Rusa Resources (Australia) Pty Ltd v Sharon Crowe and Others on behalf of Gnulli

[2015] NNTTA 26

NATIONAL NATIVE TITLE TRIBUNAL

Rusa Resources (Australia) Pty Ltd v Sharon Crowe and Others on behalf of Gnulli  [2015] NNTTA 26 (16 July 2015)

Application No:         WF2015/0003

IN THE MATTER of the Native Title Act1993 (Cth)

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

Rusa Resources (Australia) Pty Ltd (grantee party)

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Sharon Crowe and Others on behalf of Gnulli (WC1997/028) (native title party)

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The State of Western Australia (Government party)

DECISION ON WHETHER THE TRIBUNAL HAS POWER TO CONDUCT AN INQUIRY

Tribunal:  Mr JR McNamara, Member
Place:  Brisbane
Date:  16 July 2015

Catchwords:   Native title – future act – s 35 application for a determination - petroleum exploration permit application STP-EPA-0110 – jurisdiction – power – whether grantee party has negotiated in good faith – grantee party has not negotiated in good faith – Tribunal does not have power to proceed with future act determination inquiry.

Legislation:Petroleum and Geothermal Energy Resources Act 1967 (WA)

Native Title Act 1993 (Cth)

Cases:Bradford and Julie Young v Kariyarra and Another [2014] NNTTA 103 (‘Young v Kariyarra’)

Drake Coal Pty Ltd, Byerwen Coal Pty Ltd /Grace Smallwood & Ors (Birri People)/Queensland, [2012] NNTTA 9 (‘Drake Coal v Birri People’)

FMG Pilbara Pty Ltd v Cox and others (2009) 175 FCR 141; [2009] FCAFC 49 (‘FMG Pilbara v Cox’)

Gulliver Productions Pty Ltd v Western Desert Lands Aboriginal Corporation (2005) 196 FLR 52; [2005] NNTTA 88 (‘Gulliver v Western Desert Lands Aboriginal Corporation’)

Placer (Granny Smith) Pty Ltd v Western Australia (1999) 163 FLR 87; [1999] NNTTA 361 (‘Placer v Western Australia’)

Rusa Resources (Australia) Pty Ltd v IS (deceased) and Others on behalf of Wajarri Yamatji [2015] NNTTA 15 (‘Rusa Resources v Wajarri Yamatji’)

Strickland v Minister for Lands for Western Australia [1998] FCA 868; (1998) 85 FCR 303; (1998) 100 LGERA 50 (‘Strickland v Minister for Lands’)

Western Australia v Daniel (2002) 172 FLR 168; [2002] NNTTA 230 (‘Western Australia v Daniel’)

Western Australia v Dimer (2000) 163 FLR 426; [2000] NNTTA 290 (‘Western Australia v Dimer’)

Western Australia v Taylor (1996) 134 FLR 211; [1996] NNTTA 34 (‘Western Australia v Taylor’)

White Mining (NSW) Pty Ltd v Franks (2011) 257 FLR 205; [2011] NNTTA 72 (‘White Mining v Franks’)

Xstrata Coal Queensland Pty Ltd & Ors/Mark Albury & Ors (Karingbal #2);Brendan Wyman & Ors (Bidjara People)/Queensland, [2012] NNTTA 93 (‘Xstrata Coal v Bidjara’)

Representative of the     
grantee party:                  Mr Chas Lane, Consultant

Representatives of the     Ms Maimbo Chilala and

native title party:             Mr David Farrell, Yamatji Marlpa Aboriginal Corporation

Representatives of the     Ms Maryie Platt, Department of Mines and Petroleum
Government party:          Ms Sarah Power, State Solicitor’s Office

REASONS FOR DECISION

1. The grantee party, Rusa Resources (Australia) Pty Ltd, has applied for petroleum exploration permit STP-EPA-0110. The permit is located about eighty kilometres south of Learmoth and mainly in the Shire of Carnarvon. It is extensive, comprising some 7,500 square kilometres. The Government party, the State of Western Australia, seeks to grant the proposed permit.

2. The Gnulli native title application group assert they are the traditional owners of the area according to their laws and customs. They have lodged their native title claim application with the Federal Court of Australia and their claim has been successfully registered under the Native Title Act. Its place on the Register of Native Title Claims at this time gives Gnulli certain procedural rights including: the right to be a native title party and negotiate in good faith with Rusa and the State with a view to reaching an agreement about the grant of the permit.

3. Should parties not be able to reach agreement about a grant, any party may apply for the Tribunal to make a determination. The Tribunal has power to determine whether or not the grant can be made, and if so, whether any conditions should be included. However, if any party satisfies the Tribunal that the grantee or the State have not negotiated in good faith, the Tribunal must not make a determination about the grant. The parties must then recommence negotiations. It is possible to again apply for the Tribunal to make a determination at a later date.

4. In this matter, Rusa has applied for the Tribunal to make a determination about the grant of the permit. I was appointed as Member to conduct the inquiry by the President of the Tribunal, Raelene Webb QC. Gnulli assert that Rusa has not negotiated in good faith and that therefore I am not entitled to make a determination about the grant of the permit. I must decide: Has Rusa negotiated in good faith with Gnulli?

5. To answer the question, an inquiry has been held on the papers. Both Gnulli and Rusa have provided written statements and evidence. The State did not seek to make any submissions given there is no allegation about their conduct.

What is negotiation in good faith?

1. Negotiation in good faith is not defined in the Native Title Act, however previous Members of the Tribunal have sought to provide guidelines or indicia to assist.[1]

   [1] Often descibed as the ‘Njamal Indicia’ (Western Australia v Taylor 224-255) and the ‘Dimer Obligations’ (Western Australia v Dimer)

2. One of these indicia is whether a party has done what a reasonable person would do in the circumstances.[2] Good faith requires the parties to act with honesty of intention and sincerity, but this is not enough on its own. A party’s conduct might still be so unreasonable that no one could say they were sincere or honest about reaching an agreement.[3] I am only required to make a decision about the conduct of a grantee or Government party, although I might consider whether a lesser standard applies if a native title party’s conduct was unreasonable.[4]

   [2] Njamal indicium xvii (Western Australia v Taylor 224-255)

   [3] Placer v Western Australia at [30]

   [4] Xstrata Coal v Bidjara at [65], Placer v Western Australia at [30]

3. Parties are not required to reach any particular stage of negotiations before applying for the Tribunal to make a determination, but they cannot simply go through the motions. The overall quality of their conduct must be assessed by considering what they have done or failed to do during the negotiations.[5]

   [5] FMGPilbara v Cox at [20] and [24]) and White Mining v Franks at [33]

4. Finally, the Tribunal is not a Court, so it is not bound by rules of evidence. Nonetheless, a common sense approach means the party making the allegation about good faith must provide material to support their case.[6]

   [6] Gulliver v Western Desert Lands Aboriginal Corporation at [10]

What are the good faith issues in this matter?

1. The contentions and evidence provided by Gnulli are extensive, as are Rusa’s documents in reply. A list of key dates is provided at Appendix A, and a full list of Gnulli’s and Rusa’s submissions is provided at Appendix B.

2. I will address the following issues in determining whether or not Rusa negotiated in good faith with Gnulli:

   ·Were Rusa’s responses to Gnulli’s requests for information, sufficient, relevant and timely?

   ·Was Rusa’s financial offer reasonable and realistic?

   ·Did Rusa adopt a rigid, ‘take it or leave it’ approach to the financial offer once it was made?

   ·Did Mr Lane have authority to negotiate on behalf of Rusa?

   ·Was Rusa’s position on funding the negotiations reasonable?

   ·Did Rusa behave reasonably regarding the provision of draft agreements?

   ·Did Rusa shift positions on the terms of an agreement?

   ·Did Rusa have reasonable expectations about the length, cost and complexity of negotiations?

   ·Did Rusa allocate the financial and technical resources to meaningfully engage in the negotiations?

   ·Did Rusa act reasonably when they applied to the Tribunal for a determination?

   ·Considering Rusa’s overall conduct, does Rusa meet the threshold for good faith?

Timeline of negotiations between Rusa and Gnulli

1. The following is a brief timeline of key dates. For more details see Appendix A:

DATE	EVENT
11 March 2014 (MC05)	Rusa lodged request for Tribunal mediation assistance
5 May 2014 (MC11)	First Tribunal mediation conference held
29 May 2014 (MC18)	First Gnulli working group meeting attended by Rusa
12 June 2014 (MC20)	Second Tribunal mediation conference held
11 June 2014 (MC19)	Gnulli forwards Rusa the YMAC Heritage Protocol and a request for ‘a comprehensive draft exploration agreement’ with a list of items for inclusion
12 June 2014 (MC21)	Rusa forwards Gnulli an initial written offer: List of ‘commitments to the Gnulli People’
7 July 2014 (MC27)	Third Tribunal mediation conference held
15 October 2014 (DDF02)	Second Gnulli working group meeting attended by Rusa
31 October 2014 (DDF08)	Gnulli forwards a counter offer
2 November 2014 (DDF09)	Rusa forwards a response to Gnulli’s counter offer
3 November 2014 (DDF11)	Fourth Tribunal mediation conference held
9 December 2014 (DDF17)	Fifth Tribunal mediation conference held
19 December 2014 (DDF20, DDF29A)	Rusa forwards Gnulli a draft exploration agreement
11 February 2015 (DDF29)	Third Gnulli working group meeting attended by Rusa
16 February 2015 (DDF33)	Sixth and final Tribunal mediation conference held
17 February 2015	Rusa lodged application for a determination, Tribunal mediation terminated by mediation Member.

