Holocene Pty Ltd/Western Australia/Western Desert Lands Aboriginal Corporation (Jamukurnu – Yapalikunu)
[2009] NNTTA 8
•6 February 2009
NATIONAL NATIVE TITLE TRIBUNAL
Holocene Pty Ltd/Western Australia/Western Desert Lands Aboriginal Corporation (Jamukurnu – Yapalikunu), [2009] NNTTA 8 (6 February 2009)
Application No: WF08/27
IN THE MATTER of the Native Title Act1993 (Cth)
- and -
IN THE MATTER of an inquiry into a future act determination application
Holocene Pty Ltd (Applicant/grantee party)
- and -
The State of Western Australia (Government party)
- and -
Western Desert Lands Aboriginal Corporation (Jamukurnu – Yapalikunu) – (WC96/78) (native title party)
FUTURE ACT DETERMINATION – TRIBUNAL JURISDICTION TO CONDUCT AN INQUIRY AND DETERMINE MATTER
Tribunal: Hon C J Sumner, Deputy President
Place: Perth
Date of decision: 21 November 2008
Date of reasons: 6 February 2009
Catchwords: Native title – future act determination application – proposed mining lease – jurisdiction – whether grantee party has negotiated in good faith – in principle agreement – grantee party not required to further negotiate about agreed commercial terms – whether grantee party agreed to pay negotiation costs of native title party – unreasonable demand for native title party to execute agreement not fatal – conduct to be judged from negotiations overall – grantee party has negotiated in good faith.
Legislation:Native Title Act 1993 (Cth) ss 29, 31, 35, 36(2), 38, 150, 155
Aboriginal Heritage Act 1972 (WA), s 18
Cases:Angelina Cox & Ors on behalf of the Puutu Kunti Kurrama & Pinikura People/Wintawari Guruma Aboriginal Corporation/ Western Australia/FMG Pilbara Pty Ltd, NNTT WF07/40, [2008] NNTTA 90 (11 July 2008), John Sosso
Gulliver Productions Pty Ltd and Others v Western Desert Lands Aboriginal Corporation and Others [2005] NNTTA 88; (2005) 196 FLR 52
Placer (Granny Smith) Pty Ltd & Anor v Western Australia & Others [1999] NNTTA 361; (1999) 163 FLR 87
Rita Dempster & Ors (Southern Noongar)/Bayside Abalone Farms Pty Ltd & Anor/Western Australia, NNTT WF99/1, [1999] NNTTA 235 (27 August 1999), Hon E M Franklyn QC
Strickland v Minister for Lands for Western Australia [1998] 868 FCA; (1998) 85 FCR 303
Walley v Western Australia [1996] FCA 490; (1996) 67 FCR 366
Western Australia v Taylor [1996] NNTTA 34; (1996) 134 FLR 211
Hearing date: 7 November 2008
Representatives of the Mr Kenneth Pettit, SC, Francis Burt Chambers
grantee party: Mr Stephen Wright, Wright Barristers & Solicitors Pty Ltd
Representatives of the Mr Marshall McKenna and Ms Melissa Watts,
native title party: Hunt & Humphry Project Lawyers
Ms Christina Araujo, Western Desert Lands Aboriginal Corporation
(Jamukurnu-Yapalikunu)
Representatives of the Mr Domhnall McCloskey, State Solicitor’s Office
Government party: Ms Paola O’Neill, Department of Industry and Resources
(now Department of Mines and Petroleum)
REASONS FOR DECISION ON WHETHER THE TRIBUNAL HAS JURISDICTION TO CONDUCT AN INQUIRY
Background
On 31 October 2007, the State of Western Australia (‘the Government party’) gave notice under s 29 of the Native Title Act1993 (Cth) (‘the Act’/‘NTA’) of a future act, namely the grant of mining lease M45/1171 (‘the proposed lease’) to Holocene Ltd. The notice stated that the grant of the proposed lease would authorise the applicant to mine for minerals for a term of 21 years from notification of grant and a right of renewal for a further 21 years. The proposed lease comprises an area of approximately 3,144.25 hectares and is located 187 kilometres southerly of Telfer in the Shire of East Pilbara.
On 17 September 2007, Holocene Ltd was converted to a proprietary company – Holocene Pty Ltd. Holocene Pty Ltd is a wholly owned subsidiary of Reward Minerals Ltd (‘Reward’). Although Holocene Pty Ltd is technically the grantee party in these reasons, a reference to ‘the grantee party’ includes both Holocene Pty Ltd and Reward.
The proposed lease is entirely within the determination area of the Western Desert Lands Aboriginal Corporation (Jamukurnu-Yapalikunu) (‘WDLAC’/‘the native title party’). Native Title Claim No. WC96/78 was registered from 26 June 1996 as the native title claim of the Martu People, who were determined by the Federal Court to hold native title on 27 September 2002. WDLAC is the registered native title body corporate, being the prescribed body corporate on the National Native Title Register, determined by the Federal Court on 17 July 2003 to hold the native title rights and interests in trust for the common law holders.
On 4 September 2008, being a date more than six months after the s 29 notice was given, the grantee party made an application pursuant to s 35 of the Act for a future act determination under s 38. The application was made on the basis that negotiating parties had been unable to reach agreement of the kind mentioned in para 31(1)(b) of the Act within six months of the Government party giving notice of its intention to do the act..
The Lake Disappointment Project (‘the Project’)
The grantee party proposes to use the area of the proposed lease (‘the subject area’) to extract and process potash (potassium sulphate) from Lake Disappointment. Lake Disappointment has an area of approximately 1,600 square kilometres within the Gibson Desert of Western Australia some 320 kilometres east of Newman. The grantee party says that mining is likely to take place by means of a brine collection trench which is part of the proposed lease area. The brine is to be pumped into a series of evaporation ponds from which potassium salts (and others) are precipitated. These salts are refined to produce the final potash product which will be transported to Perth initially along Talawana Track which runs through the Martu determination area but which is available for public access. It will be sold to national distributors of fertiliser. Infrastructure on the site will include an accommodation village. Currently the Project around Lake Disappointment comprises:
seven exploration licences already granted to Holocene Pty Ltd – E45/2801 to E45/2803 and E69/2156 to E69/2159;
two pending exploration licences – E45/3285 and E45/3286 – which were applied for by the grantee party on 14 July 2008 but were not specifically included as part of the Project during the negotiations;
the proposed mining lease; and
one pending miscellaneous licence L45/172 for the purpose of an access road linking the proposed mining lease with the Talawana Track to the north.
During the negotiations, it was initially proposed by the grantee party to include other lakes to the north of Lake Disappointment in the Project. The Project was then proposed to overlap part of the Rudall River National Park which is an area over which there is no determination of native title in favour of the Martu People and other access roads but was eventually dropped from the Project by the grantee party in its proposal of 8 July 2008. Part of one of these other lakes (not covered by the Rudall River National Park but part of the determination area) is the subject of an already granted exploration licence E45/2804 and located some 140 kilometres to the northeast of Lake Disappointment. While it can be said that this exploration licence is still technically part of the Project no details of how the resource in that area would be exploited were provided by the grantee party. For all practical purposes, the Project area proposed by the grantee party now includes the subject area, the area of the pending miscellaneous licence, the seven exploration licences already granted and the two pending exploration licences.
Good faith negotiations - jurisdiction
The Tribunal must be satisfied as a pre-condition to considering the s 35 application and making a determination that the Government and grantee parties have negotiated in good faith with the native title party as required by s 31(1)(b) of the Act (s 36(2) NTA: Walley v Western Australia [1996] FCA 490; (1996) 67 FCR 366). WDLAC contend that the grantee party did not fulfil its obligation to negotiate in good faith. No such contention is made in respect of the Government party.
The Tribunal has said that 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 a lack of good faith negotiations must provide contentions and documents which specify in detail the matters it relies on (Rita Dempster & Ors (Southern Noongar)/Bayside Abalone Farms Pty Ltd & Anor/Western Australia, NNTT WF99/1, [1999] NNTTA 235 (27 August 1999) Hon E M Franklyn QC at 4, 21; Placer (Granny Smith) Pty Ltd & Anor v Western Australia & Others [1999] NNTTA 361 at [21]- [28]; (1999) 163 FLR 87 at 91-93 (21 December 1999) Hon C J Sumner (‘Placer’)).
On 25 September 2008, I made directions for the conduct of the inquiry including that the parties provide contentions and evidence in relation to the good faith issue. After consideration of submissions from the parties I decided a hearing should be convened which was held on 7 November 2008. Neither the grantee nor the native title party sought to supplement its documentary evidence by calling witnesses or seeking leave to cross-examine anyone. The Government party made no contentions on the good faith issue.
Good faith negotiations – legal principles
The obligation to negotiate in good faith is contained 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.’
In Gulliver Productions Pty Ltd and Others v Western Desert Lands Aboriginal Corporation and Others [2005] NNTTA 88 at [8]-[20]; (2005) 196 FLR 52 at 55-60) (‘Gulliver’), I considered the applicable legal principles to the issue of negotiation in good faith. I adopt those findings for the purposes of this inquiry.
Contentions and evidence
The Tribunal has had regard to the following contentions and documentary evidence submitted by the parties and oral submissions made at the Hearing on 7 November 2008.
The native title party provided the following submissions supporting its contention that the grantee party did not negotiate in good faith regarding the doing of the act:
The native title party Statement of Facts and Contentions (‘NTP contentions’), dated 17 October 2008 and supporting documents:
- draft Martu determination area map;
- affidavit of Tony Adekunle Wright (‘TAW affidavit’), Acting Chief Executive Officer of WDLAC and at relevant times its Chief Financial Officer, sworn 16 October 2008, annexing financial documents dated between 25 March 2008 and 26 August 2008 in relation to invoices and payments between the native title and grantee parties, including ‘Cost Estimate’, native title party invoices and grantee party payments; and
- affidavit of Clinton Bradley Wolf (‘CBW1 affidavit’), Chief Executive Officer of WDLAC from February 2006 to 12 September 2008, sworn 16 October 2008, annexing a chronology of events, letters, emails, draft agreements, press releases, file notes and correspondence dated between 27 March 2008 and 19 September 2008.
The native title party’s reply to the grantee party’s Statement of Facts and Contentions, dated 31 October 2008, and attached affidavit of Clinton Bradley Wolf (‘CBW2 affidavit’) sworn 30 October 2008.
The grantee party’s submissions in relation to the good faith issue comprise the following documents:
Grantee party’s Statement of Contentions (‘GP contentions’) regarding Negotiation in Good Faith dated 26 October 2008 and supporting documents:
- affidavit of Dr Michael Ruane (‘MR1 affidavit’), Managing Director of Holocene Pty Ltd since 2002 and a Director of Reward, sworn 25 October 2008, annexing correspondence between 15 January 2008 and 14 August 2008 in relation to communications between the native title and grantee parties including letters, emails, tax invoice and tenement map;
- affidavit of Dr Michael Ruane (‘MR2 affidavit’) sworn 6 November 2008 provided at the hearing annexing correspondence between 1 May 2007 and 10 March 2008 in relation to communications between the native title and grantee parties including letter, emails, negotiation protocols and Cost Estimate;
- Martu determination area map of subject area; and
- s 35 future act determination application (form 5) lodged on 4 September 2008 and attached s 29 notice and map of subject area.
