FEDERAL COURT OF AUSTRALIA

Henry v Western Downs Group Limited [2018] FCA 1168

ORDERS

THE COURT ORDERS THAT:

1.    The Attorney-General for the State of Queensland be granted leave to intervene in the proceeding for the purposes of making submissions pursuant to r 9.12 of the Federal Court Rules 2011.

2.    The applicants on the amended originating application have leave to substitute Elizabeth Johnston, who acts on her own behalf and on behalf of the Kambuwal Family Group, for Matthew Queary as an applicant in the proceeding.

3.    All parties have leave to inspect and, in accordance with the usual practice of the Registry, to make copies of any documents produced on subpoena unless there is currently an order prohibiting access to any particular document or documents.

4.    Any requirement to file any defences that have not been satisfied be stayed until further order.

5.    The matter be stood over for case management on 30 October 2018.

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

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

RARES J:

1    This is an application under s 237 of the Corporations Act 2001 (Cth), by six individuals, being Beatrice Henry, Elizabeth Johnston, Gregory Emmerson, Patricia Conlon, Deidre Daylight and George Hopkins, to, in effect, convert Western Downs Group Limited, a company established as a charitable trust, from being the first respondent into being the seventh applicant, and to pursue the proceeding in its name. Some of the applicants, including Ms Henry and Mr Emmerson, became initial directors of Western Downs. The second, third and fourth respondents, Russell Doctor, Jason Jarro and Kerry-Anne Lacey, were also initial, and remain, directors of Western Downs. Mr Doctor and Mr Jarro appear to have arranged for the sixth respondent, Sandlewood Aboriginal Projects Limited, to act as a service provider to Western Downs. The fifth respondent, Lucy Davis, allegedly assisted Mr Doctor in respect of his alleged misuse of trust money.

Background

2    The circumstances relevant for the present purposes can be briefly stated. A substantial amount of material has been deployed in evidence before me, but it is not necessary to set out much of it for the purposes of these reasons.

3    On 10 December 2012 a number of individuals, including Ms Henry, Ms Conlon, Mr Emmerson, Mr Doctor, Mr Jarro and Ms Lacey, entered into an indigenous land use agreement (the ILUA) with Arrow Energy Pty Ltd on their own behalf and on behalf of persons who then understood themselves to comprise 11 native title, or potential native title, claim groups (that the ILUA defined as the “Western Downs Unclaimed Area Native Title Group”) with an interest in land and waters in south-east Queensland, in the Western Downs area, not then the subject of any determination of native title under the provisions of the Native Title Act 1993 (Cth).

4    The ILUA recorded that there were no registered native title claims on the Register of Native Title Claims at the authorisation date over the ILUA area, and that Arrow was intending to conduct a project that would, first, involve physical disturbance to land and waters and, therefore, secondly, have the capacity to cause harm to Aboriginal cultural heritage and to the lands and waters of which the indigenous people are spiritual guardians. Under the ILUA, Arrow was to pay a total of $5.75 million (defined as “the Benefits”) to a “Corporate Entity”, that the ILUA defined as an entity established by the native title party (comprising those persons who had signed the ILUA) and that fulfilled the requirements prescribed in cl 7. It is common ground that Western Downs became the “Corporate Entity” for the purposes of the ILUA.

5    Clause 7.2 of the ILUA provided that the native title party had to ensure that Western Downs, as the Corporate Entity, have a constitution or other legally binding rules that provided that, among other matters:

    only members of the broader native title claim group, that included the 11 identified native title claim groups, could be members, shareholders or directors of it; and

    “the Benefits received are distributed in a fair and equitable manner to the members of the Western Downs Unclaimed Area Native Title Group”.

6    Under cl 7.2, the native title party also had to ensure that Western Downs became the trustee of a trust established to distribute the benefits to the claim group, and that the trust deed had to contain similar requirements to Western Downs’ constitution.