Were Rusa’s responses to Gnulli’s requests for information, sufficient, relevant and timely?

1. Any consideration about the adequacy of Rusa’s responses to Gnulli’s requests for information must be assessed against the resources available to each party, the activities proposed by Rusa, and the effect those activities might have on Gnulli’s rights and interests which have been registered as part of their claim application. I am entitled to have regard to the resource constraints affecting Gnulli, their representative body YMAC and to the financial and operational pressures on Rusa.[7] Mr Lane, Rusa’s representative in the negotiations and the present inquiry, held himself out as a person with extensive knowledge and experience in petroleum exploration and production. On the other hand, while Gnulli have been involved in negotiations with other petroleum exploration companies, it is not apparent that they have significant expertise in this area.

   [7] Rusa Resourcesv Wajarri Yamatji at [50] and Western Australia v Dimer at [106]).

2. Gnulli contend that Rusa ‘failed to provide required sufficient and relevant information’ about the permit within a reasonable time to allow them to assess the impact on their claimed native title rights and interests. Specifically, Gnulli say they requested information about the location of Rusa’s proposed work area; the location of proposed seismic lines and potential drill sites; and where heritage surveys were proposed. More generally, Gnulli say they raised, and asked Rusa to respond to their environmental and heritage concerns, including how exploration methods such as hydraulic fracturing might affect the lands and waters in the permit area (Gnulli Contentions paras i-iv and 25).

3. Gnulli’s information needs were first raised by Ms Chilala at the first mediation conference convened by the Tribunal in early May 2014. Mr Lane advised the proposed works were ‘no different to work generally carried out by petroleum explorers’ and felt the project could be explained in the 30 minutes allocated to Rusa at the first meeting with the Gnulli working group at the end of May. Ms Chilala however ‘expressed her concerns that more time may be required for all the questions that may be raised by the working group members to be answered and the proposed project discussed’ (MC11). Prior to the first working group meeting, Ms Chilala sent an email to Mr Lane outlining the kinds of information the working group required. This included: heritage protection and the process for conducting heritage surveys; environmental protection including water use on the project; employment and training opportunities; cross-cultural awareness; financial compensation and contracting opportunities. Ms Chilala also suggested Rusa prepare a presentation introducing the project and the company (MC13).

4. According to Ms Chilala, at their first meeting with Rusa the working group raised a number of issues regarding Rusa’s proposal and discussed the impact of the project on the land and waters in the permit area (MC Affidavit para 32). Mr Lane also delivered a presentation on Rusa’s proposed exploration methods. No minutes of the meeting or any other notes have been provided so I am not able to ascertain what issues were discussed or to express a view about the adequacy of Mr Lane’s response/s. However, Ms Chilala’s subsequent email confirming the outcomes of the meeting suggests that the affect on water was discussed, as the working group had requested Rusa to include in their proposal ‘Environmental Protection provisions including an outline of how Rusa intends to responsibly manage water use on the project’(MC19). The adequacy of the information provided by Rusa about their proposed activities was not raised again until mid-January 2015, and this time by Mr Farrell, who had replaced Ms Chilala in late September 2014. Mr Farrell asked Mr Lane to clarify whether the proposed exploration and production methods would be conventional or unconventional and invited him to make a presentation to the working group on the proposed exploration methods at the third working group meeting (DDF21). Mr Farrell later noted he had reviewed Mr Lane’s presentation to the working group and YMAC’s minutes from the first meeting and found there was no record that Mr Lane had discussed whether Rusa would be employing conventional or non-conventional methods on the permit area (DDF25).

5. Mr Lane’s response to this enquiry was that the proposed exploration methods were ‘conventional in their impact on the land and environment’, though it was ‘correct to describe the potential resources as “unconventional” in that the exploration will be assessing the potential for shale gas and oil’ (DDF22). Given the potential for apprehension regarding hydraulic fracturing and these terms, Mr Lane’s response did little to assist and possibly only further clouded the issue. However, YMAC’s notes from the third working group meeting on 11 February 2015 indicate that Mr Lane did address this issue with the working group and discussed the possible environmental impacts of the proposed exploration and the statutory conditions placed on the permit (DDF29). The adequacy of the information provided at this meeting was not raised in subsequent correspondence.

6. I agree that lack of information regarding the location of proposed works, particularly the location of seismic lines and drill sites, may limit the capacity of a native title party to evaluate how a permit might affect their registered native title rights and interests. However, in his email to Ms Chilala on 17 February 2014, Mr Lane indicated that no decision had yet been made about where seismic surveys would be situated (Rusa Submission 3 at page 1). This position was consistent with; Rusa’s work program, which contemplated geological, physical and environmental studies and field mapping in the first two years of the permit (MC01); and with the relevant policy applicable to the assessment of applications for petroleum acreage. The policy provides that if ‘there is no current lead or prospect identified, there must be sufficient phased seismic to enable a lead/prospect to be identified somewhere in the permit area, and be brought to a drillable status’ (DDF34).

7. Ms Chilala did make further enquiries about Rusa’s environmental policies, and Mr Lane was able to provide examples of environmental plans developed by Rusa for other works, as well as a general company environmental management plan (MC25). However, Mr Lane specifically stated that the environmental management plan for the permit would be ‘project specific’ and prepared in accordance with the relevant planning process (MC23, Rusa Submission 1 at page 2). In the circumstances, there was no plan which Rusa could provide, as the location of seismic lines had yet to be determined. This aspect of the negotiations may have been improved if Mr Lane had been more forthcoming in sharing his knowledge and experience with Gnulli, by explaining the lack of exploration data in the permit area and the procedural steps involved in the preparation of an environmental management plan. A more helpful approach by Mr Lane might have given the parties an opportunity to discuss ways of addressing Gnulli’s environmental and heritage concerns, even though the exploration program had yet to be determined. However, I do not consider Rusa’s responses to Gnulli’s requests for information exhibited a lack of good faith.

8. Gnulli also contend that Rusa failed to provide an independent economic assessment as requested (Gnulli Contentions para 24). The type of report envisioned by Gnulli might have assisted the parties to determine what is reasonable and appropriate compensation for the effect of Rusa’s project on Gnulli’s native title rights and interests; for example, by comparing it with similar projects. However, what is reasonable and appropriate compensation was ultimately a matter for negotiation between Rusa and Gnulli. Rusa was obliged to consider Gnulli’s request to provide funding for an independent assessment of the project, but was not obliged to provide it. Although the proposal was raised by Gnulli in the initial stages of the negotiations, it was not pursued in later discussions. In any event, it is apparent that Gnulli had received offers from other petroleum companies regarding resource projects which they apparently used to evaluate Rusa’s offers of compensation (DDF04).

9. Gnulli submit Rusa is required to show ‘sufficient ongoing financial resources to comply with its firm two year work plan commitment on the Tenement to then be entitled to commence negotiations’ (Gnulli Contentions para 26). I note that the policy guiding the assessment of applications for petroleum acreage provides that the applicant must satisfy the Minister of their capacity to undertake their proposed work program, having regard to the adequacy of the applicant’s financial resources and the likelihood that they will continue to have sufficient resources to meet the requirements of the proposed work program and other commitments (DDF34). However, this requirement is part of the assessment of applications under the Petroleum and Geothermal Energy Resources Act and is not a precondition to commencing good faith negotiations under s 31 of the Native Title Act. There is no authority for Gnulli’s submission and no evidence regarding the information provided during the permit application process.

10. Information about Rusa’s financial position may well have assisted Gnulli to evaluate whether Rusa was capable of meeting commitments made during negotiations. This information may also have assisted Gnulli to understand the constraints upon Rusa’s negotiating position and the way their offers were formulated. In the case of public and large proprietary companies, financial information will be publically available in the form of annual reports. However, in the case of a small private company, this information may not exist in a format which would enable another party to understand the company’s financial position. A small private company is required to keep financial records but is only obliged to prepare a financial report in certain circumstances[8].

    [8] see Corporations Act 2001 (Cth), Pt 2M

11. Rusa’s financial capacity was first raised during the fourth mediation conference convened by the Tribunal on 3 November 2014, where Mr Farrell noted that ‘Gnulli have some concerns regarding whether Rusa have sufficient financial resources to undertake its work program as the offer it has made to Gnulli doesn’t appear to reflect such a capacity’ (DDF11). Later the same day, Mr Lane telephoned Mr Farrell and, according to the file note made by Mr Farrell, stated that Rusa ‘currently did not have the resources to comply with the Work Program committed to if the tenement was granted but would seek to raise the necessary capital when granted’ (DDF10). Gnulli did not make any specific request for financial information until 17 November 2014, when Mr Farrell emailed Mr Lane and requested a copy of Rusa’s annual report and accompanying financial statements (DDF14). In reply, Mr Lane stated that Rusa does not prepare annual reports but said he had asked the directors to provide ‘a balance sheet or similar’ (DDF15). This document was not provided until the third working group meeting on 11 February 2015 (DDF31-32).

