Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon #2 - [2018] NNTTA 48

NATIONAL NATIVE TITLE TRIBUNAL

Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon #2 [2018] NNTTA 48 (27 August 2018)

Application No:

WF2016/0014

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

- and -

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

Mount Jowlaenga Polygon #2 (WC2014/005)

(native title party)

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Sheffield Resources Ltd

(grantee party)

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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:	27 August 2018

Catchwords:	Native title – future act – s 35 application for a determination – mining lease application M04/459 – remittal – jurisdiction – power – whether grantee party has negotiated in good faith – voluntary negotiations – post-FADA conduct – direct contact with named applicants – Tribunal not satisfied grantee party has not negotiated in good faith
Legislation:	Native Title Act 1993 (Cth) ss 3, 31, 35, 36, 38, 76, 77, 150, 169
Cases:	Brownley v Western Australia [1999] FCA 1139; (1999) 95 FCR 152 Charles, on behalf of Mount Jowlaenga Polygon #2 v Sheffield Resources Limited [2017] FCA 1126 Charles, on behalf of Mount Jowlaenga Polygon # 2 v Sheffield Resources Limited [2017] FCAFC 218 (‘Charles v Sheffield Resources’) Doxford/Janice Barnes, Jessie Diver, Owen McEvoy, Deree King, Patrick Fisher (Wangan and Jagalingou)/State of Queensland [2008] NNTTA 54 (‘Doxford v Queensland’) FMG Pilbara Pty Ltd v Cox and Others (2009) [2009] FCAFC 49; 175 FCR 141 (‘FMG v Cox’) Gulliver Productions Pty Ltd/Western Desert Lands Aboriginal Corporation (Jamukurnu-Yapalikunu)/Darcy Hunter & Ors on behalf of Nyangumarta People/Karajarri Traditional Lands Association (Aboriginal Corporation/)western Australia [2005] NNTTA 88 (‘Gulliver Productions v WDLAC’) June Ashwin, Geoffrey Alfred Ashwin, Ralph Edward Ashwin and Raymond William Ashwin on behalf of the Wutha People/Western Australia/Contact Uranium Limited [2008] NNTTA 129 (‘Ashwin v Contact Uranium’) Marine Produce Australia Limited and Another v Mayala People [2018] NNTTA 28 (‘MPA v Mayala’) McGlade v Native Title Registrar and Others [2017] FCAFC 10; (2017) 251 FCR 172 (‘McGlade v Native Title Registrar’) Perfection Fresh Australia v Melbourne Market Authority (No 2) [2013] VSC 342 (‘Perfection Fresh Australia v Melbourne Market Authority’) Placer (Granny Smith) Pty Ltd v Western Australia [1999] NNTTA 361; (1999) 163 FLR 87 Rita Dempster & Ors on behalf of various Southern Noongar families/Bayside Abalone Farms Pty Ltd; Wa Abalone Farming Pty Ltd/Western Australia [1999] NNTTA 235 Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon # 2 [2017] NNTTA 25 Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon # 2 [2017] NNTTA 34 Western Australia/Arthur Dimer, Ollan Dimer, John Walter Graham, Sonny Graham, Katie Ray, Maureen Young, Georgina Schultz, Mabel Wilson, Jack Schultz, Betty Bullen, Graeme Pellew (Ngadju People, WC95/17); Cyril Barnes, Merle Forrest, Mercy O'Loughlin, Stevie Sinclair, Judy Slater, Elvis Stokes & Victor Willis (Central East Goldfields People, WC99/30)/Equs Limited [2000] NNTTA 290 (‘Dimer v Equs’) Western Australia/Roberta Vera Thomas & Ors (Waljen)/Austwhim Resources Nl; Aurora Gold (Wa) Ltd [1996] NNTTA 30; (1996) 133 FLR 124 (‘Western Australia v Thomas’)
Representatives(s) of the native title party:	Dante Mavec, Kimberley Land Council Chris Shanahan SC, Murray Chambers

Representative(s) of the grantee party:

Christine Lovitt, Hewett & Lovitt
Stephen Wright SC, Francis Burt Chambers

Representatives(s) of the Government party:

Dennis Jacobs, Department of Mines, Industry Regulation and Safety
Domhnall McCloskey & Emily O’Keeffe, State Solicitors Office

REASONS FOR DETERMINATION

Introduction and background

This application has been remitted to the Tribunal following a successful appeal to the Full Federal Court from a decision made on the question of negotiations in good faith.
In a decision dated 22 May 2017 (Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon # 2 [2017] NNTTA 25) (‘the initial determination’), I concluded Sheffield Resources Ltd (‘Sheffield’) had negotiated in good faith, per s 31(1)(b) of the Native Title Act 1993 (Cth) (‘the Act’). Accordingly, I found the Tribunal was empowered to make a determination under s 38 of the Act.
On 14 June 2017, I handed down my determination in relation to the s 35 application, finding that the act, namely the grant of mining lease M04/459 (‘the proposed lease’) to Sheffield, may be done (see Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon # 2 [2017] NNTTA 34).
The initial determination was the subject of an appeal to the Federal Court by Mount Jowlaenga Polygon #2 (‘Mount Jowlaenga’) under s 169 of the Act. The appeal was made on three grounds, the primary ground being that the proper construction of s 35(3) of the Act would see the good faith obligation continue to apply to negotiations, including those that followed the making of a s 35 application. On 21 September 2017, Barker J dismissed the appeal on all grounds (see Charles, on behalf of Mount Jowlaenga Polygon #2 v Sheffield Resources Limited[2017] FCA 1126).
Mount Jowlaenga further appealed to the Full Court and, on 20 December 2017, the appeal was allowed by majority decision (Charles v Sheffield Resources). The Court ordered the initial determination and the decision of Barker J be set aside, and that the matter be remitted to the Tribunal for a re-hearing according to law, limited to the issue of whether or not s 36(2) of the Act applies.[1] The Court also ordered the implementation and operation of the Tribunal’s determination in relation to the s 35 application be stayed until further notice, with the Court to determine its validity following the Tribunal’s decision on the remitter.
[1] Section 36(2) of the Act states if ‘any negotiation party satisfies the arbitral body that any other negotiation party (other than the native title party) did not negotiate in good faith as mentioned in paragraph 31(1)(b), the arbitral body must not make the determination on the application.’
The Court’s reasons for judgment did not preclude my appointment to the matter, stating (at paragraph 76) ‘[t]here is no reason why the remitted hearing should be conducted by a differently constituted [Tribunal]. That issue should be left to the President to determine.’ On 17 January 2018, the then Tribunal President Raelene Webb QC appointed me as the member to constitute the Tribunal for the purpose of re-hearing the matter, pursuant to the orders of the Court.
What follows are my reasons on the issue of whether or not s 36(2) of the Act applies. I have taken into account the submissions and evidence made in the initial inquiry. It is not necessary for me to repeat the findings of fact made in the initial determination but I confirm they are adopted in these reasons. Where necessary to assist in understanding, some of the findings of fact are repeated.
The Court observed (at paragraph 77) that given ‘the volume of material and lengthy submissions which were made leading up to [the initial determination]…it will be a matter for the [Tribunal] to decide the extent to which the parties should have an opportunity to supplement that material on the remitter.’ I issued directions which allowed for the submission of further material addressing the question of good faith negotiations, limited to the period following the making of the s 35 application.
The below is an outline of the documents lodged by parties following the remitter:
·Mount Jowlaenga contentions (‘NTPC’), supported by:
-Affidavit of Hayley Haas (‘Haas affidavit’);
-Sheffield Interim Financial Report, 31 December 2017; and
-Sheffield ASX Release, 14 February 2018.
·Sheffield contentions (‘GPC’), supported by:
-Affidavit of Christine Lovitt (‘Lovitt affidavit’);
-Affidavit of Bruce McFadzean (‘McFadzean affidavit’);
-Affidavit of David Boyd (‘Boyd affidavit’);
-Affidavit of Justin King (‘King affidavit’);
-Affidavit of Wayne Groeneveld (‘Groeneveld affidavit’); and
-Affidavit of William Burbury (‘Burbury affidavit’).
·Mount Jowlaenga contentions in reply (‘NTP Reply’), supported by:
-Affidavit of Dante Mavec (‘Mavec affidavit’); and
-Further affidavit of Hayley Haas (‘Further Haas affidavit’).
The directions issued in this matter contemplated parties providing an agreed statement of issues and facts, identifying any material facts not agreed. Parties submitted an Agreed Statement of Issues, and advised it had not been possible to agree a list of material facts. In the circumstances I chose to accept the statement as provided and abandon the requirement for a list of agreed facts. The list of issues, as provided by parties, is as follows:
1. Whether the grantee party is in breach of the obligation of good faith pursuant to s 36(2) NT Act, or put another way, whether the Tribunal is satisfied for the purposes of s 36(2) NT Act that Sheffield did not negotiate in good faith with a view to reaching an agreement of the kind referred to in s 31(1)(b) of the NT Act, as required by s 31(1)(b). In particular:
2. The level of satisfaction that the Tribunal must reach in order to be precluded under s 36(2) of the NT Act from making a determination on the FADA, and the nature and extent of the evidentiary or other onus on each party;
3. Sheffield considers a key issue which should be separately articulated is whether the Tribunal is obliged to dismiss the FADA under s 36(2) if it is satisfied that particular conduct of Sheffield associated with the delivery of the 26 October 2016 letter to the Named Applicants and/or associated with the 7 March 2017 letter constituted a failure to negotiate in good faith, or whether the Tribunal must consider the whole of Sheffield’s conduct and all of the circumstances from 13 August 2014 to the date negotiations ceased and decide whether on the whole of that conduct and in all those circumstances it is satisfied that Sheffield did not negotiate in good faith. The native title party considers this is incorporated within issues [1] and [2] above.
4.   Whether the grantee party engaged in a course of conduct as part of a deliberate strategy designed to circumvent the Native Title Party’s representatives by negotiating or engaging with the Named Applicants directly;
5.   The objective meaning of the 26 October 2016 letter which was delivered to three of the Named Applicants;
6.   The subjective intent with which the 26 October 2016 letter was prepared and delivered, and whether that intent is relevant;
7.   Whether, if relevant, that subjective intention was objectively reasonable;
8.   Whether the grantee party’s actions in preparing and delivering the 26 October 2016 letter was, on an objective assessment, a reasonable course of action to take in all the circumstances;
9.   Whether there were any Subdivision P negotiations conducted after the FADA was made on 1 November 2016, or the significance otherwise of events which occurred after that date; and
10.    The extent to which the decision of the Full Court requires the findings in the Initial Decision to be revisited.
By agreement, a hearing was held on 18 May 2018, with both Sheffield and Mount Jowlaenga making oral submissions. No witnesses were called or exhibits tendered. The hearing was recorded and transcribed, and all references to oral submissions in this decision are taken from that transcript.