Negotiations prior to 27 March 2008
The affidavit of Dr Ruane of 25 October 2008 and the affidavit of Mr Wolf of 16 October 2008, detail the factual background to negotiations between the parties. No party contests the facts established by these documents in relation to the negotiations prior to 27 March 2008, and, accordingly, for the purposes of this inquiry I accept the accuracy of the material contained therein. The details outlined are as follows.
Reward, through its subsidiary Holocene Pty Ltd, which was then called Potash Australia Ltd, commenced discussions with Martu People about the Lake Disappointment potash project in 2005. (MR1 affidavit, para 6)
In early 2006, the parties entered into a heritage protection agreement which resulted in the grant of several exploration licences over Lake Disappointment. (MR1 affidavit, para 6 and CBW1 affidavit, para 6)
On 23 January 2007, the grantee party obtained consent under s 18 of the Aboriginal Heritage Act to drill Lake Disappointment and subsequently established the existence of a potash resource (MR1 affidavit, paras 6 to 7 and CBW1 affidavit, para 7). In early 2007, the grantee party approached WDLAC to enter into an agreement on the development of a viable potash project, the subject of the proposed lease. (MR1 affidavit, para 8 and CBW1 affidavit, para 8)
The native title party engaged the services of Mr Joe Procter of Indigenous Energy Pty Ltd to act as a consultant in negotiating the commercial terms of the agreement. (MR1 affidavit, para 9 and CBW1 affidavit, para 8)
Between May 2007 and August 2007, the grantee party met with Mr Procter and, following a series of correspondence, proposals and counter-proposals, parties reached an ‘impasse’ in August 2007. (MR1 Affidavit, paras 10 to 15)
In January 2008, discussions resumed between the parties which resulted in an ‘in principle’ agreement on 27 March 2008. (MR1 affidavit, paras 17 to 19 and CBW1 affidavit, para 9)
Exchange of correspondence on 27 March 2008
Correspondence between the parties on 27 March 2008 contained the in principle agreement:
letter from Stephen Wright, Wright Barristers & Solicitors, dated 27 March 2008 to Teddy Biljabu, Chairman of WDLAC (referred to as ‘the term sheet’); and
letter in response from Teddy Biljabu to Stephen Wright dated 27 March 2008.
The agreement had commercial terms including milestone and royalty payments and the issue of options to acquire shares in Reward. On 7 November 2008, on the application of the grantee party and without opposition from the other parties, I directed pursuant to s 155 of the Act that the evidence in respect of the commercial terms agreed between the native title and grantee parties not be disclosed to anyone except the parties to the proceedings. I have not considered it necessary to refer to the financial details of these terms in these reasons and they remain confidential except where those commercial terms have previously been made public (such as occurred in relation to the share options).
The key aspects of the term sheet, excluding details of the specific commercial terms covered by the s 155 direction, are as follows.
The native title party agrees, either by way of an Indigenous Land Use Agreement or a s 31 agreement or both, to the grant of the proposed lease and miscellaneous licence L45/172 to the grantee party and furthermore agrees to the extension or renewal of eight exploration licences associated with the Project (E69/2156 to E69/2159 and E45/2801 to E45/2804) and the grant of other (unidentified) mining leases and tenements for the purposes of the Project (paras 1(a) to (b)).
The native title party agrees to facilitate the development and commissioning of the Project subject to reasonable environmental and Aboriginal heritage protection measures including by arranging and conducting archaeological and ethnographic Aboriginal surveys of the Project tenements (para 1(c)).
The grantee party will reimburse the past negotiation costs of WDLAC with respect to the Project and pay certain future costs of the negotiation. Given the importance the payment of these costs assumed I set out verbatim the relevant part of the term sheet.
‘Negotiation costs and milestone payments
2. RWD or its nominee will:
(a)reimburse WDLAC’s past negotiation costs in respect of the Lake Disappointment potash project; and
(b)pay for future costs of negotiation, consultation and authorisation processes in respect of the Agreement (including professional advice, meetings, heritage clearances and travel),
up to a sum not exceeding [specific figure nominated] or as otherwise authorised by RWD.
Such payments will be conditional upon:
(i)substantiation of past costs through tax invoices and receipts, to RWD’s satisfaction;
(ii)WDLAC providing RWD with work programmes and budgets in respect of future costs to which this paragraph applies, which costs are not to be incurred without RWD’s prior approval; and
(iii)substantiation of expenditure of future costs to which this paragraph applies in accordance with approved work programmes and budgets to RWD’s satisfaction, including through tax invoices and receipts.’
The grantee party will pay WDLAC a specified agreed sum ‘upon execution and registration under the Native Title Act of the Agreement’ (para 3).
The grantee party will pay WDLAC a specified agreed sum ‘upon Holocene obtaining all necessary approvals to commence mining operations on M45/1171 and L45/172 (including approvals under the Mining Act1978 (WA) and consent under s 18 of the Aboriginal Heritage Act 1972 (WA))’ (para 4).
The grantee party will pay a specific agreed value based royalty to WDLAC in relation to potassium sulphate and other minerals derived from the Project mining leases in each financial year (para 5).
The aggregate amounts paid in accordance with the previously mentioned payments at paras 2, 3 and 4 of the term sheet will be partially offset against the royalty payments specified in para 5 (i.e. up to a specified maximum in any one year) (para 6).
Upon execution of the agreement Reward will issue to WDLAC 7,000,000 options to acquire fully paid ordinary shares in Reward exercisable at 0.50 cents within four years of the execution of the agreement (para 7).
The written response of Mr Biljabu on behalf of the native title party of the same date said:
‘HOLOCENE PTY LTD - LAKE DISAPPOINTMENT POTASH PROJECT
I refer to your term sheet letter of offer dated 22 February 2008 and to subsequent amendments dated 26 March 2008 in relation to the above project.
Commercial offer
I confirm that a meeting of the Board of Western Desert Lands Aboriginal Council (WDLAC) and WDLAC members was held on Thursday 13 March 2008 at which Holocene’s commercial offer, as set out in the abovementioned letter, was presented and recommended by our commercial advisor, Indigenous Energy Pty Ltd (IndiEnergy).
WDLAC are now instructed that the commercial terms set out in your letter are an acceptable outcome to our Stage 1 negotiations. WDLAC or its nominee are therefore authorised to include those terms in a binding mining agreement in relation to the project, subject to:
1.completion of the authorisation process in relation to those matters affecting native title (that is, completing the process of obtaining informed consent as to the tenements proposed to be granted and the activities proposed to be conducted within those tenements);
2.the negotiation of an acceptable outcome to Stage 2 of the negotiation; and
3.a resolution of the WDLAC Board approving the final terms of the agreement.
Negotiation protocol
The WDLAC Board also authorised execution of a negotiation protocol in relation to this project subject. Whilst it is important to have a protocol we prefer a simple format given its non-binding nature as has been previously discussed between both parties. We expect that the legal detail will be dealt by all parties in the final mining agreement.
WDLAC Negotiation Team (Stage 2)
The WDLAC negotiation team will be led by IndiEnergy, together with relevant WDLAC staff and external legal counsel (to be announced) as part of WDLAC’s selection process. Members of the team currently include Joe Procter, Frank Procter and Tony Wright.
At last week’s meeting, the WDLAC Board appointed the following Martu members of the WDLAC negotiation team for Stage 2 of the negotiation in relation to this project:
o Brian Samson
o Nyaparu (Jimmy) Williams
o Allen Charles
o Mark Jefferies
o Timmy Patterson
o Heather Samson
o Margaret Samson
o Rebecca Jefferies, and
o Beth Jefferies
Past negotiation costs
We will provide to you shortly an itemised tax invoice together with receipts and supporting documentation for our past negotiation costs for payment by Reward. We will ensure that, as requested in your letter, those past costs do not exceed [a specified amount is referred to].
Future negotiation costs
All future negotiation costs associated with the development of the draft, travel and accommodation, organisation of community consultation and authorisation will be met by Holocene after prior approval of a budget.
Next steps
We propose a meeting in Perth between WDLAC and Holocene representatives in the near future to discuss how to progress the Stage 2 negotiations. In particular, we would like to arrange a meeting between the Holocene representatives and the WDLAC Stage 2 negotiation team, to provide the Martu members of the negotiation team with the opportunity to hear the nature of the proposed development first-hand from Holocene. We will contact you in due course to arrange a convenient time for this meeting.’
On 31 March 2008 the agreement was announced to the market and media. Documentary evidence provided by the native title party contains a number of ASX and press releases which highlight that the agreement of the commercial terms was favourably regarded and celebrated by both the native title and grantee parties. For example, Mr Procter described the commercial terms as ‘excellent’ (ASX Release from IndiEnergy dated 31 March 2008) and Dr Ruane is quoted as saying that the agreement was ‘amicable’ and that it was a ‘win-win for all concerned’ (‘The Australian Financial Review, 1 April 2008’).
The Tribunal is satisfied that negotiations between the native title and grantee parties from 2005 to 27 March 2008 were conducted in good faith by both parties. They resulted in an in principle agreement and agreed commercial terms which was publicised to the ASX and media in a positive way by both parties. There can be no doubt that the grantee party genuinely wanted an agreement, negotiated constructively and at least prior to 27 March 2008 was prepared to amend some aspects of the commercial offer which it had originally made.