1. The State’s letter of 11 December 2013 initiating negotiations, requested Rusa to provide Gnulli with, among other things, their last annual report (MC01). In their response to Gnulli, Rusa stated that, as a private company, they had no annual report or similar prospectus and had ‘no other exploration or production assets at this time’ (MC02). Apart from this, Rusa’s financial position was not raised at the outset of negotiations, although Mr Lane stated in an email to Mr Farrell on 19 December 2014 that Gnulli had ‘known of Rusa’s very limited financial capacity since early on in these negotiations’ (DDF20). There is no indication that this was the case, though Rusa’s initial financial offer may have put Mr Farrell on notice. Even so, it is reasonable to assume that the extent to which Rusa’s financial capacity placed limits on their participation in the negotiations and the commitments they were willing to undertake, would not have been apparent to Gnulli until the balance sheet was provided on 11 February 2015.

2. The delay in providing the financial information was not in itself a breach of good faith. Nevertheless, the fact that Rusa’s true financial position was not disclosed to Gnulli at the outset did colour the negotiations that followed. If it had been disclosed at an earlier stage, other options might have been put forward and explored. As it was, the negotiations proceeded on the understanding that Rusa’s project would involve significant financial resources to meet the costs of their $8.1 million exploration work program. It was not until November 2014 that it became clear to Gnulli that Rusa presently lacked those financial resources. Even then, it may not have been apparent that Rusa did not have the means to make any immediate financial commitments to Gnulli. In the circumstances, the failure to disclose this information early on may have led Gnulli to believe that the type of arrangements they sought were capable of being met by Rusa. Consequently, this had an adverse effect on the way the negotiations were conducted and resulted in Gnulli expending resources they may not otherwise have. However, I am not satisfied the delay in providing the information of itself constituted a lack of good faith on the part of Rusa.

Was Rusa’s financial offer reasonable and realistic?

1. As a general rule, good faith should not be determined on the basis of evaluating the reasonableness of offers.[9] There are two circumstances which might require departure from this rule: first, where the offer is so manifestly and obviously unfair that any reasonable person would regard it as a ‘sham’ or an ‘unrealistic’ offer; and second, if independent material is produced which indicates that an offer is unfair or unrealistic.[10]

   [9] Rusa Resources v Wajarri Yamatji at [65]

   [10] Drake Coal v Birri People at [200]-[204]

2. The initial offer made by Rusa to Gnulli is identical to the offer Rusa made to the Wajarri Yamatji native title party in Rusa Resources v Wajarri Yamatji. That matter involved another application to the Tribunal for a determination over Rusa’s other petroleum exploration permit STP-EPA-0111, which overlapped the Wajarri Yamatji native title claim area. Wajarri Yamatji contended that Rusa failed to negotiate in good faith with them. They contended Rusa’s offer was a ‘sham’ and relied on the fact that Rusa was proposing to expend $8.1 million on the project, as well as evidence that Rusa had entered into an agreement with Tap Oil in relation to the project. I concluded that the evidence did not justify departure from the general rule that it is not for the Tribunal to assess the reasonableness of any offer (at [68]).

3. There is evidence that Tap Oil formally terminated its agreement with Rusa on 23 February 2015 (DDF36), though it was apparently still in place for most of the negotiations between Gnulli and Rusa. This arrangement appears to have involved a ‘farm-in option’ which Tap Oil could choose to exercise upon the grant of the permit, thus becoming the permit’s operator and assuming all of Rusa’s contractual obligations for the permit. As Mr Lane explained in his email to Mr Farrell on 19 November 2014, if Tap Oil chose not to exercise their ‘farm-in option’, Rusa would have to find another way of raising the necessary funds (DDF15). It is clear in this context that Rusa was operating under significant financial constraints.

4. Gnulli rely on two factors to support their view that Rusa’s initial offer was unrealistic: first, Mr Lane’s extensive experience in the oil and gas exploration industry and on his own account with native title negotiations; and second,  that ‘it was significantly lower that similar offers for similar future acts’ (Gnulli Contentions para 28).

5. On the first issue, it is apparent that Mr Lane is a person who has, and holds himself out as having, experience with the oil and gas industry and native title negotiations (Rusa Letter). Mr Lane concedes the initial offer ‘may have been lower than others’, but says that other offers made to Gnulli ‘were not made known’ to Rusa, which suggests he was unaware of the kinds of offers made by others in the industry. Mr Lane states that ‘Rusa did not “expect” the NTP to accept its initial offer, though there was a tiny chance that that might happen’ (Rusa Submission 3 page 4). This statement suggests that either Rusa or Mr Lane knew the offer was comparatively low and unlikely to be accepted.

6. As to offers made to Gnulli by other petroleum companies, Gnulli rely on the comparison table prepared by Ms Chilala and presented to the working group at the second meeting in October 2014 (DDF04). This table contains a summary of the compensation packages offered by two other petroleum companies. It is unnecessary to discuss these packages in detail and it will suffice to note the packages are significantly larger than Rusa’s initial offer. However, the table leaves out some important matters. For example, it is difficult to tell whether the packages contained in the table formed part of completed or in-principle agreements with those companies, or simply reflected the current status of those negotiations. It is also not clear whether the amounts were those initially offered by each company or were reached as a result of negotiations with Gnulli. There is also a lack of information about the nature of each company and whether the projects were comparable to Rusa’s project, including the area covered by the projects and the number of permits involved. As such, it is difficult to draw any comparisons between Rusa’s initial offer and the compensation packages outlined in the table.

7. Gnulli provided the table to Rusa during these proceedings, but chose not to provide it at the time their counter offer was made. If it had been, it may have assisted in explaining the basis for their counter offer. However by the same token, Rusa did not explain the basis of their offers until these proceedings either: Mr Lane has since explained that ‘Rusa did not offer large upfront cash payments, because it could not afford them’ and that their offer was ‘carefully structured to tie the financial benefits to the exploration projects. If there were insufficient funds for the projects, they would not proceed and therefore would not trigger Rusa’s proposed terms’ (Rusa Submission 3 page 6 and 7). In short, neither party was completely transparent about how they arrived at their compensation offers until these proceedings.

8. Rusa and Mr Lane were aware that the initial offer made to Gnulli was low, by Mr Lane’s own admission and according to Gnulli’s representatives. However, I am not satisfied on the material before me that the offer was so unreasonable or unrealistic that it could not be regarded as a genuine offer.

Did Rusa adopt a rigid, ‘take it or leave it’ approach to the financial offer once it was made?

1. Gnulli argue that Rusa’s initial offer was not only low, but was also made on a rigid, non-negotiable, ‘take-it-or-leave-it’ basis. Rusa refutes this argument, noting they did increase their offer ‘significantly’. Indeed, the revised offer was more than double the initial offer, though it was still significantly lower than Gnulli’s counter offer. Mr Lane describes Gnulli’s counter offer as an ‘ambit claim’ and one that Gnulli would have known was ‘unreasonable unrealistically high’ (Rusa Submission 3 at page 4).

2. I do not accept Mr Lane’s characterisation of Gnulli’s counter offer. It was consistent with the offers set out in the comparison table prepared by Ms Chilala and this leads me to think that Gnulli saw their counter offer as reasonable. Mr Lane argues that no explanation was provided as to what the amounts were for or how they were arrived at. This was of course a matter for discussion during negotiation.  The failure of the parties to engage on these issues is explained in part by the events of the second working group meeting on 15 October 2014. This will be discussed further below. I also note that Rusa did not seek to explain the basis for their initial offer either. And, their revised offer was, at least until the sixth and last mediation on 16 February 2015, conditional on the negotiations being ‘fast-tracked’ (DDF33, Rusa Submission 3 at page 4).

3. The definition of ‘fast track’ appears to have been something of a moveable feast. When it was suggested on 2 November 2014 that Rusa would consider increasing their compensation offer ‘in return for some faster-tracking of this process’, Mr Lane raised it in the context of the parties adopting an agreement previously entered into between Gnulli and Empire Oil (DDF09). Although at the outset of the negotiations, Mr Lane suggested that an existing agreement might serve as a ‘starting point’ for the negotiations, Mr Lane’s email of 2 November suggests that what was now being proposed was somewhat narrower in scope. Although Rusa had already said they would ‘essentially accept’ the cultural heritage protocol proposed by Gnulli, Mr Lane stated that adopting the Empire Oil agreement ‘would include any and all attachments such as a cultural heritage protocol that we have already spent some time discussing.’ Mr Lane also intimated that ‘if Empire Oil was happy with their general terms, then Rusa is likely to be as well.’ In this context, it is difficult to avoid the conclusion that Rusa had already formed the opinion that the Empire Oil agreement would not require much further negotiation under this ‘fast track’ process (DDF09).

