Raymond William Davison and 28 of his family and friends were denied entry to the Bidwill Hotel in Bidwill after they attended a funeral and a wake at a nearby church in February 2019.

His claim states pub staff locked some doors of the hotel, "physically blocked others" and rang emergency services to report 60 to 100 people of Aboriginal appearance had been denied entry and were becoming verbally abusive in the car park.

Mr Davison said the alleged racial discrimination caused emotional distress, humiliation and feelings that group members weren't entitled to the same legal protections as other Australians.

Video of the conflict has been watched more than 200,000 times after being posted by a group member, former South Sydney Rabbitohs player Nathan Merritt.

The hotel management denied the racism allegations, saying those associated with the wake were barred due to licensing restrictions about hosting large events and a lack of staff at that time to host such an event.

All denials of entry that day were for lawful reasons, it said.

NSW Police accepted it received a call from the pub about 60 to 100 people of Aboriginal appearance becoming aggressive outside, and said it responded accordingly.

Its officers couldn't force the pub owner to accept patrons and hadn't seen non-Indigenous patrons "mocking and/or humiliating" the group, the force's filed defence says.

The $60,000 settlement was struck by the parties in July and was approved by the Federal Court on Thursday.

The figure can be reported after several details of the confidential settlement deed were mistakenly annexed to orders published online in August and viewed by AAP.

Justice John Griffiths said the plaintiffs faced real risks in establishing liability if the matter were to proceed to trial.

"I am satisfied that the settlement sum and settlement deed are fair and reasonable and in the interests of all group members," he said.

Mr Davison had sought compensation and a court order that the defendants publicly acknowledge the alleged discriminatory conduct.

The plaintiffs alleged police officers stood between the group and the hotel and ordered them to move away.

Bidwill Hotel staff allegedly also blocked entry to a man of Indigenous appearance who was not associated with the group while permitting non-Aboriginal people entry, the claim states.

The police dog unit was among the officers on site. Police denied officers opened the back of squad cars where the police dogs were housed to intimidate the group, but rather was to cool the dogs on a hot day.

However, police accepted that after requiring the group to leave the Bidwill Hotel, an officer rang a Rooty Hill pub and said a group of about 100 Aboriginal people denied entry at Bidwill was headed its way.

Members of the Davison group were either kicked out or denied entry to the second establishment.

An earlier claim was terminated by the Australian Human Rights Commission after it decided there was no reasonable prospect of conciliation.

Mr Davison was represented by not-for-profit social justice law firm, National Justice Project.

Australian Associated Press