Full Court Judgment in Charles v Sheffield Resources

By majority, the Full Court in Charles v Sheffield Resources ruled that Barker J (and therefore the Tribunal) had erred in concluding that the obligation to negotiate in good faith pursuant to s 31(1)(b) does not continue to apply to negotiations that take place after a s 35 future act determination application (‘FADA’) has been made. This ruling overturned what had been a fairly established approach by the Tribunal to good faith negotiations under Part 2, Division 3 Subdivision P of the Act. The Full Court’s ruling turned on a proper construction of s 35(3) as read with s 31(1)(b). Section 35(3) states, in part:
Even though the [FADA] has been made, the negotiation parties may continue to negotiate with a view to obtaining an agreement of the kind mentioned in paragraph 31(1)(b) before a determination in relation to the act is made …
Section 31(1)(b) states:
The negotiation parties must negotiate in good faith with a 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.
The majority judgment stated, at [59] (emphasis in original):
Merely because there is no obligation on the Government party or a grantee party to continue to negotiate once a s 35 arbitral determination has been made does not necessarily mean that the obligation to negotiate in good faith, as imposed by s 31(1)(b), does not apply as a matter of implication where the parties do agree to continue to negotiate. It is significant that s 35(3), which contemplates that the negotiation parties may voluntarily agree to continue to negotiate after the making of a s 35 application, describes the objective of those post-s 35 application negotiations as being to obtain an agreement of the kind mentioned in s 31(1)(b) before an arbitral determination is made. An agreement of that kind is an agreement which results from good faith negotiations as to the doing of the future act with or without conditions. The good faith obligation is an integral part of the process which is directed to the objective of making an agreement with the native title parties. That obligation subsists even though an agreement may not ultimately be reached.
Justices North and Griffiths noted that any approach to statutory construction must include regard to the context and purpose of the statute, and that this is particularly so in instances where there is an absence of plain or unambiguous language. Their Honours highlighted the beneficial nature of the Act as well as its objects and purpose, as set out in s 3 and the Preamble. Citing the initial appeal at [5], the Full Court stated (at paragraph 53) the two main objects of the Act are: to provide for the recognition and protection of native title; and, to establish ways in which dealings affecting native title may proceed and to set standards for those dealings. In the context of future acts, the right to negotiate regime as set out in Subdivision P forms a key component of the protection of native title rights and interests under the Act and gives effect to one of the main objects of the Act, as stated in the Preamble to the Act:
In future, acts that affect native title should only be able to be validly done if, typically, they can also be done to freehold land and if, whenever appropriate, every reasonable effort has been made to secure the agreement of the native title holders through a special right to negotiate.
For these reasons, the right to negotiate is not to be narrowly construed.

Preliminary Issues

Which of the factual findings from the initial determination are relevant and applicable to the issues on remittal?

Parties’ submissions raised as an issue the extent to which the remittal of this matter required my findings from the initial determination to be revisited. Through oral submissions, this issue was narrowed somewhat by parties’ agreeing on the following:
·the Full Court’s decision did not establish any matters of fact;
·a fresh finding is required in relation to whether the good faith obligation has been satisfied (whether that finding is consistent with my initial determination is a matter to be determined); and
·conduct that occurred in the time between lodgement and acceptance of the FADA is directly relevant to my considerations (in contrast to the initial determination where this was an indirect consideration).
Sheffield’s contentions state (GPC, para 7):
[T]he Tribunal previously considered a large volume of evidence and contentions regarding Sheffield’s conduct prior to the lodgement of the FADA, and made various findings about that conduct. Those findings should be adopted and not reopened for the purposes of the remittal.
Mount Jowlaenga’s contentions in reply take issue with the above position and argue it contradicts other submissions made by Sheffield. Mount Jowlaenga argues (NTP Reply, para 66):
[T]he Tribunal cannot be prevented from (i) considering new evidence adduced by the parties in the Remitted Proceedings, or (ii) re-evaluating findings made in the [initial determination] when viewed through the prism of what occurred on or after [the FADA was lodged]. Indeed it is obliged to do so.
In oral submissions, Sheffield somewhat refined its position regarding whether findings on previous conduct can be taken into account or can be reconsidered in light of new evidence. Sheffield stated it did not press upon the Tribunal any formal limitations on how evidence before it is dealt with. In this regard, Sheffield stated its view is that the Tribunal can take into account all of the new evidence that has been provided in the remittal. Further, Sheffield says it is open for the Tribunal to determine the extent to which this may cause reconsideration of anything previously found.
Sheffield’s contentions seek to address comments made in the initial determination regarding contact it made with some Mount Jowlaenga Named Applicants in the days following lodgement of the FADA. At [195]-[196] of the initial determination I stated:
[195] I have already commented on the relevance or otherwise of parties’ conduct following lodgement of the s 35 application (see [180]). In South Blackwater Coal v Kina (at [10]), Deputy President Sumner states ‘[i]n my view the scheme of the [Act] is that negotiations in good faith must occur before (but not after) the s 35 application is made. The reference in Walley v Western Australia to ‘the next stage’ of the right to negotiate procedure being arbitration supports my conclusion.’ At this stage in negotiations, Sheffield were not obliged to negotiate in good faith according to the Act. Therefore, I will not make an adverse finding against Sheffield on this point.
[196] I will make clear that this finding is made on a relatively technical point and should not detract from the inappropriateness of the behaviour. Had Sheffield’s contact occurred prior to the lodgement of the s 35 application my findings may have been different. It appears clear that the purpose of this communication was to advance negotiations by circumventing Mount Jowlaenga’s legal advisors which is not acceptable.
Sheffield’s contentions state the initial determination did not ‘make a finding as to whether or not Sheffield failed to negotiate in good faith by reason of the 26 October letter’ (GPC, para 50). It states my comments at [196] are not determinative of the issues on remittal and the ‘observations’ made therein ae in effect ‘obiter.’ Sheffield notes that, as observed by the Tribunal, these comments were not necessary for the decision. More importantly, Sheffield argues, they were made in the absence of any evidence or contentions from Sheffield because of the view it took at the time as to the scope of the negotiation in good faith inquiry. During oral submissions, Sheffield invited the Tribunal to ‘reconsider at least the tenor of those comments in light of the evidence that has now been provided’ which was not provided previously.

Mount Jowlaenga has challenged the view taken by Sheffield, arguing these paragraphs do contain specific findings regarding Sheffield’s conduct, in particular that Sheffield’s conduct was ‘inappropriate.’ Mount Jowlaenga argues the use of the word ‘may’ in [196] to suggest the findings may have been different if the conduct occurred at a different time, coupled with the findings at [195] and the reference to a ‘relatively technical point’ is clearly directed to the technical question (now resolved by the Full Court) as to whether the obligation to negotiate in good faith applied at that time or not.
The findings at [195] and [196] of the initial determination relate to my consideration of Sheffield’s direct engagement with individual Named Applicants and other Traditional Owners.[2] In considering a call made by Mr David Boyd (Sheffield Exploration Manager) to Mr J Manado[3] (a Mount Jowlaenga claim member), I was presented with affidavit evidence from both Mount Jowlaenga and Sheffield. As stated at [193]: ‘In considering this communication between Mr Boyd and Mr J Manado, I have considered the context of the call, the nature of the relationship between parties, and the intent behind it’ before concluding that I did not believe that the contact complained of was intended to undermine negotiations.
In contrast, the statements made at [196] of the initial determination were made in the absence of specific evidence or contentions from Sheffield regarding the contents of the 26 October letter or the context in which it was sent. It was my view at that time that the obligation to negotiate in good faith was not current when the 26 October letters were dispatched. The absence of explanation and context led me to consider the possibility that the purpose of the communication was to advance negotiations by circumventing Mount Jowlaenga’s legal advisors and the acceptability of such behaviour. The statement at [196] that ‘had Sheffield’s contact occurred prior to the lodgement of the s 35 application my findings might have been different’ should not be surprising. The ‘findings’ is a reference to my comments in [195] that ‘I will not make an adverse finding against Sheffield on this point.’ Were such a finding made, it would not necessarily amount to a finding (or overall conclusion) as to whether Sheffield failed to negotiate in good faith. It is a ‘finding on this point’ relative to the instances of direct contact alleged by Mount Jowlaenga. This is discussed in more detail below under issues 5 and 7.

What is the relevance of the post-FADA communication?
[2] Parties’ contentions and evidence on this issue are outlined at [188] to [192] of the initial determination.
[3] Other incidents of direct contact were seemingly not instigated by Sheffield or were addressed in the section dealing with allegations of misconduct.

