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.