensland (2001) 108 FCR 453 at [156] (Dowsett J, with whom French J relevantly agreed); O’Mara v Minister for Lands (2008) 167 FCR 145 at [34]; Corunna v South West Aboriginal Land and Sea Council (No 2) (2015) 235 FCR 53.

138    In some cases, when exercising the discretion with respect to the award of costs, the Court has had regard to the apparent policy underpinning s 85A even though the section is not applicable to the proceeding: see for example Murray v Native Title Registrar [2003] FCA 45 at [9]; Fesl v Delegate of the Native Title Registrar (No 2) (2008) 173 FCR 176 at [19]. However, caution with respect to such an approach was expressed in Burragubba v State of Queensland (2015) 236 FCR 160.

139    To allow for submissions on that point, the parties will be permitted to file written submissions on the question of the costs of the appeal limited to 3 pages.

Associate:

Dated:    6 March 2025

REASONS FOR JUDGMENT

HORAN J:

140    I have read in draft the reasons for judgment of O’Bryan and Halley JJ, and agree that the appeal should be allowed. I adopt the abbreviations in those reasons. For the reasons given by their Honours, BMAC was not entitled to be paid the relevant share of the funds held in Court prior to its entry into voluntary administration, upon which it was no longer capable of being a Nominated Entity under the ILUA. Accordingly, orders should be made in the terms proposed by O’Bryan and Halley JJ at [129]–[139].

141    Unless BMAC had an entitlement to payment that was “crystallised” by or under the orders made by Rares J on 3 February 2023, there was no such right to payment that was capable of being regarded as the property of the company as at 2 March 2023, when those orders were suspended to the extent that they relate to BMAC, pending the provision of a resolution in accordance with its rule book notifying the Court of its bank account details. Further, in circumstances where BMAC did not provide such a resolution giving notice of its bank account details, it had no right to payment on 14 September 2023 when it entered voluntary administration and ceased to meet the criteria for a Nominated Entity under Annexure 3 of the ILUA.

142    Under cl 9(a) of the ILUA, QGC agreed to provide the Benefits, including the Financial Benefits set out in Annexure 3. Clause 2.2 of Annexure 3 provides that QGC will transfer the Benefits to the Nominated Entity “[o]nce the Nominated Entity has been established and all signatories to [the ILUA] have provided written notice and direction to transfer the Benefits to the Nominated Entity”. In circumstances where a Nominated Entity for any reason has ceased to be capable of acting as such in accordance with cl 1.2 of Annexure 3, the written notice and direction under cl 2.2 may be provided by the Native Title Party notifying QGC in writing of the name and address of the (replacement) Nominated Entity as soon as practicable after its establishment: see cl 2.1(b) as varied by the implied term found by Rares J in QGC (No 2); QGC (No 4) at [28], [31].

143    In so far as QGC was obliged under the ILUA to pay the Financial Benefits, including the annual payments of $350,000 (which were to be indexed annually) that had fallen due, that obligation was discharged by the commencement of the interpleader proceeding and the successive payments into Court pursuant to orders made under r 18.03 of the Rules. At the time of the commencement of the proceeding, BMAC had not yet been incorporated, let alone established as a Nominated Entity under Annexure 3 of the ILUA.

144    It is not suggested that the funds paid into Court by QGC were subject to any pre-existing trust which conferred on BMAC or any other Nominated Entity a present entitlement to those funds. Rather, the funds were the subject of a dispute about the entity or entities to which they were properly payable under Annexure 3 of the ILUA, in circumstances where disputes had arisen within the Native Title Party and where BCJWY, which was then the Nominated Entity, subsequently appointed administrators and was then placed in liquidation: see QGC (No 2) at [27] (Rares J).

145    In such circumstances, no party has an interest in the funds held in Court that is vested in interest or in possession, and “[s]uch rights as claimants to those funds may have are to the due administration of the funds in court, and a right to be heard about disposition of the funds, rather than a right of property”: Cellarit Pty Ltd v Cawarrah Holdings Pty Ltd (No 2) [2018] NSWCA 266 at [80] (McColl JA, with whom Macfarlan JA agreed); see generally Harmer at 272–273; JKB Holdings Pty Ltd v De La Vega [2013] NSWSC 501 at [99]–[114] (Lindsay J). Accordingly, the funds are to be disbursed in accordance with the orders made by the Court, having regard to the particular purpose for which the funds were paid into Court: Cellarit at [80]–[81]; JKB Holdings at [81], [94], [111]. In the present case, that encompasses the purposes for which the Benefits are paid to and held by Nominated Entities under the ILUA which, broadly speaking, is “for the Families”.

146    This is consistent with the opinion that was expressed by Rares J in QGC (No 2) at [80], referring to Harmer at 272–273, that “the money currently held in the Court is held on trust for the person or persons that the Court finds beneficially entitled to receive it based on the outcome of the proceeding” and that, following that outcome, “the money will need to be paid ultimately to, or at the direction of, the persons beneficially entitled, which are likely to be the families as provided in cl 1.1 of the ILUA”. Similarly, in QGC (No 4) at [16], Rares J reiterated that “the money currently paid into Court is held on trust for the claim group and all persons who, by force of s 24EA(1) of the [Native Title Act], are parties to the ILUA, until the claim group and the families established one or more nominated entities that could be used to enable the fulfilment of the purposes of the ILUA”. Those references to the funds being held on trust should be understood “in the broad sense” contemplated in Harmer, that the Court is not beneficially entitled to the funds and holds them for the particular purpose for which they were paid into Court.

