Backreef Oil Pty Ltd and Oil Basins Ltd/John Watson and Ors on behalf of Nyikina and Mangala/Western Australia - [2012] NNTTA 98

NATIONAL NATIVE TITLE TRIBUNAL

Backreef Oil Pty Ltd and Oil Basins Ltd/John Watson and Ors on behalf of Nyikina and Mangala/Western Australia, [2012] NNTTA 98 (6 September 2012)

Application No: WF12/14

IN THE MATTER of the Native Title Act 1993 (Cth)

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IN THE MATTER of an inquiry into a future act determination application

Backreef Oil Pty Ltd (first grantee party/first applicant)

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Oil Basins Ltd (second grantee party/second applicant)

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John Watson and others on behalf of Nyikina and Mangala (WC99/25) (native title party)

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The State of Western Australia (Government party)

DECISION ON WHETHER THE TRIBUNAL HAS POWER TO CONDUCT AN INQUIRY

Tribunal:  Helen Shurven, Member
Place:  Perth
Date:  6 September 2012

Catchwords: Native title – future acts – application for a determination in relation to a petroleum exploration permit – power – jurisdiction – whether grantee parties have negotiated in good faith – scope of the obligation to negotiate in good faith (s 31(2)) – grantee parties have negotiated in good faith

Legislation:Native Title Act 1993 (Cth), ss 26(1)(c)(i), 28, 29, 30(1)(a), 30A, 31, 35, 36(2), 38, 109, 151(2)
Petroleum and Geothermal Energy Resources Act 1967 (WA)

Cases:Commercial Bank of Australia v Amadio (1983) 151 CLR 447
FMG Pilbara Pty Ltd v Cox (2009) 175 FCR 141
Gulliver Productions Pty Ltd v Western Desert Lands Aboriginal Corporation (2005) 196 FLR 52
Magnesium Resources Pty Ltd, Anthony Warren Slater/Puutu Kunti Kurrama and Pinikura, Puutu Kunti Kurrama and Pinikura #2/Western Australia [2010] NNTTA 211
Mt Gingee Munjie Resources Pty Ltd v Victoria (2003) 182 FLR 375
Placer (Granny Smith) Pty Ltd v Western Australia (1999) 163 FLR 87
Strategic Minerals Corporation NL/Allan Kynuna & Ors on behalf of the Woolgar Group/Queensland [2003] NNTTA 83
Western Australia v Taylor (1996) 134 FLR 211
Xstrata Coal Queensland Pty Ltd & Ors/Mark Albury & Ors (Karingbal #2); Brendan Wyman & Ors (Bidjara People)/Queensland [2012] NNTTA 93

Representatives of the Mr Chris Humphry, Hunt and Humphry
grantee parties: Ms Melissa Watts, Hunt and Humphry

Representatives of the Ms Jacki Cole, Kimberley Land Council
native title party: Mr Reece O’Brien, Kimberley Land Council

Representatives of the     Mr Domhnall McCloskey, State Solicitor’s Office
Government party:         Ms Maryie Platt, Department of Mines and Petroleum
  Ms Rosie Emms, Department of Mines and Petroleum

REASONS FOR DECISION

Background

On 30 January 2008, the Government party gave notice under s 29 of the Native Title Act 1993 (Cth) (‘the Act’/’NTA’) of future acts, namely the grant of petroleum exploration permit application 5/07-8 EP (‘the proposed permit’) to Backreef Oil Pty Ltd and Oil Basins Ltd (‘the grantee parties’). Such grants are made pursuant to the Petroleum and Geothermal Energy Resources Act 1967 (WA).
The proposed permit comprises 5,061.5 square kilometres being 61 graticular blocks located between Lake Daley and Lake Paterson in the Shires of Derby-West Kimberley and Broome. Part of the proposed permit is also located within State Internal Waters. The s 29 notice gives the following description of the proposed permit:
The north western corner (Lat 17° 04’ 54.99’’ S, Long 123° 10’ 04.52’’ E – GDA94) of the application is situation approx 57km north west of Derby. From this point the application extends approx 124 km in an easterly direction (Lat 17° 39’ 54.97’’ S, Long 124° 20’ 04.51’’E – GDA94) and then from this point approx 18 km in a southerly direction to the south eastern corner (Lat 17° 49’ 54.98’’ S, Long 124° 20’ 04.52’’ E – GDA94). From this point the application extends approx 80 km in a westerly direction to (Lat 17° 44’ 59.55’’ S, Long 123° 34’ 35.26’’E – GDA94).
At the conclusion of the s 29 notice period (30 May 2008), the Nyikina and Mangala native title claim (WC99/25 – registered from 28 September 1999) overlapped the proposed permit and was on the Register of Native Title Claims. The claim remains on the Register. The Mawadjala Gadjidgar native title claim (WC11/3 – made on 7 April 2011 and registered from 23 June 2011) also overlaps the proposed permit area. However, it was not made ‘before the end of 3 month after the notification day’ of 30 January 2008. Therefore, the applicant for that claim is not a ‘native title party’ in respect of these proceedings (see ss 29(2)(a) and (b) and s 30(1)(a) of the Act).
To the extent the Nyikina and Mangala claim overlaps the proposed permit area, the registered native title claimant for the claim is the native title party in respect of these proceedings: see s 29(2)(b)(i). The Nyikina and Mangala claim overlaps the proposed permit area by 67.23 per cent. The proposed permit is a future act covered by s 26(1)(c)(i) of the Act and so, unless there is compliance with s 28, the act will be invalid to the extent that it affects native title. In this case, s 28(1)(g) is the relevant requirement, that is, ‘a determination is made under section ... 38 that the act may be done, or may be done subject to conditions being complied with.’
This is because the grantee parties made an application pursuant to s 35 of the Act for the Tribunal to make a determination under s 38 of the Act on 29 May 2012, being a date more than six months after the s 29 notice was given. The application was made on the basis that the negotiation parties had not been able to reach agreement within six months of the Government party giving notice of its intention to do the act. On 7 June 2012, I was appointed as Member to conduct an inquiry into the s 35 application.
A preliminary conference was convened on 3 July 2012. At that conference, the native title party contended that the grantee parties did not fulfil their obligation to negotiate in good faith. No such contention was made in respect of the Government party. Pursuant to s 36(2), if the native title party satisfies the Tribunal that a grantee party did not negotiate in good faith as mentioned in s 31(1)(b), the Tribunal must not make a determination under s 38.
Therefore, at the conference, I made directions for the conduct of the inquiry into the native title party’s allegation that the grantee parties did not negotiate in good faith. Native title party submissions were received on 17 July 2012 and grantee party submissions were received on 7 August 2012. The directions allowed for a period of time in which the native title party could file a statement or documents in reply to grantee party submissions; however, the Tribunal did not receive any further submissions from the native title party. Having reviewed the submissions, I considered it appropriate to determine the matter on the papers pursuant to s 151(2). No party objected to my doing so.