Negotiations from 27 March 2008 to lodgement of s 35 application
On the basis of the documentary evidence submitted by both the native title and grantee parties, I accept that the following key events occurred between the parties following the 27 March 2008 term sheet and the date on which the grantee party lodged its s 35 future act determination application on 4 September 2008:
| DATE | EVENT |
| (1) 31 March 08 | Joe Procter (NTP) and Michael Ruane (GP) exchange emails in relation to the terms of a media release advising of the in principle agreement. (term sheet of 27 March 08). Email from Joe Procter to Michael Ruane states in part: ‘Key messages on deal · This agreement was made on commercial terms, has a signed term sheet and full Martu community support for the development of a mining agreement within the next three to six months which will cover all the other non commercial areas’ see NTP docs: ‘CBW1’ |
| (2) 10 April 08 | Meeting between Clinton Wolf, Tony Wright, Nic Green (consultant anthropologist) and Michael Ruane and Greg Cunnold (GP). GP provided with a document headed ‘Cost Estimate’ from Clinton Wolf: see CBW1 affidavit para 15, TAW affidavit para 4, MR1 affidavit para 21 and MR2 affidavit para 6 |
| (3) 21 April 08 | NTP invoice no. 98 for NTP past negotiation costs paid by GP: see NTP docs: ‘TW2’ and MR1 affidavit para 20 |
| (4) 6 May 08 | Stephen Wright (GP) emails native title party (Joe Procter, Christina Araujo [In house Counsel for WDLAC] and Clinton Wolf) with attached Lake Disappointment Project Native Title Agreement proposal by Reward and Holocene: see NTP docs: ‘CBW1’ |
| (5) 7 May 08 | NTP issues invoices 708078 and 708077(with attached Cost Estimate) to GP. Invoice 708078 for ‘advanced payment of Aboriginal Heritage Survey’ paid by GP on same date: see NTP doc: ‘TW2’ |
| (6) 15 & 16 May 08 | NTP holds a working group meeting with the Martu People to discuss draft agreement provided by GP: see NTP docs: Chronology ‘CBW1’ |
| (7) 19 May 08 | GP pays approximately half of 7 May invoice 708077 issued 7 May 08 following telephone request from Clinton Wolf: see NTP docs: ‘TW2’, CBW1 affidavit para 19 , MR1 affidavit paras 23 to 24 and GP doc: ‘MR3’ GP pays NTP invoice 708080 issued 15 May 08 for negotiations consultant fees: see NTP doc: ‘TW2’ |
| (8) 19 to 22 May 08 | Heritage survey conducted over area of proposed lease and miscellaneous licence L45/172 with the traditional owners and GP: see NTP docs: Chronology ‘CBW1’and MR1 affidavit para 27 |
| (9) 19 & 29 May 08 | Following WDLAC request, Stephen Wright emails WDLAC attaching ‘Agreement Area’ maps and stating in part: ‘We will produce a more detailed map, including the native title determination area boundaries, in due course. We are also giving further consideration to how those parts of the Agreement Area which fall within the areas excluded from the existing Martu native title determination should be dealt with in the Native Title Agreement, or in any separate access agreement.’ see NTP docs: ‘CBW1’ |
| (10) 27 June 08 | Christina Araujo emails GP (Stephen Wright and Michael Ruane) with attached NTP revised draft Lake Disappointment Project Native Title Agreement and stating in part: ‘…we would welcome the opportunity to meet with you during this time [3-15 July]’ see NTP docs: ‘CBW1’ |
| (11) 30 June 08 | NTP issues invoice 708102 for negotiation legal costs of Hunt & Humphrey, Project Lawyers to GP: see NTP doc: ‘TW2’ |
| (12) 8 July 08 | Stephen Wright emails Christina Araujo attaching letter and GP revised draft Lake Disappointment Project Native Title Agreement stating in part: ‘You will see that Reward and Holocene have agreed to a number of WDLAC’s changes. However there are still several outstanding issues…as follows… 1. Reward and Holocene consider that the terms of the in-principle agreement ... are extremely beneficial to the Martu People having regard to previous native title agreement precedents. ... 2. The companies therefore wish to finalise the agreement as soon as possible. ... 3. The companies require the agreement to be registered as an Indigenous Land Use Agreement… 4. I note that Holocene is applying for further exploration licences adjacent to the existing Lake Disappointment tenements, to secure additional ground for the Project and to allow for future ‘drop off’ requirements. These will form part of the ILUA Area. We are in the process of preparing an updated map of the ILUA Area… 5. …The heritage survey protocol proposed in the 27/6/08 Draft relates to exploration activities and is not appropriate or workable in the present context. The companies are also awaiting the results of the recent heritage survey so that the Lake Disappointment Cleared Area and the newly defined Lake Disappointment Protected Area may be properly mapped and included in the agreement… 6. The companies are not prepared to amend the terms of the in-principle agreement as recorded in my letter dated 27 March 2008 in the manner WDLAC proposes in clauses 8.21, 26.2 [change to the time at which the second milestone payment was to be made] and 29.1(1) [change to share options clause] of the 27/6/08 Draft. The companies are however prepared to pay an annual administration allowance of [specific figure nominated] plus CPI, to cover WDLAC’s costs of implementing the agreement. This allowance will be set off against future royalty payments (see clauses 38 and 29.10 of the 8/7/08 Draft)… Could you please review the 8/7/08 Draft as soon as possible, and then contact me to arrange a meeting between you and me (and, if you wish, Hunt & Humphry) to discuss the changes in the 8/7/08 Draft. If, after such a meeting, there are still outstanding issues, then a further meeting involving Joe Procter and Michael Ruane may be arranged.’ See NTP docs: ‘CBW1’ |
| (13) 11 July 08 | Clinton Wolf and Michael Ruane exchange emails regarding future meeting date in which Clinton Wolf states in part: ‘…there are a number of substantive changes that need careful consideration, there is therefore no point in meeting at this time as it is likely that only limited progress will be made.’ Michael Ruane responds: ‘The only substantial changes made are those introduced by WDLAC which we agreed to. The other changes to the H&H [Hunt & Humphry] draft are merely reversions of certain clauses they put in, back to those we had in there originally and are not agreeable to change or omit as they are in accordance [with] terms agreed to and required to make the agreement operable. I will be out bush next week and not available to consider changes from there. Will advise when I return.’ see NTP docs: ‘CBW1’ |
| (14) 14 July 08 | Stephen Wright emails Christina Araujo with amended version of clause 30.1 ‘which is intended to cover the issues the subject of WDLAC’s proposed clause 30.3 which we deleted’: (The clause related to notice of capital raisings and bonus issue of shares to the Martu before the Martu option had been exercised) see NTP docs: ‘CBW1’ and MR1 affidavit para 34 |
| (15) 15 July 08 | NTP issues invoice 708117 for Final payment of ethnographic survey for the Aboriginal Heritage Survey at Lake Disappointment Project Area fieldwork dated between the 19th May 2008 to the 22nd May 2008’: see NTP doc: ‘TW2’ |
| (16) 21 July 08 | Stephen Wright telephones Chris Humphry to inquire as to the NTP response to GP 8 July 08 draft agreement and is advised that comments were provided to WDLAC on 8 July 08: see MR1 affidavit para 36 and 5 August 08 letter from Stephen Wright to Christina Araujo: see NTP docs: ‘CBW1’ |
| (17) 23 July 08 | Christina Araujo telephones Greg Cunnold (GP) and requests payment of NTP legal expenses before NTP can respond to 8 July 08 GP draft agreement. Christina Araujo file note indicates Greg Cunnold advised ‘that they [Holocene] didn’t want to pay the bill because they hadn’t gotten anything back. I said that was definitely not the case and we cannot be expected to continue to work on this and make it a priority if the bills aren’t being paid…’ Christina Araujo emails Greg Cunnold advising NTP lawyers (Hunt & Humphry) have ‘just issued a further bill for the month of June’ and asking ‘when we can expect the two bills to be paid’. see NTP docs: ‘CBW1’ |
| (18) 24 July 08 | Michael Ruane forwards letter to Christina Araujo responding to 23 July 08 email stating in part: ‘1. Reward Minerals Ltd is agreeable to pay the Hunt & Humphrey accounts ([specific figure nominated]) upon execution by WDLAC of the Lake Disappointment Project Mining Agreement, essentially in the form of the Draft forwarded by Mr Stephen Wright to WDLAC on 14 July 2008 [sic – 8 July 2008]. Payment of the legal fees will be in accordance with clause 28.1 of the Lake Disappointment Agreement (Draft) and conditional upon the Mining Agreement being executed by WDLAC by 31 July 2008. 2. In the view of Reward, the changes sought by WDLAC to the Draft Mining Agreement, represent substantial deviation from the terms agreed to by the parties and documented in the Letter Agreement dated 28 (sic) [27] March 2008 and announced to ASX by Reward on 31 March. In the Draft Mining Agreement sent to WDLAC on 14 (sic) [8] July, Reward agreed to changes recommended by WDLAC for protection of the (agreed) WDLAC position, but did not agree to fundamental changes sought by WDLAC to improve its commercial position from that previously agreed to. 3. Since the 31 March agreement, WDLAC has forwarded to Reward invoices in total of [specific figure nominated] in respect of matters related to implementation of the Mining Agreement, including a community meeting and Heritage survey. Reward has not received any suggestion or been advised at any stage, that the community sought to change the agreement, in which case the invoiced expenditure referred to might not be justified. Likewise, we have had no feed back on the outcome of Meetings or the Heritage Survey conducted to clear the Mining Lease and Miscellaneous Licence areas. We believe that Reward Minerals Ltd has acted professionally and in good faith in all of its dealings with WDLAC and the Martu People…’ see NTP docs: ‘CBW1’ and MR1 affidavit paras 37 to 39 |
| (19) 24 July 08 | Joe Procter emails Greg Cunnold and Shaw Stockbroking (GP stockbroker) regarding letter of same date from Michael Ruane, stating in part: ‘I have no idea why you guys are not paying the bills as agreed on the term sheet. In any native title deal, there was never any way on earth that either party accepts a first go at draft agreement. I spoke to Clinton and he has had a gutful and I will be speaking to the old Martu boys tmr morning. There will be no more ridiculous arguments, silly letters making demands or childish behaviour. Otherwise we will just put the tools down and do other things. If your position doesn’t change, December will roll around, nothing will be agreed, your stock price will be back to 40c, your capital raising will be iced, your collective and individual market worth will be divided by 10 and you will all have a shitty Christmas – all because of a poxy irrelevant [specific figure nominated] legal bill. Meanwhile, we will have a Martu trust set up, truckloads of money in a war-chest and thinking we should of went for more. We just want the bill paid and let’s get back into it and get the agreement over the line. We could knock it off literally in 1 month.’ GP doc: ‘MR5’ |
| (20) 24 July 08 | Additional email from Joe Procter to Greg Cunnold and Shaw Stockbroking stating: ‘BTW – the most hilarious thing in all this Greg, is that all the deal costs are deducted from the Martu Split, so you guys don’t even pay for it! Imagine if every insto and sell-side analyst here and in North America knew that Michael was doing all this for a bill he got reimbursed. They wouldn’t touch him ever and you two blokes have got way too much coin handing on it to let that happen, so for heaven’s sake sort it out mate.’ Greg Cunnold responds: ‘As I said though Joe. It’s not the number, it’s the terms if the agreement. Please get Christina et al in your Perth office to dig out the approved budget in question and hopefully we can move on.’ GP doc: ‘MR10’ |
| (21) 25 July 08 | Joe Procter responds to request from Greg Cunnold and attaches the budget (Cost Estimate) as ‘approved by Michael’ and further noting: ‘As you can see the corporate advisory and legal were cited at cost so they were definitely tabled and agreed’ see NTP docs: ‘CBW1’ |
| (22) 31 July 08 | Meeting between Michael Ruane and Clinton Wolf regarding GP payment of NTP negotiation costs: see CBW1 affidavit para 30 and MR1 affidavit para 41 |
| (23) 31 July 08 | Joe Procter emails Shaw Stockbroking (Andrew Van Heyst) and Greg Cunnold stating: ‘Gents, my guys had a meeting with Ruane this morning and he was up to his old tricks of shouting and refusing to pay the legal bill, bal bla bla. My orders unfortunately are to issue a public release stating our side, RWD breaches of terms sheet conditions, impossible dealing with Ruane, etc…and start assessing alternative arrangements. I have been instructed to start drafting one now. We will release it with an indication of our own financial situation which is massive and of our intentions that it will only ever be developed when Martu are majority owners. This is unfortunate but we gave you upteen chances just to pay the bill. Which wass to [be] reimbursed anyway. All [of] which will be part of the release. Sorry guys.’ GP doc: ‘MR6’ |
| (24) 31 July 08 | Michael Ruane responds to Joe Procter by email regarding the issuing of a public release and stating in part: ‘In respect of such a release we advise as follows: 1. Firstly, any release without the approval of Rewards Minerals Ltd represents a fundamental breach of confidentiality obligations between Reward and Martu/WDLAC. As presented the release is designed to cause maximum damage to the credibility and capital raising capacity of Reward Minerals Ltd. 2. The proposed release is also a fundamental breach of good faith parameters to which Reward has meticulously adhered since day one of our negotiations with the Martu people in respect of Lake Disappointment. 3. In our view it is WDLAC that has breached the conditions of the Term Sheet executed in March by the Parties in an attempt to improve its commercial position over that agreed to at that time. 4. Please also be advised that should any public announcements be made without the approval of Reward Minerals Ltd which cause the Company damage we intend to take legal action against WDLAC and Indigenous Energy for loss and damages incurred.’ see GP doc: ‘MR7’ |