7    Ultimately, Western Downs was incorporated as a company limited by guarantee. Its constitution provided that:

    the distribution amounts would be the amounts that it received, pursuant to the ILUA, less a reasonable amount, as determined by its directors, to meet its expenses; and

    there would be 11 identified groups comprising descendants of named apical ancestors, together with any innominate (but never formed) “group of persons who hold or may hold native title (as defined in the Native Title Act 1993 (Cth)), in the ILUA Area as determined by a resolution passed by more than 75% of the Directors”.

8    The constitution excluded the replaceable rules under the Corporations Act by cl 4.1. Clause 5.1 defined the purposes for which Western Downs was established and would be maintained, namely to promote and benefit the beneficiaries by pursuing, substantively, charitable objects, to the extent that they comprised charitable purposes, as recognised by the law of equity, the Income Tax Assessment Act 1997 (Cth) and Charities and Not-for-profits Commission Act 2012 (Cth) and any other applicable legislation.

9    Importantly, cl 7 provided:

7    APPLICATION OF INCOME AND PROPERTY

7.1    The income and property of the Company however derived shall be applied solely towards the promotion of its Purposes and no part shall be paid or transferred directly or indirectly to or among the Members (in their capacity as Members) PROVIDED HOWEVER that: -

(a)    nothing shall prevent the payment in good faith of interest to any such Member in respect of moneys advanced by him or of remuneration to any Directors, officers or servants of the Company or to any Member, or other person in return for any services actually rendered to the Company; and

(b)    nothing herein contained shall be construed so as to prevent the repayment to any Member of out-of-pocket expenses or interest on money lent, or rent for hire of goods or for premises demised to the Company.

7.2    In the promotion of its Purposes, the Company will pay or distribute the Distribution Amounts in equal shares to, or for the benefit of, the Groups within a reasonable time after receipt.

7.3    The Native Title Party signatories to the ILUA representing a Group or the Director appointed by that Group or other authorised representatives of that Group may nominate in writing to the Company a Group Representative Company, that they have been authorised by that Group to nominate, to receive a Group’s share of the Distribution Amounts.

7.4    The Company may only pay or distribute a Group’s share of the Distribution Amounts to a Group Representative Company if that Group Representative Company at the time of payment or distribution:

(a)    is a “not for profit” entity whose constitution prohibits the payment or distribution of its income or property to its individual members;

(b)    has a majority of members and directors who are members of the relevant Group or which agrees in writing to only use such payments to benefit the relevant Group;

(c)    is not insolvent, the subject of a winding-up application or under the control of administrators, receivers, liquidators or controllers; and

(d)    is not in material breach of financial reporting, audit and other requirements under the legislation regulating that company.

7.5    If a Group has not nominated a Group Representative Company or that Group Representative Company does not meet the requirements in Clause 7.4, the Company will pay or apply that Group’s share of the Distribution Amounts for the benefit of that Group as directed in writing by the Native Title Party signatories to the ILUA representing that Group, the Director appointed by that Group or by other authorised representatives of that Group or as reasonably determined by the Board. (emphasis added)

10    Clause 9 required Western Downs to keep records.

11    In the event, Western Downs held some early directors’ meetings and established a bank account. After this occurred, it is common ground that, on about 10 January 2014, Arrow paid Western Downs $5.75 million.

12    The applicants seek that Western Downs be joined as an additional applicant so that they can make a claim in its name against each of Mr Doctor, Mr Jarro and Ms Lacey, for breach of fiduciary duty in paying, or causing to be paid to themselves or their associates, very large amounts of the trust money, that were intended to be for the benefit of the native title claim groups and their members. The applicants also seek to bring claims, in Western Downs’ name against:

    first, Sandlewood to recover over $1.6 million in trust money that it received and then, mostly, paid away; and

    secondly, Ms Davis in respect of nearly $600,000 of trust money that she allegedly received, by reason that each of them allegedly knowingly assisted and participated in primarily, but not exclusively, Mr Doctor’s and Mr Jarro’s breaches of fiduciary duty owed to it.