In addressing this question, Sheffield contends this inquiry need only consider the period of time up to the making of the FADA. Sheffield argues this is due to the fact parties did not voluntarily enter into negotiations at any point after the lodgement of the FADA, therefore the good faith obligation ended once the FADA was made. Sheffield notes there is no obligation for parties to continue to negotiate in good faith once a FADA ‘has been made’, however parties may continue to negotiate (per s 35(3)). Accordingly, and as expressly recognised in the Full Court’s decision, the obligation to negotiate in good faith per s 31(1)(b) only applies after the date a FADA is made where the parties voluntarily continue negotiations.
It is not expressly stated in the Act when a FADA is considered ‘made.’ The Full Court’s majority decision did not make a finding on this question;[4] however, White J addressed the issue in the dissenting judgment. In summary, his Honour’s view was that acceptance of the application was a necessary aspect of making a FADA. As such, a FADA is considered made when an application complying with the requirements of s 76 is given to the Registrar and the Tribunal determines to accept it, as required by s 77.
[4] This issue was relevant to Mount Jowlaenga’s second and third grounds for appeal, however, these grounds were made in the alternative to the first ground. The majority judgment stated, given Mount Jowlaenga’s success on the first ground of appeal, the second and third did not arise for determination.
Sheffield acknowledges that, while the opinions expressed in the judgment of White J are not binding, they are the only considered comments by a judge of the Federal Court on this issue and the Tribunal may be persuaded to adopt this interpretation. Mount Jowlaenga’s contentions state the views of White J on this issue are compelling and in the absence of any dissenting view should be adopted by the Tribunal.
I am satisfied that White J’s reasoning on this issue (see Charles v Sheffield Resources, [139] to [143]) provides a sound approach to the issue. I will proceed on the basis that the FADA was made on the date it was accepted by the Tribunal, being 1 November 2016. As such, it is relevant for me to determine whether parties voluntarily continued negotiations after this point in time, thereby making this post-FADA period of time relevant to my considerations.
In support of its contention that post-FADA voluntary negotiations did not occur, Sheffield states it sought to participate in further negotiations through Tribunal convened conferences under s 150 of the Act. However, Mount Jowlaenga advised it did not have sufficient resources to participate in s 150 assistance while preparing for the inquiry, therefore the process was terminated without any conferences being convened. Sheffield acknowledges there was some post-FADA communication between parties, which occurred between 7 and 9 March 2017. However, Sheffield disputes that this communication could be characterised as negotiation with a view to reaching an agreement of the kind referred to in s 31(1)(b).
The evidence before me shows that on 7 March 2017 Sheffield sent KRED, as Mount Jowlaenga’s representative, a copy of a letter under cover of email. In the covering email Sheffield stated it would be providing the letter to the Named Applicants as well, however the evidence suggests this did not eventuate. I will examine the contents of this letter and the context around its delivery in greater detail later in this decision. For the purposes of deciding the current issue I note the enclosed letter provided a brief summary of the history and status of the matter, including: that in October 2016 Sheffield had delivered a letter to some Named Applicants which ‘provided details of the status of the “right to negotiate” proceedings’; prior to delivery of the 26 October 2016 letter, Sheffield lodged a FADA with the Tribunal; and, that KRED on behalf of Mount Jowlaenga, has claimed Sheffield has not acted in good faith in these negotiations, however Sheffield believes it has.
In the letter, Sheffield outlined the key terms of its last proposed offer (as also outlined in the 26 October 2016 letter). Sheffield stated the purpose of the letter was to advise Mount Jowlaenga it will voluntarily commit to providing these benefits, by way of a deed of covenant, and seeks Mount Jowlaenga’s support in the operation of the deed. Sheffield stated:
If you [support the deed of covenant], consistent with our previous offers, the milestone payments will be made. However, if you feel you cannot support the Company and the Project, Sheffield will still deliver the benefits listed above, without the milestone payments.
Sheffield characterises its letter to Mount Jowlaenga as a ‘declaration of Sheffield’s intention to provide certain benefits to [Mount Jowlaenga] regardless of whether any such agreement was entered into’ (GPC, para 18). Sheffield states the letter did not seek a response from Mount Jowlaenga, and that was not its intention. I note the actual wording of the letter is that it is:
for your information only and we do not expect or require any response from you until the completion of the NNTT determination process.
Sheffield further argues, given the absence of any response from Mount Jowlaenga to the letter, it cannot be concluded that negotiations were voluntarily entered into by the parties at that time. Again I note, it would be more accurate to say Mount Jowlaenga’s representatives did respond to the letter, albeit the response did not go to the content of the letter. On 8 March 2017, KRED emailed Sheffield confirming receipt of the letter, advising its contents would be communicated to Mount Jowlaenga, and reiterating its request that Sheffield refrain from making direct contact with Mount Jowlaenga. There was also a further email in response to KRED sent by Ms Lovitt, on behalf of Sheffield, on 9 March 2017.
Mount Jowlaenga rejects the contention there was no voluntary negotiations after 1 November 2016. It argues that, according to the authorities, what constitutes negotiation is a ‘broad church.’ Mount Jowlaenga cites comments made in Dimer v Equs where the Tribunal described a range of activities that could be considered negotiations, including:
making offers by one or other party and response or counter-offers to those offers; … making requests for action on matters connected with the negotiation and responding to those requests by providing answers or complying in whole or in part with the request; and seeking commitments from other parties and making concessions or otherwise responding to the comments sought.
Mount Jowlaenga states Sheffield’s 7 March 2017 letter reiterated an offer of terms for an agreement, and an offer of incentive to enter into that agreement by reference to non-payment of milestone amounts. It contends this communication clearly contains a commercial offer and falls squarely within the definition of negotiations.
My view on this issue, particularly in light of the Full Court’s findings, is that the beneficial objects of the Act are not served by narrowly construing the right to negotiate regime. This approach can be extended to what constitutes negotiations for the purposes of this inquiry. I accept Mount Jowlaenga’s contention that sending the 7 March 2017 letter was a voluntary step taken by Sheffield and that it contained a commercial offer. I do not accept Sheffield’s suggestion that, given no response to the offer was ever received from Mount Jowlaenga, voluntary negotiations cannot be said to have been occurring. I am satisfied the communication between parties that occurred in the post-FADA period can form part of my considerations in this matter.

What is the legal and evidentiary onus on Mount Jowlaenga under s 36(2)?

Sheffield acknowledges as common ground between parties that the first step in any application in respect of s 36(2) is for the party asserting a breach to identify the conduct complained of, and it is that conduct that is to be assessed by the Tribunal. Sheffield also notes as agreed Mount Jowlaenga’s contentions in reply at 131, which state (emphasis in original):
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 that specify in detail the matters it relies on. (Rita Dempster & Ors (Southern Noongar)/Bayside Abalone Farm Pty Ltd & Anor/Western Australia, NNTT WF99/1, [1999] NNTTA 235 (27 August 1999) Hon E M Franklyn QC (at pps 4, 21); Placer (Granny Smith) Pty Ltd & Anor v Western Australia & Others[1999] NNTTA 361; (1999) 163 FLR 87 (21 December 1999) (‘Placer’) (at [21]-[28]).)
Sheffield goes on to say, while there is some common ground between the parties, there appears to be a difference of views regarding the evidentiary and legal onus that arises under s 36(2). Sheffield’s contentions state (at 48) that Mount Jowlaenga bears the evidentiary burden of satisfying the Tribunal that Sheffield did not negotiate in good faith. It states the allegation made by Mount Jowlaenga on remittal has not been made out, therefore the Tribunal should make the same finding as in the initial determination.
During oral submissions, Sheffield stated the native title party’s evidentiary onus is made clear both in the terms of s 36(2) itself, and from the decision of the Full Court in FMG v Cox. The Full Court’s decision in FMG v Cox explained that the statutory prohibition at s 36(2) affects the ‘power’ of the Tribunal to make an arbitral determination rather than its ‘jurisdiction.’ It further explained (at 11):
The prohibition on exercise of the power only arises when the good faith point is both taken and taken successfully by a negotiation party. If there were no good faith but the point were not taken, the Tribunal would still have jurisdiction and power.
Sheffield says, following the reasons in FMG v Cox, there is a positive obligation on the Tribunal to be satisfied the good faith obligation had not been met for it to not proceed to make a determination. This is in contrast to the previously held view that the Tribunal must satisfy itself there had been negotiations in good faith for it to have ‘jurisdiction’ to make an arbitral determination.
The full wording of s 36(2) is as follows:
If any negotiation party satisfies the arbitral body that any other negotiation party (other than the native title party) did not negotiate in good faith as mentioned in paragraph 31(1)(b), the arbitral body must not make the determination on the application.
Sheffield notes, in particular, the opening words of the subsection ‘If any party satisfies ….’ It argues this indicates an obligation on the native title party to, firstly, particularise what is the conduct that is said to lead to a finding of a failure to negotiate in good faith and, secondly, to provide evidence in support of that allegation.
In reply, Mount Jowlaenga argues the language used by Sheffield appears to confuse: (i) satisfying an evidential burden, and (ii) satisfying a legal burden of proof. Mount Jowlaenga states Sheffield’s position is in contrast to s 109 of the Act, which states in part that the Tribunal is ‘not bound by technicalities, legal forms or rules of evidence.’
Mount Jowlaenga cites a number of authorities to support the position 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 (see Dempster v Western Australia; Placer v Western Australia).
Mount Jowlaenga refers to the following passages from the Tribunal’s findings in Western Australia v Thomas, citing Carr J in Ward v Western Australia:
The “common sense approach to evidence” is not the same as applying an evidential onus of proof. In administrative matters such as these, any party (not just the native title party) has what might be termed an evidentiary choice. They might choose not to lead any evidence on a particular issue. But that does not necessarily mean that they must fail on that issue ie. that they have an evidential onus of proof. The Tribunal might (subject to observing the requirements of procedural fairness) make its own inquiries and satisfy itself that the particular issue should be decided in favour of the party electing not to put evidence before it.
…
We accept that there is no burden of proof, evidential or otherwise, which falls on any of the parties in these inquiries and that we should adopt the common sense approach to evidence as outlined in McDonald and Ward.
Mount Jowlaenga argues its view, as described above, is entirely consistent with Gulliver Productions v WDLAC, being the authority relied on by Sheffield. Mount Jowlaenga cite Deputy President Sumner’s comments in Gulliver Productions v WDLAC (at [10]):
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 Farm Pty Ltd& Anor/Western Australia, NNTT WF99/1, [1999] NNTTA 235 (27 August 1999) Hon E M Franklyn QC (at pps 4, 21); Placer (Granny Smith) Pty Ltd& Anor v Western Australia & Others [1999] NNTTA 361; (1999) 163 FLR 87 (21 December 1999) (‘Placer’) (at [21]-[28]).)
Mount Jowlaenga contends there can be no doubt that it has satisfied any practical evidentiary requirement by adducing or pointing to the detailed matters upon which it relies. It states whether the Tribunal is satisfied that there has been a breach of good faith to the requisite standard, based on the facts as found, is a matter for it.
During oral submissions, Sheffield argued the cases relied upon by Mount Jowlaenga which reference a ‘common sense approach to evidence’ are not relevant to s 36(2) due to the fact these comments were made in the context of making an arbitral determination. Sheffield reiterated that, in the context of negotiation in good faith there is an evidentiary onus on the native title party.
Sheffield argues an important consequence of this onus is that where, for instance, the grantee party has provided evidence and there is no evidence in reply from the native title party or a request to cross-examine the deponents, there is no basis upon which the Tribunal can be invited to find something to the contrary. Sheffield accepts there may be cases where something is so blatantly unbelievable that it may be the Tribunal cannot accept the evidence. However, particularly when dealing with questions of subjective intention, and particularly when there is an onus on the native title party, Sheffield argues there is no scope for finding something to the contrary.
I accept that there is a positive obligation on the Tribunal to be satisfied the good faith obligation has not been met for it to proceed to make a determination. As noted in FMG v Cox above: ‘If there were no good faith but the point were not taken, the Tribunal would still have jurisdiction and power.’ I also accept that a party alleging a lack of good faith negotiations must provide contentions and documents which specify in detail the matters it relies on. Mount Jowlaenga has described the basis upon which it alleges a lack of good faith negotiations. It made an evidentiary choice not to provide affidavit evidence in reply or seek to cross examine Sheffield witnesses. Contrary to Sheffield’s position, in my view the ‘common sense approach to evidence’ is relevant to s 36(2).

The native title party’s conduct and the s 36(2) standard

Mount Jowlaenga have suggested that a consequence flowing from the Full Court’s judgment is that ‘the Tribunal cannot, as a matter of law, lower the standard applied by s 36(2) of the [Act] by reference to any characterisation of the conduct by the native title party’ (NTPC at 18). Mount Jowlaenga rely on the findings made in the majority judgment at [57], which state (emphasis in original):
Secondly, although the obligation to negotiate in good faith is imposed on all the negotiation parties, it is explicitly stated to be directed to obtaining the agreement of each of the native title parties to the specified matters. It is evident that the object of the obligation is directed to protecting the native title parties. This is further reflected in the fact that the s 36(2) prohibition on the arbitral body making a s 35 determination operates by reference to any negotiation party (i.e. Government party, grantee party or native title party) satisfying the arbitral body that any other negotiation party, other than a native title party, did not negotiate in good faith as mentioned in s 31(1)(b). Thus, while a native title party has an obligation to negotiate in good faith pursuant to s 31(1)(b), this is a matter of imperfect obligation and appears not to carry any relevant consequences under the NT Act if the native title party fails to discharge that obligation. This stands in sharp contrast to the statutory consequences for the other two categories of negotiation party.