4. Gnulli had already outlined their position regarding the use of previous agreements such as the Empire Oil agreement at the outset of the negotiations. During a phone conversation with Ms Chilala in February 2014, Mr Lane ‘proposed that an agreement similar to one negotiated between Gnulli and another company about 10 years ago should suffice’. Ms Chilala had explained that ‘each negotiation was dependent on the facts’ and Gnulli ‘did not consider an agreement from 10 years ago would be appropriate in the circumstances’ (MC Affidavit para 11e). At the first working group meeting in late May 2014, Mr Lane’s request to use the Empire Oil agreement was rejected and he was again advised that ‘each negotiation had different considerations depending on the facts’ (MC Affidavit paras 34-35). Mr Farrell repeated this view at the fourth mediation conference on 3 November 2014, but agreed to provide Rusa with a more current template agreement (DDF11). He later advised that YMAC did not have a template for petroleum matters and that, back in May, the working group had in fact requested Rusa to provide a draft agreement (DDF12). I accept that Mr Farrell made a mistake by agreeing to provide a template, owing perhaps to the fact that he had only been at YMAC since September. Nevertheless, Mr Lane agreed to provide the draft agreement and did so on 19 December 2014 (DDF20). This draft was based on a conjunctive agreement developed in South Australia in the early 2000s, adapted to remove any references to subsequent tenure. However, Mr Lane reiterated that the increased compensation was being offered on the ‘fast track’ condition, ‘that is that the draft provided here forms the basis of our agreement in a reasonable period of time.’

5. Mr Lane continued to use the phrase ‘fast track’ in his negotiations with Gnulli. In an email to Mr Farrell in preparation for the third working group meeting on 11 February 2015, Mr Lane notes that the ‘financial compensation I have offered is as set out in the “fast track” deal of late last year’. Mr Lane also stipulates that the working group ‘needs to either accept my current offer on payments or propose something else on the same scale’, though additional payments could be negotiated if Gnulli were to accept a conjunctive agreement (DDF28). This statement suggests the offer was subject to negotiation, although no explanation was given for what ‘on the same scale’ might mean. In any event, Gnulli had made it clear at the first working group meeting in May 2014 that they were not prepared to enter into a conjunctive agreement, preferring ‘to progress negotiations for the Permit currently notified by the DMP’ (MC Affidavit para 35).

6. Mr Lane presented the revised offer at the third working group meeting on 11 February 2015. In his submissions, he states that if Gnulli had accepted this offer as presented ‘then we had a deal’, but notes that certain key members of the working group were absent, and so they could not make any decisions or respond to Rusa’s offer (Rusa Submission 2 at page 1). Gnulli do not deny this, though they say that YMAC contacted the relevant members before the meeting and had no control over their attendance. Nevertheless, Gnulli dispute that the parties could have finalised the agreement at the meeting, as the other terms had yet to be negotiated or incorporated into a draft agreement acceptable to both parties (Gnulli Reply at para 18). The following evidence supports Gnulli’s argument.

7. At the sixth mediation conference on 16 February 2015, the parties agreed to work further on the draft agreement. Mr Farrell agreed to adopt Rusa’s draft and undertook to incorporate the YMAC heritage protocol into that agreement. Mr Lane expressed concern about the amount of work that would involve, but was ‘happy to proceed along that path’ (DDF33). Mr Farrell also explained the revised financial offer would need to go back to the working group and advised he ‘cannot say when another working group meeting will be held as there needs to be sufficient non-proponent claim business to warrant another government-funded meeting’. Nonetheless, he was ‘willing to continue working on the agreement to get it into a form acceptable to both parties’ before that time. When asked by the mediator how this would affect Rusa’s wish to ‘fast track’ the negotiations, Mr Lane replied that he ‘didn’t want to focus on the term “fast-track” and asked that it no longer be used.’ Mr Lane and Mr Farrell agreed to continue their negotiations until the next mediation meeting set for the end of March. However the following day Rusa applied for the Tribunal to make a determination.

8. In conclusion, whilst Rusa did revise their initial compensation offer, it was made on the basis of a condition to ‘fast track’ negotiations by using a previous agreement as a template. This conditional form of negotiation placed Gnulli at a disadvantage and to couch the offer in such a way risked good faith: Rusa’s ‘fast track’ position bordered on being rigid and non-negotiable.[11] Furthermore, it was poorly executed. When it was made clear that the ten year old Empire Oil agreement was not a template acceptable to Gnulli, Mr Lane was only able to locate a South Australian conjunctive agreement from the early 2000’s as a substitute. By his own admission the agreement wasn’t suitable in its current form as the task of incorporating the agreed YMAC protocol into it ‘would not be possible without considerable re-writing to merge the two’ (DDF20). Mr Lane’s skills were evidently limited to adapting existing agreements, and so Rusa made the decision to abandon the YMAC heritage protocol and offer the agreement ‘with its CH [cultural heritage] procedures’ instead. This offer only confused the negotiations. At the last meditation meeting in February 2015, no one disputed that Rusa’s draft agreement required substantial work ‘to get it into a form acceptable to both parties’ and Mr Lane proposed that the term ‘fast track’ no longer be used. This suggests a degree of awareness that it was no longer reasonable for Rusa to adhere to the approach they had advocated as Mr Lane and Rusa were unable to bring a suitable template agreement to the table and they didn’t have the requisite drafting skills to develop one.

   [11] Njamal indicium xiv ‘Adopting a rigid non-negotiable position’ (Western Australia v Taylor 224-255)

Did Mr Lane have authority to negotiate on behalf of Rusa?

1. While there is no evidence Mr Lane communicated Gnulli’s counter offer to Rusa’s directors, there is nothing to suggest he had limited authority to negotiate or that particular matters were beyond the scope of his authority. Mr Lane states he did not have authority to agree to a signature payment without reference to the directors, but did have authority to reject it. There were clearly limits on what Rusa was prepared to negotiate about in terms of compensation and other financial benefits and Mr Lane acted within those limits.

Was Rusa’s position on funding the negotiations reasonable?

1. Gnulli contend Rusa ‘failed to contribute reasonable funding for the negotiations’ and ‘adopted an unreasonable, rigid, non-negotiable, “take it or leave it approach” in its policy of not contributing any funding towards negotiation meetings’ (Gnulli Contentions paras 32 and 37). They contend they: ‘accommodated the position of the Grantee Party on negotiation funding’; made ‘repeated funding concessions’ and ‘absorbed’ the costs of Rusa’s attendance at three working group meetings; and that such actions indicate they negotiated in good faith with Rusa (paras 32 and 47).

2. In response, Mr Lane submits there is no requirement for a grantee party to contribute towards a native title party’s expenses and if they were to contribute ‘then this is entirely at the discretion of that Grantee Party’. He asserts that to ‘pay a legal organisation such as YMAC to act against its interests is ludicrous’ and states that Rusa ‘consistently offered to pay for its share of genuine shared outgoings such as catering and venue hire’. He maintains that Rusa was not unreasonable in ‘declining to pay for the GWG to attend meetings that they desired, and to pay for their unfettered legal representation’. He asserts the meetings were ‘at the whim’ of Gnulli and that Rusa ‘would have been happy to organise the meetings, if so asked’. He states he ‘made three trips to Carnarvon for a total of 2.5 hours with the full GWG, and an additional hour with the non-representative GWG on the third occasion’. He also asserts that the ‘actual outgoings … of accommodating Rusa at these meetings was nil’ and that Gnulli ‘has not produced any evidence to show that these negotiations have cost them anything at all.’ (Rusa Submission 3 page 5-6, Rusa Reply page 6).

3. There is no automatic obligation on a grantee party to fund a native title party’s participation in negotiations. However, the Tribunal may consider whether the grantee’s position on funding meets the standard of negotiating behaviour expected of them, by taking into account their financial resources and the nature of their proposed works.[12]

   [12] Drake Coal v Birri People at [189]-[191].

4. Rusa’s position on funding, which they maintained throughout the negotiations, was that they would not pay for Gnulli’s meeting costs ‘over and above our share of the venue of any catering expenses’ (MC07). This position was clearly informed by the view that the proposed exploration was conventional in nature and would not require extensive negotiations. No doubt it was also informed by the significant financial constraints experienced by Rusa, and Mr Lane was hopeful that parties could minimise the cost of negotiations by adopting a previous agreement as a template document.

1. Gnulli’s position on funding is summarised in Ms Chilala’s letter to Rusa in May 2014. In the letter, Ms Chilala explains that YMAC ‘receives a limited amount of funding from the Department of Prime Minister and Cabinet … to assist the Gnulli to progress their native title claim and to deal with matters arising from the claim.’ This funding ‘allows YMAC to hold 2-3 working group meetings for Gnulli each year.’ As the time at these meetings ‘is prioritized appropriately in order to progress the Gnulli Claim and other claim related business’, there is ‘very limited time available to deal with other matters, such as negotiations over large resource developments.’ Ms Chilala informed Rusa that resource companies ‘ordinarily contribute to the costs of meetings’, but in cases where a resource company does not contribute to funding the meeting, ‘we try to facilitate that company’s attendance’, though she noted the time would be limited and priority would be given to matters that had otherwise been funded. Ms Chilala indicated that, in the absence of funding, Rusa ‘will have to rely on the limited opportunities available’ at funded meetings. While these meetings ‘generally only take place only every 3-6 months’, funding from Rusa ‘would enable YMAC to hold these meetings closer together’ (MC10).

2. Consistent with that advice, Gnulli tried to accommodate Rusa’s position by allocating time for Rusa to attend Government-funded meetings to progress the negotiations. In spite of this, Mr Lane appears to have maintained the expectation that Rusa would be allocated ‘substantial time’ at these meetings (MC27, DDF22). In the circumstances, this was not a reasonable expectation, given the fact that Rusa was not prepared to facilitate Gnulli’s participation in the negotiations.