| (25) 31 July 08 | Clinton Wolf forwards emails to GP advising progress on the draft agreement will not occur until payment of the outstanding legal costs is received and states in part: ‘Once you have paid the legal bill as you agreed to do at the start of this process then you will hear what WDLAC’s proposal is. WDLAC has paid the legal bill in full and we are now over [specific figure nominated] out of pocket. Your assertion that you are not paying one more cent towards negotiation costs until Martu have signed the agreement is unacceptable and commercially and morally unethical.’ see NTP docs: ‘CBW1’ and MR1 affidavit para 42 |
| (26) 31 July 08 | Joe Procter emails Andrew Van Heyst (Shaw Stockbroking) in response to email from Michael Ruane of same date, stating: ‘I want a call from you today providing your feedback Andrew otherwise the pressure on me to go public will be immense.’ see GP doc: ‘MR8’ |
| (27) 31 July 08 | Clinton Wolf becomes aware of notification from Joe Procter to GP’s stockbrokers of the NTP proposed media statement and the objection by GP to issuing of a statement and: ‘instructed Mr Procter to cease direct communications with Reward and I decided not to issue a media statement as that may have inflamed the situation’ see NTP docs: CBW1 affidavit para 29 |
| (28) 31 July 08 | Joe Procter emails Andrew Van Heyst and Greg Cunnold and advises: ‘I have now been formally instructed by WDLAC to cease all communications with RWD or Shaws as we are now seeking Queens Counsel advice.’ see GP doc: ‘MR9’ |
| (29) 1 August 08 | Michael Ruane emails Clinton Wolf stating: ‘the fact that WDLAC is not prepared to sit down and finalise the Mining Agreement without the precondition of paying unauthorised legal fees has to be taken by Reward as a rejection of the terms agreed to by WDLAC in the March Term Sheet…’ see MR1 affidavit para 49 |
| (30) 5 August 08 | Stephen Wright sends letter to Christina Araujo in relation to the issue of outstanding legal fees. The letter reiterates paragraph 2 of the 27 March 2008 in-principle agreement and the 27 March 2008 NTP letter of acceptance of the terms and states in part: ‘…5. On the face of those letters, the parties had not reached agreement as to the quantum of future costs. There was however a common understanding that any future costs would require prior approval of a budget, and would be set off against future royalties. Nevertheless, in good faith and on the understanding that the commercial terms had been agreed, on 21 April 2008 Holocene paid [specific figure nominated] in respect of WDLAC’s past negotiation costs; and between 27 March and 30 June 2008 Holocene has paid a total of [specific figure nominated] in respect of WDLAC’s future costs. …9. …At no time did Holocene agree to pay those fees. Indeed at no time has WDLAC provide[d] Holocene with a budget in respect of legal or other costs associated with the negotiation of the Lake Disappointment Project Native Title Agreement. …23. Also on 31 July 2008 WDLAC sent Holocene an invoice for the balance of the costs of the heritage survey referred to above. Mr Ruane responded the same day requesting an itemised breakdown of the total invoice, and stating that the invoice would be paid immediately [once] the heritage survey report is received. …Furthermore, if WDLAC continues to demand payment of invoices by Holocene notwithstanding the absence of an approved budget then Holocene can have no confidence that the agreement will be finalised at a reasonable cost. In the circumstances I am instructed to make the following offer to WDLAC to resolve the current impasse: (1) On or before 5.00pm on Friday 8 August 2008, WDLAC will: (a) undertake in writing to negotiate in good faith with Holocene and use its best endeavours to finalise and execute the Lake Disappointment Project Native Title Agreement in accordance with the terms agreed on 27 March 2008, by 1 September 2008; and (b) confirm in writing that it will keep the negotiations confidential… (2) On or before 5.00pm on Friday 8 August 2008, WDLAC will provide me with comments on the latest draft… (3) On or before 5.00pm on Friday 8 August 2008, WDLAC will provide Holocene with a preliminary advice in relation to the heritage survey conducted on 19th to 22nd of May 2008 and will provide the final report by 22 August 2008. Subject to receiving satisfactory substantiation of the costs of the heritage survey and reports… Holocene will pay the second and final instalment… (4) On or before 5.00pm on Friday 8 August 2008, WDLAC will confirm in writing to Holocene that it will not present Holocene with any further demands for payment of its costs in negotiating…unless and until those costs have been the subject of a budget approved by Holocene prior to the costs being incurred. Nothing in this paragraph shall be taken to oblige Holocene to approve any particular budget amount, but Holocene must negotiate in good faith with WDLAC in respect of any proposed budget. (5) Holocene will pay the invoices of Hunt & Humphry…and any further agreed negotiation costs, upon execution of the…Agreement, and on the basis set out in clause 28.1 and other relevant clauses of that draft agreement. Could you please confirm by 5.00pm on Friday 8 August 2008 WDLAC’s acceptance, and performance, of the terms of the above offer. If the above offer is not accepted, or some other alternative satisfactory arrangement is not reached, by that time then Holocene will proceed on the basis that the proposed agreement as set out in my letter of 27 March 2008 and as reflected in the current draft Lake Disappointment Project Native Title Agreement has been rejected by WDLAC. In those circumstances Holocene will continue to seek the grant of M45/1171 and other tenements in accordance with appropriate Native Title Act 1993 (Cth) processes.’ see NTP docs: ‘CBW1’ |
| (31) 6 August 08 | Clinton Wolf telephones Michael Ruane and requests a meeting for the following week: see NTP docs: Chronology ‘CBW1’ |
| (32) 6 August 08 | Michael Ruane emails Clinton Wolf to advise he will be unavailable the following week and requests a meeting occur the subsequent week after. GP further request WDLAC provide a written response to the 5 August 08 letter from Stephen Wright: see NTP docs: ‘CBW1’ |
| (33) 7 August 08 | Michael Ruane emails Clinton Wolf, reiterating GP request for a written response to 5 August 08 letter and further states in part: ‘It would seem from your comments and those of Joe Procter that there is little chance of agreement. As indicated earlier, Reward is of the view that the Draft Agreement (of 14 (sic) [8] July 2008) faithfully records the terms agreed to by the Parties in March and also accommodates reasonable requests of WDLAC to protect the Martu position within the terms agreed. The execution of the Term Sheet agreement in March 2008 was undertaken by Reward in good faith with Reward agreeding to abide by the obligations imposed on it under the agreement. Reward does not regard the execution of [the] Term Sheet agreement as an invitation to negotiate as appears to be the view of Mr Procter. …Reward Minerals Ltd believe that further communications can only be effectively conducted in writing via the respective legal representatives.’ see NTP docs: ‘CBW1’ |
| (34) 7 August 08 | Clinton Wolf emails Michael Ruane advising that WDLAC will respond to Reward and requests Michael Ruane ‘advise what days [of] the week after next you are prepared to sit down with WDLAC and its advisers to work through the agreement, I would think that we need a day and a half’: see NTP docs: ‘CBW1’ |
| (35) 8 August 08 | NTP (Hunt & Humphry) provides requested comments to GP in relation to Stephen Wright letter of 5 August 08 which states in part: ‘The proposal contained in your letter dated 27 March 2008…is expressed to be an agreement in principle and was not intended to be legally binding on the parties. In its response by letter dated 27 March 2008, WDLAC advised that the inclusion of the proposal in a binding agreement is subject to… The first draft was prepared on behalf of Reward. This included substantive provisions that were not part of the term sheet and which were for the benefit of Reward, included clauses 10.1 to 10.11 (suspension of benefits), clause 10.6 (contractual right of set off), clause 16.6 (Holocene as WDLAC attorney) and clauses 25.6 to 25.7 (section 18 notices). The revised draft prepared on behalf of WDLAC on 28 June 2008 included provisions intended to protect WDLAC’s legitimate interests and achieve a more balanced agreement. The additional terms are not unusual for agreements of this nature. The revised agreement also rejected some of Reward’s additions which were unacceptable to WDLAC… While both parties need to respect the commercial terms contained in the term sheet a proposal to vary the commercial terms during the course of the negotiations for the detailed agreement should not necessarily be damaging to the negotiation process… …Reward’s demand in its letter dated 24 July 2008 that the agreement must be signed by 31 July 2008 as a condition of payment of WDLAC’s legal costs was both extraordinary and overbearing. Essentially, Reward appears to object to WDLAC attempting to protect its position by negotiating a fair and commercially sound agreement. This is obviously unacceptable. Both parties have presented their respective drafts and it is now a matter for the outstanding issues to be discussed. WDLAC remains confident that the remaining issues can be resolved if the parties meet and review them in an orderly manner… Reward can be assured that WDLAC accepts that the term sheet and WDLAC’s letter of 27 March 2008 form the basis for the negotiations. However, it is an oversimplification to talk in terms of whether the parties accept or reject the proposal contained in the term sheet. As was always contemplated, a detailed agreement needs to be negotiated and both parties should respect the other’s negotiating positions, even if that involves variations and additions to the term sheet. In relation to any application under the Native Title Act, we are instructed WDLAC does not consider that Reward has satisfied its obligation to negotiate in good faith on a number of grounds… …WDLAC wishes to look for solutions and remains ready and willing to continue the negotiations. If you wish, we could provide detailed written comments on the 8 July 2008 draft, or alternatively, make drafting changes. However, WDLAC is strongly of the view that the most effective method of advancing the matter at this stage is for the parties to meet and review the outstanding issues in an orderly manner following which a further draft should be prepared. If this approach is adopted, the Martu governing committee is meeting in the first part of September and WDLAC’s objective would be for a recommended agreement to be presented for consideration and approval at that time. WDLAC urges Reward to engage in further negotiations and is available to meet on any of 13, 14 and 18 to 20 August 2008.’ see NTP docs: ‘CBW1’ |
| (36) 8 August 08 | Clinton Wolf writes to Michael Ruane to advise that WDLAC’s lawyers have responded to Stephen Wright’s letter of 5 August 2008 and suggests ‘our lawyers should meet to discuss Reward’s draft of 8 July 2008 meet to see what issues they can agree...’ NTP offers to provide further draft agreement if GP is not willing to meet: see NTP docs: ‘CBW1’ |
| (37) 14 August 08 | Joe Procter emails Greg Cunnold and advises: ‘We have $20m in our account today. Its been a great day greg. All the best to Mick.’ see GP docs: ‘MR10’ and MR1 affidavit para 50 |
| (38) 15 August 08 | Stephen Wright emails Christina Araujo seeking clarification as to an understanding that WDLAC will provide a further draft of the agreement to GP and subsequent to which a meeting will be arranged between the parties’ lawyers and principals: see NTP docs: ‘CBW1’ |
| (39) 18 August 08 | Christina Araujo emails response to Stephen Wright advising a further draft of the agreement will be forward to the GP by 20 August 2008: see NTP docs: ‘CBW1’ |
| (40) 20 August 08 | Christina Araujo emails GP with attached NTP draft Lake Disappointment Project Native Title Agreement and further suggests parties arrange a time to meet and discuss for late August 08: see NTP docs: ‘CBW1’ |
| (41) 27 August 08 | Stephen Wright forwards letter to Christina Araujo advising that based on the 20 August 08 revised NTP draft agreement ‘it seems to us that the parties are still quite a distance apart.’ The letter states in part: ‘I am instructed that Holocene and Reward were prepared to enter into an agreement with WDLAC on the terms set out in the 27 March 2008 correspondence… my clients have lost confidence that the Lake Disappointment Project Native Title Agreement will be concluded on mutually acceptable terms within a reasonable timeframe and at a reasonable cost. In the circumstances, I am instructed that Holocene and Reward do not consider that further meetings as proposed by WDLAC are likely to be productive. The companies do not intend to continue direct negotiations with WDLAC in relation to the Lake Disappointment Project Native Title Agreement, and withdraw any offer to enter into an agreement on the terms set out in the 27 March 2008 correspondence. Holocene will now seek resolution of the issues through the arbitration process under the Native Title Act.’ See NTP docs: ‘CBW1’ |
| (42) 27 August 08 | Michael Ruane emails Christina Araujo with attached draft of a proposed ASX release advising of breakdown in negotiations for WDLAC’s ‘information and comment if you wish to do so’: see NTP docs: ‘CBW1’ |
| (43) 27 August 08 | Christina Araujo emails response to Michael Ruane advising ‘WDLAC does not agree that Reward’s proposed ASX release properly reflects the position. In this regards, WDLAC will give consideration to issuing a responsive public statement’: see NTP docs: ‘CBW1’ |
| (44) 28 August 08 | GP issues ASX press release advising: ‘In March 2008 Reward and WDLAC agreed upon commercial terms applicable to the Lake Disappointment project development. That agreement was announced to the Market on 31 March 2008, following an exchange of letters between Reward and WDLAC. Subsequently however, the parties have been unable to settle upon the terms of the formal agreement.’ see NTP docs: ‘CBW1’ |
| (45) 29 August 08 | Christina Araujo forwards letter to Stephen Wright expressing disappointment at the position adopted by the GP and advises that ‘WDLAC remains ready and willing to continue negotiations with your client.’ The letter further contends that the NTP does not consider the GP has fulfilled its obligations to negotiate in good faith on several grounds and offers the opportunity for parties to meet in early September 2008 to continue negotiations: see NTP docs: ‘CBW1’ |
| (46) 4 September 08 | GP lodges s 35 Future Act Determination Application (form 5) with the Tribunal |
Native title party’s contentions
The native title party makes the following five principal contentions in support of its position that the grantee party failed to fulfil its obligation under the Act to negotiate in good faith.