The obligation to negotiate in good faith

The obligation to negotiate in good faith is set out in s 31 of the Act:
31 Normal negotiation procedure
(1)Unless the notice includes a statement that the Government party considers the act attracts the expedited procedure:
(a)the Government party must give all native title parties an opportunity to make submissions to it, in writing or orally, regarding the act; and
(b)the negotiation parties must negotiate in good faith with the view to obtaining the agreement of each of the native title parties to:
(i) the doing of the act; or
(ii) the doing of the act subject to conditions to be complied with by any of the parties.
Note:The native title parties are set out in paragraphs 29(2)(a) and (b) and section 30. If they include a registered native title claimant, the agreement will bind all of the persons in the native title claim group concerned: see subsection 41(2).
Negotiation in good faith
(2)If any of the negotiation parties refuses or fails to negotiate as mentioned in paragraph (1)(b) about matters unrelated to the effect of the act on the registered native title rights and interests of the native title parties, this does not mean that the negotiation party has not negotiated in good faith for the purposes of that paragraph.
Arbitral body to assist in negotiations
(3)If any of the negotiation parties requests the arbitral body to do so, the arbitral body must mediate among the parties to assist in obtaining their agreement.
On the interpretation of s 31, I adopt relevant legal principles from Gulliver Productions Pty Ltd v Western Desert Lands Aboriginal Corporation (2005) 196 FLR 52 (Gulliver) (at 55-60) for the purposes of this inquiry unless in conflict with the Full Federal Court decision in FMG Pilbara Pty Ltd v Cox (2009) 175 FCR 141 (see also Mt Gingee Munjie Resources Pty Ltd v Victoria (2003) 182 FLR 375; Western Australia v Taylor (1996) 134 FLR 211 (Taylor)).
Pursuant to s 30A of the Act, the ‘negotiation parties’ are the Government party, any grantee party and any native title party. As noted at [6] above, if any negotiation party satisfies the Tribunal that any other negotiation party (other than the native title party) did not negotiate in good faith, as mentioned in paragraph 31(1)(b) of the Act, the Tribunal must not make a determination (s 36(2) NTA).
The practical effect of s 36(2) is to place an evidential burden on the party alleging lack of good faith negotiations, which would normally require it to produce evidence to support its allegations. The Tribunal is not required to adopt strict rules on burden of proof, but any party alleging lack of good faith negotiations must provide contentions and documents which specify in detail the matters it relies on (Placer (Granny Smith) Pty Ltd v Western Australia (1999) 163 FLR 87).

Contentions and Evidence

The native title party provided the following submissions in support of its contention that the grantee parties did not negotiate in good faith in relation to the proposed permit:
·Submissions (‘NTP Submissions’), dated 17 July 2012; and
·Letter from Reece O’Brien to Members Daniel O’Dea and Helen Shurven entitled ‘RE: Native Title Party Response to Pre-Mediation “Response” and Submissions made by the Grantee Party in Application WM11/1’ (‘NTP Letter’), dated 6 July 2011.
The grantee parties’ submissions in relation to the good faith issue comprise the following documents:
·Grantee Party’s Statement of Facts and Contentions Regarding Negotiations in Good Faith (‘GP Submissions’), dated 7 August 2012; and
·Affidavit of Neil Francis James Doyle sworn on 3 August 2012 and annexures (‘Doyle Aff’).
The Government party declined to make submissions on the issue of whether the grantee parties failed to negotiate in good faith as alleged by the native title party. No allegation was made that the Government party did not fulfil its obligation to negotiate in good faith.
The grantee parties submit that the NTP Submissions make serious and unsubstantiated allegations concerning the honesty, integrity and motives of the grantee parties. The grantee parties contend that, where such allegations are made, they should be substantiated by affidavit evidence. The grantee parties argue that the NTP Letter, on which the NTP Submissions rely, provides no basis for the allegations and that the native title party’s contention that the grantee parties did not negotiate in good faith should be dismissed at the threshold without further consideration.
The Tribunal has observed that, where allegations regarding honesty are made in the context of a challenge to the good faith of a negotiation party, the standard of proof is the civil standard (that is, on the balance of probabilities: see Strategic Minerals Corporation NL/Allan Kynuna and Others on behalf of the Woolgar Group/Queensland [2003] NNTTA 83 (Strategic Minerals) at [40]). In applying that standard, the Tribunal must be conscious of the gravity of the allegations: Strategic Minerals at [40]. As discussed above at [11], the party alleging an absence of good faith needs to provide evidence in support of that allegation. On the other hand, the Tribunal is not bound by the rules of evidence: see s 109 of the Act. The native title party has not provided affidavit evidence in this matter; however, even taking into account the seriousness of the allegations, this is not sufficient reason to dismiss the allegations at the threshold. While there may be circumstances in which it is desirable for such allegations to be supported by affidavit evidence, I do not believe such support is mandated in this matter. Whether the honesty allegations are made out on the basis of the available evidence is outlined further in this decision.