147    The orders of Rares J on 2 February 2023 were made to give effect to his reasons for judgment in QGC (No 4) on the distribution of the funds paid into Court. In that judgment, Rares J also addressed the “compliance issue”, namely, whether each of the 11 families had complied with the entity establishment orders that were made on 28 May 2021 (with later variations). The entity establishment orders were made following the judgment in QGC (No 2), in which Rares J held that a company in administration or liquidation is not capable of being a Nominated Entity under cl 1.2 of Annexure 3 of the ILUA, and that a process needed to be undertaken to ensure that one or more new Nominated Entities was or were established by the families, with the agreement of the Native Title Party, for the purposes of the ILUA: QGC (No 2) at [54], [70], [77], [81]–[82].

148    In dealing with the compliance issue in QGC (No 4), Rares J specifically addressed the question whether a notice given to QGC by the Native Title Party under cll 2.1 and 2.2 of Annexure 3 of the ILUA is required to identify the bank account of the Nominated Entity. As Rares J recognised, those clauses do not expressly provide for the identification of a bank account, as opposed to the notification of the name and address of the Nominated Entity that would be the payee of the benefits then due: QGC (No 4) at [32]. Thus, the requirement to notify bank account details was not directly sourced in the terms of the ILUA.

149    Nevertheless, once BCJWY was no longer capable of being the Nominated Entity, the process of establishing one or more new Nominated Entities was governed by the entity establishment orders made on 28 May 2021. Annexure A to the entity establishment orders set out nine steps to be completed within specified timeframes. Central to this process was the facilitation of meetings of each Family to enable consultation and to decide on the process and provide instructions for the establishment of a Nominated Entity for that Family. The penultimate step in the Annexure (step 8) was “Notification of Nominated Entities and written notice and direction”, under which QGC was to convene a meeting or request written notification of the Native Title Party for the purpose of providing the notice and direction under cls 2.1 and 2.2 of Annexure 3 of the ILUA in respect of the Nominated Entities established by the Families. The final step (step 9) was “Presentation of outcome to Federal Court for further order”, under which all parties were “to comply with the orders to be made by Rares J for the payment of funds held in Court and for future Benefits payable under the ILUA”.

150    On 3 March 2022, Rares J made orders listing the matter for a case management hearing on 21 April 2022 for purposes that included “making orders with respect to the filing of evidence and submissions and listing of the final hearing with respect to the nominated corporations”. The notes to those orders recorded that the President of the NNTT had advised the Court that a number of Families had completed all the necessary steps in the Annexure to the entity establishment orders, and that “[o]n 2 February 2022, representatives of the Daylight family also advised the NTTT and the Applicant (QGC) that it has also completed the necessary steps” in that Annexure. The orders annexed a list of the corporations established by each of the Families, which relevantly included BMAC in respect of the Daylight Family.

151    On 4 May 2022, following the case management hearing on 21 April 2022, Rares J made orders listing the matter for final hearing on 27 July 2022. The case management orders contemplated that various respondents would file submissions addressing compliance with Annexure 3 of the ILUA, together with affidavit evidence that was required to include “details of the bank account for the Nominated Corporation to which the party seeks payment of the funds held in Court and for the payment of future Financial Benefits under the ILUA” and to annex any notification of Nominated Entities and written notice and direction as provided for in step 8 of the Annexure to the orders made on 28 May 2021.

152    The appeal book prepared by the parties did not include copies of the transcript of the hearing before Rares J on 27 July 2023 or the preceding case management hearings, which might have shed further light on the genesis of the requirement to notify QGC or the Court of the bank account details of Nominated Entities. In his judgment in QGC (No 4), Rares J stated that, having regard to the increase in the use of electronic funds transfer since the ILUA was entered into in 2010, the entity establishment orders “required that QGC be given the details of each nominated entity’s bank account to facilitate electronic funds transfer of what was due to it”: QGC (No 4) at [32]. While this might have been a gloss on the terms of the entity establishment orders, such a requirement appears to have been accepted by the parties in the course of their submissions before Rares J. Accordingly, Rares J concluded that “[o]nce each nominated entity gives QGC the bank account details, all of the nominated entities will have complied with the entity establishment orders”: QGC (No 4) at [34]. It therefore appears that Rares J and the parties were proceeding on the basis that the Court-ordered process for establishing the Nominated Entities would culminate in the notification of bank account details for the purposes of transferring funds.