Failed to abide by an agreement to pay the native title party’s future negotiation costs.
Failed to approach negotiations with an open mind and adopted a predetermined position from which it was not prepared to shift.
Failed to negotiate in good faith by imposing unreasonable deadlines and unrealistic demands on the native title party.
Failed to meet the native title party to continue negotiations, or to agree to their respective lawyers meeting, in spite of repeated requests by the native title party.
Failed to engage in specific negotiations in relation to the future act following the breakdown of broader negotiations.
Failure to pay native title party’s future negotiation costs
The native title party contends that the grantee party failed to abide by an agreement to pay the native title party’s future negotiation costs as outlined in paragraph 2 of the 27 March 2008 term sheet. The issue of past costs as identified in paragraph 2(a) of the term sheet is not disputed by the parties and I make no further reference to it except to observe that the payment of negotiation costs by the grantee party up to the term sheet agreement is indicative of its good faith up to that point in time.
Facts critical to a consideration of this issue are contained in the term sheet and Mr Biljabu’s reply of 27 March 2008 and what happened at the meeting of 10 April 2008 (Chronology para (2), (5) and (7)). The document given to Dr Ruane at that meeting was entitled ‘Reward Pty Ltd, Mining Agreement Negotiation, Cost Estimate’ (‘the Cost Estimate’) and at the foot of it showed an Estimated Total Cost (to which GST would be added where required). There are two aspects of the Cost Estimate which it is convenient to identify separately because potentially different considerations apply to each of them. The first (‘travel & meeting costs’) is for travel, accommodation and sitting fee allowances for nine members of the claim group for four days attendance at meetings and a specific amount (approximate only) for a community meeting. These items made up more than half of the total amount. In addition travel and accommodation expenses for various of WDLAC’s staff (including in house counsel), catering and hall hire and a percentage of the invoiced amount for WDLAC’s administration on-costs were specified. All these items had specific amounts allocated to them including the Estimated Total Cost.
The second aspect of the Cost Estimate was for ‘Consultants’ (‘the consultant’s fees’) made up of ‘Legal’ at a specified rate per hour and ‘Commercial Advisor’ at a specified rate per day, both said to be ‘at cost’ but not included in the figure given as the Estimated Total Cost.
WDLAC’s invoice of 7 May 2008 mirrored the Cost Estimate. It contained the same specific amounts for travel and meeting costs (with an additional amount for GST) and the same daily and hourly rates for consultants costs but there were no specific amounts identified for work done. On 19 May 2008, after an approach from Mr Wolf, Dr Ruane paid approximately half of the invoiced amount which he described as ‘Part payment’ of the invoice of 7 May 2008. In addition, he paid an amount on 19 May 2008 on WDLAC’s invoice of 15 May 2008 for Professional Services rendered by IndiEnergy, it appears for attendance at WDLAC’s Working Group meeting on 15 and 16 May 2008. There is also no dispute that an advance payment was made by the grantee party for conduct of an ethnographic survey at Lake Disappointment held from 19 to 22 May 2008 but that the balance was not paid because according to Dr Ruane (MR1 affidavit para 27) the grantee party had not been provided with any report of the survey. The grantee party has not paid the balance of the invoice of 7 May 2008 or invoices for negotiation legal fees for Hunt & Humphry Project Lawyers for May (invoice of 30 June 2008) and June 2008 (invoice of 26 August 2008).
The native title party makes the following contentions:
‘The terms of the 27 March 2008 letter were not questioned by Reward.’ (para 1.1)
At the 10 April 2008 meeting involving Dr Ruane and Mr Greg Cunnold for the grantee party and representatives of the native title party, Mr Wolf, Mr Tony Wright and a consultant anthropologist, Mr Nic Green, ‘the native title party provided a costs estimate for the negotiations which specified that future legal expenses would be charged on an “at cost” basis. … After a brief discussion, Mr Ruane accepted the costs estimate.’ (para 1.2)
The actions of the grantee party in paying approximately 50 per cent of an invoice dated 7 May 2008 which was based on the Cost Estimate indicated acceptance of the costs estimate on the part of the grantee party. (para 1.3)
On 24 July 2008, the grantee party refused to pay the costs of the native title party ‘unless the native title party agreed to execute an agreement in the form proposed by Reward no later than 31 July 2008’, notwithstanding a failure on the part of the grantee party to provide requested information and clarify outstanding aspects of the agreement. (para 1.4)
On 5 August 2008, the grantee party indicated that costs would not be paid ‘until the execution of the agreement and on the basis set out under the 8 July draft agreement’. The refusal to pay the legal costs of the native title party on the part of the grantee party ‘unless the final agreement was signed was contrary to the in principal [sic] agreement of 27 March 2008... This demonstrated a lack of good faith in the negotiations.’ (paras 1.5 and 1.6)
The affidavits of Clinton Wolf and Tony Wright are similar in their account of the 10 April 2008 meeting. Mr Wolf and Mr Tony Wright both depose that after discussion, ‘Mr Ruane accepted the cost estimate.’ (CBW1 affidavit para 16 and TAW affidavit para 4). Mr Wolf also deposed: ‘I reiterate that it appeared to me that Mr Ruane through his actions accepted the Costs Estimate.’ (CBW2 affidavit, para 4). Mr Wolf also says that he asked whether Dr Ruane agreed that the native title party should engage Hunt & Humphry and that Reward would pay the legal costs (CBW1 para 16). There is no specific denial of this aspect of the conversation from Dr Ruane.
The affidavit of Dr Ruane disputes the accounts of Mr Wolf and Mr Wright of the 10 April 2008 meeting in which Dr Ruane is said to have ‘accepted the cost estimate’. Dr Ruane deposes ‘[a]t the end of the meeting Mr Wolf handed me the ”Cost Estimate”. I was surprised by the amount of the estimate, and made a comment to that effect… I responded that there was no way Reward was going to pay that much in negotiation costs… Neither I nor Mr Cunnold (Reward’s Exploration Manager) in any way agreed to accept that document as an approved budget for WDLAC’s legal fees.’ (MR1 affidavit paras 21 and 22). Dr Ruane says he is certain of this situation because, among other things, Reward always manages its legal costs carefully and that based on past company practice he would not agree to pay expenses ‘at cost’ without a budgeted amount. He says to do so would be contrary to the position adopted during negotiations leading up to and included in the term sheet agreement of 27 March 2008. Dr Ruane says that no approved budget for the payment of WDLAC’s legal fees exists.
Mr Kenneth Pettit SC, counsel for the grantee party, submitted that Dr Ruane’s reasons for his view that no agreement was entered into on 10 April 2008 on the basis of the Cost Estimate were more detailed than the limited explanations provided in the affidavit of Mr Tony Wright and two affidavits of Mr Wolf. The grantee party’s submissions query Mr Wolf and Mr Wright’s use of the term ‘accepted’ with reference to Dr Ruane’s receipt of the costs estimate, noting that ‘no detail is given as to what ”accept” means, nor what Mr Ruane is alleged to have said. The grantee party disputes that it agreed or “accepted” the Costs Estimate’ (GP contentions, para 34). Mr Pettit submitted that the word ‘accepted’ is both ‘limp and ambiguous’ and that of the evidence put forth by the three deponents, including the responding affidavit of Mr Wolf sworn 30 October 2008, ‘Mr Ruane is the only one who is crystal clear the Cost Estimate was not agreed’.
The grantee party further contends that the Cost Estimate does not constitute a work program or budget for the purposes identified in paragraph 2 of the 27 March 2008 term sheet but that it ‘constituted a partial budget related only to a particular set of meetings then actually in prospect. It was ”partial” because it did not estimate legal costs’ (GP contentions para 28(h)(i)). ‘This [the Cost Estimate] is not a budget or a worksheet for legal advice, it simply says ”at cost”’ (TR p 48, line 24).
While the native title party relies on the half payment of the 7 May 2008 invoice as indicative of agreement to the Cost Estimate the grantee party, by contrast, asserts payment of half of the invoice disproves the contention that it had agreed to the Cost Estimate (GP contentions para 35). The native title party’s reply to the contentions of the grantee party note that part payments are not uncommon and that at no time during negotiations did the grantee party advise the native title party that it did not accept the Cost Estimate or would not pay the balance of the 7 May 2008 invoice (NTP response paras 10 and 11).
Dr Ruane deposes (MR1 affidavit paras 23 and 24) that the 7 May 2008 invoice was dealt ‘on its face’ and that at the time the grantee party was requested to pay the invoice on 19 May 2008, there was no discussion about the 10 April 2008 Cost Estimate. In relation to the meeting between Mr Wolf and Dr Ruane on 19 May 2008, Dr Ruane said he was not prepared to pay the whole invoice as Reward had not been invited to the meeting and would not pay the claimed administration fee. Dr Ruane authorised payment of half the invoice and indicated he would consider paying the balance later, ‘once Reward received feedback on the draft agreement’. He says Mr Wolf agreed and that WDLAC never subsequently sought payment of the balance of the invoice (MR1 affidavit paras 24 and 25). Mr Pettit submits that Dr Ruane’s actions mean the grantee party acted in conformity with the term sheet agreement which stipulated that payment for future negotiation costs was at a specific agreed capped figure ‘or as otherwise authorised by RWD [the grantee party]’ (term sheet, para 2). I note that the amount paid by Dr Ruane was in excess of the capped amount referred to in the term sheet.