Sheffield has argued its conduct must be considered in the context of all the circumstances, including the conduct of Mount Jowlaenga and its representative, and nothing in the Full Court’s decision contradicts that proposition. It contends the majority were saying no more than that the obligation to negotiate in good faith in effect falls upon the Government and grantee parties and is for the benefit of the native title party. Sheffield argues its conduct cannot be considered in a vacuum and what is required to satisfy the good faith obligation necessarily depends upon the behaviour of the other parties to the negotiation.
The need for a contextual evaluation is a well-established approach to considering the question of good faith negotiations and I do not believe the Full Court’s comments, as cited above, require a deviation from that approach. In Ashwin v Contact Uranium, Deputy President Sosso observed (at [25]) ‘it would be incorrect to impose on parties altruistic or artificial standards of behaviour removed from the financial, regulatory and interpersonal reality that they face.’ The example provided by Sheffield demonstrates this point further and, in particular, highlights how the native title party’s conduct can influence the context: ‘For example, a native title party could not succeed in arguing that a grantee party did not negotiate in good faith because it did not attend meetings in circumstances where the native title party refused to meet’ (GPC at 65).

Issues regarding good faith

Did Sheffield engage in a deliberate strategy designed to circumvent Mount Jowlaenga’s representatives by negotiating or engaging with the Named Applicants directly?

Mount Jowlaenga’s contentions on this issue appear to allege there was a certain level of premeditated, and purposefully damaging, intent behind Sheffield’s contact with the Named Applicants that occurred over an extended period of time. Mount Jowlaenga contends Sheffield undertook a ‘course of conduct’ that was part of a ‘deliberate strategy’ designed to advance negotiations by circumventing Mount Jowlaenga’s legal advisors (NTPC at 14). Mount Jowlaenga argues that by following this strategy and engaging with the Named Applicants directly, Sheffield breached the requirements of good faith negotiations. Mount Jowlaenga contends Sheffield’s direct contact (and attempts to make direct contact) with the Named Applicants after the FADA was lodged were part of a course of conduct that began prior to lodgement of the FADA. Mount Jowlaenga argues it is important that the contact with the Named Applicants is understood in the light of this strategy.
Mount Jowlaenga contends Sheffield’s course of conduct focussed on a two-pronged strategy: firstly, the lodging of a FADA; and, on or about the same time, an attempt to directly negotiate with the Named Applicants in the absence of their legal representatives (via the 26 October letter). Mount Jowlaenga argues the timing of the direct contact, in circumstances where Sheffield believed the obligation to negotiate in good faith no longer applied,[5] is ‘revealing and probative’ (NTP Reply at 16).
[5] This understanding has now been shown to be erroneous, per Charles v Sheffield Resources
Mount Jowlaenga has stepped out a chronology of negotiations that details various pieces of communication between Sheffield and KRED, and Sheffield and the Named Applicants. Mount Jowlaenga argues that, when viewed as a whole, the evidence supports a conclusion that a strategy existed.
Mount Jowlaenga refers to email correspondence sent in August 2016 by Mr Boyd to Mr McFadzean. The email stated that Sheffield needed to ‘follow up and make an effort to chat directly’ with ‘Jerome’ and ‘Rona etc’ (i.e. Jerome Monado and Rona Charles, both Mount Jowlaenga Named Applicants). This correspondence was considered in some detail at [192]-[193] of the initial determination.
Mount Jowlaenga highlights statements made in the affidavit of Ms Rosemary Nunju (a Mount Jowlaenga Named Applicant who filed an affidavit in the initial determination’s proceedings). Ms Nunju deposed that on or about 18 October 2016 she was told that people associated with Sheffield had been in her community that day looking for her. They had not said what they wanted but said they would be back sometime to see her.
Mount Jowlaenga states negotiations between parties continued by correspondence from 23 September 2016 to 14 October 2016. It states that, during this time, arrangements were being made for parties to attend a two-day Tribunal-mediated negotiation meeting on 1 and 2 November 2016 in Broome. On 21 October 2018, Sheffield emailed KRED advising its intention to lodge a FADA. Mount Jowlaenga goes on to state (NTPC at 56-57):
It is contended that it can be inferred (because of the deliberative nature of corporate decision-making relying on third party advice, including legal advice) that at the same time that these negotiations were taking place and preparations were being made for the 1 November 2016 meeting Sheffield was considering, and ultimately decided, to make a s 35 application.
On that basis the decision to lodge a [FADA] and the strategy of writing directly to members of the Named Applicant must have had a significant gestation period.
Sheffield denies the allegation that it formulated or implemented a deliberate strategy of direct negotiation with the Named Applicants in the absence of legal advisers. It argues that, at the time it made its FADA, and at all relevant times subsequently, its intention (subjectively and as demonstrated by its actions) was to seek to continue negotiations with the nominated representatives of Mount Jowlaenga through the Tribunal’s s 150 conference process.
Sheffield’s contentions and supporting affidavits attest to the fact that lodging a FADA and writing to the Named Applicants directly was first discussed as a way forward at the meeting of Directors and management on 14 October 2016. It states the genesis of the FADA, and the idea to write to the Named Applicants directly, was a letter from KRED which Sheffield received on 14 October in which KRED stated it considered negotiations to be at an impasse.
Sheffield argues the statement made by Mr Boyd to Mr McFadzean in the email referred to at [58] above was in reference to community consultation Sheffield had undertaken and was in the process of undertaking, with the Indigenous and non-Indigenous community as a requirement to obtain environmental approval. I note this was not something raised by Sheffield in the initial proceedings, where I considered this email and an affidavit from Mr Boyd in some detail (see initial determination at [191] to [193]).
In relation to the contact Sheffield attempted to make with Ms Nunju, referred to at [59] above, it argues its intention was to introduce her to Mr Justin King, who was an Indigenous community liaison officer who had recently commenced employment with Sheffield. Sheffield contends the attempted communication had nothing to do with native title negotiations. This is supported by the affidavit of Mr King.
In support of the above contention, Sheffield relies on a number of passages from the affidavits of Mr Boyd, Mr McFadzean (Sheffield Managing Director), Ms Lovitt (Sheffield’s legal representative), Mr Burbury (non-Executive Chairman of Sheffield) and Mr Groeneveld (Sheffield Sustainability Manager). It is not necessary for me to reproduce each affidavit in full. The affidavit of Mr McFadzean has been extensively relied on and the relevant paragraphs can be found at Annexure A.
During oral submissions, Sheffield argued any allegation of a strategy inherently suggests some subjective intention on Sheffield’s part. Sheffield notes it has provided sworn affidavit evidence attesting to the fact there was no such strategy, and Mount Jowlaenga has not sought to file contradictory evidence or cross-examine the deponents on this point. Sheffield argued that when dealing with questions of subjective intention, unless the evidence is so blatantly unbelievable that it cannot be accepted, it should not be open to the Tribunal to find to the contrary of evidence given under oath.
In its contentions in reply, Mount Jowlaenga reiterates that a corporate entity like Sheffield would make decisions such as lodging a FADA and contacting the Named Applicants directly only after careful and deliberate consideration. It argues that the course of conduct, which culminated in the 26 October letter, must therefore have begun well before the FADA was lodged on 24 October 2016. In Mount Jowlaenga’s submission, this can be discerned from the attempts to contact Named Applicants in or around October 2016.
Sheffield has been critical of Mount Jowlaenga’s use of the terms ‘strategy’ and ‘course of conduct.’ I agree they are not particularly helpful phrases. Mount Jowlaenga’s use of the word ‘strategy’, for example, seems to be in an almost pejorative sense. Yet there is nothing inherently wrong with a party pursuing a strategy. Negotiating parties’ conduct does not occur in isolation and it would be inefficient for parties to operate without some sort of planned approach.
I am not satisfied that Sheffield’s conduct leads to a conclusion it was seeking to negotiate directly with the Named Applicant in the absence of legal advisors. A key reason for this conclusion is the fact that the combined experience of the directors and management, advised and informed by high level legal advice, could not reasonably lead Sheffield to believe an agreement could be negotiated directly with the Named Applicants. As noted in the affidavit of Mr Burbury, he was fully aware that such a course of action would leave any agreement reached open to challenge and this is not a risk Sheffield would reasonably take. Direct communications (as opposed to negotiation) might, however, cause a schism between a party and their representative which might lead to a change in instructions, a change in negotiating team, or even a change in representation and possibly agreement, albeit by a rather circuitous route.

Is direct contact with a represented native title party fundamentally inconsistent with good faith negotiations?

Mount Jowlaenga contends, as a matter of law, that certain species of conduct are so unacceptable or antithetical to the process of good faith negotiations they cannot be accepted. It argues one such species of conduct is the grantee party circumventing the native title party’s legal advisors and directly contacting members of the native title party in order to advance negotiations.
Mount Jowlaenga contends, in relation to representation, Sheffield failed to respect the boundaries established by both the Act and the negotiation protocol, and the fact Mount Jowlaenga were at all relevant times legally represented.

a.Legal and ethical rules concerning a party directly contacting another legally represented party