13    The applicants, through their solicitors, conducted extensive searches, aided by the use of subpoenas, to ascertain what became of the $5.75 million that Arrow paid to Western Downs. They assert that four of the 11 native title claim groups to which cl 7.2 of the ILUA contemplated equal distributions (of about $520,000) of that sum should have been made, received either nothing or very little. A number of allegations that the applicants wish Western Downs to make against Mr Doctor and Mr Jarro require consideration. The applicants allege that Mr Doctor and Mr Jarro received $330,000 or more each, (and they do not appear to dispute) through payments made by Sandlewood in respect of fees for alleged meetings or consultancy work that they undertook for Western Downs during the course of 105 meetings with one another. The minimum rate of their remuneration was $2,500, and in some cases, $3,500 per meeting. In a number of instances, the alleged meetings occurred on sequential days.

14    For example, on 29 August 2014, Mr Jarro sent an email to Sandlewood, asking it to pay, on that day, sitting fees to Mr Doctor by a deposit it into his bank account. He added:

As for the other groups, Russell [Doctor] and myself have spoken and they aren’t to receive anything. (emphasis added)

15    Indeed, they did not. On another occasion, on 14 January 2015, Mr Jarro emailed Sandlewood asking it to pay, first, fees of $2,500 to himself and to Mr Doctor for 6 and 7 January (a total of $10,000), secondly, fees of $3,500 for “Consultancy Meeting 12 & 14” (a total of $14,000), and, thirdly, fees of $3,500 to Mr Jarro himself for “Consultant meeting 9th, 10th, 11th” (a total of $10,500). Mr Jarro noted in that email that he would require another consultant fee to be paid to Mr Doctor the next day, but added that it could be paid on the same day “if it is easier” (making a total of $38,000 in fees for the two men over eight days).

16    Mr Doctor was associated with the Bigambul claim group, which was one of the 11 native title claim groups named in the ILUA and Western Downs’ constitution as a beneficiary of the trust. It received its exact share of $522,727.27, being one-eleventh of the total payment paid by Arrow. But, Bigambul also received approximately another $1 million, much of which came to it through payments that Western Downs made to Sandlewood. Mr Doctor gave evidence that he had opened Bigambul’s three bank accounts. Although he could operate them with another director, one signatory could effect any transactions. He admitted that he received from one Bigambul bank account about $465,000, and from another, about a further $486,500.

17    Mr Doctor claimed that Bigambul had employed Ms Davis at a salary of about $95,000 per annum, that it paid her for three years. He admitted that Bigamul also had paid him a total salary of over $260,000, which may have included director’s fees, also that it had paid $94,000 in tax for him, and another $35,000 for his car to be repaired because he claimed that that car was part of his “package”.

18    One might be forgiven for thinking that these salaries and benefits reflected appropriate remuneration for executives of companies that had extensive businesses and dealings. However, there is nothing in the evidence to suggest in what way any of these payments, prima facie, benefited any of beneficiaries of the trust, being the native title claim groups, or achieved, or were directed to, the charitable purposes for which Western Downs was established. Mr Doctor, however, said that these payments were necessary for him to undertake work on behalf of Bigambul. No doubt that will be a matter for trial. He also said in his affidavit of 3 May 2018 that:

Bigambul did receive its benefits amount of $522,727.27 but also received the other money as a service provider for [Western Downs] and carried out that function in spending that extra money in a similar way as Sandlewood was employed by [Western Downs] as authorised by the board.

19    Mr Doctor accepted that Bigambul had received in total $1.537 million from Western Downs, either directly or through Sandlewood. The statement of claim alleges that in total, Mr Doctor personally received over nearly $1.5 million out of the trust moneys paid by Arrow, and any interest those moneys may have earned in the brief time they appear to have remained in a bank account.

20    Sandlewood, through its chairperson and director, John Leslie, opposes the applicants being granted leave under s 237(2). He said that Sandlewood is a charity, incorporated in 2001, that has done work for indigenous persons and assisted in dealing with cultural heritage issues. Mr Leslie said that, ordinarily, Sandlewood was entitled to invoice companies to which it provided services so as to reimburse it for outlays on their behalf and to receive an administration fee of 20%.