The other related issue is whether there was agreement to pay the expenses incurred by the native title party for the legal services of Hunt & Humphry, Project Lawyers. Mr Wolf says that a ‘fully itemised’ invoice dated 31 May 2008 was issued to the grantee party on or about 30 June 2008 outlining legal costs of the native title party for services of Hunt & Humphry in May 2008 (CBW1 affidavit para 21). At some stage following the provision of the 31 May 2008 invoice on or around 30 June 2008, Mr Wolf instructed Mr Procter to contact Dr Ruane to ascertain ‘what the problem was’ with regards to the grantee party ‘object[ing] to paying the invoice’. Mr Procter ‘informed me that he telephoned Mr Ruane who refused to pay the costs and objected to the changes to the agreement, particularly the inclusion of a non dilution clause in the share option provisions’ and ‘threatened to lodge an application with the National Native Title Tribunal unless the native title party accepted the agreement as drafted by Reward.’ (CBW1 affidavit para 22).
On 24 July 2008, Dr Ruane wrote to the native title party advising that the grantee party is ‘agreeable to pay[ing] the Hunt & Humphrey accounts [specific figure nominated] upon execution by WDLAC of the Lake Disappointment Project Mining Agreement, essentially in the form of the Draft forwarded by Mr Stephen Wright to WDLAC on 14 (sic) [8] July 2008.’ (NTP docs: ‘CBW1’). The native title party asserts that the position adopted by the grantee party that it would not pay the legal costs of the native title party until WDLAC executed the grantee party proposed agreement was contrary to the 27 March 2008 term sheet and as such evidences a lack of good faith on the part of the grantee party.
The grantee party responds by saying that the term sheet did not contain any agreement as to when any costs would be paid (GP contentions para 37(a)) and furthermore, the refusal to negotiate in good faith with respect to this issue was not through the actions of the grantee party, but on the part of the native title party who refused to negotiate in good faith or at all ‘until its demands for payment were met’ (GP contentions para 39).
In addition to the uncertainty surrounding what occurred at the meeting on 10 April 2008 there are other aspects of this issue which are confusing. In his oral submissions (TR p 48) Mr McKenna, counsel for the native title party, said that he was instructed and could confirm by affidavit if necessary that the community meeting referred to in the Cost Estimate would be ‘conducted at the end of the negotiations to approve a final executable document’. He also says that the ‘Cost Estimate’ was an all up figure for the balance of the negotiations including meetings with the negotiating group for up to four occasions and a community meeting (TR p 47).
Despite this being the position of the native title party the invoice of 7 May 2008, in relation to travel and meeting costs, mirrored exactly the Cost Estimate including the amount for the community meeting as well as expenses for meetings on four days. The invoice did not specifically itemise the meetings or other activities which had taken place and involved expenditure covered by the Cost Estimate. Mr Wolf deposes (CBW1 affidavit para 19) that he approached Mr Ruane on 19 May 2008 to request payment of the invoice ‘as the native title party had incurred significant expenses’. According to Dr Ruane (MR1 affidavit para 23) Mr Wolf told him during this conversation that there was some urgency about payment of the invoice because Martu were holding an on country meeting of Martu People to take instructions on the draft agreement which was to coincide with the heritage survey which was being undertaken at the same time. It is not clear whether this was a reference to a different meeting to that which occurred on 15-16 May 2008 to discuss the draft agreement but there is no evidence of another on country meeting.
I accept that some expenses (including legal expenses) would have been incurred after the 10 April 2008 meeting to consider the draft agreement provided by the grantee party including the expenses for the working group meeting on 15-16 May 2008. However, those expenses would have been less than those specified in the Cost Estimate. At the time of the part payment of the Cost Estimate no invoice had been rendered by Hunt & Humphry (although legal services had been provided starting on 9 April 2008) and no specific budget, work program or estimate of their costs had been provided to the grantee party. It appears that the native title party’s expectation was that the grantee party would pay the whole of the Cost Estimate in respect of travel and meeting costs up front (even though not all the expenses had been incurred) and that it would pay whatever consultant’s fees were incurred at either the hourly or daily rate specified.
If the native title party’s contention is upheld this would prima-facie suggest that the grantee party had not negotiated in good faith. Indeed unless there were some extenuating circumstances such as the native title party being in breach of key agreements entered into by it as part of the negotiations, failure by the grantee party to abide by an agreement of this kind, in all likelihood, would be fatal to a contention that it had negotiated in good faith.
The key questions are first, whether the term sheet required the grantee party to pay future negotiation costs and second, whether there was an agreement entered into on 10 April 2008 to pay negotiation costs. Both the native title and grantee parties have provided contradictory affidavit evidence and no request from either party has been made to clarify this issue through oral hearing and cross examination. The Tribunal has been presented with sworn testimony of the witnesses for the native title party, Mr Wolf and Mr Wright, that the grantee party had accepted to pay negotiation costs as proposed by WDLAC, and sworn evidence from Dr Ruane that the grantee party had made no such agreement (particularly in relation to legal fees).
The practical effect of s 36(2) of the Act is to place an evidential burden on the party or parties alleging lack of good faith (Placer at 93 [28]). I find that the native title party has not sufficiently met its evidential burden with respect to this issue. It can be disposed of on the basis that the native title party’s evidence which is directly contradicted by Dr Ruane is not sufficient to establish the existence of a concluded agreement to pay the amount in the Cost Estimate, either for the travel and meeting costs or the consultant’s fees (including legal expenses).
There is no question that the term sheet obliged the grantee party to pay for future negotiation costs but this was up to a specified capped amount or as otherwise authorised by Reward. The specified capped amount was considerably less than the amount specified in the Cost Estimate. The term sheet in effect set up a procedure for payment of future negotiation costs which involved conditions to be complied with by the native title party. This involved WDLAC providing work programs and budgets and no costs being incurred without the grantee party’s prior approval (para 2(ii)) and subsequent substantiation of expenditure in accordance with those approved work programs and budgets to Reward’s satisfaction. In my view those conditions were not complied with.
It is arguable that the travel and meeting cost in the Cost Estimate constituted a work program and budget but there was no substantiation of these costs having been incurred and at the time the invoice of 7 May 2008 was rendered, not all of them would have been. With respect to the consultant’s fees which were specified to be at either an hourly or daily rate and the total amount ‘at cost’ I am satisfied that this did not constitute a budget or work program. It is not unreasonable to expect, particularly as the amount claimed for negotiation costs was well in excess of the amount specified in the term sheet, that the native title party would have entered into detailed correspondence to justify the amount claimed in accordance with the conditions of the term sheet.
The circumstances of the payment by Reward on 19 May 2008 of half the invoice of 7 May 2008 are not conclusive in supporting the existence of an agreement whereby Reward authorised the expenditure of the full amount. There is no correspondence to this effect and Dr Ruane provides some reason for his view that the negotiation costs (including legal) had not been agreed to by him (company policy etc). The native title party did not seek to challenge this evidence and it lends itself to a commonsense inference that a responsible company would not agree to open-ended legal costs.
With respect to Mr Pettit’s submission in relation to the use of the word ‘accepted’ by Mr Wolf and Mr Tony Wright as indicative of the fact that there was not a firm agreement, particularly when confronted with Dr Ruane’s clear denial of one, it is my view, the use of such a word could be sufficient to establish an agreement but in this case neither Mr Wolf nor Mr Tony Wright have provided any details of the actual conversation or whether Dr Ruane himself actually said he ‘accepted’ the Cost Estimate or used any other word to indicate agreement. In the end the Tribunal has been faced with conflicting evidence about what was said at the crucial meeting of 10 April 2008. There is no oral evidence or compelling corroborative facts to definitely determine whose version is correct. The evidence presented by the native title party does not establish the existence of an agreement to pay the amount specified in the Cost Sheet and particularly to pay the legal costs incurred by the native title party with Hunt & Humphry. It certainly appears that the native title party thought there was such an agreement and regrettably this is one of the issues which soured the previously good relations between the parties. I can only conclude that there was a misunderstanding about this issue.
It may be that confusion over this issue arose because the native title party thought that the ‘term sheet’ involved agreement to pay ‘all future negotiation costs’ after approval of a budget (see Teddy Biljabu’s letter of 27 March 2008). However, this does not accord with para 2 of the term sheet which has a specified agreed cap for both past and future negotiation costs unless otherwise authorised by the grantee party. In any event no budget which complies with the term sheet was agreed.
Failed to approach negotiations with an open mind and adopted a predetermined position from which it was not prepared to shift
On 6 May 2008 the grantee party provided a draft agreement in the form of an Indigenous Land Use Agreement to the native title party which contained the commercial terms and other clauses dealing with issues customarily found in mining agreements including allowing the Project to proceed, environmental and Aboriginal heritage protection measures (referred to in the term sheet), the non-extinguishment principle, Martu Peoples’ access, employment, training and contracting, business development, Liaison Committee, cultural awareness and training. There were also clauses dealing with payment of the native title party’s negotiation and authorisation costs.
With reference to the term sheet agreement, the native title party asserts that ‘negotiation of a detailed agreement would involve the introduction of numerous and complex provisions’ as evidenced by the length and complexity of the first draft agreement prepared by the grantee party and dated 6 May 2008 (NTP contentions para 2.3). Mr McKenna says that the amendments sought by the native title party were ‘never asserted to be fixed positions, they were negotiating positions’ (TR p 27, line 8). The affidavit of Mr Wolf notes that the 6 May 2008 grantee party draft agreement ‘incorporated a range of provisions not referred to in the in principal [sic] agreement of 27 March 2008’ (CBW1 affidavit para 17).
On 27 June 2008 the native title party responded to the grantee party with a revised draft agreement and ‘included provisions intended to protect the native title party’s legitimate interests and achieve a more balanced agreement’ (NTP contentions para 2.5). These included the following amendments to the commercial terms of the term sheet of particular importance in these proceedings.
The second milestone payment was amended to be payable ‘upon grant’ of the mining lease rather than on ‘obtaining all necessary approvals to commence mining operations’.
The exercise price of the share options was altered from being exercisable at 0.50 cents per share to 25 per cent of the volume weighted average price of a fully paid ordinary share in the 30 trading days up to and including the business day before the issue.
During negotiations the native title party said that while ‘both parties need to respect the commercial terms contained in the term sheet a proposal to vary the commercial terms during the course of the negotiations for the detailed agreement should not necessarily be damaging to the negotiation process…’ (Chronology (35)).
The native title party contends that the grantee party adopted a rigid, inflexible and ”take it or leave it” position by rejecting the native title party’s amendments of 27 June 2008 and responded in its 8 July 2008 revised draft agreement by reinstating its original provisions. The native title party declined to make changes to its draft and reaffirmed this in correspondence of 20 August 2008 which proposed further discussions between the parties.