3. Mr Lane’s statement that working group meetings were ‘at the whim’ of Gnulli discloses an underlying suggestion that his time is more valuable than theirs. Native title is not a hobby. For traditional owners, negotiations involving their claimed native title rights and interests are conducted by members of their community who are chosen based on their status, knowledge, and qualifications.  Those members who carry that responsibility are regularly required to take time away from their work and family commitments to meet with land users who seek petroleum or mineral tenure over their native title claim. To trivialise that status, skill and responsibility is regrettable.

4. Mr Lane’s statement that ‘to pay a legal organisation such as YMAC to act against its [Rusa’s] interests is ludicrous’ suggests that the interests of the Gnulli (for whom a legal organisation such as YMAC act) are necessarily “against the interests” of Rusa.  If Mr Lane’s statement is intended as an attack on the professionalism of YMAC (which is itself clearly inflammatory) and not the Gnulli, it nevertheless suggests that Mr Lane predetermined an adversarial (as opposed to interest based) negotiating environment.  In those circumstances the chances of productive negotiations and a good outcome would be the result of luck rather than design. 

5. Considering the extensive correspondence between the parties and the obvious logistics involved in organising Mr Lane’s attendance at the working group meetings, Rusa’s assertion that the ‘actual outgoings … of accommodating Rusa at these meetings was nil’ is unreasonable (Rusa Submission 3 page 5). Although these costs have not been quantified, it can be accepted that time spent on negotiations with Rusa, whether during the meetings or otherwise, was time that could otherwise be spent on other matters. In this respect, Gnulli made significant concessions on the funding of negotiation meetings. However, that does not mean that Rusa was required to make similar concessions. Rusa’s position on funding, is not on its own, evidence of unreasonable behaviour amounting to a lack of good faith.

Did Rusa behave reasonably regarding the provision of draft agreements?

1. As noted above at [37], Ms Chilala clearly outlined Gnulli’s position regarding the use of template agreements such as the Empire Oil agreement at the outset of negotiations in February 2014, and again at the first working group meeting in late May. At the meeting, Ms Chilala advised each negotiation ‘had different considerations depending on the facts’ and agreements negotiated by Gnulli ‘are confidential and should not be disclosed to third parties’ (MC Affidavit para 35). Instead, Gnulli proposed that they would provide a template heritage protocol, and requested Rusa to provide ‘a comprehensive draft exploration agreement’ covering a range of specific issues raised by the working group (MC Affidavit para 37, MC19). There is no evidence which causes me to question Rusa’s agreement to this proposal: In her affidavit Ms Chilala states Gnulli’s request was conveyed to Mr Lane at the meeting (37) and ‘agreed’ to (39); Mr Lane emailed the Tribunal stating the meeting was ‘brief but productive’ (MC18); the outcomes of the meeting were emailed by Ms Chilala on 11 June 2014 (MC19); and Mr Lane responded to the outcomes the following day (MC21).

2. Following the appointment of Mr Farrell as Gnulli’s legal officer in September 2014, Mr Lane again proposed using the ‘most recent’ Empire Oil agreement including any and all attachments ‘such as a cultural heritage protocol’.  The proposal was raised via email to Mr Farrell on 2 November 2014 and at the fourth mediation meeting the following day, at which he was again advised that the proposal was not acceptable to Gnulli (DDF09, DDF11). Mr Lane’s proposal was raised in the context that Rusa ‘would be willing to increase its offer of financial compensation if Gnulli could fast-track the negotiation process by using an agreement reached with another proponent, such as the agreement between Gnulli and Empire Oil & Gas NL, as a template.’  Mr Farrell advised ‘the Empire Oil agreement is ten years old and the YMAC template agreements have evolved since then due to the benefit of experience with other agreements’. Mr Farrell undertook to provide a draft YMAC template which might be acceptable to Gnulli.

3. At the same mediation, both the mediator and the State queried the viability of Mr Lane’s proposal. The mediator ‘pointed out that it may be difficult to import an existing agreement made with another grantee party as the current parties would be missing the historical/relationship context in which that agreement was made’. The State representative ‘advised that each application area is bespoke and it is important for parties to look at each future act in its context. She urged the parties to work out the issues, particularly in relation to land access, prior to grant... [and] emphasised the need for good working relationships between parties’. Despite this, Mr Lane maintained that ‘the offer to increase compensation is tied to the parties using a template agreement previously signed by a proponent’ (DDF11).

4. Shortly after the mediation meeting, a telephone conversation took place between Mr Lane and Mr Farrell. Mr Farrell’s notes of the conversation indicate that Mr Lane ‘raised the issues of the supply of a template Pet and Gas Exploration Agreement and stated that it should have been supplied in February’ (DDF10). In his submissions, Mr Lane does not dispute that a discussion concerning templates occurred, but states ‘using the word “could” instead of “should” is an interpretation I would agree with’ (Rusa Submission 2 page 1).

5. On 7 November 2014, Mr Farrell advised that following ‘conversations with colleagues since [the fourth mediation meeting on 3 November], it has become apparent that there is no appropriate YMAC agreement available specifically for petroleum and gas exploration’. As noted previously, I accept that Mr Farrell made a mistake by agreeing to provide a template, owing perhaps to the fact that he was only recently employed at YMAC. He also advised he had reviewed the file and ‘discovered’ that, at the first working group meeting in May 2014, Gnulli had requested that Rusa ‘provide the agreement’ (DDF12). Mr Lane did not dispute that the request had been made. Rather, he replied:

   I misread or misunderstood the request for me to provide a draft exploration agreement. It has always been my experience that the NT Party has a template it prefers, and this is usually based on the most recent agreement it has done which is why I have been asking YMAC/Gnulli for one, since early this year [DDF13].

6. It seems improbable to me that Mr Lane had ‘misread or misunderstood the request’ to provide a draft agreement. The request, along with a list of points for inclusion, was unambiguously conveyed to him both at the 26 May 2014 meeting with the working group (MC Affidavit para 37) and in writing on 11 June 2014 (MC19). Furthermore, in his response email the following day, Mr Lane copied Gnulli’s request in its entirety and pasted it into the email. Below this, he outlined the list of ‘commitments’ which specifically addressed each of the points listed by Gnulli and also included an additional statement regarding a possible conjunctive agreement (MC21). Rather than a ‘misunderstanding’, it would appear that Mr Lane considered Rusa’s list of ‘commitments’ was a sufficient response to the request. Furthermore, in reading Mr Lane’s reply to Mr Farrell’s email of 7 November, and considering the circumstances before, during and after the fourth mediation meeting, it is difficult not to conclude that Mr Lane sought to take advantage of Mr Farrell’s recent engagement as Gnulli’s representative to yet again propose the use of the Empire Oil agreement, and failing that, to seek another previously negotiated or template agreement from Gnulli.

7. Although Gnulli again rejected the proposal to adopt a previously negotiated agreement, Mr Lane continued to maintain at the fifth mediation meeting on 8 December 2014 that, ‘as parties are fast-tracking the matter, he is able to increase Rusa’s [financial] offer’ (DDF17). The revised offer was not provided until 19 December, in an email to Mr Farrell enclosing a draft agreement based on a conjunctive South Australian petroleum agreement. On this occasion, it was made clear that ‘the increased compensation payments are offered on the “fast-track” condition, that is that the draft provided here forms the basis of our agreement in a reasonable period of time’ (DDF20). As stated previously at [41], this conditional form of negotiation risked good faith.

Did Rusa shift positions on the terms of an agreement?

1. As agreed at the first working group meeting in May, Gnulli provided Rusa with a draft heritage protocol to use as a template document (MC19). Mr Lane also forwarded a list of ‘commitments to the Gnulli People... in respect of a s31 agreement’ offer to Gnulli (MC21). At the second mediation meeting on 12 June 2014, Mr Lane undertook to review the heritage protocol, noting some initial concerns with the document (MC20). The following day, Mr Lane emailed Ms Chilala asking to use the heritage protocol as a basis for agreements with other native title parties represented by YMAC (MC22). Gnulli contend this request was unreasonable. I do not find anything objectionable about this request, though it does suggest that Rusa regarded the protocol as generally acceptable.

2. Over the following month, the heritage protocol was discussed and comments exchanged (MC Affidavit para 43, MC23, MC26). At the third mediation meeting on 7 July 2014, Mr Lane advised that Rusa ‘will essentially accept the heritage protocol to expedite the resolution of the matter’ (MC27). Despite Rusa’s statement that it would ‘essentially accept’ the protocol, it was the only matter of substance discussed at the second meeting with the Gnulli working group on 15 October 2014. Mr Lane did not discuss Rusa’s ‘list of commitments’ at the meeting, even though he was aware there were limited occasions for consultation given Rusa’s position on funding. Mr Lane maintains the heritage protocol was raised for discussion by the working group; however, the weight of evidence suggests it was Mr Lane who requested that negotiations commence with the heritage protocol.

3. Although the working group was unable to discuss Rusa’s ‘list of commitments’ with Mr Lane at the second working group meeting in October 2014, they nevertheless formulated a compensation counter offer and instructed Mr Farrell to present the counter offer to Rusa. In the absence of a discussion with Mr Lane about the list of ‘commitments’, the financial component was the only aspect that Gnulli could meaningfully attempt to progress at that time. When the counter offer was communicated to Mr Lane on 2 November, he declined to engage with Gnulli on the counter offer stating ‘Rusa will not be paying any of those items or amounts you have listed below, beyond what was offered previously’. He then indicated that ‘Rusa would consider increasing these’ if Gnulli agreed to ‘fast track’ negotiations by using the most recent Empire Oil agreement as a template. Mr Lane made it clear ‘this would include any and all attachments such as a cultural heritage protocol that we have already spent some time discussing’ (DDF09).