21    Mr Leslie claimed, without producing any contract or other documents on the present application, that Sandlewood knew nothing about the ILUA or the constitution of Western Downs and:

the only page that Sandlewood receives out of the ILUA or [Cultural Heritage Management Plan] is the Schedule of Rates which advises Sandlewood what payments it is required to pay for wages or meetings.

22    Mr Leslie also said that the Western Downs’ representatives were made up of persons from the nominated 11 Western Downs native title claim groups, which he accurately set out, both as to the representatives and the names of the claim groups. He deposed that the board of Western Downs had been made up of nine persons and that the executive board was comprised by Mr Doctor, as chairman, Mr Jarro, Ms Lacey and a fourth director, Susan Maytom, who dropped out of activity on the board in about mid-2014. Mr Leslie said that the executive directors were the persons who authorised Sandlewood to make all payments “on their behalf for Western Downs”. He said that he knew all of the Western Downs representatives, as he had had dealings with each of them over the years, and that none had raised a concern with him about the executive board, and nor had Ms Maytom or Ms Lacey when each resigned from the executive committee. He said that if any of the Western Downs representatives had made a complaint, he would have stopped Sandlewood from making any further payments until there was a full board meeting that resolved the issues of conflict, and that “they” could also have reported the matter to the police fraud unit.

23    He said that the executive had authorised and directed Sandlewood to pay “the following items on behalf of the eleven Native Title representatives” and then described types of payments, including “any other financial matters that the Western Downs executive directed Sandlewood to carry out for each of the 11 representatives of the Native Title Group”.

24    Mr Leslie said that Sandlewood denied participating in any deception, dishonesty or fraud. He said, somewhat confusingly, that Sandlewood had been paid a total of $317,425 for its fees, asserting that 10% of that had been paid in respect of GST (although that assertion appeared to have overlooked any input tax credits that Sandlewood may have been able to benefit from), and that Sandlewood had also received a further amount of $158,712.50. He said:

There were no circumstances surrounding the authorisations or payments such that caused Sandlewood to make any inquiries as to the appropriateness or otherwise of the authorisation or payments, nor was Sandlewood required to make any such enquiries, if circumstances existed in view of the limited scope of its appointment.

25    He explained that appointment in two somewhat potentially inconsistent ways, in paragraphs 17 and 19 of his affidavit as follows:

17    Sandlewood knew nothing concerning the dealings of the directors of Western Downs Group Limited and its only role was to pay the persons or groups authorised by the board for the matters referred to in paragraph 12. It was not Sandlewood’s role to scrutinize or audit any of the authorisations or payments. Sandlewood was a conduit and nothing more, and at all material times acted on its instructions.

…

19    Sandlewood was advised by Western Downs that Arrow Energy was approached for extra funds to set up an office to administer the funds from Arrow Energy but the request was refused. As there was a considerable amount of time and expertise required to act as a service provider and as the executive did not have the knowledge and expertise to carry out this expertise [sic] they therefore appointed Sandlewood as the service provider with its recognised expertise to carry out all of the functions necessary to administer the funds to the traditional owner groups. Some of the tasks Sandlewood was obliged to carry out were: Advertising, conference room hire, catering, accommodation, meals, flights, mileage payments, authorisation meetings, family group meetings, Yarrowair Sorry business, incorporation fees, consulation [sic] fees, to Dobson Finance and Pelkham Consultation, incorporation fees to set up trust funds, solicitors fees, facilitation fees for each of the 11 representative Native Title Groups. (emphasis added)

26    The Attorney-General for the State of Queensland has intervened, because of the charitable nature of the trust under which Western Downs received and dispersed the money, and her duty to safeguard and ensure the proper enforcement of charitable trusts in the public interest. The Attorney-General’s intervention is appropriate in the circumstances. Hopefully, the Attorney-General for the Commonwealth will give similar consideration to the importance of ensuring that the Court is assisted by submissions and or more active participation in cases of this nature, that are brought to clarify how, and in what ways, the distribution of the very substantial moneys that are often paid under indigenous land use agreements should occur.