Chronology

On the basis of evidence submitted by the native title party and the grantee parties, I accept that the following events occurred following the s 29 notification day and prior to the date on which the s 35 application was made:

DATE	EVENT
20 January 2008	Notification of intention to grant the proposed permit issued by the Government party
21 January 2008	Letter sent from Department of Industry and Resources (‘DOIR’)[1] to Neil Doyle (Managing Director, Oil Basins Ltd) enclosing s 29 notice.
30 January 2008	Kimberley Land Council (‘KLC’) received notice of the proposed permit from DOIR.
5 February 2008	Letter sent from KLC to the grantee parties enclosing a draft Heritage and Native Title Protection Agreement (‘HPA’) and stating that the KLC is open to negotiating an agreement on behalf of the native title party in relation to exploration.
27 February 2008	Letter sent from DOIR to David Archibald (Director, Backreef Oil Ltd) and Robert Powrie (then Principal Legal Officer, KLC) enclosing documents relating to the proposed permit, seeking submissions from the native title party and requesting that Backreef Oil Ltd provide information to the native title party including the company’s last annual report, advice as to heritage surveys proposed or completed within the permit area and any company policies or information relevant to the native title party.
12 March 2008	Letter sent from Mr Archibald to Mr Powrie and copied to DOIR enclosing the information requested and requesting that parties enter into discussions about the completion of a heritage survey prior to the grant of the proposed permit.
23 April 2008	Email sent by Ania Maszkowski (Future Acts Officer, KLC) to Mr Archibald attaching a draft HPA.
4 June 2008	Email sent by Mr Archibald to Ms Maszkowski attaching a draft conjunctive agreement.
24 June 2008	Robert Houston (Legal Officer, KLC) emailed Mr Archibald, advising that the conjunctive agreement was ‘unacceptable to the KLC in its current form’ and that, if the grantee parties wish to negotiate an agreement in relation to the production phase, they would need to attend a meeting with the native title party. Mr Houston also advised Mr Archibald that, if the grantee parties wish to enter a production phase agreement, they would need to enter into a negotiation protocol based on a draft attached to the email.
27 March 2009	Mr Houston advised the Department of Mines and Petroleum (DMP) that if the grantee parties wish to pursue a production phase agreement then the timeframes for negotiation would need to be extended
30 June 2009	Mr Archibald addressed a meeting attended by approximately 20 members of the claim group, Mr Houston and other KLC personnel.
21 July 2009	Letter sent from Mr Houston to Mr Archibald stating that the native title party’s preference was for an exploration phase agreement. Mr Houston also asked Mr Archibald to confirm whether the royalty figure mentioned in Mr Archibald’s presentation to the meeting on 30 June 2009 was negotiable and reiterated that, if the parties were to negotiate on the basis of a conjunctive agreement, the grantee parties would need to enter into negotiation protocol.
27 August 2009	Letter sent via email from Mr Archibald to Mr Houston stating that the grantee parties were prepared to negotiate the royalty figure but did not see the need to enter into a negotiation protocol.
1 September 2010	Nigel Harvey (Director, Oil Basins Ltd) met with Siobhan Dooan (Future Acts Officer, KLC) in Broome to discuss the proposed permit.
3 September 2010	Mr Harvey and Mr Doyle (Executive Director and Chief Executive Officer, Oil Basins Ltd) met with DMP officers to discuss negotiations about the proposed permit.
20 December 2010	Kim McGrath (Chairman, Oil Basins Ltd) and Mr Doyle met Ms Doohan, Athlea Sullivan (Manager, Responsible Development Unit, KLC) and Lauren West (Legal Officer, KLC) in Broome to discuss the company’s interests in the Kimberley and the proposed permit in particular.
21 February 2011	DMP referred matter to the Tribunal for mediation assistance.
12 May 2011	First mediation conference.
18 May 2011	Copies of a HPA adapted for petroleum exploration and a draft negotiation protocol provided to the Tribunal and all other parties by the KLC.
29 June 2011	Letter sent by Mr Archibald to KLC in response to the HPA and negotiation protocol.
6 July 2011	Letter sent by Reece O’Brien (Legal Officer, KLC) to Members O’Dea and Shurven regarding Mr Archibald’s letter of 29 June 2011.
7 July 2011	Second mediation conference.
13 July 2011	Email sent by Mr Archibald to the Tribunal and parties enclosing grantee parties’ response and proposed amendments to the HPA.