To support its contention, Mount Jowlaenga highlights the professional and ethical obligations of legal practitioners to not contact a represented party in the absence of that party’s lawyer. Mount Jowlaenga argues these ‘professional and ethical standards go to the heart of protecting the efficacy of dispute resolution and obtaining fair negotiated outcomes in good faith’ (NTPC at 16).
Sheffield’s position on this point is that the 26 October letters were not sent by a legal practitioner, but rather from one negotiation party to another. As such, there is ‘no ethical, let alone legal, rule or principle that a ‘client’ (i.e. a party represented by a legal practitioner) cannot communicate directly with another ‘client’ (i.e. another party represented by a legal practitioner)’ (GPC at 58). Sheffield argues that in some situations such communications are actually facilitative of the parties reaching a settlement, but also accepts that a client is entitled to insist that communications are conducted between legal representatives, as was the case in this matter.
Sheffield states that it accepts legal and ethical issues may arise where one party seeks to unduly influence or take advantage of another party, particularly where there is an inequality in bargaining power or where one party is at a relevant disadvantage. Sheffield argues that while Mount Jowlaenga has alluded to this in its contentions, it has not made any attempt to establish by evidence that the Mount Jowlaenga Named Applicants are at a particular disadvantage in the context of the negotiations. Sheffield states that to make any assumptions on this would be inappropriate.
Mount Jowlaenga’s contentions in reply argue that Sheffield’s contentions and evidence, while addressing some aspects of its conduct, fail to address the fundamental values secured by s 36(2). Mount Jowlaenga argues the good faith obligation secures core procedural values of fairness that prevent a negotiation party seeking to circumvent the legal representatives of another party. Mount Jowlaenga states (at 20):
It would be perverse, where all negotiation parties are legally represented, that a grantee party in negotiations under Subdivision P could flout such an obvious ethical requirement that ensures parties have the benefit of professional representation – whatever their capacity and however that capacity is perceived by their opponent.
Mount Jowlaenga refers to evidence that has been provided by Sheffield regarding the meeting of Directors and management, held on 14 October 2016. The affidavits of Mr McFadzean and Mr Burbury both attest to the decision being made at this meeting to lodge a FADA and write directly to the Named Applicants. Both affidavits refer to Sheffield’s legal representative, Ms Lovitt, being present at the meeting and providing advice around this proposed course of action. The Burbury affidavit states, at 6:
During the meeting, the Board received the following legal advice from Ms Lovitt in relation to this matter, inter alia:
(a)That based on her knowledge and understanding that negotiations were at an impasse and that it was open to Sheffield to progress a FADA;
(b)That following the lodgement of the FADA Sheffield was under no further statutory obligations to continue negotiations;
(c)That the Native Title Act did allow further mediation to continue should both parties elect to accept it and that she would recommend that Sheffield do so;
(d)That is if Sheffield wanted to it could still elect to honour its offer to the Native Title Party rather than withdraw its offer from the table and that this may preserve some goodwill that was otherwise at risk of being eroded following lodgement of the FADA. It also showed Sheffield’s bona fides in relation to its social licence;
(e)That the legal understanding at that time was that the good faith obligations of the Native Title Act did not apply to any negotiations after the lodgement of a FADA;
(f)That it was open to Sheffield to write to the Named Applicants for the sole purpose of informing them of the lodgement of the FADA and the content of the last counter offer from Sheffield. I recall Ms Lovitt advising that should Sheffield re commence negotiations that this must be done through the authorised representative of the Named Applicants (ie KRED);
(g)That summarising the terms of the last counter offer did not constitute negotiating, and as such that course of action was available to Sheffield; and
(h)That she would prepare the FADA paperwork and undertake legal review of the correspondence prepared by Sheffield to the Named Applicants.
Mount Jowlaenga argues it is apparent that the legal advice provided by Ms Lovitt that the good faith obligation ceased after the lodgement of the FADA was a material consideration for the Board when deciding to make direct contact with the Named Applicants. Mount Jowlaenga states this is strongly suggestive of Sheffield having a subjective awareness that they were about to act inconsistently with that obligation, an awareness that ‘negatives the explanations and “genuine” concerns relied upon by Sheffield to expiate its conduct’ (NTP Reply at 105).
On a related side note, Mount Jowlaenga voices criticism of the fact there is no contemporaneous record of what was said or agreed at the meeting, aside from a hand written note by Ms Lovitt. Mount Jowlaenga notes that, aside from the point cited at 6(a) above, the account provided by Mr Burbury is not supported by Ms Lovitt’s note. It argues that Sheffield’s evidence regarding this meeting is, essentially, self-serving and not corroborated by written records that are required by law. Having made this point, Mount Jowlaenga stated that the Tribunal should approach this evidence with caution.
Further oral submissions were made by parties on this issue at the hearing. Sheffield referred the Tribunal to the findings of Elliot J in Perfection Fresh Australia v Melbourne Market Authority, arguing this authority encapsulated Sheffield’s position on the issue. Specifically, Sheffield cited Elliot J at paragraph 184:
Obviously once solicitors are on the record, unless one of the exceptions to the usual position exists, the solicitors should communicate directly with the opposing solicitors. However, absent some form of improper or inappropriate behaviour on the part of a party or parties, I can see no good reason why the parties should be prevented from communicating directly with each other. Indeed, there are likely to be good reasons why, in many cases, an order preventing direct communication would be contrary to the interests of the parties, and the interests of justice.
Sheffield reiterated its view that one party contacting another party directly is normal and acceptable, and is no basis for a finding of a failure to negotiate in good faith. Sheffield noted this is subject to the circumstances, for example if the contact is to harass or engage in conduct that is otherwise inappropriate. However, the focus should then be on the inappropriateness of that conduct.
Mount Jowlaenga’s oral submissions on this point addressed the significance of the professional conduct rules referred to in its contentions. It stated the protective nature of the obligation at s 36(2) suggests the requirement placed on negotiating parties is higher than what would ordinarily be the case in commercial negotiations.
Mount Jowlaenga also addressed the suggestion it had simply alluded to the Named Applicants being at a relative disadvantage without establishing that fact in evidence. It drew the Tribunal’s attention to the affidavit of Mr Nathan Lenard, which states at paragraph 8:
I know what Wayne Groeneveld told me on the phone on 27 October this year, about “We should just be talking to you mob about benefits, not to KRED” but would I [sic] never vote that us Named Applicant do a negotiation like this with Sheffield without our own representatives. I would not want to negotiate with any company as a Named Applicant without specialists at this level. I don’t have the skills to negotiate this level without our representatives. I see it we need representation to protect us for native title, and on commercial and legal side. Our representatives give us the information we need to make decisions for country. What the company say, it might look colorful on paper but without Victor, our commercial bloke, I would not be able to check what it means and if it’s true. That’s why we have our proper representatives there all the time to negotiate on legal and commercial and native title. Sheffield mob – they have their team and we have ours. It’s their project so they understand it a lot better than us.
I am not swayed by the argument Sheffield makes that because the 26 October letters were sent ‘negotiation party’ to ‘negotiation party’, concerns regarding direct contact can be dismissed. The letters were settled by Sheffield’s legal representative. Sheffield explicitly acknowledges that legal and ethical issues may arise where one party seeks to unduly influence or take advantage of another party (see [74]), particularly where there is an inequality in bargaining power or where one party is at a relevant disadvantage. Sheffield caution that to make assumptions regarding disadvantage in the absence of evidence would be inappropriate. However, Mount Jowlaenga have provided primary affidavit evidence from a Mount Jowlaenga Named Applicant attesting to his need for legal representation in native title negotiations.

Power imbalances are evident in most relationships. The knowledge held by Named Applicants regarding their native title rights and interests would likely be superior to that of a mining executive. However, where negotiations concern the technical and financial aspects of a significant project, the directors of the proponent company have access to information and analysis which would invariably result in them being better placed. Further, engaging the Named Applicants in negotiations individually rather than collectively might also be seen as antithetical to the principles of good faith negotiation.

b.Proper interpretation of the Negotiation Protocol

Mount Jowlaenga’s contentions state that, in May 2015, Sheffield and KRED entered into a negotiation protocol that stated ‘KRED has been appointed by the Mount Jowlaenga … to act on [their] behalf in relation to Negotiations.’ It also stated that Mount Jowlaenga shall ‘nominate negotiators, who are authorised to deal with matters arising in the course of the negotiation process.’ Mount Jowlaenga notes the negotiation protocol was subsequently varied by parties, but the relevant provisions have continued unchanged at all relevant times and remain in operation as at the date of Mount Jowlaenga’s submissions.
Mount Jowlaenga also notes correspondence between parties, sent in June 2015 during the pre-FADA negotiation period. In response to a request by KRED, Sheffield advised it would ‘observe the correct protocol’ by not engaging directly with the Named Applicants (see initial determination at [187] and [188]).
Sheffield argues Mount Jowlaenga appears to be contending that delivery of the 26 October letters breached the obligation to negotiate in good faith per se because it was contrary to the negotiation protocol. Sheffield rejects this contention, arguing the Negotiation Protocol did not expressly provide that Sheffield was not to communicate directly with Mount Jowlaenga. Sheffield does ‘not deny that the protocol contemplates a process under which negotiations would be conducted between the parties’ authorised representatives’ but disputes the ‘provision of information directly to the Named Applicants was in breach of the protocol’ (GPC at 62).
Sheffield notes the Negotiation Protocol had not been expressly terminated as at 26 October 2016. However, both parties had acknowledged that negotiations under Part 2 Division 3 Subdivision P had reached an ‘impasse’ and Sheffield had lodged a FADA. As such, Sheffield was of the view the Negotiation Protocol was no longer operative as those negotiations had come to an end.
Sheffield notes the following clauses within the Negotiation Protocol:
·3.2(a) - obliged Sheffield from time to time to provide to KRED and the Mount Jowlaenga Claimants and their specified advisors, information about the nature and scope of the proposed and actual Thunderbird Project;
·6.1(a) – required the Mount Jowlaenga Claimants to nominate negotiators, who are authorised to deal with matters arising in the course of the negotiation process;
·12.1 – provided for termination of the protocol at any time by mutual agreement in writing; and
·13.9 – provided an address for service of any communications.
Sheffield argues it is unnecessary for the Tribunal to determine the proper construction of the Negotiation Protocol. It states the important point is that the circumstances at 26 October 2016 were clearly different to those which existed in June 2015 when Sheffield stated it agreed to ‘observe the correct protocol’ (see [86] above). Sheffield contends that, however it is interpreted, the existence of the Negotiation Protocol does not compel a finding that it failed to negotiate in good faith. It states if delivery of the 26 October letters was a breach of the Protocol, then that fact alone is a technical matter, provided it is accepted that Sheffield was not seeking to negotiate an agreement directly with the Named Applicants. Sheffield argues that at most it fell short of ideal negotiating behaviour by delivering the letters directly to three of the Named Applicants, rather than sending to KRED with a request to pass the information on.
At the hearing, Sheffield sought to advance the argument that, under the terms of the Negotiation Protocol, the fundamental relationship is between Sheffield and the Mount Jowlaenga Claimants, not KRED. Sheffield noted clause 3.1(a) of the Negotiation Protocol which states the ‘Mount Jowlaenga Claimants and Sheffield Resources agree to negotiate in good faith to reach agreement ….’ Sheffield argued KRED is not the negotiation party, rather it is a representative, and the issues are between the parties. Sheffield pointed to clauses 6.1(a) (cited at [89] above) and 6.1(b), which states:
The Traditional Owner Negotiation Committee may, at their discretion, be assisted by their legal representatives and such other advisers as are reasonably necessary for the purpose of the Negotiations.
Sheffield argued it is clear from both of these clauses that the negotiators being referred to are the Traditional Owner Negotiation Committee (‘TONC’). Sheffield contended this position was supported by the Protocol’s proposed schedule of negotiations at Annexure 3. This schedule showed that there would be four negotiation meetings which would be between Sheffield, KRED and TONC (with an ‘if required’ note next to TONC for the third meeting).
During oral submissions I queried Sheffield’s point, specifically if it was arguing that the TONC and KRED are separate parties in the negotiations. Sheffield stated its position was that the negotiations were between Sheffield and the native title party (as represented by the TONC) and the role of KRED was to be the advisors to the TONC. Sheffield argued, given this position, its direct contact with the Named Applicants in no way breached to Negotiation Protocol.
Mount Jowlaenga’s oral submissions on this point stressed that KRED was appointed as the representative of Mount Jowlaenga. Therefore, any attempt to interpret the Negotiation Protocol in a way that makes KRED something other than the native title party is something that should be ‘immediately rejected.’ Mount Jowlaenga argued that, per clause 6.1(a), it had the right to nominate negotiators. It also argued that, as demonstrated in the schedule of negotiations at Annexure 3 and the affidavit evidence of Ms Hayley Haas, KRED was present at every meeting in relation to the process of negotiation. Therefore, it is entirely artificial to suggest the native title party representative is in some way a different party to the native title party.
I do not find Sheffield’s contention that the protocol was no longer operative by 26 October particularly compelling. Despite Mount Jowlaenga describing the negotiations as being at an impasse, there was still a meeting between parties scheduled for 1 November. Following lodgement of the FADA, Sheffield actively sought to continue negotiations with Mount Jowlaenga, evidenced in the 26 October letter where Sheffield wrote: ‘we have requested the NNTT to continue the mediation process via a Section 150 conference…’ (emphasis added). Given this was the case, it is not reasonable for Sheffield to assume the protocol was no longer in effect without at least seeking Mount Jowlaenga’s view.
While perhaps not expressly stated in the document, the spirit of the Negotiation Protocol was that negotiations would be conducted between the parties’ authorised representatives.’ Although there is no reference to it in the Burbury affidavit, the affidavits of Ms Lovitt and Mr McFadzean state that Sheffield’s legal advice was that contacting the Named Applicant ‘for the purposes of informing them’ would not be a breach of the Negotiation Protocol (Lovitt affidavit at 6). Sheffield contends it was of the view that the protocol was no longer operative as negotiations had come to an end. At most Sheffield say that if delivery of the 26 October letters was a breach of the protocol then it fell short of ideal negotiating behaviour, provided it is accepted that Sheffield was not seeking to negotiate an agreement directly. In my view Sheffield was not seeking to negotiate an agreement directly. My reasons for this are explained in detail at [69].

