Federal Court of Australia

Reabel (in substitution for Henry) v Sandlewood Aboriginal Projects Limited [2026] FCA 648

ORDERS

THE COURT ORDERS THAT:

1.    Pursuant to s 238 of the Corporations Act 2001 (Cth), Veronica Reabel is substituted for Beatrice Maud Henry as the first applicant.

2.    Pursuant to s 240 of the Corporations Act 2001 (Cth), the parties have leave to settle the proceeding in the terms of the Deed of Settlement annexed to these Orders (save that the execution clause is modified by Order 3).

3.    The first, second and fourth applicants, the fifth respondent and the seventh applicant by its current directors execute the Deed of Settlement by signing the Deed by 4.30 pm on 23 April 2026.

4.    Upon filing an affidavit annexing the executed Deed of Settlement, the first, second and fourth applicants have leave pursuant to rule 26.12(2)(c) of the Federal Court Rules 2011 (Cth) to file a notice of discontinuance.

5.    The first, second and fourth applicants will not be liable to pay the costs of the other parties in relation to the discontinued claim.

6.    The first, second and fourth applicants file and serve an application for orders for the distribution of money held in Court in connection with this proceeding by 4.30 pm on 5 May 2026.

7.    The fifth respondent be excused from attendance in respect of any hearing concerning the application for orders for distribution of money held in Court.

8.    The parties have liberty to apply.

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

REASONS FOR JUDGMENT

RANGIAH J:

1    The first, second and fourth applicants made an oral application, pursuant to s 240 of the Corporations Act 2001 (Cth) (the Act), for leave to settle the proceedings against the fifth respondent.

2    I heard the application on 26 March 2026 and granted such leave. I indicated that I would provide my reasons in due course. These are my reasons.

3    The proceedings have a lengthy and complex history. It is necessary to summarise part of that history in order to put the present application into context.

4    The proceedings were initially docketed to Rares J. His Honour delivered six interlocutory judgments:

(a)    Henry v Western Downs Group Limited [2018] FCA 1168 – granting leave under s 237 of the Act to the applicants to bring proceedings on behalf of Western Downs Group Limited (Western Downs) and making Western Downs the seventh applicant;

(b)    Henry v Sandlewood Aboriginal Projects Limited (No 1) [2019] FCA 2060 – refusing an adjournment application by the second respondent, Russell Doctor;

(c)    Henry v Sandlewood Aboriginal Projects Limited (No 2) [2019] FCA 2061 – ordering that Western Downs have judgment on the breach of fiduciary duty claim against the second and third respondents, Mr Doctor and Jason Jarro;

(d)    Henry v Sandlewood Aboriginal Projects Limited (No 3) [2021] FCA 728 – ordering that Western Downs have judgment on part of its claims against the fourth respondent, Kerry-Anne Lacey, concerning her conduct in relation to payments received from Western Downs and Sandlewood Aboriginal Projects Limited (Sandlewood);

(e)    Henry v Sandlewood Aboriginal Projects Limited (No 4) [2021] FCA 1655 – granting leave for the applicants and Sandlewood to enter into a deed of settlement; and

(f)    Henry v Sandlewood Aboriginal Projects Limited (No 5) [2021] FCA 1648 – ordering that Western Downs have judgment on part of its claims against the fourth respondent, Ms Lacey, concerning her conduct in relation to payments received from Matilda of Barunggam Aboriginal Corporation.

5    Only the claim against the fifth respondent, Lucy Davis, remained to be resolved.

Background

6    These proceedings arise out of the respondents’ alleged dealings with monies paid by Arrow Energy Pty Ltd (Arrow) to the seventh applicant, Western Downs, under an Indigenous Land Use Agreement (the ILUA) made on 10 December 2012.

7    At the time the ILUA was entered into, there were no registered native title claimants under the Native Title Act 1993 (Cth) (the NTA). The ILUA was made between Arrow and representatives of eleven family groups who may have native title in the Western Downs area of South-East Queensland.