18 June 2011	Mr Archibald and Mr Doyle met with Mr O’Brien and Sophia Rihani (Legal Officer, KLC) at the KLC’s office in Broome to discuss the HPA and proposed amendments.
24 August 2011	Third mediation conference.
8 September 2011	Email sent by Mr Archibald to the Tribunal and parties attaching a marked-up HPA.
9 September 2011	Fourth mediation conference
22 September 2011	KLC provided a further marked-up HPA to the grantee parties.
30 September 2011	Email sent by Mr Archibald to the Tribunal and parties attaching a further marked-up HPA and a letter addressed to Mr O’Brien explaining the amendments.
7 October 2011	Fifth mediation conference.
18 October 2011	Email sent from Mr McGrath to Mr O’Brien providing a summary of the outstanding issues and attaching a further marked-up HPA.
7 November 2011	Sixth mediation conference.
18 November 2011	Email sent by Ms Rihani to the Tribunal and parties informing them that she had taken carriage of the matter from Mr O’Brien and attaching a further marked-up HPA.
30 November 2011	Seventh mediation conference.
22 December 2011	Letter sent by Mr Humphry (for Oil Basins) to Ms Rihani and circulated to the Tribunal and parties concerning specific clauses of the HPA.
23 January 2012	Email sent by Ms Rihani to Tribunal and parties informing them that a meeting of the native title claimants had been arranged for 13-17 February and the grantee parties were invited to attend.
24 January 2012	Email sent by Mr McGrath to Tribunal and parties advising that the grantee parties had not received notification of the meeting and requesting further information.
31 January 2012	Email sent from Mr McGrath to the Tribunal and parties advising that Oil Basins Ltd considered it preferable for the native title claimants to instruct KLC in the absence of the grantee parties.
31 January 2012	Email sent from Ms Jacki Cole (Principal Legal Officer, KLC) to grantee parties requesting a contribution of $6,105.77 towards the costs of the meeting, on the basis that the native title party would be discussing the proposed permit and the HPA.
1 February 2012	Email sent from Mr McGrath to the Tribunal and parties raising concerns with the KLC in relation to the request for funding and changes in KLC personnel.
2 February 2012	The Federal Court made orders replacing the native title claimants in the Nyikina and Mangala native title determination proceedings.
27 February 2012	Letter sent from Ms Cole to the grantee parties and copied to the Tribunal and the Government party stating that the proposed permit had been discussed with the claim group, who had identified areas of cultural significance in the permit area. Ms Cole advised that KLC had been instructed that the native title party were willing to enter into the standard KLC HPA and if the grantee parties were unwilling to do so, there would be no further negotiations unless the grantee parties agreed to fund negotiations (to be conducted by an independent expert engaged by the KLC) and a heritage survey. Ms Cole further advised that the native title party would ‘not be withdrawing from the mediation or discontinue from its statutory right to negotiate.’
28 February 2012	Email sent from Mr McGrath to Tribunal and parties asking Ms Cole to clarify whether KLC’s instructions were consistent with its recommendations to the native title party and to explain the apparent inconsistency in the position adopted by the native title party (that is, that the KLC would not proceed unless funded, but would not be withdrawing from the mediation or from negotiations).
6 March 2012	Eighth mediation conference.
19 March 2012	Letter sent from Hunt & Humphry (for the grantee parties) to Ms Cole seeking clarification of the native title party’s position and offering to fund a heritage survey in lieu of agreement on HPA.
29 March 2012	Letter sent via email from Ms Cole to Mr Humphry attaching amended HPA including those amendments the native title party was prepared to agree to and reiterating that the KLC had no capacity to support further negotiations and unless the grantee parties were willing to fund negotiations, the draft HPA represented the native title party’s final position.
30 March 2012	Ninth and final mediation conference.
2 April 2012	Email sent from Mr O’Brien to Tribunal and parties confirming that KLC’s instructions allowed them to reconsider the amended budget clause.
10 April 2012	Letter sent via email from Hunt & Humphry to Ms Cole and copied to the Tribunal and parties giving notice of the grantee parties’ decision not to fund the native title party’s negotiations.
1 May 2012	Email sent from KLC to Tribunal and parties advising that the native title party would no longer engage in negotiations with the other parties.
4 May 2012	The Tribunal terminated the mediation process.