c.Conclusion regarding direct contact with a represented native title party

I am not prepared to conclude that direct contact with a represented native title party is fundamentally inconsistent with good faith negotiations. Consideration of s 36(2) is necessarily contextual, therefore, the issues must always be decided on the facts of the matter.
In Doxford v Queensland the circumstances saw the grantee party request contact details for the Named Applicant from the State in order to assist meeting arrangements. In that matter representation of the native title party was unclear, there was significant confusion around who to contact, and the relevant land council was not progressing the matter. The State sought, and was granted, permission from the Named Applicant to pass on her contact details. The Tribunal found no issue with this contact, observing at [41]:
The obligation placed on a grantee party to negotiate in good faith does not require that party to ascertain who is the solicitor on the record or who has the authority to negotiate in an organisation the size of a representative body. The obligation is to use best endeavours to make contact with the native title party and to evince a desire to negotiate, and then to negotiate with an open mind in an endeavour to reach an accord, if possible. There is a professional duty imposed on a representative body who is the legal representative of a native title party requiring that body to inform a negotiation party seeking to negotiate whom to contact, and to be proactive in advancing the negotiation process.
What can be said is that power imbalances in negotiations are universal and parties must be alert to this to ensure they do not adversely affect the process. Contacting parties in the absence of their representation does court particular legal and ethical considerations. As stated at [69], direct communications could cause a schism between a party and their representative which might lead to a change in instructions, a change in negotiating team, or even a change in representation and possibly agreement, albeit by a rather circuitous route. A finding of manipulative intent could be the basis of a conclusion that the manipulative party did not negotiate in good faith.

26 October 2016 letter

A primary issue of this remittal is the 26 October 2016 letter. Parties have provided contentions and evidence regarding its content, purpose, and the context around its delivery. The Full Court’s findings in Charles v Sheffield Resources made clear the obligation to negotiate in good faith still applied at this time. Therefore, the question I must answer is whether Sheffield’s conduct in conveying this information directly to certain Named Applicants breached the good faith obligation.
Understandably, there has been some focus by the parties on my statements in the initial determination at [195] and [196] (as quoted at [21] above). As noted by Sheffield, the initial determination did not make a finding on whether or not Sheffield failed to negotiate in good faith by reason of the 26 October letter. Sheffield contends the observations made at [196] do not determine the issues on remittal. It states they were made in the absence of any evidence or contentions from Sheffield on this issue because of the view Sheffield took at the time as to the scope of the negotiation in good faith inquiry.
In addressing the Tribunal’s observations at [196] of the initial determination, Sheffield does not dispute that it delivered letters to three of the Named Applicants in an attempt to ‘advance the prospect that parties would reach an agreement of the kind mentioned in s 31(1)(b)’ (GPC at 10). It also does not dispute that the letters were sent directly to the Named Applicants rather than to KRED. However, Sheffield challenges any suggestion contained in the Tribunal’s observations that Sheffield sought to negotiate directly with the Named Applicants in the absence of legal representation. It argues such a finding would not be correct based on the evidence now submitted in this matter.

a.What was Sheffield’s subjective intention concerning the 26 October letter and what is its relevance?

Sheffield argues it is necessary to consider not only whether the impugned conduct was reasonable in the circumstances, but also was it done with honesty of intention and sincerity. Sheffield has referred to my findings in MPA v Mayala which stated at [108]:
The requirement to negotiate in good faith has both objective and subjective standards as explained by Deputy President Sumner in Placer v WA at [30]:
Good faith requires the Government [and grantee] party to act with subjective honesty of intention and sincerity but this, on its own, is not sufficient. An objective standard also applies. The Government and grantee parties’ negotiating conduct may be so unreasonable that they could not be said to be sincere or genuine in their desire to reach agreement.
The state of mind of the parties is relevant to the consideration of whether MPA has acted with subjective honesty and intention.
Sheffield contends the reason it wrote to three of the Named Applicants directly was because of its ‘subjectively genuine and reasonably held concerns’ that:
(i)Mount Jowlaenga would misinterpret the lodging of the FADA as meaning Sheffield no longer wanted to reach agreement with Mount Jowlaenga, which was the opposite of Sheffield’s true position; and
(ii)KRED would not promptly and accurately communicate Sheffield’s position to Mount Jowlaenga. That concern arose:
a.due to the breakdown in relationship between Sheffield and KRED; and particularly in the context where Wayne Bergmann had been making public comments derogatory of Sheffield (see initial determination at [214] to [215]); and
b.Sheffield was in possession of information which caused it to believe that members of Mount Jowlaenga may not have been informed of developments with the negotiations and with the Thunderbird Project generally
Sheffield states that, in writing directly to the Named Applicants, its actions were subjectively honest and genuinely undertaken with a view to reaching agreement with Mount Jowlaenga. The affidavits of Mr McFadzean, Mr Groeneveld, Mr Burbury and Ms Lovitt all attest to the above views and concerns being voiced at the 14 October Sheffield meeting. All deponents attest to these views being the impetus for sending the 26 October letter. Specifically, and by way of example, Mr McFadzean’s affidavit at 29 to 32 (see Annexure A) describes the ‘difficult’ relationship between Sheffield and KRED following public comments made by Wayne Bergmann (KRED CEO) about Sheffield. It also describes instances which contributed to Sheffield’s view that information about the negotiations was not being provided to the Mount Jowlaenga claim group. In his affidavit Mr Groeneveld states (at 21):
We were concerned [lodging a FADA] could be taken by [Mount Jowlaenga] to mean that Sheffield was giving up on them … It was felt that Sheffield would need to communicate with [Mount Jowlaenga] to assure them that this was not the case. Sheffield’s primary concern at that time was preserving its good relationship with [Mount Jowlaenga] going forward.
In response, Mount Jowlaenga states (NTP Reply at 72) there are ‘significant matters in the evidence that give substantial cause to doubt the subjective intention claimed by Sheffield.’ Mount Jowlaenga argues Sheffield’s concern that KRED would not promptly and accurately communicate Sheffield’s position to Mount Jowlaenga is a serious allegation and one not supported by evidence.
Mount Jowlaenga has addressed Sheffield’s statement that its concern arose, in part, because of the breakdown in relationship between KRED and Sheffield. It argues these are entirely unrelated propositions and nothing about the relationship between Sheffield and KRED bears upon the relationship between KRED and Mount Jowlaenga. Mount Jowlaenga states there has not been, nor could there be, any evidence put in this matter to suggest KRED was not acting on instructions.
Similarly, Mount Jowlaenga argues there is no evidence to support the view held by Sheffield that members of Mount Jowlaenga were not being kept fully informed. In relation to the evidence Sheffield cites as informing this view, Mount Jowlaenga raises a number of issues which would go to its credibility. It notes in several instances the conversations described by Sheffield’s deponents were with people who were either not Mount Jowlaenga claim members, or not members of the Named Applicant. It also notes that several of the statements made in Sheffield’s affidavits simply and broadly referred to ‘Traditional Owners’ (see Boyd affidavit at 4-5) or ‘people on the ground’ (see McFadzean affidavit at 18 – Annexure A), without providing any evidence of their relationship to Mount Jowlaenga and the Named Applicant.
Mount Jowlaenga argues it is the Named Applicants, not members of the claim group or other Traditional Owners, who have the authorisation and responsibility to decide what is in the best interests of the claim group in the context of negotiations. It also states, at the time of the 14 October meeting, Sheffield was aware that Mount Jowlaenga had committed to and was making arrangements for, the attendance of the Named Applicant at a meeting on 1 November (i.e. 18 days later). Therefore, the claim that Sheffield genuinely held the view that the Named Applicant would not be properly informed or that KRED would not properly seek instructions is implausible. Mount Jowlaenga argues that Sheffield’s evidence provides an ‘exceedingly slim, and unconvincing, basis’ upon which to seek to justify its direct contact with the Named Applicants (NTP Reply at 96).
Section 62A of the Act provides that the applicant is authorised to deal with all matters arising under the Act in relation to the application. In the context of the right to negotiate, the role of the Named Applicants is confirmed by s 41(2), which states that, if a registered native title claimant is a party to an agreement of the kind mentioned in s 31(1)(b), the agreement will bind any other person included in the native title claim group concerned. As a matter of practice, it is sometimes the case that the applicant will act on the advice or instructions of a specially-constituted decision-making group or a subsection of the claim group with a particular interest in the subject matter of the negotiations. There may also be conditions on the authorisation under which the applicant must operate. Ultimately however, it is the applicant, acting collectively, who is authorised to make such decisions under the Act (see McGlade v Native Title Registrar at [233]-[267], [360]-[361], [382], [447]-[451]).
A further relevant issue which has been raised by Mount Jowlaenga is the fact Sheffield did not raise its concerns directly with KRED. Sheffield acknowledged that it did not raise its concerns directly with KRED but argues the Tribunal should nevertheless be satisfied the concerns were genuinely held. Mount Jowlaenga argues, even if Sheffield genuinely held concerns that Mount Jowlaenga claim members and the Named Applicants were not being kept informed, this is a matter to be raised with their legal representatives. Mount Jowlaenga states Sheffield knew who was actively participating in the negotiations, and it is to be expected that people not actively participating in the negotiations and providing instructions to KRED would not be as well-informed. Mount Jowlaenga argues there was no logical reason for Sheffield to conclude the Named Applicant were not properly informed based on people who were not actively involved in the negotiations not having a complete and current knowledge of the state of negotiations.

