Excel Texel Pty Ltd v Wilson (No 2)

This page explains the Federal Court's reasons in Excel Texel Pty Ltd v Wilson (No 2) [2026] FCA 154 using the published judgment text presently available. That text is incomplete. It includes the Court's introductory explanation of the issues, the background to the two related class actions, the settlement structure, the summary of the earlier Davis v Wilson decision, and part of the discussion of the applications before the Court. It does not include the full later reasoning or the complete final distribution analysis.

Because of that, some important end-point details remain to be confirmed from the complete reasons and any final orders. In particular, readers should not treat this page as confirming the exact final amounts allowed for legal costs, disbursements or any funding commission, or the final treatment of the Davis funder's claim, or the final mechanics of distributing the Quintis settlement sum. Those matters should be checked against the complete judgment and the orders made to give effect to it.

The commercial story starts with Quintis Ltd, a listed company involved in sandalwood-related business activities. Shareholders brought two separate representative proceedings after Quintis's position deteriorated and its share price fell. The first was the Excel Texel proceeding. It alleged that Quintis and its chief executive officer, Mr Frank Wilson, had made misleading or deceptive statements to the market and that Quintis had breached continuous disclosure obligations. The alleged statements concerned sandalwood supply arrangements with Galderma SA and contracts for supply into China. The claim was not simply that isolated statements were wrong. The broader allegation was that the market had been given a misleadingly positive impression of Quintis, which was reflected in the share price.

The second was the Davis proceeding. That case focused on a different but related theory. The Davis applicants alleged that Quintis and Mr Wilson had overstated asset values in Quintis's financial statements. They also sued Ernst & Young, Quintis's auditor, alleging misleading conduct and breaches connected with audited financial statements that allegedly did not present a true and fair view because the asset valuations were overstated and not in accordance with applicable accounting standards.

These were not entirely separate worlds. The proceedings overlapped in parties, factual background and shareholder groups. The Court noted that it was always clearly envisaged that they would be case managed and ultimately heard together. That overlap later became commercially important because one side funded and carried work that might benefit the other side.

The Excel Texel proceeding was commenced in November 2017 on behalf of people who purchased Quintis shares between 1 July 2015 and 10 May 2017. It was funded by Ironbark Funding Navy Pty Limited and run by Gadens. A separate proceeding brought by Mr Andrew Wyma in September 2017 made similar or overlapping claims. In December 2018, that proceeding was consolidated with the Excel Texel proceeding, and Mr Wyma became co-lead applicant with Excel Texel.

The Davis proceeding was commenced in May 2018 on behalf of people who purchased Quintis shares between 31 August 2015 and 15 May 2017. It was funded by LCM Operations Pty Ltd and run by Piper Alderman. The Court's reasons make clear that the Davis claims were distinct in focus but capable of benefiting a broader shareholder cohort if successful.

A major procedural turning point came in July 2022. The Excel Texel applicants were granted leave to amend their pleading to adopt or include the Davis claims. But the Court imposed a condition designed to avoid duplicated legal costs. The practical effect was that the Excel Texel applicants could pursue those claims against Mr Wilson, but the Davis applicants and their lawyers would have the effective carriage of those claims at trial. The costs of pursuing them were to be borne, at least initially, by the Davis applicants alone, even though the Excel Texel applicants and group members might eventually benefit.

The judge described the consequences of that arrangement in pointed terms. Little or no thought appeared to have been given to how, or in what circumstances, the Excel Texel applicants would contribute to the costs incurred by the Davis applicants in prosecuting claims that might benefit the Excel Texel side. That omission sat at the heart of LCM's later application for a share of the settlement proceeds.

Quintis went into administration on 20 January 2018 under s 436A of the Corporations Act 2001 (Cth). That changed the practical landscape. In March 2020, both the Excel Texel applicants and the Davis applicants settled with Quintis. In return for releasing Quintis from claims, Quintis agreed to pay the remaining balance of an insurance policy responsive to the claims. The balance turned out to be $4,377,154.78. Importantly, the settlement agreement did not specify how that money would be divided between the two proceedings.

On 1 July 2022, the Court approved the Quintis settlement under s 33V(1) of the Federal Court of Australia Act, but declined at that stage to make distribution orders under s 33V(2). So the settlement with Quintis was approved, but the question of who should get what from that insurance-funded pool remained unresolved.