[1] I note that the DOIR subsequently became the Department of Mines and Petroleum (‘DMP’).

Native title party’s submissions

The native title party contends that the grantee parties’ conduct, when viewed as a whole, indicates an unwillingness to engage with the native title party in a way that a reasonable person would in the circumstances, and that they have failed to meet the overarching obligation imposed by s 31(1)(b) to act honestly and reasonably when negotiating ‘in good faith with a view to obtaining the agreement of the native parties to the doing of the future act’, with or without conditions. In support of its contention, the native title party relies on the following indicia as set out in Taylor:
a)   the grantee parties adopted a rigid non-negotiable position;
b)   the grantee parties engaged in unilateral conduct which harmed the negotiating process;
c)   the grantee parties failed to take reasonable steps to facilitate and engage in discussions between the parties; and
d)   the grantee parties failed to do what a reasonable person would do in the circumstances.

I will discuss each of these points in turn.

Rigid non-negotiable position

The native title party submits that the grantee parties brought to the negotiations a preconceived idea of how they would conduct business with the native title party, and their subsequent conduct was focused on seeking to satisfy formal requirements of negotiation rather than genuinely attempting to reach agreement with the native title party (NTP Submissions, at [3e]). The native title party further submits that the grantee parties’ offer of a conjunctive agreement (that is, one that provided for the subsequent grant of a production permit), after the native title party expressly stated that it would not consider such an agreement, was indicative of a ‘take it or leave it’ approach and was unreasonable in the circumstances. The native title party contends that the grantee parties’ insistence on a conjunctive agreement against the wishes of the native title party ‘further eroded the relationship between the parties’ and ‘cast doubt on the honesty and sincerity’ with which the grantee parties conducted themselves in the negotiations (NTP Submissions, at [3m]).
According to the documents provided to the Tribunal, the first reference to a conjunctive agreement appears to have been in Mr Archibald’s email to the KLC on 4 June 2008, which attached a copy of the proposed agreement. Although it is possible that the use of a conjunctive agreement had been raised earlier (Mr Doyle states that Mr Archibald had been corresponding with the KLC between February and June 2008 – Doyle Aff, at [10]), Mr Archibald’s email appears to be the first time a conjunctive agreement was put forward as a concrete proposal. There is no evidence that the KLC had expressly stated to the grantee parties that it would not consider such an agreement before Mr Houston’s reply on 24 June 2008, in which he indicated that the proposal was ‘unacceptable in its current form.’
Nor was the native title party refusing to consider the proposed agreement unequivocally. Rather, Mr Houston suggested that the native title party would consider whether it was prepared to negotiate an agreement covering the production phase of the project after the grantee parties presented their proposal to the claim group. Mr Houston’s email also attached a draft negotiation protocol, which he said would provide ‘greater certainty around any future negotiation if Backreef Oil proceeds to the production phase,’ the implication being that the grantee parties would be expected to contribute funding if they wished to negotiate a conjunctive agreement. The negotiation protocol required the grantee parties to pay the ‘reasonable costs and expenses’ incurred by the KLC and the native title party in relation to the co-ordination and conduct of and participation in negotiations, as well as providing financial assistance to the KLC to engage the services of a legal officer, a project officer/manager and a field officer for the purpose of providing advice to the native title applicants and co-ordinating the negotiation process. It is not clear from the materials provided to the Tribunal whether specific costings were provided, in terms of the duration these persons were to be employed and the exact or likely costs which may be incurred. The only information which appears to have been provided to the grantee parties was a broad schedule to the protocol listing a number of staff and general per day costings, though a number of items listed were yet to be costed.
Mr Archibald and Mr Houston continued to discuss the possibility of a conjunctive agreement alongside the HPA, and in March 2009 Mr Houston invited Mr Archibald to make a presentation to the claim group at a meeting on 30 June 2009 in relation to the proposed conjunctive agreement. The native title party asserts that Mr Archibald’s presentation was perceived by the claim group as a ‘take it or leave it’ proposal (NTP Letter, at [13]), though Mr Doyle (who was not present at the meeting) says that Mr Archibald spoke to a member of the claim group after the meeting and confirmed that the proposed royalty rate was negotiable (Doyle Aff, at [17]). I will return to this issue later. For the time being, it will suffice to say that the meeting concluded on the basis that the native title party would consider the grantee parties’ proposal.
Further correspondence between Mr Houston and Mr Archibald followed in July 2009, in which Mr Houston informed Mr Archibald that the native title party had instructed the KLC to negotiate on the basis of an exploration agreement, highlighted issues with the proposed conjunctive agreement, and reiterated the need for grantee parties to enter into a negotiation protocol if they wished to negotiate in relation to the production phase. Mr Archibald replied that the grantee parties did not consider that a negotiation protocol was needed. It is worth noting that Mr Archibald repeated to Mr Houston that the proposed royalty rate was negotiable. It is not clear whether the native title party suggested an alternative royalty rate, and there does not appear to have been any further communication between Mr Archibald and the KLC until the first mediation conference, though representatives for Oil Basins Ltd met with KLC staff in September 2010 and December 2010.
The fact that the parties did not enter into negotiations at this stage about payments made by reference to royalties does not, in my view, indicate an absence of good faith on behalf of the grantee parties. The royalty rate was raised in the context of the grantee parties’ offer of a conjunctive agreement. Mr Archibald indicated to Mr Houston that the grantee parties were open to negotiate the royalty rate if the native title party was prepared to consider the grantee parties’ proposal. The native title party did not accept Mr Archibald’s invitation. If the native title party had presented a counter-offer, or made its own proposal regarding royalty-type payments, the grantee parties would have been obliged to consider it (see Xstrata Coal Queensland Pty Ltd & Ors/Mark Albury & Ors (Karingbal #2); Brendan Wyman & Ors (Bidjara People)/Queensland [2012] NNTTA 93 (Xstrata) at [211]-[218]). However, the native title party does not appear to have done so at this stage of the negotiations.
The conjunctive agreement was raised again at the first mediation conference. However, there is no evidence that the grantee parties insisted on a conjunctive agreement during the mediation. Rather, the Tribunal’s outcomes from the conference suggest that the grantee parties were prepared to consider any proposal put forward by the native title party. Moreover, according to notes taken by Mr Humphry and annexed to Mr Doyle’s affidavit, Mr O’Brien stated during the mediation that the KLC was not opposed in principle to a conjunctive agreement and would be prepared to resubmit the proposal to the claim group even though their current instructions were to negotiate an exploration agreement. The native title party has not sought to challenge the content of Mr Humphrey’s notes. In any case, the available evidence suggests that the native title party only stated its position regarding the conjunctive agreement definitively in Mr O’Brien’s letter of 6 July 2011. As the grantee parties observe in their submissions, that letter indicates that the native title party was prepared to consider a conjunctive agreement at least until May 2011 (GP Submissions, at [54]).
Although the grantee parties reiterated their preference for a conjunctive agreement at the next mediation conference on 7 July 2011, and put forward what they considered were the advantages of such an agreement in their submissions to the native title party prior to their meeting in Broome on 18 July 2011, subsequent negotiations revolved around the HPA. In addition to the 18 July meeting, those negotiations involved the exchange of successive drafts of the HPA and participation in nine Tribunal mediations over a period of seven months. The negotiations came to an end when the KLC informed the grantee parties, on 27 February 2012, that the native title party was not prepared to negotiate any further amendments to the HPA unless they were funded to do so by the grantee parties.
It is clear that the grantee parties entered into negotiations with the native title party with the intention of negotiating on the basis of a conjunctive agreement. It is also clear that they were prepared to negotiate the terms of such an agreement, though they considered their proposal to be in line with the established royalty rate in South Australia. The evidence does not show that the grantee parties insisted on a conjunctive agreement. Nor does it suggest that the grantee parties presented their offer as a ‘take it or leave it’ proposition.
That is not to say that the grantee parties did not press for a conjunctive agreement, even when the native title party had indicated its preference to confine negotiations to the exploration phase. However, when it became apparent that the native title party would not consider the proposal, the grantee parties began to negotiate on the basis of the native title party’s preferred agreement. There is no evidence that the grantee parties did so only to satisfy the formal requirements of negotiations. In fact, the negotiations only came to an end when the native title party indicated it was not prepared to negotiate further amendments to the HPA unless they were funded to do so by the grantee parties.
In my view, there is no evidence that the grantee parties adopted at any point of the negotiations a rigid, non-negotiable position regarding matters related to the effect of the act on the registered rights and interests of the native title party.