Mount Jowlaenga states it does not doubt Sheffield wanted to reach agreement, particularly given the significant commercial advantages this would have for Sheffield. However, the issue is not whether Sheffield wanted an agreement with Mount Jowlaenga but how it sought to obtain that agreement on terms most acceptable to it. Mount Jowlaenga is critical of Sheffield’s claim that its actions showed a genuine desire to reach agreement. Mount Jowlaenga states, for example, if a grantee party genuinely sought to reach agreement with a native title party by bribing its representatives, it could not be said to have negotiated in good faith regardless of its desire to reach agreement.
Mount Jowlaenga argues the relevant state of mind of a party is not to be discerned by establishing an overall impression of its approach to negotiations. Rather, it is measured with particularity by reference to its actions. In support, Mount Jowlaenga cites the Full Court’s findings in FMG v Cox at 20:
It has been repeatedly recognised that the requirement for good faith is directed to the quality of a party’s conduct. It is to be assessed by reference to what a party has done or failed to do in the course of negotiations and is directed to and is concerned with a party’s state of mind as manifested by its conduct in the negotiations: see, for example, Brownleyv Western Australia (No 1)[1999] FCA 1139; (1999) 95 FCR 152 at [24]- [25] per Lee J, Strickland 85 FCR 303 at 319-320 and Western Australia/Thomas on behalf of the Walgen People/Anaconda Nickel Ltd [1998] NNTTA 8 at [7]-[18].
Mount Jowlaenga also calls upon the observations of Lee J in Brownley v Western Australia at [27]:
To determine if the obligation in s 31(1)(b) has been complied with, honesty and good faith in the conduct of a Government [and grantee] will be judged objectively, not by whether a Government [or grantee] believes that it has so acted. The standard of honest conduct is not set by a subjective belief.
Mount Jowlaenga concludes that Sheffield’s conduct must be judged against an objective standard. It states, whatever Sheffield’s subjective view, it cannot objectively ‘explain, excuse, justify or authorise’ contacting a represented native title party directly such as to ameliorate the conclusion that such conduct was a breach of good faith (NTP Reply at 23)
In the initial determination, I considered the overall behaviour of the parties in the negotiations. I noted several incidents that contributed to the breakdown in the relationship between Sheffield and KRED. I expressed my view that by the end of July 2016 ‘the gloves were off.’ At [246] of the initial determination I said that the behaviour of both Sheffield and Mount Jowlaenga was at times not ideal and this affected the relationship between the parties. The evidence disclosed exasperation. The decision to write directly to the Named Applicants was made at the meeting of directors and management held 14 October 2016. The account of the legal advice received discussed at [76] above, particularly at (e), (f), (g) and (h), provides the backdrop to the events which followed.
While it is almost impossible to read these paragraphs as other than self-serving, some elements do not appear to serve Sheffield’s interest. At paragraph (e) it says ‘That the legal understanding at that time was that the good faith obligations of the Native Title Act did not apply to any negotiations after the lodgement of a FADA.’ Why ‘good faith’ deserved a special mention is odd. Mount Jowlaenga speculate this is suggestive of Sheffield having a subjective awareness that they were about to act inconsistently with that obligation. In the absence of other evidence or explanation, that conclusion is open.
However, on balance, the more credible interpretation is that the haste in dispatching the 26 October letter directly to Named Applicants, was not to unduly influence or negotiate directly. Rather, it was ‘damage control’ – to seek to explain what might otherwise have been interpreted as a ‘negotiation ending’ and adversarial step in lodging the FADA and get that information to Mount Jowlaenga as quickly as possible, even at the expense of adversely affecting the already factious relationship with KRED. Despite Sheffield’s stated concern regarding public comments made by Mr Bergmann and the concern that KRED would not promptly and accurately communicate Sheffield’s position to Mount Jowlaenga as the basis for sending the letter, I find no manipulative intent in the content and delivery of the 26 October letters.

b.Was Sheffield’s conduct objectively unreasonable?

I have already concluded that directly contacting a represented native title party is not fundamentally antithetical to the good faith obligation (see [97] above), but does raise a number of potential issues that parties must be aware of. Therefore conduct of this kind must be carefully examined to determine whether it can be deemed reasonable conduct. The question I must consider in this matter is whether, in the circumstances, it was objectively unreasonable for Sheffield to have contacted the Named Applicants via the 26 October letter.
As stated above, Mount Jowlaenga’s view is that, regardless of Sheffield’s intent in contacting the Named Applicant directly, the conduct was objectively unreasonable. Sheffield has argued Mount Jowlaenga’s contentions fail to sufficiently particularise this issue. Sheffield argues it is not clear from Mount Jowlaenga’s submissions what the objective conduct being complained of is.
i)26 October letter - content
A summary of the content of the 26 October letter can be found at [194] of the initial determination. Sheffield has sought to address any suggestion that this content may have somehow been inappropriate. Sheffield states the content of the 26 October letter informed the counter party of a very significant step in the negotiations (i.e. the lodging of a FADA). Sheffield argues, given the content of the letter was for information only and did not seek any response, it cannot reasonably be characterised as an attempt to negotiate directly with the Named Applicant. Sheffield states the fact the letter informed the Named Applicants that Sheffield still wished to reach agreement and continue negotiations through the s 150 conference process, despite lodging a FADA, is supportive of a finding that Sheffield did negotiate in good faith.
In response, Mount Jowlaenga argues the letter was ‘a substantive offer and invitation to negotiate which was made direct to the Applicant, and envisaged discussions in the absence of the Applicant’s representatives’ (NTP Reply at 70). Mount Jowlaenga states this is in fact what occurred, it is the behaviour that is complained of, and therefore Sheffield’s subjective intention in preparing the letter is of little relevance.
Parties have provided substantial submissions addressing the final sentence of the 26 October letter, which reads: ‘Please take the time to consider the contents and get back to us to discuss at your earliest convenience.’ Mount Jowlaenga argues Sheffield’s position, as summarised at [121] above, fails to acknowledge the letter’s open invitation for the Named Applicants to contact Sheffield regarding the enclosed ‘Summary of Offer’ document. It states the letter cannot have been merely for the purpose of information only as, if it were, it would not have invited the Named Applicants to make further direct contact with Sheffield in the absence of their lawyers. Mount Jowlaenga argues (NTP Reply at 33) this is:
…entirely inconsistent with a negotiation process in which [Mount Jowlaenga’s] legal representatives are present and engaged, and where those representatives have copies of all communications relevant to such negotiations.
Mount Jowlaenga argues, more broadly, that this is also inconsistent with the protection that has been provided to negotiations under Subdivision P of the Act. It argues fairness in negotiations of this sort can only be assured where parties have the benefit of the representation they have chosen for that purpose.
Sheffield disputes Mount Jowlaenga’s interpretation of the letter, and in particular its final sentence, as an invitation to negotiate. Sheffield states it was intended to be an invitation to answer any questions. Sheffield concedes (GPC at 36):
In that regard, Sheffield accepts that, on reflection, the last sentence should have been better worded. Nevertheless, Sheffield contends that objectively the last sentence does not support the inference [Mount Jowlaenga] is seeking to put on it.
Mr Groeneveld, who drafted the 26 October letter (with input from the Sheffield directors), addresses in some detail in his affidavit the intention behind the letter’s final sentence. Mr Groeneveld states that he has extensive experience in native title negotiations and therefore is aware that it would not be appropriate for a mining company to negotiate directly with a native title party. He explains the closing remark was intended to mean that if any Named Applicants had any concerns about what was in the letter they could contact him. Mr Groeneveld states the final sentence was not an invitation for negotiations to be carried out directly and that this position is supported by the letter’s reference to mediation continuing via s 150 conferences (which would have involved KRED if held).
As noted at [120] above, Mount Jowlaenga considers any subjective intent in preparing the 26 October letter irrelevant as the letter constitutes a substantive offer and invitation to negotiate made direct to the Named Applicant, evidenced in the final sentence of the letter inviting the Named Applicant to make direct contact with Sheffield.
While Sheffield insists that the purpose of the letter was to inform and not an attempt to negotiate, Sheffield knew that sending the letter to the Named Applicant was a ‘risk.’ The risk is not explained, rather it is expressed in comparative terms, that is, the risk of providing information directly as against the risk of ‘real damage’ that could be done to the relationship between Sheffield and Mount Jowlaenga if the information was not communicated. There is nothing in the material to suggest that the ‘risk’ referred to and the risk being taken was related to matters of legal or ethical propriety, or for that matter, good faith. It was a risk of further damaging the relationship with KRED. Given the breakdown in the relationship between Sheffield and KRED by this time, it is not surprising that Sheffield would choose to prioritise the relationship with Mount Jowlaenga over the relationship with KRED.
ii)26 October letter - fact of delivery
Sheffield states, if the Tribunal accepts that the content of the 26 October letter is consistent with good faith negotiations (and Sheffield argues it is), then Mount Jowlaenga’s argument rests on the fact of delivery. Sheffield contends any argument that the fact of delivery of the letters, in and of itself, constitutes a failure to negotiate in good faith is not sustainable.
Sheffield states any finding by the Tribunal that a grantee party has failed to negotiate in good faith must be made based on all the facts, relating to the conduct of both parties, over the whole of the relevant negotiation period. It notes that in the initial determination the Tribunal found instances where the conduct of both parties fell short of ideal negotiating behaviour, but overall Sheffield had not failed to negotiate in good faith. Sheffield argues Mount Jowlaenga has not articulated why the fact of delivery of the 26 October letter, even if it constituted conduct falling short of ideal negotiating behaviour, would justify a finding that Sheffield did not negotiate in good faith.
Sheffield’s contentions state it is not in dispute that, upon receiving the 26 October letters, the Named Applicants referred them immediately to their legal representatives and that nothing in fact occurred as a result of the delivery. Sheffield argues it could not be contended, for example, that the 26 October letter was causative of parties failing to reach agreement.
Sheffield argues that an interpretation of the Act under which the fact of delivery of a letter directly to the Named Applicant would in and of itself engage s 36(2) would not promote the purpose or objects of the Act. Sheffield states the evident object of the right to negotiate is to ensure all reasonable efforts have been made to secure the agreement of the native title party. Sheffield goes on to state (GPC at 55):
If that has occurred [i.e. all reasonable efforts to secure an agreement with the native title party], and negotiations have reached an impasse, and a grantee party then does something which when viewed in isolation may be characterised as falling short of ‘good faith’ negotiation conduct but which has no material impact on the overall negotiation process, then no legislative purpose is served by dismissing the FADA.
Sheffield argues (GPC at 56), even if its conduct in sending the letters directly to the Named Applicants fell short of ideal negotiating behaviour:
… the letters were sent. Dismissing the FADA will not change that fact. Nothing flowed from the sending of the letters. Hence further negotiation cannot ameliorate or address that conduct in such a way that the Tribunal would then, and only then, be satisfied that the grantee party had negotiated in good faith.
Mount Jowlaenga rejects the ‘artificially narrow confines’ (NTP Reply at 157) that it contends Sheffield is applying to the ‘fact of delivery’ issue. Mount Jowlaenga argues the statements made by Sheffield in its contentions on this issue seek to characterise its conduct as consequence-free and victimless. It also rejects Sheffield’s suggestion that s 36(2) requires some balancing of the conduct of the parties. Mount Jowlaenga acknowledges its conduct is contextually relevant to the allegations made against Sheffield, but notes good faith is ‘an imperfect obligation’ as per the Full Court’s findings in Charles v Sheffield at [57]. Further quoting the Full Court, Mount Jowlaenga states the native title party’s good faith obligation ‘appears not to carry any relevant consequences under the NT Act if the native title party fails to discharge that obligation.
In respect of Sheffield’s suggestion that ‘nothing in fact occurred’ as a result of the delivery, Mount Jowlaenga argues there is no element of causation required or relevant to an alleged breach of good faith. It argues the same claim could be made in relation to an unsuccessful attempt to bribe another party. Mount Jowlaenga states: ‘Good faith is a procedural value and cannot be proven or disproven by the substantive outcome of the negotiations’ (NTP Reply at 168). It states the Tribunal’s role is to establish and apply a standard of conduct in how negotiating parties seek to reach agreement. As such, the relevant element of the behaviour is that Sheffield acted in a way that was ‘inconsistent with the fundamental procedural values expected of negotiation parties’ (NTP Reply at 144).
Mount Jowlaenga calls it ironic that Sheffield seeks to rely on the fact the Named Applicants referred the letter to their legal advisors. Mount Jowlaenga states this begs the question why Sheffield did not do so itself.
Mount Jowlaenga also addressed what it terms the ‘damage done by’ the 26 October letter, being the continuing impasse between parties (NTP Reply at 145). Mount Jowlaenga argues Sheffield’s conduct was causative of the destruction of trust between parties, therefore making an agreement impossible. Mount Jowlaenga states (NTP Reply at 164):
The statutory obligation of good faith seeks to create and preserve an open and fair negotiation process characterised by trust. Those objects are compromised when such active undermining takes place.
A further consideration, and one that is fundamentally linked to the ‘fact of delivery’ issue, is the fact the letter was not sent to KRED instead of, or as well as, the Named Applicant. During oral submissions I queried with Sheffield whether it was the case that Sheffield knowingly made a decision not to send the 26 October letter to KRED. Sheffield conceded that there was certainly no positive attempt made to send the letter to KRED but rejected any suggestion this was an attempt to conceal the information from KRED. Sheffield argued the purpose of the letter was not an attempt to negotiate and was not meant to be some step in negotiations, rather it was to inform the Named Applicants therefore there was no need to send it to KRED.
Sheffield’s contentions repeat this assertion, noting it had already advised KRED a few days prior to 26 October of its intention to lodge a FADA and to seek s 150 assistance. Sheffield argues, if its intention was to circumvent Mount Jowlaenga’s legal advisors and conclude an agreement directly with the Named Applicants, it would not have sought to engage those legal advisors through s 150 assistance.
I note several of the affidavits filed by Sheffield contain references to the decision made at the 14 October meeting to write directly to the Named Applicants. Ms Lovitt’s affidavit states (at 5):
It was acknowledged by the directors that there may be some risk of a further deterioration in the relationship between Sheffield and KRED in writing directly to [Mount Jowlaenga] but it was considered that the risk of providing information directly to the Named Applicants outweighed the risk of real damage that could be done to the relationship between Sheffield and [Mount Jowlaenga] if the information was not communicated.
Ms Lovitt’s affidavit states her advice to Sheffield’s directors at that meeting was that, in her view, it would not be a breach of the Negotiation Protocol if Sheffield wrote to the Named Applicants for the purposes of informing them only.
Although it is not referred to in Ms Lovitt’s affidavit, there also appears to have been a discussion about Sheffield’s obligation to negotiate in good faith. The affidavits of Mr McFadzean and Mr Burbury make specific mention of the fact Ms Lovitt advised Sheffield at that meeting that the good faith obligation ceases once a FADA has been made.[6] This appears from the McFadzean affidavit at 36 (Annexure A) and Burbury affidavit at 6(e) (see [76] above). It is somewhat unclear in both affidavits whether this advice was provided in the context of Sheffield writing directly to the Named Applicants or Sheffield continuing negotiations following the lodgement of a FADA, or both. It does not assist that there were no contemporaneous minutes taken at the meeting. Without making any specific findings on this, it seems an odd piece of advice to have been given if there were not concerns around Sheffield’s proposed course of action and its good faith obligations.
[6] Sheffield acknowledge this was based on an erroneous understanding of the law, per Charles v Sheffield Resources.
Mount Jowlaenga argues there is nothing in the evidence adduced by Sheffield that offers an explanation as to why the 26 October letter was not sent to KRED. During oral submissions, Mount Jowlaenga rejected Sheffield’s assertion it was being entirely open, noting Sheffield had been writing to KRED about everything else. In contrast, Mount Jowlaenga states had Sheffield sent the letters with a ‘benevolent intention’ Sheffield would have ‘copied the letter to KRED and asked the Named Applicants to discuss the correspondence with their lawyers; they did not’ (NTP Reply at 44).
During oral submissions Mount Jowlaenga called upon the Tribunal to compare Sheffield’s 26 October letter and its 7 March letter. Specifically, Mount Jowlaenga noted that unlike the former, the latter was specifically delivered to KRED before it was delivered to the Named Applicants, thereby providing an opportunity for KRED to object to its proposed course. Also, the letter explicitly stated there was no need to respond to the letter at this time. Mount Jowlaenga argues the inference to be drawn from these differences is that Sheffield accepted its 26 October letter was improper.