The grantee party denies that it failed to approach negotiations with an open mind and adopted a predetermined position from which it was not prepared to shift. However, it is indisputable that in relation to the two relevant commercial terms the grantee party was not prepared to budge. The grantee party argued that it was unreasonable conduct for the native title party to seek to change the commercial terms of the term sheet (GP contentions para 42) and that this constituted a reneging on the part of the native title party from what was originally agreed on 27 March 2008. This was made clear to the native title party through a series of correspondence dated 8 July 2008, 11 July 2008, 24 July 2008, 31 July 2008, 5 August 2008, 7 August 2008 and 27 August 2008. Mr Pettit says the parties ‘knew it [27 March 2008 term sheet] was coming and it had previously been agreed and that’s why it’s called the term sheet rather than on its face an offer.’ (TR p 42, line 8). The grantee party also says that the commercial terms were ‘extremely beneficial to the Martu People having regard to previous native title agreement precedents’. (Chronology (12)). Although there is no specific comparative evidence to support this contention the Tribunal accepts from its own knowledge that the upfront and royalty payments are often found in future act agreements for mining (whether s 31 agreement or Indigenous Land Use Agreements). The share option proposal was novel. Certainly the commercial terms were acknowledged by parties to be beneficial in their public statements following the term sheet agreement.
In my view the native title party’s contention does not reflect the grantee party’s position in the negotiations overall. In discussions prior to 27 March 2008 the grantee party evinced an intention to compromise by making a number of offers and counter offers as it did with respect to some matters the subject of the negotiations after 27 March 2008.
I accept the grantee party’s contention that it accepted or substantially accepted a number of changes proposed by the native title party in its response on 8 July 2008 to the native title party’s draft of 27 June 2008 (GP contentions paragraph 15). In addition, the grantee party accepted a native title party proposal to pay a specific agreed annual administration fee. Although this amount was to be offset against future royalty payments it was another example of it accepting (at least in part) a native title proposal. The grantee party also drafted a clause to deal with issues raised in relation to the share options (Chronology (14)) which was to deal with the native title party’s concerns.
While it is true that the grantee party was not prepared to shift position on the two commercial terms, that stance is explicable by the fact that these aspects of the 27 March 2008 agreement were quite specific and arrived at after some months of negotiations. Although the term sheet letter of 27 March 2008 confirms the terms of the agreement to be ‘in principle’ I am satisfied that the specific commercial terms had been agreed. By their very specific nature they are clearly more than an in principle agreement. The agreement was ‘in principle’ because there were clearly many more issues that needed to be dealt with and which were reflected in the draft agreements exchange by the parties. Further, there needed to be an authorisation process and final approval of the WDLAC Board as specified in Mr Biljabu’s reply to the term sheet of 27 March 2008.
My finding that the commercial terms agreed at Stage 1 of the negotiations were settled terms and not meant to be the subject of further negotiations which substantially altered them is supported by the following facts.
The letter of 27 March 2008 to Stephen Wright from Teddy Biljabu, Chairman of WDLAC accepting the commercial term sheet was written after approval from the Board of WDLAC and its Members on 13 March 2008 and also according to Mr Procter after approval at a full community meeting (IndiEnergy ASX Release, 31 March 2008).
The email correspondence between Mr Procter and Dr Ruane on 31 March 2008 which provided key messages on the deal for media purposes. Mr Procter said that the 27 March 2008 agreement ‘was made on commercial terms, has a signed term sheet and full Martu community support for the development of a mining agreement within the next three to six months which will cover all the other non commercial areas’ (NTP Docs: ‘CBW1’). The fact that there were ‘agreed commercial terms’ was reiterated in IndiEnergy’s ASX Release of 31 March 2008. In its ASX release on the same day Reward provided further particulars of the agreed financial terms and said ‘Non-commercial aspects of the agreement are being finalised for formal documentation.’
Mr Biljabu’s letter of 27 March 2007 acknowledges that the commercial terms are an acceptable outcome of the Stage 1 negotiations and can be included in ‘a binding agreement’. It then refers to negotiations for Stage 2 of the Project.
If it could be said that the native title party’s proposed changes to the commercial terms were of a purely technical or drafting nature which the grantee party was not prepared to consider then the native title party’s contentions might have more merit. However in my view both the changes proposed were of a substantial nature and of benefit or potential benefit to the native title party.
With respect to the second milestone payment, grant of the proposed lease could occur well before all necessary approvals to commence mining and thus be of benefit to the native title party. The payment would stand even if there was some subsequent regulatory impediment to the grant being made. I do not regard the agreed term as one that is devoid of certainty. The time could be readily ascertained even if not as specific as the actual date of grant. The native title party’s proposed change was likely to result in a substantial milestone payment being made earlier than contemplated by the term sheet.
On the share option issue the media reporting of the term sheet agreement on 1 April 2008 indicated that Reward’s share price increased from $1.00 to $1.25 following the announcement and that if the option had been exercised before the increase the Martu would have benefited to the extent of $5.25 million, (i.e. $3.5 million from the 50¢ per share gain on exercise of the option and $1.75 million from the 25¢ from the share price increase). The Martu would have invested $3.5 million in Reward for this result. If the native title party’s proposal was adopted (and assuming that the volume weighted average price in the 30 days prior to exercise of the option was $1.00) the native title party would have obtained the shares for $1.75 million which Mr Pettit correctly says at that time was hugely advantageous to the native title party.
Whether the fixed price or volume weighted average price formula is more advantageous or not will depend on the circumstances at the time the options are taken up. If the volume weighted average price exceeded $2.00 then the 50¢ fixed formula would be more advantageous to the native title party. The cost of purchasing the shares would always remain at $3.5 million. If the share price increased and the volume weighted average was say $4.00 the cost of purchasing the shares would double. However, if the volume weighted average price is less than $2.00 then the formula based on 25 per cent of the volume weighted average formula is more advantageous to the native title party. If Reward’s share price falls below 50 cents then there would be no point in exercising the options but presumably the native title party if so minded could purchase shares on the open market.
No matter how this commercial situation might have played out in the future, it is indisputable that the native title party’s proposed change was a substantial one. The commercial terms were set on 27 March 2008 after extensive negotiation, during which time the native title party was receiving commercial advice. The native title party was not mislead in any way and positively acknowledged the substantial benefit of the term sheet agreement. It was not entitled to change this aspect of the agreement in any significant way.
Imposing unreasonable deadlines and unrealistic demands
The main points at issue with regards to this contention are first, the 24 July 2008 correspondence from Dr Ruane which states in part that ‘Reward Minerals Ltd is agreeable to pay the Hunt & Humphry accounts ([specific figure nominated])upon execution by WDLAC of the Lake Disappointment Project Mining Agreement essentially in the form of the Draft forwarded by Mr Stephen Wright to WDLAC on 14 (sic) [8] July 2008…by 31 July 2008’ (Chronology 18). Second, another letter dated 5 August 2008 from Mr Stephen Wright also imposed a three day deadline in which the native title party was to respond to the grantee party over a number of issues and in particular to provide comments on the latest 8 July 2008 draft agreement (Chronology 30). The native title party contends that both letters placed unrealistic expectations on the native title party, particularly with regards to the 24 July 2008 stipulation that the agreement be executed by 31 July 2008.
The evidence of Dr Ruane is that he did not consider the practicality of the document being executed within the deadline imposed but was concerned with settling the terms of the final agreement by the end of July. The letter was aimed at progressing the matter at hand, not as a threat or coercion, asserts Dr Ruane, whose aim was to seek assurances that negotiations could be progressed speedily (MR1 affidavit paras 38 and 39). Mr Pettit however concedes that ‘there is no doubt we agree that it would have been very difficult to comply with this, by the date stipulated [31 July 2008]’ and cites ‘exasperation arising out of the constant reneging on the original agreement’ (TR p 39, line 28) as the motivation for the stringent timeframes set by the grantee party. The grantee party relies on its actions following the 24 July 2008 letter in which it sought to continue negotiations beyond the 31 July 2008 deadline to say that it continued to negotiate in good faith.
While I can accept that Dr Ruane had legitimately become concerned about the delay in resolution of the negotiations and particularly the changes proposed to the commercial terms by the native title party, a demand without notice that a complex agreement should not only be finalised but executed within six days is not indicative of negotiating in good faith and reasonable. Such a request is a near impossibility in native title negotiations, keeping in mind the necessity to obtain approval and authorisation from the Martu People, something which the 27 March 2008 agreement says will need to occur. However, on its own it is not fatal to the grantee party’s general contention that it has behaved properly in relation to the negotiations. Had it peremptorily terminated negotiations because of the native title party’s failure to meet its demand this may have been a more serious example of unreasonable negotiating behaviour but it did not do so. Negotiations continued by correspondence at least, after 31 July.
The grantee party contends that the 5 August 2008 letter which imposed a three day time constraint was not unreasonable nor could it not be complied with. In particular, the grantee party refers to the ‘two substantive demands’ being the provision of comments to the 8 July 2008 draft agreement and preliminary advice with regards to the heritage survey conducted in May 2008 (GP contentions para 49). The basis for its claim that these were not unreasonable demands are outlined in the affidavit of Dr Ruane that the grantee party was aware the external lawyers for the native title party had already provided comments to WDLAC and that preliminary advice from the anthropologist with regards to a heritage survey had also been provided (MR1 affidavit paras 27 and 36).
Given the lengthy history of negotiations, I do not regard this request as indicative of a failure to negotiate in good faith. The 5 August 2008 letter from Mr Stephen Wright contained a detailed argument in support of his client’s position and contained an offer dealing with a number of topics to resolve the matter. It did not deal so much with the substance of the draft agreement as with a process for bringing the negotiations to finality. Mr Wright wanted the offer accepted by 8 August 2008 ‘or some other alternative satisfactory arrangement’ reached. In the event an alternative arrangement was agreed and the native title party provided a further draft of the agreement on 20 August 2008. This agreement reaffirmed the native title party’s proposed changes to the commercial terms and the grantee party decided to withdraw its offer to settle on the basis of the 27 March 2008 agreement and to seek arbitration by the Tribunal. Given the delay and the dispute which had arisen over the payment of negotiation cost and the commercial terms I am satisfied that the grantee party was entitled to take steps to bring matters to finality. The fact that a s 35 application was made is not indicative of the grantee party’s failure to negotiate in good faith (Strickland v Minister for Lands for Western Australia [1998] 868 FCA; (1998) 85 FCR 303 at 322).
Failure to meet to continue negotiations
Subsequent to the breakdown in negotiations in late July 2008 and prior to the s 35 lodgement date, the native title party made a number of offers for meetings with the grantee party or its lawyers on 6, 7 and 8 August 2008, and 29 August 2008 for the purposes of resolving the differences and reviewing the agreement. Although Dr Ruane indicated by email on 6 August 2008 that he would be willing to attend a meeting at an alternative date to the one proposed, no such meeting took place between the parties.
On 7 August 2008 Dr Ruane advised Mr Wolf by email that the grantee party would require a response from WDLAC to Mr Stephen Wright’s letter of 5 August 2008 before a meeting could occur and that future communications should be conducted in writing through the parties’ legal representatives. He also said that it seemed from the comments of Mr Procter and Mr Wolf that there was little chance of agreement. Hunt & Humphry responded to the 5 August 2008 letter on 8 August 2008 and suggested a meeting to review the outstanding issues. On 15 August 2008, Mr Stephen Wright wrote to Ms Araujo expressing his understanding that a meeting involving lawyers and/or principal (as necessary) would be arranged once the native title party had provided, as agreed, a further draft of the agreement and it had been reviewed by the grantee party. Ms Araujo provided the revised draft agreement on 20 August 2008. Contrary to previous indications that a meeting would be organised following the provision of the native title party’s draft agreement, the grantee party advised in writing on 27 August 2008 that it did not intend to continue negotiations for the reasons already explained.