Unilateral conduct which harmed the negotiating process

The native title party further submits that the grantee parties intentionally exploited the native title party’s lack of resources and capacity to engage in the negotiation process on an even footing. According to the native title party’s submissions, the grantee parties did so in order ‘to intentionally take advantage of statutory provisions advantageous to [them]’ for the purpose of attaining the grant of the proposed permit, without having to enter into an associated agreement with the traditional owners. The native title party submits that the grantee parties’ conduct was ‘unconscionable,’ in that it sought to ‘[take] advantage of a party with special disadvantage’ (NTP Submissions, at [3f]).
It is well established that the obligation to negotiate in good faith does not require the Government party or a grantee party to provide funding to the native title party to participate in negotiations. As the Tribunal observed in Gulliver, s 31(2) of the Act presents a considerable obstacle to the contention that a refusal to negotiate on matters other than the effect of the future act on native title rights and interests equates to a failure to negotiate in good faith. Accordingly, there is no obligation for a Government party or a grantee party to negotiate about funding the native title party to negotiate about the doing of the act. The native title party concedes that the grantee parties’ refusal to fund the native title party does not in itself amount to a lack of good faith. However, the native title party argues that the refusal to fund the native title party’s participation in negotiations illustrates a lack of honest and genuine intention on the part of the grantee parties to reach any agreement, and was unreasonable in the circumstances (NTP Submissions, at [3r]).
It is unclear from the native title party’s submissions what statutory provisions are said to be advantageous to the grantee parties and of which the grantee parties are alleged to have intentionally taken advantage. It is also unclear how the grantee parties’ refusal to provide funding to the native title party illustrates a lack of honest and genuine intention to reach agreement with the native title party, when they were under no obligation to negotiate about matters other than the effect of the act on native title rights and interests. Furthermore, the native title party does not specifically identify how they were at a special disadvantage with respect to the grantee parties or how the grantee parties took advantage of their position in a way which was unconscionable.
In respect to the last point, the native title party refers to the High Court’s decision in Commercial Bank of Australia v Amadio (1983) 151 CLR 447. That case involved an action to set aside a mortgage and guarantee on the ground that the bank had engaged in unconscionable conduct. In Amadio, Mason J identified (at 462):
... an underlying principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created.

The question to be decided by the Tribunal (that is, whether the grantee parties failed to fulfil their obligation under the Act to negotiate in good faith) is not the same as the inquiry undertaken by a court of equity when it is asked to exercise its discretion to provide relief on the ground of unconscionable conduct. In any case, the position that the native title party was in with respect to its negotiations with the grantee parties was manifestly different from the position in which the plaintiffs in Amadio were placed. As Deane J held (at 477):

[T]he result of the combination of [the plaintiffs’] age, their limited grasp of written English, the circumstances in which the bank presented the document to them for signature and, most importantly, their lack of knowledge and understanding of the contents of the document was that ... they lacked assistance and advice where assistance and advice were plainly necessary.

In the present matter, the native title party were represented throughout the negotiations by the KLC. The KLC has considerable experience negotiating future act agreements and is funded by the Commonwealth to assist registered native title claimants with future act negotiations. The native title party had the opportunity to assess the grantee parties’ proposal when Mr Archibald addressed them at the meeting on 30 June 2008, which was attended by KLC personnel. Rather than suffering a special disadvantage, which the native title party contends seriously affected its ability to make a judgment as to its own best interests, the native title party instructed the KLC to advise the grantee parties that it preferred to negotiate an exploration agreement. When the KLC made a further request for funding in February 2012, the parties were negotiating on the basis of the native title party’s preferred agreement.
The native title party has not identified any factor other than general assertions regarding the KLC’s lack of resources that put the native title party at a special disadvantage in its negotiations with the grantee parties. Indeed, as the grantee parties argue, the KLC provided ‘robust’ representation of the native title party in the mediation process and, it appears, in negotiations from January 2008 to May 2012 (GP Submissions, at [50(d)]).
Neither has the native title party explained how the grantee parties ‘intentionally exploited’ the native title party’s lack of resources. The grantee parties were entitled to put their proposal to the native title party. When it became clear that the native title party would not accept a conjunctive agreement, the grantee parties began to negotiate with the native title party about the HPA. It was the native title party who insisted that the grantee parties fund an independent expert to negotiate on behalf of the native title party protocol as a precondition of further negotiations.
The one instance upon which the native title party seeks to rely to contend that the grantee parties ‘exerted pressure’ on the native title party is a statement Mr Archibald allegedly made during the meeting on 30 June 2009 that, if the native title party did not make an immediate decision about the grantee parties’ proposal, they ‘might not see [him] again’ (NTP Letter, at [13]). I note that the allegation is not made in an affidavit but by way of an unsworn letter, the author of which was not present at the meeting. The grantee parties reject the allegation (though they do not expressly deny that the statement was made) and submit that allegations of this nature should be supported at least by an affidavit from persons present at the meeting. If the statement was made, it was not an ideal negotiating strategy at that point in time. However, given the grantee parties’ conduct in subsequent negotiations over several years, it does not on its own illustrate a failure to fulfil their obligation to negotiate in good faith.
The Tribunal has found in previous decisions that, although the obligation to negotiate in good faith does not require the parties to negotiate about funding, it does require a Government party or grantee party to give due consideration to specific proposals made by the native title party in relation to funding: see Gulliver at [84], [95]; Magnesium Resources Pty Ltd, Anthony Warren Slater/Puutu Kunti Kurrama and Pinikura, Puutu Kunti Kurrama and Pinikura #2/Western Australia [2010] NNTTA 211 at [60]. The native title party has not made any specific contention that the grantee parties did not give due consideration to its funding proposal. Nevertheless, the native title party’s submissions imply that the grantee parties had no intention of doing so.
It is true that, when Mr Houston raised the negotiation protocol in relation to the grantee parties’ proposal for a conjunctive agreement in his letter to Mr Archibald on 21 July 2009, Mr Archibald replied that the grantee parties did not consider that a negotiation protocol was necessary. However, the grantee parties contend that a specific proposal was never put to them, and that the native title party merely demanded that the grantee parties fund negotiations on an open-ended basis (GP Submissions, at [45(j)]).
As I noted above at [21], the draft negotiation protocol provided by Mr Houston did not set a limit on the extent to which the grantee parties would be required to fund the negotiations, or give an indication of the likely costs that would be incurred by the native title party. Rather, the protocol only specified that the grantee parties would be required to pay ‘the reasonable costs and expenses’ incurred by the native title party. Although a schedule of costs was attached to the protocol, several items were not costed. The draft protocol provided by the KLC on 24 June 2008 was drafted in similar terms to the version provided by Mr Houston, although Mr O’Brien confirmed in his letter of 6 July 2011 that the protocol was negotiable and the request to fund KLC staff was not a pre-condition to negotiating a production agreement.