There was also a related insurance rectification dispute. In July 2020, the Excel Texel applicants and the Davis applicants commenced proceedings seeking rectification of Quintis's insurance policy. The reasons say only that the rectification application succeeded at first instance but failed on appeal. The Court noted that this history was relevant to quantifying the amount that might properly be deducted from the Excel Texel settlement sum to pay or reimburse Gadens and Ironbark for legal fees and disbursements.

The two shareholder proceedings were then heard together. The joint trial commenced before Shariff J on 18 March 2024. Evidence concluded on 19 April 2024, and the matters were adjourned to July 2024 for final submissions. Before the Excel Texel applicants began oral closing submissions, they reached a settlement with Mr Wilson on 12 July 2024.

That settlement was carefully structured. Subject to Court approval, Mr Wilson would pay $13.5 million to settle the Excel Texel claims other than the adopted Davis claims. As to the Davis claims, the settlement provided only for mutual releases and covenants not to sue. The deed recited that the parties intended, in light of their view of the different prospects of the claims after hearing openings and evidence, that the Excel Texel claims would be settled for money and releases, while the Davis claims would be settled for releases only. The Court treated the implication of that structure as highly important to the issues raised by LCM's application.

The Court identified two main issues in relation to the Excel Texel application. First, whether the settlement reflected in the deed with Mr Wilson was a fair and reasonable compromise of the claims of the Excel Texel group members and in their best interests. Secondly, if the settlement was approved, what deductions should be made from the settlement fund before the balance was distributed to group members.

Those proposed deductions included large amounts to be paid to Gadens and Ironbark in relation to legal fees and costs incurred or paid in respect of the Excel Texel proceeding, and a large amount to be paid to Ironbark as commission for funding the litigation. The Court had the assistance of a detailed report by a costs referee appointed to determine the reasonableness of legal fees and disbursements billed by or paid to Gadens, and in some instances Ironbark. But the reasons record that it ultimately became common ground that the report had to be varied to account for errors or discrepancies, many first identified by the contradictor.

A further complication was the intervention by LCM, the funder in the Davis proceeding. LCM contended that it was entitled to a share of the Excel Texel settlement sum because it had effectively funded prosecution of some of the claims pursued by the Excel Texel applicants. This was not a side issue. The Court said that the arrangement under which the Excel Texel applicants adopted the Davis claims, while the Davis side bore the costs in the first instance, lay at the heart of LCM's application.

The Court also had to separately consider how the proceeds of the earlier Quintis settlement should be distributed. The available text records that both the Excel Texel applicants and the Davis applicants ultimately sought orders with the effect that the Quintis settlement sum would be split equally between the two proceedings. The published text then cuts off before the full discussion of that issue.

A major part of the commercial context was the earlier judgment in Davis v Wilson [2025] FCA 108. The Court in this case reproduced paragraph 24 of Shariff J's summary of the outcome. That summary is important because it shows why the parties might have treated the Davis claims differently in settlement.

Shariff J found that the Davis applicants had established that the heartwood yield assumption used by Quintis in its discounted cash flow model for trees aged under five was unrealistic and lacked reasonable foundation. He also found that Mr Wilson made the relevant representations without reasonable grounds. As to EY, he found that EY ought reasonably to have evaluated the assumption as not reasonable, failed to obtain sufficient appropriate audit evidence, lacked a reasonable basis for certain audit-related representations, and had not exercised reasonable care and skill. The summary records findings that Mr Wilson and EY contravened s 1041H of the Corporations Act, and that EY also contravened s 12DA of the ASIC Act.

But the Davis applicants failed on a critical element. They did not establish their counterfactual case about the heartwood yield assumption that should have been used, and they did not establish causally connected loss for the purposes of the statutory and negligence claims. In short, they established important aspects of liability but failed to recover because loss and causation were not proved.

That earlier result helps explain the settlement structure in Excel Texel. The deed with Mr Wilson allocated money only to the non-Davis claims and resolved the Davis claims by releases only. Once that happened, the Court had to confront a difficult fairness question. Even if the settlement deed said no money was being paid for the Davis claims, had the work done in the Davis proceeding still contributed to the settlement outcome in a way that justified some payment to the Davis funder? The available reasons make clear that this was one of the central practical disputes.