The native title party contends that the grantee party’s persistent refusal to meet with WDLAC and its advisors to discuss the agreement demonstrates a lack of good faith and was unreasonable.
The grantee party asserts that it was not an unreasonable suggestion to arrange a meeting to progress discussions once the grantee party was provided with a response from the native title party to its letter dated 5 August 2008 and the draft agreement provided on 8 July 2008. Moreover, Dr Ruane notes his reasons for suggesting parties communicate in writing through their legal representatives as being based on ‘my experience with these negotiations [between Mr Procter, Mr Wolf and himself], [and] because of the personalities involved, progress was much more likely to be made through correspondence and the legal representatives than through face to face meetings’ (MR1 affidavit para 53). The grantee party justifies its failure to meet with the native title party, despite the provision of the native title party revised draft agreement on 20 August 2008 on the basis that a further meeting would not be productive (Chronology (41)) on the basis that the parties were ‘still quite a distance apart’.
I do not find the failure of the grantee party to meet with the native title party in these circumstances to be indicative of bad faith. There was not an absolute refusal to meet or continue negotiations but a proposal that a meeting occur after the native title party’s response to the draft agreement and that the negotiations continue by correspondence. In the event the grantee party decided to terminate the negotiations because it considered it unlikely that agreement would be reached within a reasonable time and at reasonable cost given that the negotiations had been going on since early 2007. I accept that one factor arriving at this decision was the native title party’s insistence on its changes to the commercial terms (the draft of 20 August 2008 reaffirmed the native title party’s changes to the commercial terms). Given the view I have taken of the commercial terms the failure of the native title party to modify its proposals in relation to them despite being invited to by the grantee party was indicative of a failure to negotiate in good faith and provided justification for the grantee party to terminate the negotiations. Given the deteriorating relationship between the principal participants I also see nothing untoward in Dr Ruane’s suggestion of dealing with issues by correspondence between lawyers.
Failure to engage in specific negotiations
The native title party refers to Deputy President Sosso’s decision in Angelina Cox & Ors on behalf of the Puutu Kunti Kurrama & Pinikura People/ Wintawari Guruma Aboriginal Corporation/Western Australia/FMG Pilbara Pty Ltd, NNTT WF07/40, [2008] NNTTA 90 (11 July 2008) (‘PKKP and Wintawari’) where he found that the grantee party did not negotiate in good faith when it failed to engage in specific negotiations over an individual tenement application following breakdowns in a broader agreement. With respect to the present matter, the native title party contends that similarly the grantee party did not engage in specific negotiations over the proposed lease once negotiations for the Lake Disappointment project agreement stalled.
The grantee party disagrees with the native title party’s reliance on PKKP and Wintawari on the basis that negotiations with respect to the present matter were substantive as indicated by the term sheet on 27 March 2008. Further, the proposed lease was fundamental to the Project and to the agreement which included detailed provisions which were directly related to the proposed lease.
In my view PKKP and Wintawari is plainly distinguishable from the present case. The proposed mining lease was central to negotiations which occurred over a considerable period of time and included agreement on key commercial terms.
Grantee party’s contentions relating to whether native title party negotiated in good faith
The grantee party makes a number of contentions relating to the failure of the native title party to negotiate in good faith and which can be taken into account in deciding whether the grantee party has negotiated in good faith. That is, the bar may be lowered for the grantee party in these circumstances. The grantee party points to two key issues which ultimately resulted in the termination of discussions on the part of the grantee party namely the native title party reneging on the commercial terms and the alleged unacceptable behaviour of Mr Joe Procter the chief negotiator for the native title party.
Reneging on commercial terms
As already stated, I am satisfied that the changes proposed to the commercial terms were of a substantial nature and had the potential to benefit the native title party. They were not mere drafting or technical amendments. I acknowledge that the changes were proposed after ‘obtaining legal advice’ (NTP contentions para 2.6) and that the reason for seeking the variation of the share option clause was to accord with ‘common commercial practice’ (NTP contentions para 2.6(b)) and that the variation to the trigger for the second milestone payment was to make it what the native title party considered to be more certain. I also acknowledge that the native title party put them forward for further negotiation. Despite these explanations I reiterate my view that the commercial terms were not meant to be open for further negotiation and the attempt to do so by the native title party was indicative of a lack of good faith on its part.
On the evidence presently before the Tribunal the reneging was on the part of WDLAC and the negotiating committee as it appears that the Martu common law holders of native title on behalf of whom WDLAC hold the native title in trust had not yet been involved in the proposal to amend the commercial terms. Although approved at a community meeting, there is no evidence of a subsequent community meeting having endorsed WDLAC’s proposal to modify the commercial terms.
Conduct of chief negotiator
On 1 May 2007 the native title party wrote to the grantee party to advise that it had engaged the exclusive consultancy services of Mr Procter to assist in the negotiation of the commercial terms of the agreement both prior to and subsequent to the 27 March 2008 term sheet agreement. The grantee party contends (GP Contentions para 80) that the behaviour of Mr Procter was another element in the native title party’s failure to negotiate in good faith. Dr Ruane says it was one of the factors which led the grantee party to consider that agreement was unlikely in a reasonable time and at a reasonable cost, and to terminate the negotiations (MR1 affidavit para 55).
The documents appended to the first affidavit of Dr Ruane contain a series of correspondence between Mr Procter and the grantee party, specifically relating to late July 2008, following Dr Ruane’s letter dated 24 July 2008.The facts relevant to this issue are contained in paras (19), (20), (23), (24), (27), (28), (31), (37) of the Chronology. They are not in dispute. Dr Ruane considered the communications from Mr Procter as a threat to the credibility and capital raising capacity of the grantee party as well as indicative of the native title party’s intentions to prevent the reaching of agreement unless the grantee party conceded to the negotiating position of WDLAC (MR1 affidavit para 48).
On 31 July 2008, the native title party was made aware of Mr Procter’s conduct and Mr Wolf deposes that ‘I instructed Mr Procter to cease direct communications with Reward and I decided not to issue a media statement as it may have inflamed the situation’ (CBW1 affidavit para 29). Indeed Mr McKenna acknowledges that Mr Procter ‘exceeded his brief and when that came to the attention of the native title party, Mr Procter was told to, essentially, pull his head in and stop’ (TR p 19, line 36). In his second affidavit Mr Wolf says the native title party did not authorise and was not aware of the email correspondence from Mr Procter to the grantee party (CBW2 affidavit para 9). Mr McKenna further suggests that a meeting between the parties would have resolved this issue. The native title party further points to what it considers the inappropriate actions of Dr Ruane at a meeting with Mr Wolf on 31 July 2008 in which he ‘repeatedly resorted to a raised voice and even shouting’ (CBW2 affidavit para 8).
Although the native title party instructed Mr Procter to cease contact with the grantee party, there is no evidence to suggest that the grantee party was informed that Mr Procter was not authorised to act on its behalf prior to 31 July 2008 when the alleged inappropriate behaviour of Mr Procter occurred. I observe in passing that despite the instruction from Mr Wolf, Mr Procter continued some contact with the grantee party (see Chronology (37)).
The grantee party contends that despite the conduct of Mr Procter which is indicative of bad faith on the part of the native title party, the subsequent response and action of the grantee party exemplifies its willingness to attempt to reach agreement in good faith. Instead of immediately ceasing negotiations with WDLAC on the basis of the construed threats, negotiations as evidenced through correspondence from the grantee party dated 5 and 7 August 2008 continued. The grantee party identifies the 20 August 2008 native title party revised draft agreement which reiterated the reneges on the 27 June 2008 commercial terms, as the point in which it ceased negotiations on the basis that agreement seemed unlikely within a reasonable timeframe and at a reasonable cost
On the basis of the evidence and submissions provided, I am of the opinion that the behaviour of Mr Procter referred to from the Chronology was inappropriate. At least until 31 July 2008 there can be no dispute that Mr Procter was an advisor to and agent of the native title party in his dealings with the grantee party. Some explanation for Mr Procter’s behaviour can be found in the fact that he thought the grantee party had reneged on its agreement to pay the native title party’s legal costs. However, for the reasons already given, this was a mistaken view and would not justify taking steps potentially adverse to the grantee party particularly the proposal to make disclosure to the ASX.
Although finding that Mr Procter’s actions were inimical to the native title party negotiating in good faith, this finding has not been decisive in coming to my overall conclusion. Even without Mr Procter’s behaviour I am satisfied that the grantee party negotiated in good faith. However, Mr Procter’s behaviour was a legitimate factor in the grantee party concluding that a timely agreement was unlikely and justifying its resort to s 35 arbitration.
Conclusion
Applying the principles summarised in the Gulliver matter I am satisfied that overall the grantee party satisfied its obligation to negotiate in good faith. While certain matters have been identified as being indicative of a failure to negotiate in good faith (Western Australia v Taylor [1996] NNTTA 34; (1996) 134 FLR 211) they must be looked at in the context of the grantee party’s behaviour as a whole. The grantee party must behave honestly and be genuine about wanting to reach agreement. There can be no doubt that parties communicated and negotiated with a view to reaching agreement over a considerable period of time. Substantive offers were put on the table to provide compensation to the native title party in return for its agreement to the Project. These were agreed on 27 March 2008 and thereafter the grantee party made further proposals in the form of a comprehensive agreement, and made some concessions with a view to obtaining a final agreement.
If the native title party’s principal contentions about aspects of the grantee party’s behaviour had been supported by the facts they would have been strongly indicative of a failure to negotiate in good faith. However this is not the case. There was an agreement to pay future negotiations costs up to a specified capped amount or as authorised by the grantee party in the term sheet but the process for giving effect to that agreement was not adhered to fully, particularly in relation to the provisions of a work plan and budget for legal costs. Even so, the grantee party paid an amount in excess of the specified capped amount. The grantee party was entitled to be fixed in its view that the commercial terms should not be modified in any substantial way.
Any lapses in ideal behaviour (such as Dr Ruane’s unreasonable demand of 24 July 2008 that the agreement be executed within 6 days) must be seen in the context of the very substantial negotiations which had progressed very successfully over many months. I have little doubt that the grantee party’s attitude and frustration with the negotiations after 27 June 2008 when the native title party provided its first draft agreement and its reluctance to authorise the payment of more costs was particularly related to what it saw as a reneging on the commercial terms agreement. Its concern deepened when the final draft from the native title party reiterated its proposed changes to those terms.
It is regrettable that final negotiations broke down over different interpretations and misunderstanding about the term sheet and meeting on 10 April 2008. It emphasises the importance of parties ensuring that the terms of any agreement are clearly understood and that there is care in complying properly with any conditions such as in this case agreeing on a proper budget for the negotiations even if there are cordial relations between them.
During a directions hearing on 16 January 2009 I encouraged the parties to consider re-opening negotiations, particularly given the good relationship which existed during most of the negotiations and directed the holding of conference pursuant to s 150 of the Act for this purpose.
Hon C J Sumner
Deputy President
6 February 2009
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