Irrespective of whether these drafts constituted specific proposals or an open-ended request for funding, the evidence suggests that the grantee parties nevertheless gave due consideration to the protocol. Although Mr Archibald’s response to the initial proposal was less than satisfactory, it was made at an early stage in the negotiations and in circumstances where the native title party had indicated that it preferred to negotiate an exploration agreement, in which case the protocol would not be required. When the subsequent proposal was made, Mr Doyle indicated to the native title party, on 30 June 2011, that the grantee parties considered that the requirement to negotiate a separate negotiation protocol would cause ‘unnecessarily delay and complication [to the negotiations]’ and provide ‘little practical benefit to either party.’ The available evidence indicates that the grantee parties considered the native title party’s request but decided against it, and the parties continued to negotiate on the basis of the HPA.
The issue of funding was not raised again until Ms Cole’s letter of 27 February 2012, in which she stated that the native title party would only consent to the proposed permit on the basis of the KLC’s standard HPA (that is, without the previously agreed amendments). In the letter, Ms Cole indicated that, if the grantee parties were not willing to enter into the standard HPA, the KLC would not participate in further negotiations unless the grantee parties agreed to fund an independent expert to continue negotiations on their behalf, as well as finance a heritage survey. On 19 March 2012, the representatives for the grantee parties wrote to the KLC requesting them to clarify their position with respect to the previously agreed amendments to the HPA and provide reasons for engaging an independent expert to conduct the negotiations. On 29 March 2012, Ms Cole responded by stating that the KLC had no capacity to support the native title party in any further negotiations and suggested that, if negotiations were to continue, it would need to be on the basis of a negotiation protocol. However, Ms Cole did not enclose the proposed protocol or give any indication of what kind of commitment the protocol would require in terms of funding. In this respect, a specific proposal was not put to the grantee parties. Rather, Ms Cole’s letter of 27 February 2012, and her subsequent reply on 29 March 2012, constituted an open-ended request for funding. Ms Cole explicitly stated that the native title party intended to withdraw from the negotiations if that request was not met. When the grantee parties communicated their decision not to fund the native title party, it effectively withdrew from the negotiations.
If the KLC’s request for funding had been in the form of a specific proposal, the grantee parties would have been obliged to give it due consideration. As it was, there was no specific proposal presented to the grantee parties. The Tribunal’s outcomes from the mediation held on 9 March 2012 indicate that Mr McGrath enquired about the costs of the independent expert, but the KLC responded that it had not yet been informed of those costs. In any event, the evidence provided to the Tribunal by the grantee parties demonstrates that the request was nevertheless considered, though it was ultimately rejected. On 19 March 2012, Hunt & Humphry sent a letter to the KLC on behalf of the grantee parties enquiring whether the KLC would be prepared to arrange a heritage survey to be funded by the grantee parties in lieu of reaching an agreement on the HPA. This proposal was made on the basis that it was (or at least appeared to the grantee parties to have been) contemplated by Ms Cole’s letter of 27 February 2012, though it was not taken up and does not seem to have been discussed any further. According to Mr Doyle, the ultimate decision to refuse funding was ‘the result of a combination of reasons including the length of time negotiations had been ongoing since the s 29 notice was issued, the substantial costs already incurred, the nature of the outstanding issues and the lack of any indication of the scope of the likely costs to be incurred by the Nyikina Mangala’ (Doyle Aff at [75]). No doubt the decision was also influenced by the fact that the parties had been negotiating about the HPA for some time before the request was put to the grantee parties.
In my view, there is no evidence that the KLC lacked the resources to participate in the negotiations, nor is there evidence that the grantee parties exploited the native title party’s position to gain a strategic advantage. In fact, the available evidence suggests that the native title party was capable of asserting its interests in the negotiations. In any case, it was not a condition of the grantee parties’ obligation to negotiate in good faith that they agree to fund a native title party’s participation in the negotiations. Though the grantee parties could be said to have adopted a rigid position with respect to funding the native title party, they were not required to negotiate about funding and their conduct did not amount to a failure to negotiate in good faith (see Xstrata at [288]-[292]).

Failure to take reasonable steps to facilitate and engage in discussions

The native title party’s submissions do not specify on what grounds it asserts that the grantee parties failed to take reasonable steps to facilitate and engage in discussions with the native title party. However, the native title party does make several contentions which could be classified in these terms. First, the native title party submits that the grantee parties effectively denied the native title party equity in resources and bargaining power by refusing to fund any negotiation protocol in any amount (NTP Submissions, at [3r]). Second, the native title party submits that, at the meeting on 30 June 2009, the grantee parties exerted pressure on the native title party to accept the grantee parties’ proposal (NTP Submissions, at [3n]). Third, the native title party submits that the grantee parties provided little or no information in response to requests made by the native title party for further information (NTP Submissions, at [3o]).