8    Under the ILUA, Arrow was permitted to engage in activities that could affect native title (and which constituted “future acts” within s 233 of the NTA) in the area covered by the agreement, including extraction and production of natural gas. The eleven family groups were to be paid compensation of $5,750,000, to be distributed in accordance with Schedule 4 of the ILUA through a corporate entity trustee.

9    The corporate entity became Western Downs, a company limited by guarantee and established as a charitable trust. Its role was to distribute the ILUA compensation funds equally amongst the eleven groups.

10    On 10 January 2014, Arrow paid the $5,750,000 into the Western Downs bank account. Each group’s share was $522,727.27 and was required to be distributed in accordance with Schedule 4 of the ILUA.

11    Of the eleven groups, only eight have substantially been paid their entitlements. The three groups who have not received any funds are the Emon Group (represented by the first applicant, named as Beatrice Henry); the Kambuwal Group (represented by the second applicant, Matthew Queary); and the Western Wakka Wakka Group (represented by the fourth applicant, Patricia Conlon).

12    The Originating Application originally sought an account and inquiry pursuant to rr 30.51 and 30.55 of the Federal Court Rules 2011 (Cth) (the Rules). An application was subsequently made under s 237 of the Act for the applicants to bring the proceedings against the respondents on behalf of Western Downs. On 13 July 2018, Rares J granted the applicants that leave. Western Downs was joined as the seventh applicant: see Henry v Western Downs Group Limited [2018] FCA 1168 at [46].

13    I do not propose to detail the lengthy, complicated and tortuous history of case management hearings and interlocutory applications. It is enough to say that on 4 June 2024, I granted the first, second and fourth applicants leave to file a Fifth Further Amended Statement of Claim, but they did not file that document within the required time. The applicants then filed an application on 28 February 2025 for leave to file the Fifth Further Amended Statement of Claim. At the hearing of that application on 10 July 2025, I ordered the parties to attend mediation and adjourned the interlocutory applications for, inter alia, leave to file and serve the Fifth Further Amended Statement of Claim to a date to be fixed.

14    Mediation then took place before two Registrars of the Court on 18 and 19 December 2025. As a result of the mediation, the applicants and the fifth respondent negotiated the Deed of Settlement and Release (the Deed of Settlement).

The claims against the respondents

15    The applicants alleged that the second respondent (Mr Doctor) and third respondent (Mr Jarro), the then directors of Western Downs, misapplied about $1.8 million of Western Downs’ funds in breach of their fiduciary duties.

16    On 13 September 2019, Rares J gave judgment against Mr Doctor for $1,720,554 and Mr Jarro for $1,780,782 plus costs as follows:

(a)    $1,014,924 plus interest in the sum of $284,428.98, against Mr Doctor and Mr Jarro;

(b)    $329,000 plus interest in the sum of $92,201.12 against Mr Doctor; and

(c)    $376,044 plus interest in the sum of $105,385.04 against Mr Jarro.

(See Henry v Sandlewood Aboriginal Projects Limited (No 2) [2019] FCA 2061 at [33]-[34].)

17    The proceeding was settled against Sandlewood by a deed of settlement approved by the Court: Henry v Sandlewood Aboriginal Projects Limited (No 4) [2021] FCA 1655. Sandlewood has paid $550,000 into Court.

18    The applicants allege that the fifth respondent, Ms Davis, received around $690,000 of the ILUA money. The applicants claim equitable compensation. They contend that Ms Davis was a knowing recipient of funds paid to her in breach of trust by Messrs Doctor and Jarro (first limb of Barnes v Addy (1873-74) LR 9 Ch App 244); or, alternatively, that she knowingly assisted them in their dishonest and fraudulent design (second limb).