The legislative context

27    Section 237 of the Corporations Act governs the circumstances in which the Court must consider the grant of leave and relevantly it provides:

237    Applying for and granting leave

(1)    A person referred to in paragraph 236(1)(a) may apply to the Court for leave to bring, or to intervene in, proceedings.

(2)    The Court must grant the application if it is satisfied that:

(a)    it is probable that the company will not itself bring the proceedings, or properly take responsibility for them, or for the steps in them; and

(b)    the applicant is acting in good faith; and

(c)    it is in the best interests of the company that the applicant be granted leave; and

(d)    if the applicant is applying for leave to bring proceedings—there is a serious question to be tried; and

(e)    either:

(i)    at least 14 days before making the application, the applicant gave written notice to the company of the intention to apply for leave and of the reasons for applying; or

(ii)    it is appropriate to grant leave even though subparagraph (i) is not satisfied.

28    It appears to be common ground between the parties that there is a serious question to be tried for the purposes of s 237(2)(d). That question involves the propriety of very large payments that Western Downs made by reason of the control that Mr Doctor, as chairman of directors and a member of its executive, and Mr Jarro, as another member of its executive with Ms Lacey and, while she was a director, Ms Maytom, exercised and whether Western Downs can recover any such payments.

29    There is no question about the adequacy of any written notice being provided before the application was made for the purposes of s 237(2)(e).

30    Thus, the substantial questions in contest between the parties are whether, for the purposes of each of s 237(2)(a), (b) and (c), it is probable that Western Downs would not itself bring the proceedings or properly take responsibility for them or for steps in them, the applicants are acting in good faith and that it is in the best interests of Western Downs that the applicants be granted leave to bring the proceedings in its name.

Consideration

31    I have considered and read all of the evidence upon which the parties relied. That evidence is much too voluminous to summarise here, nor would such a summary be fruitful, since there was common ground that there was at least one serious question to be tried.

32    In Huang v Wang (2016) 114 ACSR 586 at 597-598 [56]-[60], Bathurst CJ, with whom McColl JA and, with additional observations, Barrett AJA agreed, identified that if the five criteria in s 237(2) are made out, the court is required to grant leave. He said that the requirement of the best interests of the company in s 237(2)(c) required the applicant for leave to establish, on the balance of probabilities, that the action is in the best interests of the company, and that this fact that could only be determined by taking into account all relevant circumstances.

33    Bathurst CJ said that, ordinarily, the best interests of the company were those of the shareholders: Huang 114 ACSR at 597 [59]. But, Western Downs is a company limited by guarantee and established as a charitable trust. In my view, the relevant interests of Western Downs for the purposes of s 237(2)(c) are its interests as a trustee, with a duty to distribute what Arrow had paid, in accordance with cl 7 of its constitution, to the beneficiaries or potential beneficiaries in equal shares, being the 11 groups. There is a real and serious question as to whether that in fact has occurred and whether some of the trust money has been diverted from its proper destination of benefiting some of those nominated beneficiaries.

34    I am satisfied that it is probable that Western Downs itself will not bring or properly take responsibility for the claims that the applicants wish to bring in its name for the purposes of s 237(1)(a). It is not in dispute that the board of Western Downs has not effectively functioned since early 2014. Mr Doctor made three affidavits in one of which he said that, in May 2018, he found that it was impossible to call a meeting of directors of Western Downs because the directors who are aligned with the applicants were not prepared to attend. Moreover, Mr Doctor had explained in an earlier affidavit that he had been suffering, and later recovering from, treatment for cancer in 2017. As Mr Doctor argued, it is subject to a boardroom fight that is unlikely to be resolved, at least, in a way that would to enable the company itself to take the proceedings. On the evidence before me, it is bereft of money, despite the applicants’ allegations that four of the 11 claim groups have not received all, or much, of their equal shares of about $520,000, amounting in total to about $2 million. Much of the money allegedly unpaid to the four beneficiary groups appears on the present evidence to have been paid to, or directed towards, Mr Doctor, Mr Jarro and Ms Davis for what they, no doubt, will contend they will be able to be establish, at a hearing, were appropriate purposes.