4. The fourth mediation meeting was held the following day at which Gnulli again declined Rusa’s proposal to use the Empire Oil agreement including attachments as a template. The Tribunal’s synopsis and outcomes document notes:

   Mr Farrell indicated that Gnulli had been focussed on negotiating the [YMAC] heritage protocol at Rusa’s request, and that the draft heritage protocol they had been working on so far can be included in the draft petroleum agreement as a schedule. Mr Farrell advised that further negotiations relating to the heritage protocol had taken place at the Gnulli working group and so the protocol as currently drafted does not necessarily reflect the most up to date positions of the parties. Mr Lane and Mr Farrell agreed to start from scratch and go back to the original heritage protocol template. [DDF11]

5. Despite stating that Rusa ‘can live with most things’ in the YMAC heritage protocol, when Rusa provided their own draft agreement in December 2014, the agreement included its own cultural heritage procedures. Mr Lane says he eventually accepted the YMAC heritage protocol at the 11 February 2015 mediation meeting and Mr Farrell then undertook to incorporate the heritage protocol into Rusa’s draft agreement (Rusa Submission 2 page 1). These shifts in position not only had the effect of frustrating the progress of negotiations, but they also meant the parties had little opportunity to engage on other aspects of a possible agreement.

Did Rusa have reasonable expectations about the length, cost and complexity of negotiations?

1. Gnulli contend Rusa held ‘unreasonable and unrealistic expectations of administrative, logistical and legal assistance in relation to the negotiations’. With reference to Njamal indicium xvii[13], they contend Rusa ‘unreasonably and knowingly placed the burden of cost for the negotiations’ on Gnulli including ‘the organising and conduct of negotiation meetings at its own cost’, and providing ‘templates and draft agreements’ at their cost (Gnulli Contentions paras 41-42, 34 and 35 respectively).

   [13] Failure to do what a reasonable person would do in the circumstances (Western Australia v Taylor 224-255)

2. Mr Lane submits Njamal indicium xvii ‘cannot apply in this circumstance, as what might be considered reasonable for a company such as Woodside to do is not the same as for an individual person or persons, such as the director/shareholders of a private company’ like itself. He submits Rusa’s directors/shareholders ‘would have to draw on personal assets’ in order to pay the meeting costs. Of course, in the absence of specific funding to discuss a project such as Rusa’s, it would be for Gnulli to meet that cost by; extending meetings convened for other purposes; convening special meetings; or discussing the project at the expense of other business.

3. Mr Lane asserts that Rusa did not ‘expect’ Gnulli to provide drafts, but ‘did think it a reasonable way forward’ and that ‘it is normal’ for a native title party to do so. He submits that, according to the petroleum permit map of Western Australia, it is likely that Gnulli have held s 31 negotiations for seven exploration permit applications resulting in ‘at least seven agreements’ and it ‘is not credible that each of these agreements is written from a blank piece of paper.’ He asserts that it was Rusa who provided the draft ancillary agreement and that the only draft provided by Gnulli was a heritage protocol designed for a mining rather than petroleum project. He asserts there ‘is no evidence presented that the provision of drafts by the NTP cost the NTP anything’ and later states ‘I challenge the NTP to declare what it has actually spent on these negotiations’ (Rusa Submission 3 page 6-8).

4. From the very outset of negotiations, Mr Lane and Rusa clearly operated on the expectation that negotiations with Gnulli would be ‘simple’ because their proposed program was ‘conventional in scope’ and ‘no different to the work generally carried out by petroleum explorers’ (MC Affidavit para 11e, MC04 and MC11). An intrinsic part of this expectation was Rusa’s repeated attempts to use an existing agreement as a template, which may have also been motivated by Rusa’s limited financial means. It is apparent from the material before me that Mr Lane had a specific agreement in mind, namely that between Gnulli and Empire Oil (MC Affidavit paras 11e and 34-35, MC14, DDF09, DDF11). It would also seem likely that Mr Lane either possessed or had access to a copy of that agreement, or at least was familiar with its terms (MC07, DDF09, DDF11). Although the proposal was first presented in terms of using an existing agreement or template as an ‘initial model’ upon which to negotiate an agreement, Rusa was evidently operating on the assumption that a template would avoid the need for ‘numerous Working Group or community meetings’ (MC04) and ‘minimise the cost and inconvenience to the NT parties in reaching agreement’ (Rusa Submission 1 page 1). This statement seems to acknowledge the costs native title parties bear in negotiations, and in this light, it is difficult to accept Mr Lane’s assertions that Gnulli’s participation in negotiations could have been at little cost to them: the parties did not reach agreement concerning a template and the negotiations did not proceed in the straightforward manner initially anticipated by Rusa (Rusa Submission 3 pages 5 and 8).

5. By contrast, it is clear from the evidence that substantial resources were employed by Gnulli. Ms Chilala spent considerable time negotiating the terms of the heritage protocol with Mr Lane and it formed a substantial part of discussions at the second working group meeting on 15 October 2014. Mr Lane also acknowledges that at the sixth mediation on 16 February 2015, Mr Farrell agreed ‘to take on the task of blending the accepted heritage protocol into the draft template I had provided, despite my reservations that this would be an onerous and complicated task’ (Rusa Submission 3 page 6-8). Mr Lane himself had previously declined to undertake the task because ‘it would not be possible without considerable re-writing of the two’, preferring instead to use the heritage procedures in the draft template in order to ‘fast-track the process’ (DDF20).

6. As discussed above, Rusa’s limited financial means influenced their position on funding and compensation, but it also seems to have informed Rusa’s decision to insist on adopting a previous agreement, and their subsequent ‘fast track’ proposal. Motivated by costs and a view that negotiations would be ‘simple’ because their work program was ‘conventional’, Rusa’s strategy was not to provide resources towards meetings and drafting, and to push for a template agreement in an attempt to minimise costs. From the outset, Rusa attempted to direct an approach that underestimated the complexity of negotiations, especially regarding the development of a workable agreement. When Mr Lane attempted to adapt a South Australian conjunctive agreement to fit, it should have been clear to Rusa that there was no ‘off the shelf’ agreement to suit the particular circumstances and that their approach was poorly conceived. It was obvious at this point that Rusa’s flawed plan had failed and not because of any unwillingness on the part of Gnulli. They still endeavoured to work with Rusa’s chosen approach: At the last mediation meeting on 16 February, Mr Lane and Mr Farrell agreed that Mr Farrell would undertake the task of ‘building the YMAC heritage protocol into Rusa’s draft exploration agreement’ (DDF33). The following day, Rusa lodged their application for a determination. Mr Lane stated:

   I have submitted a request for determination to the NNTT. It has become clear from the recent mediation session that reaching an agreement with the Gnulli will not happen in the foreseeable future. [DDF39]

Did Rusa allocate the financial and technical resources to meaningfully engage in the negotiations?

1. The person seeking the benefit should contribute resources towards achieving the agreement of another party. The appropriate level of resources is of course measured against the potential benefit, which in this matter is a petroleum exploration program in excess of $8 million. Mr Lane states he is experienced in native title negotiations, however his capability for drafting an appropriate agreement is not apparent. It is evident that the work required some expertise which Mr Lane did not possess. Instead, at the last mediation meeting, Mr Farrell agreed to undertake the task of incorporating the agreed heritage protocol into the template agreement provided by Mr Lane.

2. Although I make no finding as to whether Rusa had sufficient financial resources to commence negotiations with Gnulli (see [21] above), the issue is relevant to Rusa’s conduct during the negotiations. Rusa’s limited financial means clearly influenced their position on funding, compensation, template agreements and their subsequent ‘fast track’ proposal. As I noted above, the only reasonable interpretation of the ‘fast track’ condition was that the increased compensation would only be made if Gnulli agreed to narrow the scope for further negotiation and expedite the grant of the permit.

3. In Rusa’s submissions, Mr Lane sought to represent the proposal as a quid pro quo or ‘giving something in return for something back’: the increase in the financial terms was offered in exchange for Gnulli ‘accelerating’ the process of drafting an agreement by using a prior agreement as a template (see Rusa Submission 3 page 5).  Mr Lane’s characterisation is merely a gloss on the fact that, as a consequence of the limited resources available to Rusa, there was a real prospect of further delay and expense in obtaining the grant of the permit.  More resources were required from Rusa at this point, not less. If Rusa was not prepared or able to employ the appropriate resources to progress the agreement, it should have allowed further time for Gnulli to use theirs.

Did Rusa act reasonably when they applied to the Tribunal for a determination?

1. There is no requirement for negotiations to have reached a certain stage before an application is made. Any party has the right to make an application and it cannot be relied on to establish a lack of good faith.[14]

   [14] See Strickland v Western Australia at 322; FMG Pilbara v Cox at [23]).

2. A party simply adopting a negotiating position cannot form the basis of a finding that they have not negotiated in good faith, unless the position is the product of improper motives or is so unreasonable that it indicates they are not sincere in their desire to reach agreement.[15]

   [15] See Western Australia v Daniel at [47]).