19    The terms of the proposed settlement are contained in a draft Deed of Settlement provided to the Court. In summary, the Deed of Settlement provides that:

(a)    the applicants (on their own behalf and on behalf of their respective family groups) have agreed to discontinue the proceeding against Ms Davis (clauses 7 and 8);

(b)    the family groups are defined to mean the Emon Group, the Kambuwal Group and the Western Wakka Wakka Group (clause 1);

(c)    the applicants and Ms Davis will each bear their own costs of and incidental to the proceeding (clause 5);

(d)    the parties agree to release and indemnify (on their own behalf and on behalf of their family groups) each other from all claims arising out of, in connection with or incidental to the allegations made in the proceeding (clauses 10, 11, 12, 13, 14 and 16);

(e)    the parties agree that the Deed of Settlement may be pleaded as an absolute bar in response to any relevant claim brought by any of the applicants (or their family groups) other than a proceeding taken to enforce the provisions of the Deed of Settlement (clause 17).

Substitution of first applicant

20    The first applicant, Beatrice Maud Henry, passed away on 11 February 2026. The applicants seek an order that Veronica Reabel be substituted for Ms Henry. Ms Reabel is Ms Henry’s niece.

21    The application for substitution is made under s 238(1) of the Act. That provision permits a member, former member or person entitled to be registered as a member of the company to apply for an order that they be substituted for a person to whom leave has been granted.

22    I am satisfied that Ms Reabel is a descendant of one of the Emon ancestors identified at Schedule 1 to Western Downs’ constitution and is entitled to be registered as a member of Western Downs.

23    Under s 238(2) of the Act, the Court may make a substitution order if satisfied that Ms Reabel is acting in good faith and it is appropriate to make the order in all the circumstances. I am satisfied that Ms Reabel was appointed by members of the Emon group to replace Ms Henry as the representative of that group at a meeting held on 14 December 2025 at Rockhampton. I am satisfied that Ms Reabel is acting in good faith and that it is appropriate to make the order for substitution.

24    I will order that Ms Reabel be substituted for Ms Henry as the first applicant in the proceeding. However, since the previous judgments in this proceeding have named Ms Henry as the first applicant, I will order that the first applicant be styled, “Veronica Reabel in substitution for Beatrice Maud Henry”, so as to avoid confusion.

The application for leave to settle the proceeding

25    Section 240 of the Act provides that proceedings brought with leave must not be discontinued, compromised or settled without the leave of the Court.

26    In Rafferty v National Australia Bank Limited [2011] FCA 169, Mansfield J observed at [10]:

[Section 240 of the Act] is intended to ensure that the Court [has] the opportunity to prevent any collusion between the plaintiff and the defendant in the particular circumstances, and perhaps more widely to oversee the question whether the proposed resolution is in the best interests of the company. The Court may permit others whose interests may be affected to be heard before deciding whether to grant leave to compromise a proceeding brought with leave under s 237(2).

(Citation omitted.)

27    In Henry v Sandlewood Aboriginal Projects Limited (No 4) [2021] FCA 1655, Rares J held at [15] that:

Nothing in Pt 2F.1A expressly sets out the considerations relevant to the grant of leave to settle a proceeding under s 240. In my opinion, the discretion to grant leave under s 240 falls to be exercised on the principle that it is unconfined, except in so far as the subject matter, scope and purpose of the Act may enable the Court to discern any reason that is definitively extraneous to any objects that the Parliament could have had in view: see Water Conservation and Irrigation New South Wales v Browning (1947) 74 CLR 492 at 505 per Dixon J; The Queen v Australian Broadcasting Tribunal; Ex parte 2HD Pty Limited (1979) 144 CLR 45 at 49–50 per Stephen, Mason, Murphy, Aickin and Wilson JJ. The considerations governing the grant of leave to bring the proceeding under s 237 must also be relevant to the discretion to grant leave to enter into any particular settlement, as Stewart J held in Nation Energy (Australia) Pty Limited v Paltar Petroleum Limited (Administrators Appointed) [2019] FCA 1473 at [15], where he said:

Given that the power under s 241 is supervisory of proceedings commenced with leave under s 237, and the interests of the company are central to the granting of such leave, the interests of the company must be central to the exercise of the power under s 241. In considering what is in the best interests of the company, it is necessary to consider the prospects of success of the action, the likely costs and likely recovery if the action is successful and likely consequences if it is not: Robash Pty Ltd v Gladstone Pacific Nickel Pty Ltd [2011] NSWSC 1235; 86 ACSR 432 at [57] per Ball J.