35    I am satisfied that the applicants are acting in good faith for the purposes of s 237(1)(b). There is a question, which Mr Doctor raised reasonably, as to Mr Emmerson’s role. On the material before me, there is a reasonable basis to consider that he received around $21,000 in the nature of director’s fees, paid at similar rates as those paid to Mr Jarro and Mr Doctor. Of course, the payments to Mr Emmerson were for such smaller amounts, but Mr Emmerson, while accepting that he was paid some fees, claims to have no current recollection of being paid the greater part of the $21,000. However, I do not think that that indicates that the applicants are acting in bad faith, either as individuals or collectively.

36    Turning to s 237(1)(c), in one sense, the conduct of Mr Jarro, in sending and asking for payments to be made in the emails to which I have referred in [13]-[14] above, accurately could be characterised as making Sandlewood a conduit and nothing more. But that characterisation would not take account of Mr Leslie’s other description of Sandlewood having “recognised expertise to carry out all of the functions necessary to administer the funds to the traditional owner groups”.

37    The circumstance that two members of Western Downs’ executive board were giving directions on its behalf to its nominated service provider, Sandlewood, to pay them directors’ and consultants’ fees that Western Downs incurred to them, is, in my opinion, a factor that adds strength to the existence of a serious question to be tried. That creates, of itself, a reasonable basis to conclude that it is in the best interests of Western Downs that it be able to bring proceedings to assert that the substantial payments of Western Downs’ money that Sandlewood made to Mr Doctor and Mr Jarro occurred in circumstances in which Sandlewood could become liable, on the basis that it had knowingly participated in Western Downs’ directors’ alleged breaches of fiduciary duty, because it had a state of mind amounting to one of the categories of knowledge that Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ said, in Farah Constructions Pty Limited v Say-Dee Pty Limited (2007) 230 CLR 89 at 162-164 [173]-[177] was necessary to make accessorily liable under the rule in Barnes v Addy (1874) LR 9 Ch App 244 at 254; see too: Lewis Securities Ltd (In Liq) v Carter (2018) 355 ALR 703 at 742-743) [183]-[187] per Emmett AJA.

38    In particular, in my opinion the circumstances support a conclusion that there is a serious question to be tried, based on what Mr Leslie said, that it was not Sandlewood’s role to scrutinise or audit any of the authorisations or payments of Western Downs’ moneys because Sandlewood was a mere “conduit and nothing more”, as to whether it wilfully or recklessly failed to make such inquiries as an honest and reasonable man would make, or that it had knowledge of circumstances that would indicate the facts to an honest and reasonable man: Farah 230 CLR at 163 [174]. Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ observed that a person may have acted dishonestly, judged by the standards of ordinary, decent people, without appreciating that the act in question was dishonest by those standards. They also said that the test did not allow the morally obtuse to escape by a failure to recognise an impropriety that would have been apparent to an ordinary person applying the standards of such persons.

39    The scenario that directors would be causing Western Downs, through Sandlewood as a “conduit”, to pay themselves rather than not directly, raises a real question as to why those directors were causing Western Downs to make those payments in that unusual way, at least on the material presently in evidence before me. To an extent Mr Doctor has told some of his story. No doubt as Dixon CJ said in Pontifical Society for the Propagation of the Faith v Scales (1962) 107 CLR 9 at 20:

The difficulty is that the Court itself can never be certain that it knows all the circumstances. More often than not, one may be sure that the Court knows few of them. Experience of forensic contests should confirm the truth of the common saying that one story is good until another is told…

40    Thus, there are serious questions to be tried as to what has become of the substantial sums of trust money that appear not to have been paid to four groups of beneficiaries of the trust, but instead, appear to have been paid to one or more of the respondents, the justification for why the contentious payments occurred, and the various respondents’ accountability, if any, for the money that each received. There is also a serious question to be tried as to whether those sums have been applied for the charitable purposes for which Western Downs was established, and in respect of which it was bound to pay those trust moneys.