The available reasons indicate that there was ultimately little dispute about the fairness and reasonableness of the settlement itself. The Court said that, save perhaps for a last-minute submission sought to be advanced by the Davis funder, no party submitted that the settlement was not fair and reasonable and in the best interests of the Excel Texel group members. Importantly, the contradictor appointed to represent the interests of group members ultimately submitted, in effect, that the settlement was fair and reasonable.

The more difficult issues concerned distribution. The Court recorded that the proposed deductions for legal fees and disbursements were very high and represented a significant proportion of the settlement sum, but that after adjustments to the costs referee's report, the contradictor ultimately submitted, in effect, that it would be just and equitable to pay that adjusted amount to Gadens and Ironbark. The reasons also record that Ironbark sought a funding commission of 30% of the gross settlement sum, which would equate to about 60% of the net settlement amount after deduction of legal fees and costs. The contradictor submitted that this was too high, and the Court observed that there was much to be said for that submission.

What the available text does not provide is the complete final reasoning on what amount of commission was allowed, whether and to what extent LCM succeeded in claiming any share of the settlement sum, and the final mechanics of distributing the Quintis settlement sum. The orders included in the published text show that the parties, including the interveners, were required to confer within 21 days to try to agree on orders to give effect to the judgment, and to provide short minutes or written submissions within 28 days if agreement could or could not be reached. The Court also invited any party seeking final non-publication orders to file an application with supporting affidavits and submissions.

The reasons also contain a strong open justice message. The Court criticised the parties' handling of confidential and privileged material as entirely unsatisfactory. Interim confidentiality and non-publication arrangements had been made, but no party filed proper applications or evidence capable of supporting final non-publication orders. The Court made clear that if final orders of that kind were sought, proper applications and evidence would be required, and that some information referred to in open court or necessary to explain the Court's reasoning might not be protected.

For most businesses, this case is not a direct statement of day-to-day compliance rules. Its practical value is in showing how disclosure, reporting and governance issues can evolve into expensive, multi-layered litigation. The allegations in the underlying proceedings were not confined to obviously false statements. They included claims that statements and reporting assumptions created a misleadingly positive overall impression. That is a useful warning for any business communicating with investors, lenders, major customers, franchisees, joint venture partners or potential acquirers.

The case also shows that once litigation becomes collective and funded, settlement is not just a commercial handshake. The Court may closely examine whether the compromise is fair to affected claimants and whether deductions for lawyers and funders are justified. Businesses should therefore think early about document discipline, approval pathways for external statements, and how assumptions in financial models and valuations are tested and recorded. Those habits matter not only for liability, but also for settlement leverage and credibility years later.

There is also a procedural lesson. If multiple proceedings, claimant groups or funders are involved, businesses and their advisers should identify early who is advancing which claims, who is paying for that work, and what happens if one side later benefits from another side's effort. The Court's reasons suggest that failing to think through those issues early can create a second round of litigation over settlement proceeds.

The underlying proceedings show the kinds of documents and conduct that can become central in later litigation. On one side were market statements about supply arrangements and commercial opportunities. On the other were financial statements, valuation assumptions and audit work. In both settings, the real issue was not just whether a sentence was technically inaccurate. It was whether the overall picture presented to the market had a reasonable basis and whether the supporting material could withstand scrutiny.

Businesses should therefore treat important commercial statements as evidence-backed documents, not just messaging exercises. If a statement depends on assumptions, identify those assumptions and keep the supporting material. If a valuation or forecast is contestable, record the basis on which management adopted it and what contrary material was considered. If auditors or advisers are involved, make sure the business understands what they have and have not verified. And if confidential material is later relied on in court, do not assume it will automatically remain protected. The Court's criticism of the parties' approach to confidentiality is a reminder that open justice remains a strong counterweight.

The judgment is dated 27 February 2026. The hearing of the approval application took place on 24 and 25 February 2025. The orders included in the published text required the parties and interveners to confer within 21 days and then provide agreed short minutes or competing submissions within 28 days. The Court also noted that the judgment would not be published beyond the parties and interveners pending determination of any application for non-publication or suppression orders in respect of information referred to in the judgment.

Because the available text is incomplete and the orders contemplated later steps, readers should treat this record as a careful explanation of the issues and the apparent direction of the Court's reasoning, but not as a substitute for checking the complete reasons and final operative orders.