28    It is relevant to observe that Rares J gave leave for Western Downs and the first respondent, Sandlewood, to enter into a settlement deed. After reviewing the confidential advice of counsel, his Honour was, “satisfied that there were complex and difficult issues of fact and law raised on the pleadings on which there was room for the parties to arrive at a bona fide compromise having regard to the uncertainties of litigation”: Henry v Sandlewood Aboriginal Projects Limited (No 4) [2021] FCA 1655 at [20].

29    The principal basis of the proposed settlement involves discontinuance of the proceeding against Ms Davis on the basis that the parties will bear their own costs.

30    The relevant parties to the proceeding and the Deed of Settlement have separate legal representation and have agreed to the terms of settlement and discontinuance of the proceeding. I am satisfied that the settlement does not involve any collusion between the parties.

31    The applicants’ claim against Ms Davis for equitable compensation raises complex issues of fact and law. That is amply demonstrated by the fact that the Statement of Claim is now up to its sixth iteration and the delays that have occurred so far. The applicants have not yet provided their evidence for the trial despite the joinder of Ms Davis in 2018; the matter was listed for trial in early 2023 before being adjourned to mid 2023 and eventually being vacated; and orders required the filing of the applicants’ material for the trial later in 2023. Any trial would inevitably involve substantial cost and risk. There is evidence that Ms Davis has limited means to satisfy any judgment.

32    Adding to the complexity and risk is that there are four unresolved interlocutory applications:

(a)    The applicants’ application for leave to file and serve a fifth further amended statement of claim;

(b)    The applicants’ application for discovery of documents (filed October 2023 but left in abeyance and then revived);

(c)    Ms Davis’ application for security for costs;

(d)    Ms Davis’ application for costs (arising from the discontinuation of the proceeding in June 2024 by some but not all applicant parties).

33    The current pleading (the fourth further amended statement of claim) also requires substantial amendments, as was conceded by counsel for the applicants at an earlier interlocutory hearing on 10 July 2025, to ensure the pleadings comply with the pleading rules and expose the full range of facts and inferences relied upon to make out each of the causes of action pleaded. The applicants are at real risk of an adverse costs order for costs thrown away by the amendments.

34    It is also significant that the applicants’ legal representation was being funded by Queensland South Native Title Services but that funding has now ceased and there is no apparent alternative source of funding.

35    In the context of the substantial delays so far, the need to further amend the pleadings and deal with interlocutory applications, the complex and contested nature of the claim, the applicants’ exposure to orders for costs, the limited prospects of recovering any judgment sum and the lack of funding, I was satisfied that the proposed settlement was in the best interests of all the parties, including Western Downs.

Other matters

36    There remained several issues in dispute between the first, second and fourth applicants and the current directors of Western Downs.

37    First, the lawyer representing the first, second and fourth applicants, Trevor Hauff, and another firm, Massar Briggs Law, each claimed to be entitled to represent Western Downs. Second, while there was general agreement that the proceeding should be discontinued against Ms Davis, the current directors of Western Downs expressed disagreement with the terms that provided for release and indemnity of the first, second and fourth applicants and their lawyers from all claims arising out of the allegations made in the proceeding. Third, the current directors submitted that the first, second and fourth applicants were not entitled to execute the Deed of Settlement on behalf of Western Downs and that the approval of the current board was required.

38    It was ultimately unnecessary for the Court to rule upon these issues. The second issue was resolved by Massar Briggs’ eventual indication to the Court that the terms of the Deed of Settlement were satisfactory to the current directors of Western Downs. The first and third issues were bypassed by an agreement that the Deed of Settlement would be executed by the current directors, as well as the first, second and fourth applicants.

39    It appears that the only remaining issue is how the money paid into Court should be dealt with. That issue is to be the subject of an application to be made by the first, second and fourth applicants.

40    For these reasons, I granted the applicants leave to discontinue the proceedings against Ms Davis and made orders to facilitate the finalisation of the matter.

Associate:    

Dated:    25 May 2026

SCHEDULE OF PARTIES