I have already dealt with the first two submissions in this decision. In relation to the third, the native title party relies on correspondence between Mr Houston and Mr Archibald on 21 July and 27 August 2009 (NTP Letter, at [15]-[16]). In his letter of 21 July, Mr Houston stated that negotiating a conjunctive agreement would be difficult without further information about: the proposed location of productive wells and related infrastructure; the amount and value of oil produced; and the environmental and social impact of the project. In his reply, Mr Archibald stated that ‘[w]ith respect to the three points ... the first two are unknowable. The environmental and social impact of any oil production project would be the same as the existing oil production at Blina, that is to say zero.’ Mr Archibald went on to state that the fairness of the grantee parties’ offer (presumably, in relation to compensation) was the same as the established rate in South Australia, but was nevertheless negotiable, though he indicated that the grantee parties did not see the need for a negotiation protocol.
The grantee parties contend that, rather than being a refusal to provide further information, Mr Archibald’s letter was a reasonable response and an offer to negotiate, and point out that the location of production wells and relative infrastructure, and the amount and value of the oil produced, could not be known until exploration had been undertaken (GP Submissions, at [51(d)]-[51(e)]). I accept those submissions. The letter did not constitute a refusal to provide the information requested by Mr Houston. Rather, it was an expression of opinion regarding the matters raised in Mr Houston’s letter. Although there was a lapse in communication between Mr Archibald and the KLC after the exchange, the negotiations resumed in earnest once the matter was referred to the Tribunal for mediation. During subsequent negotiations, the grantee parties provided further information about the proposed permit, including information about onshore petroleum exploration and a case study of the Blina Oil Field. In the circumstances, I do not consider that Mr Archibald’s letter amounted to a failure to facilitate or engage in discussions with the native title party regarding the proposed permit or that it represented a lack of good faith on the part of the grantee parties.

Failure to do what a reasonable person would do in the circumstances

The native title party further submits that the grantee parties consistently impugned the KLC and its staff, which was unreasonable in the circumstances and illustrated a lack of honest and sincere intention to reach agreement (NTP Submissions, at [3j]). The native title party also submits that the grantee parties’ constant reference during negotiations to anonymous and unverified reports of the KLC’s work practices created a difficult environment in which to negotiate and was not reasonable conduct in the circumstances (NTP Submissions, at [3k]). In addition to those two submissions, the native title party submits that the grantee parties’ request that heritage surveys be conducted prior to the grant of the proposed permit, apparently based on the grantee parties’ prior experience with organising heritage surveys, was unreasonable and illustrated a condescending approach adopted by the grantee parties towards negotiations with the native title party (NTP Submissions, at [3l]).
The particulars of the native title party’s contentions with respect to the first two submissions are contained in the NTP Letter and are based entirely on Mr Archibald’s letter of 29 June 2011. In the letter, Mr O’Brien calls attention to ‘serious allegations carrying imputations relating to the capacity, honesty and diligence of Reece O’Brien as a legal practitioner in that he was either ignorant or deliberately misleading’ about the KLC’s position regarding the funding of a full-time legal officer (NTP Letter, at [20]). Mr O’Brien also asserts that the letter makes ‘serious allegations as to the KLC’s commitment to negotiation in respect of a Native Title Agreement on [the proposed permit]’ and refers to ‘alleged anecdotes from unidentified parties in respect of KLC’s work practice’ (NTP Letter, at [23]-[24]). Those anecdotes relate to negotiations conducted by the KLC on behalf of the native title party with other companies operating in the area, and suggest that the KLC had used its position to enrich itself and associated parties rather than acting in the interests of the native title party.
The grantee parties dispute that there was consistent behaviour of the sort alleged by the native title party (GP Submissions, at [47(b)]). Rather, the grantee parties characterise the correspondence as an isolated exchange between Mr Archibald and the KLC which did not reflect the grantee parties’ attitude towards negotiations with the native title party (GP Submissions, at [47(b)]). In the grantee parties’ view, Mr Archibald’s letter was the result of an apparent misunderstanding between Mr Archibald and Mr O’Brien concerning statements made by Mr O’Brien in the mediation conference on 12 May 2011 (GP Submissions, at [55]). The grantee parties’ concede that the tone of the letter may have been unnecessary. However, the grantee parties contend that Mr Archibald was entitled to express views which he regarded as being reasonably based on information held by him (GP Submissions, at [56]).
There is no doubt that Mr Archibald’s letter was strongly worded. It is also true that Mr Archibald’s allegation that the KLC had used its relationship with the native title party for its own benefit was not reasonable in the circumstances. However, I do not accept that it indicated a lack of good faith on behalf of the grantee parties. Nor do I accept that the letter created an ongoing difficult environment in which to negotiate. The parties continued to negotiate about the proposed permit and participated in eight further Tribunal mediations until the native title party withdrew from the negotiations in May 2012. While the correspondence between Mr Archibald and Mr O’Brien was not ideal negotiation practice, it is only one incident in negotiations that extended over a period of four years, including the nine months of mediation that followed the exchange. The evidence suggests that the grantee parties participated in the mediation process with the honest and sincere intention of reaching agreement with the native title party, and the parties appeared to have made significant progress towards an agreement until an impasse was reached over the funding of further negotiations. I do not find that Mr Archibald’s letter amounted to a failure on behalf of the grantee parties to fulfil their obligation to negotiate in good faith.
Nor do I accept the native title party submission regarding issues with the grantee parties’ request that a heritage survey be conducted prior to the grant of the proposed permit. The submission on this point appears to relate to Mr Archibald’s letter of 12 March 2008, in which he called attention to delays in the completion of heritage surveys on other petroleum titles and noted that the grantee parties’ experience in this respect suggested that heritage surveys should be conducted before the proposed permit is granted, in order to retain as much of the term as possible for exploration. I do not consider that the request was unreasonable or that it illustrated a condescending approach to the native title party. Rather, it was legitimate for the grantee parties to raise the matter in light of their previous experience and was consistent with their commercial objectives. Mr Archibald’s letter was an invitation to discuss the proposal and there is no indication that it was presented as an ultimatum. In any event, as the grantee parties state in their submissions, the request was made at an early stage in the negotiations and was not pursued.

Conclusion

For the reasons set out above, I find that the arguments advanced by the native title party in support of its allegation that the grantee parties have failed to negotiate in good faith have not been made out.

Decision

The grantee parties have negotiated in good faith with the native title party as required by s 31(1) of the Native Title Act 1993 (Cth) and the Tribunal has power to conduct an inquiry and make a determination.

Helen Shurven
Member
6 September 2012