153    The parties were ordered to confer and propose a form of orders consistent with the reasons for judgment in QGC (No 4). That ultimately resulted in the orders made by Rares J on 3 February 2023, including the orders that are critical to the outcome on the present appeal, namely that:

3.     The funds paid into Court by the applicant plus any interest accrued from the funds being held by the Court be distributed by the Court through the process set out in Order 4 to the entities noted below as follows:

a)     first, $299,384.18 be paid to Trevor Hauff Lawyers, being for solicitor/client costs as certified in the certificate of taxation issued by the Registrar on 25 July 2022; and

b)     secondly, the balance be distributed by payment in 11 equal shares to each of the following entities:

…

iv)     B&M Aboriginal Corporation ICN 9678;

…

4.     The distribution of funds pursuant to order 3 occur:

a)     on 14 February 2023 for each entity that has provided the Court with written notice of its bank account details prior to that date; or

b)     within 3 days of any entity notifying the Court of its bank account details if such details are not otherwise notified to the Court in writing prior to 14 February 2023.

154    Importantly, Order 3 provided for the distribution of the funds paid into Court to the Nominated Entities “through the process set out in Order 4”. Under that process, for each entity that had not provided the Court with written notice of its bank account details prior to 14 February 2023, the distribution of funds would occur within three days of the entity notifying the Court of its bank account details.

155    Given the common assumption that it was necessary for each Nominated Entity to provide notice of its bank account details in order to complete the steps necessary to comply with the entity establishment orders, the orders made on 3 February 2023 should be construed as imposing a requirement that the entity must have notified the Court of its bank account details as a precondition to the distribution of funds pursuant to those orders. That is, the requirement was not a mere procedural mechanism giving effect to an existing substantive right to payment. As O’Bryan and Halley JJ note at [114], such a condition served a protective purpose. That purpose would be defeated if funds could be distributed to an entity that is already in administration, receivership or liquidation at the time that it notifies its bank account details and receives payment. The orders contemplate a prompt distribution of funds by the Court to each Nominated Entity once its bank account details have been notified, on the assumption that the entity would continue to meet the requirements of cl 1.2 of Annexure 3 of the ILUA at that time.

156    The appeal was conducted on the basis that BMAC had not provided the Court with written notice of its bank account details prior to 14 February 2023, nor thereafter (see the reasons for judgment of O’Bryan and Halley JJ at [55]). Accordingly, while written notice had been given that BMAC was a Nominated Entity for the purposes of cls 2.1 and 2.2 of Annexure 3 of the ILUA (see PJ [12]), BMAC had not yet complied with the process required by the entity establishment orders and Order 4 of the orders made on 3 February 2023 in order for the funds to be distributed to it. In such circumstances, it had no entitlement to the payment of those funds. I agree that the end result is as summarised by O’Bryan and Halley JJ at [126].

157    It may be observed that these aspects of the orders made by Rares J on 3 February 2023, which are critical to the outcome of the appeal, were not clearly exposed by the parties’ submissions before the primary judge, in which little if any attention was paid to the requirement concerning the notification of bank account details. The appellant argued that the funds in Court could not be paid to BMAC because it did not continue to meet the requirements for being a Nominated Entity in accordance with the ILUA, relying principally on the condition to which the “remaining payments” were subjected by Order 5 of the orders made on 3 February 2023. The respondent, on the other hand, argued that the funds had become the property of the company once it was established as a Nominated Entity under the ILUA. Neither party attached any particular significance to the requirement for each entity to provide written notice of its bank account details in order for the distribution of funds to occur.

158    As noted by O’Bryan and Halley JJ at [96], BMAC has incurred substantial expenses in the course of its administration which, together with the alleged debt claimed by Mr Sarai of Safe Harbour Lawyers, would constitute a very large proportion of the funds held by the Court for the benefit of the Daylight family. The primary judge was alive to the “sad consequence” of the orders made below, namely, that “most of the funds that should be available to the family members for whose benefit the ILUA was established will be consumed by the fees of lawyers and corporate administrators”: PJ [20]. However, the purpose of the equity establishment orders and the orders made by Rares J on 3 February 2023 was to minimise, if not avoid, the risk of any such consequences arising.

159    Of course, it remains possible that a Nominated Entity might enter administration or liquidation after having received or become entitled to annual payments from QGC or from the funds paid into Court. In practice, that possibility is likely to be alleviated by the prompt distribution of such payments by the Nominated Entity to or for the benefit of the Families. Questions might arise in relation to the capacity in which payments are held by the Nominated Entity under the ILUA prior to their distribution, and whether those funds are properly regarded as the property of the entity. Clause 1.1 of Annexure 3 refers to the Nominated Entity being “used for the purposes of holding the Financial Benefits provided under this Agreement for the Families”. Under cls 1.2(a) and (b), however, the Nominated Entity can be either “an incorporated body” the membership or shareholding of which is restricted to members of the Families, or “a trust” for the benefit of the Families (whether as a fixed trust or a charitable trust). In the case of the former, it is arguable that the Nominated Entity holds the funds paid under the ILUA as an agent or in some other fiduciary capacity. None of these questions arise on the facts of the present appeal, and it is unnecessary to consider them further here.

160    I agree with the orders proposed by O’Bryan and Halley JJ.

Associate:

Dated:    6 March 2025

SCHEDULE OF PARTIES