3. Mr Lane submits that, had the appropriate people attended the third working group meeting on 11 February 2015 and had Gnulli accepted Rusa’s offer as presented, then they could have ‘had a deal’ (Rusa Submission 2 page 2). I do not believe this would have been likely. A variety of matters had yet to be negotiated between the parties or apparently even discussed between the representatives, notably, the ‘list of commitments’ proposed by Rusa which had simply been pasted into Rusa’s agreement without further consideration of any of its terms. Further, the heritage provisions had yet to be fully agreed or integrated into Rusa’s agreement. Though it was unfortunate the 11 February meeting was in some respects a wasted opportunity, even if the full working group had been in attendance, it was overly optimistic to expect that an agreement could have been possible at that point in time.

4. In considering whether Rusa acted reasonably when it applied for a Tribunal determination, I will compare the circumstances of this matter against that described in Young v Kariyarra at [45]-[68]. In Young v Kariyarra, the Kariyarra claimed the Youngs’ applications for a Tribunal determination was unreasonable. During those negotiations, the Youngs expressed an intention to meet with the Kariyarra working group, but like Rusa, they declined to contribute towards the costs of a working group meeting. Nonetheless, they attempted to progress negotiations by forwarding comprehensive draft agreements which endeavoured to address all aspects that the Youngs believed were of issue for Kariyarra. The agreements were fully drafted documents capable of being signed (at [35]) and enabled Kariyarra to provide detailed counter offers, although ultimately the Kariyarra did not respond to the Youngs’ last counter offer (at [57]). Furthermore, no meeting date was ever offered by Kariyarra during the six months of Tribunal assisted mediation, the Kariyarra representative may not have been clear about meeting times or instructions taken and also, Kariyarra’s decision making process was complex. The Youngs contended that if they ‘had not lodged each S35 Application, it is unclear how quickly negotiations might have otherwise progressed’ (at [60]). The Tribunal found the Youngs’ position was reasonable in the circumstances.

5. Mr Lane submits that Gnulli ‘has shown itself to be unreliable, in that it was not properly constituted at the 12 February GWG meeting, and that it [Rusa] could not forsee when it would next be able to continue negotiations.’ He concludes ‘it was apparent to Rusa that the NTP’s interest in this matter was insufficient to progress negotiations in a timely fashion... As negotiations had been on foot for over 12 months, and with only a part of the negotiation issues being settled, Rusa could no longer wait indefinitely for an agreement to be signed’ (Rusa Submission 3 page 9 and 11).

6. Mr Lane’s statements are not supported by the evidence. There is no evidence that Gnulli or their representatives were in any way disinterested or unaccommodating during the negotiations. There was no agreement on the table capable of being signed by Gnulli at the time Rusa lodged its application for a Tribunal determination.

7. The evidence discloses that Gnulli accommodated Rusa at each of their working group meetings, negotiated over the agreed YMAC heritage protocol in a timely manner, and were transparent about instructions given and the nature of their decision making process.

8. The evidence also discloses that Rusa delayed in providing a draft agreement, despite agreeing to do so at the first working group meeting in late May 2014.  Rusa’s draft was not provided until late December 2014, some seven months later, and was not in a suitable form. It was Gnulli who, at the last mediation meeting were prepared to provide the requisite drafting skills to progress an agreement. The circumstances are clearly different to Young v Kariyarra. In this context, Rusa’s decision to apply for a determination was not reasonable.

Considering Rusa’s overall conduct, does Rusa meet the threshold for good faith?

1. At [25] I concluded that Rusa’s delay in disclosing its true financial position was not in itself a breach of good faith. However, it did colour the negotiations that followed because these proceeded on the understanding that Rusa’s project would involve significant financial resources. If their position had been disclosed at an earlier stage, other options might have been put forward by Gnulli and explored. It also resulted in the Gnulli expending more resources than they might have otherwise spent.

2. At [41] I concluded that Rusa risked good faith when it attempted to control the negotiations by introducing the ‘fast track’ proposal. Rusa’s increased offer was conditional upon using a South Australian agreement modified by Mr Lane whose drafting skills were limited. I concluded that the ‘fast track’ plan was poorly designed and executed by Rusa and was abandoned by Mr Lane at the last mediation meeting. It was clear the agreement required substantial reworking. Rather than bring the requisite skills or allow Gnulli the time to redraft, Rusa made an application for a determination the next day.

3. At [48]-[51], I concluded that Rusa’s position on contributing financially to Gnulli working group meetings was not, on its own, a lack of good faith. However, I noted that Mr Lane had an unreasonable expectation that Rusa would be given substantial time at these meetings despite not contributing and held an unreasonable view that the costs of accommodating Rusa were ‘nil’. I also observed that Mr Lane displayed a regrettable attitude towards the time the Gnulli working group members spend negotiating with land users such as Rusa, and towards the skill and responsibility their attendance entails.

4. At [57], I concluded Mr Lane’s ‘misunderstanding’ of Gnulli’s request for Rusa to provide a draft agreement seemed improbable. Instead, I decided it was more likely that he sought to take advantage of Mr Farrell’s inexperience at YMAC to again pursue Rusa’s preference for a template agreement.

5. At [58] I again observed that Rusa risked good faith when they provided a draft agreement with an offer that was conditional upon Gnulli ‘fast tracking’ negotiations. At [63] I concluded that Rusa shifted positions regarding the use of the YMAC heritage protocol and that these shifts frustrated the negotiations and meant that parties had little opportunity to engage in other aspects of an agreement.

6. At [69] I observed that Rusa pursued a strategy which declined contributing towards the costs of negotiations, both in terms of meetings and the drafting of an agreement that would be acceptable to both parties. Financial constraints, a belief their project was ‘simple’, and Mr Lane’s lack of drafting expertise meant Rusa directed the negotiations towards template agreements, but ultimately Rusa underestimated the complexity of the negotiations. The point at which Mr Lane attempted to adapt a South Australian conjunctive agreement was the point at which it should have been clear to Rusa that there was no ‘off the shelf’ agreement to suit and that their strategy had failed.

7. At [72] I concluded that at this point, more resources were required from Rusa to progress the agreement, not less and, if Rusa was not prepared or able to employ these, they should have allowed further time for Gnulli to use theirs. Instead, they applied for the Tribunal to make a determination the following day. At [77] I considered the circumstances and decided it was unreasonable for Rusa to do so.

8. Overall, Rusa’s conduct does not meet the threshold for good faith.

Determination

1. I am not satisfied that Rusa Resources (Australia) Pty Ltd negotiated in the manner required by s 31(1)(b) of the Native Title Act. Therefore the Tribunal is not empowered to deal with the application and the application is dismissed under s 148(a).

James McNamara
Member

16 July 2015
APPENDIX A – BACKGROUND TO NEGOTIATIONS

Based on the evidence submitted by the parties and Tribunal records, I accept the following occurred up to the day on which Rusa made their application for the Tribunal to make a determination:

DATE	EVENT
14 April 1997	Gnulli native title claim application WC1997/1998 registered on the National Native Title Tribunal Register of Native Title Claims.
4 December 2013	s 29 notification day for STP-EPA-0110 by Government Party, the Department of Mines and Petroleum (DMP).
11 December 2013 (MC01)	DMP initial negotiation letter to Rusa and Gnulli.
23 December 2013 (MC02)	Rusa initial negotiation letter and submissions to DMP and Gnulli in relation to the proposed permit.
12 February 2014 (MC03)	Gnulli submissions to DMP and Rusa in relation to the proposed permit.
25 February 2014 (MC04)	Rusa reply letter to Gnulli and DMP.
11 March 2014 (MC05)	Rusa lodged request for Tribunal mediation assistance.
5 May 2014 (MC11)	First Tribunal mediation conference held.
29 May 2014 (MC18)	First Gnulli working group meeting attended by Rusa.
11 June 2014 (MC19)	Gnulli forwards Rusa a request for ‘a comprehensive draft exploration agreement’ with a list of items for inclusion and a ‘YMAC precedent Heritage Protocol that is normally attached to any ancillary agreement.’
12 June 2014 (MC20)	Second Tribunal mediation conference held.
12 June 2014 (MC21)	Rusa forwards Gnulli an initial written offer in response to Gnulli’s 11 June 2014 request.
7 July 2014 (MC27)	Third Tribunal mediation conference held.
14 July 2014 (MC28)	Rusa forwards comments on YMAC Heritage Protocol
15 October 2014 (DDF02)	Second Gnulli working group meeting attended by Rusa.
31 October 2014 (DDF08)	Gnulli forwards a counter offer to the financial benefits offered by Rusa on 12 June 2014.
2 November 2014 (DDF09)	Rusa forwards a response to the Gnulli counter offer.
3 November 2014 (DDF11)	Fourth Tribunal mediation conference held.
7 November 2014 (DDF12)	Gnulli repeats 11 June 2014 request to Rusa for a draft exploration agreement.
9 December 2014 (DDF17)	Fifth Tribunal mediation conference held.
19 December 2014 (DDF20, DDF29A)	Rusa forwards Gnulli a draft exploration agreement.
11 February 2015 (DDF29)	Third Gnulli working group meeting attended by Rusa.
16 February 2015 (DDF33)	Sixth and final Tribunal mediation conference held.
17 February 2015	Rusa lodged application for a determination, Tribunal mediation terminated by mediation Member.