41    There is also the potential for a constructive trust to be proved, if the applicants (or Western Downs) can trace money that was paid wrongly in breach of Mr Doctor’s, Mr Jarro’s or Ms Lacey’s fiduciary duty.

42    Mr Doctor argued that Western Downs’ should be indemnified for its costs and exposure to orders for costs and, that without such an indemnity from the applicants it would not be appropriate to make an order granting them leave under s 237(2). However, in my opinion, there is no reason to so require, in circumstances where the applicants, in any event, will bear the burden and costs of running the case, or if not they, then the Attorney-General, and in either case they would be jointly and severally liable to satisfy any adverse order for costs to the extent it might affect Western Downs.

43    In addition, this proceeding relates to native title, being the rights claimed by persons under the ILUA to receive benefits paid to them in their capacity as persons who hold or claim to hold native title, for the purposes of s 80 of the Native Title Act. Section 85A(1) provides that unless the Court otherwise orders, each party to a proceeding of that kind must bear his or own costs. There is no suggestion at the moment that the exception to that prima facie position under s 85A(2) ought to apply. The subject matter of the proceedings are the benefits, being trust moneys, paid under the ILUA that exist only by reason of the provisions of the Native Title Act. Therefore, it is arguable that the proceeding may fall within the description in s 80 of the Act: LNC Industries Limited v BMW (Australia) Limited (1983) 151 CLR 575 at 581-582, per Gibbs CJ, Mason, Wilson, Brennan, Dean and Dawson JJ, with whom Murphy J agreed. However, it may be that because the proceeding is under the Corporations Act, s 85A of the Native Title Act may not apply or the court might otherwise order: Burrabugga v Queensland (2016) 236 FCR 160. However, this is unlikely to arise for the reason I have given in [42] above.

44    For these reasons, I am satisfied for the purposes of s 237(2)(c) that it is in the best interests of Western Downs that the applicants be granted leave to bring the proceedings in its name at this point of the proceedings. However, because of the intervention of the State Attorney-General today and the issue as to what, if any, further role she may play in the proceedings and whether, if at all, the Commonwealth Attorney-General would also wish to intervene, consideration should be given as to whether the State Attorney-General, as the proper person to enforce charitable trusts, may wish to assume the role of prosecuting Western Downs’ case. The parties may wish to make submissions as to any conditions that should be imposed on the applicants or the Attorney-General, depending on what position she ultimately adopts for that purpose.

45    In my opinion, the best interests of Western Downs are to fulfil its duties as trustee and to use its position to recover any of the trust moneys or compensation for their wrongful misapplication from any of the respondents if he, she or it acted in breach of fiduciary duty or was knowingly concerned in another respondent’s breach of such a duty in respect of any such misapplication. I am satisfied that the serious question to be tried is whether, in fact, it has been not able to do so because of the alleged wrongdoing of some of its directors and/or executive and those whom they engage, namely Sandlewood, and, if it be the case, Bigambul: Huang 114 ACSR at 597-598 [56]-[60].

Conclusion

46    For these reasons, I am satisfied that this is a case in which the applicants should be granted leave to bring the proceedings in Western Downs’ name because each of the conditions in s 237(2) has been met. However, as the parties suggested, I will defer making orders until they have had an opportunity to address on what, if any, conditions should be imposed on the applicants in respect of how Western Downs is to prosecute the proceeding and to give the Attorney-General the opportunity to consider what, if any, steps she wishes to take in that regard.

Associate:

Dated:    7 August 2018

SCHEDULE OF PARTIES