APPENDIX B – LIST OF DOCUMENTS PROVIDED BY GNULLI AND RUSA FOR THIS GOOD FAITH INQUIRY

Gnulli Submissions

Gnulli Contentions	‘Submissions in support of the Native Title Party’s contention that the Grantee Party has not negotiated in good faith in relation to the grant of petroleum exploration permit STP-EPA-0110’ dated 14 April 2015
MC Affidavit	Affidavit of Maimbo Chilala sworn 14 April 2015 and attachments MC01-26
DDF Affidavit	Affidavit of David Denis Farrell sworn 13 April 2015 and attachments DDF01-41
Gnulli Reply	Submissions by David Denis Farrell in reply to the Grantee Party’s contentions that the Grantee Party has negotiated on good faith in relation to the grant of petroleum exploration permit STP-EPA-0110’ dated 5 May 2015
MC01	Government Party (Department of Mines and Petroleum) initial negotiation letter to Gnulli dated 11 December 2013
MC02	Initial letter from Rusa to Gnulli dated 23 December 2013
MC03	Gnulli submissions to the DMP dated 12 February 2014
MC04	Letter from Chas Lane to Maimbo Chilala dated 25 February 2014
MC05	Letter from Rusa to the Tribunal requesting mediation dated 11 March 2014
MC06	Email from Maimbo Chilala to Chas Lane offering working group meeting time dated 23 April 2014
MC07	Email from Chas lane to Maimbo Chilala declining funding contribution dated 23 April 2014
MC08	Email from YMAC admin to Chas Lane and Paul Lipski attaching working group meeting budget estimate dated 29 April2014
MC09	Email from Chas Lane to YMAC admin accepting invitation to first working group meeting and declining funding contribution dated 29 April 2014
MC10	Email letter from Maimbo Chilala to Paul Lipski inviting Grantee Party to NTP meeting dated 4 May 2014
MC11	Tribunal mediation conference synopsis and outcomes for first meeting of 5 May 2014
MC12	Email from Chas Lane to Tribunal, DMP and Maimbo Chilala declining funding contribution dated 6 May 2014
MC13	Email from Maimbo Chilala to Chas Lane confirming Grantee Party's attendance time at first working group meeting dated 23 May 2014
MC14	Email from Chas lane to Maimbo Chilala requesting Heritage Protocol template dated 24 May 2014
MC17	Powerpoint  on  nature  of  Rusa’s  exploration  methods  and  proposal presented at first working group meeting of 29 May 2014
MC18	Email from Chas Lane to Maimbo Chilala requested issues to be addressed and Heritage Protocol template dated 3 June 2014
MC19	Email from Maimbo Chilala to Chas Lane providing list of issues to be addressed in proposed agreement dated 11 June 2014
MC20	Tribunal mediation conference synopsis and outcomes for second meeting of 12 June 2014
MC21	Email letter from Chas  Lane to Maimbo Chilala outlining Rusa’s list of commitments to Gnulli including financial offer dated 11 June 2014
MC22	Email from Chas Lane to Maimbo Chilala requesting to use Heritage Protocol template for another native title negotiation dated 13 June 2014
MC23	Email from  Maimbo  Chilala to Chas Lane attaching draft heritage protocol with comments dated 30 June 2014
MC24	Email from Paul Lipski of Rusa forwarded to Maimbo Chilala with attached Environmental Management Plan dated 1 July 2014
MC25	Environmental Management Plan dated July 2011 attached to MC24 email
MC26	Email from Chas Lane to Tribunal and Maimbo Chilala stating that negotiations are progressing dated 3 July 2014
MC27	Tribunal mediation conference synopsis and outcomes for third meeting of 7 July 2014
MC28	Email from Chas Lane to Maimbo Chilala attaching proposed changes to draft Heritage Protocol dated 14 July 2014
MC29	Email from Tribunal to Maimbo Chilala, Chas Lane and DMP postponing scheduled mediation conference dated 24 September 2014 and Email from Maimbo Chilala to Tribunal advising availability for next Tribunal mediation conference dated 23 September 2014
MC30	Email from Tribunal to Maimbo Chilala, Chas Lane and DMP postponing scheduled mediation conference, requesting parties’ availability and requesting Paul Lipski's attendance at the next Tribunal mediation conference dated 24 September 2014
MC31	Email from Maimbo Chilala to Tribunal, Chas Lane and DMP advising availability for next Tribunal mediation conference and stating that David Farrell would be assuming carriage of the negotiations dated  25 September 2014
DDF01	Email exchange between David Farrell to Chas Lane regarding contribution and availability for second Gnulli working group meeting dated 1 October 2014
DDF02	Email from Chas Lane to David Farrell confirming attendance dated 2 October 2014

DDF03	Letter from Paul Lipski of Rusa to all parties confirming Chas Lane’s authority to represent Rusa dated 7 October 2014
DDF03A	Meeting Minutes of second Gnulli Working Group meeting of 15 October 2014
DDF04	Compensation offer comparison sheet presented at the second Gnulli Working Group meeting of 15 October 2014
DDF05	Article: 'Native Title Challenges Not Unbeatable', (11 June 2010) Oil & Gas Gazette, p 44
DDF06	Email from Chas Lane to David Farrell forwarding update on progress sent to Tribunal dated 29 October 2014
DDF07	Email from David Farrell to Chas Lane and Tribunal updating on progress dated 30 October 2014
DDF08	Email from David Farrell to Chas Lane stating Gnulli’s compensation counter offer dated 31 October 2014
DDF09	Email from Chas Lane to David Farrell reagridng counter offer dated 2 November 2014
DDF10	Filenote of phone call between Chas Lane and David Farrell dated 3 November 2014
DDF11	Tribunal mediation conference synopsis and outcomes for fourth meeting of 3 November 2014
DDF12	Email from David Farrell to Chas Lane requesting draft agreement dated 7 November 2014
DDF13	Email from Chas Lane to David Farrell agreeing to provide draft dated 8 November 2014
DDF14	Email from David Farrell to Chas Lane requesting annual report and financial information dated 17 November 2014
DDF15	Email from Chas Lane to David Farrell in response dated 19 November 2014
DDF16	Email from Chas Lane to Tribunal and David Farrell advising delays in providing agreement due to extended family business dated 8 December 2014
DDF17	Tribunal mediation conference synopsis and outcomes for fifth meeting of 8 December 2014
DDF18	Email from David Farrell to Government Party requesting whether the information provided by Rusa meets its requirements dated 9 December 2014
DDF19	Email from DMP to David Farrell in response dated 15 December 2014
DDF20	Email from Chas Lane to David Farrell attaching draft agreement dated 19 December 2014
DDF21	Email from David Farrell to Chas Lane regarding attendance at third working group meeting dated 19 January 2015
DDF22	Email from Chas Lane to David Farrell confirming attendance dated 21 January 2015 at 5:29am
DDF23	Email from David Farrell to Chas Lane requesting contribution towards costs dated 21 January 2015 at 9:55am
DDF24	Email from Chas Lane to David Farrell in reply dated 21 January 2015 at 1:34pm

DDF25	Email from David Farrell to Chas Lane in reply dated 23 January 2015
DDF26	Email from David Farrell to Chas Lane confirming date for third working group meeting dated 29 January 2015
DDF27	Email from David Farrell to Chas Lane confirming time and date for third working group meeting dated 2 February 2015
DDF28	Email from Chas Lane to David Farrell regarding status of negotiations dated 7 February 2015
DDF29	Meeting Minutes of third Gnulli Working Group Meeting of 11 February 2015
DDF29A	Copy of Rusa’s offer handed to Gnulli Working Group at third working group meeting of 12 February 2015
DDF30	Email from David Farrell to Chas Lane requesting Rusa’s financials dated 13 February 2015
DDF31	Email from Chas Lane to David Farrell attaching financials dated 13 February 2015
DDF32	Current financial statement of Rusa as at 31 December 2014
DDF33	Tribunal mediation conference synopsis and outcomes for sixth meeting of 16 February 2015
DDF34	Western Australian Government Department of Minerals and Petroleum, 'Petroleum Acreage Bid Assessment Process State Waters and Onshore: Policy and Guidelines'
DDF35	Email from Chas Lane to David Farrell attaching information dated 24 February 2015
DDF36	Letter from Tap Oil to Rusa terminating agreement dated 23 February 2015
DDF37	Email from Chas Lane to David Farrell advising lodgment of determination application dated 26 February 2015
DDF38	Email from Tribunal to David Farrell, DMP and Chas Lane terminating mediation dated 3 March 2015
DDF39	Email from Chas Lane to David Farrell regarding lodgment of determination application dated 3 March 2015
DDF40	Email from David Farrell to Chas Lane in response dated 3 March 2015
DDF41	Email from Chas Lane to David Farrell in response dated 4 March 2015

Rusa Submissions

Rusa Letter	Letter attaching submissions dated 28 April 2015
Rusa Submission 1	‘Comments on the Affidavit of Maimbo Chilala’
Rusa Submission 2	‘Comments on the Affidavit of David Farrell’
Rusa Submission 3	‘Response to the Contentions of the Gnulli NTP’
Rusa Reply	‘Submission by Charles Lane in response to the submission of David Farrell (for the Gnulli NTP)’ dated 21 May 2015