At the time Sheffield sent the 26 October letter, having lodged the FADA, the planned Tribunal mediation on 1-2 November could not proceed based on Sheffield’s (then) understanding that negotiations were at an end. Sheffield’s legal advice (as per the Lovitt affidavit at 6) was that sending the 26 October letter would not breach the Negotiation Protocol (see [96] above). Despite the view that negotiations were at an end, the 26 October letter also informed the Named Applicant that a s 150 conference had been requested which would necessarily engage KRED. While not ideal negotiation behaviour, on the facts of this matter the way in which the 26 October letter was delivered was not in itself determinative of bad faith.

c.Was Sheffield’s conduct in relation to the 26 October letter unreasonable in the circumstances?

Sheffield has argued its intentions in delivering the 26 October letter were subjectively honest and genuinely undertaken. Mount Jowlaenga states Sheffield’s contentions ‘ignore the nature, timing and effect of its direct contact and how that conduct breaches the applicable objective standard’ (NTP Reply at 11).
Whatever the reason for sending the 26 October letter, it is clear that its objective was not achieved. The risk seemingly not considered in sending the letter was the risk of the extensive cost and delay in fact experienced in the conduct of this matter. I accept that the sending of the letter was not causative of the parties failing to reach agreement. However, I agree with Mount Jowlaenga that there is no element of causation required or relevant to an alleged breach of good faith. It is about a standard of conduct. Sheffield seemingly accept that its conduct in sending the letters directly to Named Applicants fell short of ideal negotiating behaviour.
The letters were sent in the days following the lodgement of the s35 application. While the rush to correspond with Named Applicants might be viewed as opportunistic or performed with ‘indecent haste,’ the letters attempt to explain the significant step recently taken, and attempt to ‘manage’ what might otherwise be interpreted as an ‘agreement ending’ step taken by Sheffield. Sheffield knew there were risks associated with sending the letter directly to the Named Applicants. While I must agree that the sending of the letters was not ideal behaviour, particularly in light of the Negotiation Protocol, objectively I cannot conclude it to be unreasonable or of itself a failure to negotiate in good faith. The fact that later correspondence was first directed to KRED does not affect that conclusion.

Post-FADA conduct

The Full Court found in Charles v Sheffield that any voluntary negotiations conducted by parties after a FADA has been made are still subject to the good faith obligation. As explained at [29] above, I consider this FADA to have been made on 1 November 2016. Based on the evidence before me, it appears there was limited communication between parties during this post-FADA period. However, as explained at [37], I am satisfied the communication that did occur can be classified as negotiations for the purposes of my considerations.
Evidence of communication between parties during this period comprises: an email with an enclosed letter, sent by Sheffield to KRED on 7 March 2017; KRED’s email in reply, sent 8 March 2017; and a further email from Sheffield to KRED sent 9 March 2017. At several points throughout Mount Jowlaenga’s submissions it makes reference to the fact that the 9 March 2017 email from Sheffield was the last instance of communication between parties which sought to advance or continue negotiations. On 27 April 2018, the Tribunal received correspondence from Mount Jowlaenga advising recent communications between Sheffield and KRED affect the accuracy of Mount Jowlaenga’s contentions on this point. Mount Jowlaenga advised, since the lodgement of its submissions, Mount Jowlaenga and Sheffield ‘have engaged in without prejudice communications which may result in the resumption of negotiations.’ I also note annexed to the affidavit of Mr Burbury is a letter from Sheffield to Mount Jowlaenga (via the Kimberley Land Council) providing an update on the Thunderbird Project and seeking its support in resuming negotiations via independent mediation and with a fresh negotiation team.
The contents of Sheffield’s 7 March letter and KRED’s 8 March reply are outlined at [31]-[32] and [34] respectively. The 9 March email from Sheffield broadly reiterates the contents of the 7 March letter. It prefaces the details of the offer by stating:
Put simply, the purpose of the [7 March] letter addressed to the six named applicants in the Mount Jowlaenga #2 Claim … was to confirm to them that Sheffield will not walk away from its offer articulated in its letter of 26 October 2016…
In closing, the email states:
The [7 March] letter specifies that no response or action is required from your client at this time, and I would respectfully submit that it should in no way be construes as an attempt to put pressure on your client. It was intended merely to advise your client of what will happen if the outcome of the determination process is that the Mining Lease can be granted.
Although already stated earlier in this decision, it is perhaps important to repeat that, despite Sheffield advising its intention to attempt hand delivery of the 7 March letter to the six Mount Jowlaenga Named Applicants, the evidence shows this never in fact occurred.
Mount Jowlaenga states the letter reiterated an offer of terms for an agreement and an incentive to enter into that agreement by reference to non-payment of milestone amounts. Mount Jowlaenga contends that, while of lesser gravity than other matters recounted in this inquiry, the preparation of the 7 March letter and Sheffield’s proposal to provide it directly to the Named Applicants demonstrates an ongoing fundamental disregard for:
·the Named Applicant’s right to be represented: and
·Sheffield’s ongoing legal obligations under the Negotiation Protocol.
Sheffield argues the 7 March letter is evidence which goes to the sincerity of Sheffield’s previous conduct. It states the inference to be drawn from the fact it was prepared to provide benefits to Mount Jowlaenga regardless of whether it entered into an agreement, is that when Sheffield offered those benefits as part of an agreement, it genuinely desired to reach an agreement containing those terms.
In my view, the preparation and provision of the 7 March 2017 letters by Sheffield was provocative, and Sheffield was already on notice of this fact. Sheffield has clearly sought to address certain elements of the 26 October letter which caused it to be considered ‘less than ideal negotiating behaviour,’ i.e. it provided a copy of the correspondence to KRED in the first instance and allowed the opportunity for KRED to comment on Sheffield’s proposed course of conduct. In this regard it is an improvement, yet given the history and context I would be hard to not see it as at least mischievous.

Parties’ conduct as a whole

Having considered and made findings on the preceding issues, I must now turn to parties’, and in particular Sheffield’s, conduct as a whole to determine whether the good faith obligation has been met. This includes considering the findings that remain undisturbed from the initial determination together with my findings in this remittal.
The initial determination, under the heading ‘Findings on parties’ overall behaviour’, stated (at [246]):
the behaviour of both Sheffield and Mount Jowlaenga was at times not ideal and this affected the relationship between the parties. Accusations of conflict, of improper disclosure of information, and of breaches of the negotiation protocol were levelled at both sides. At some point the parties should have stepped back and discussed alternative approaches to the negotiation, including the possibility of changing negotiators and representatives on both sides to enable fresh perspectives to be brought to the issues which were identified so early in the negotiation. The cost to both parties to be in this position is enormous.
Mount Jowlaenga’s primary contention in the remittal is that Sheffield breached its good faith obligation by engaging in a ‘course of conduct’ that sought to negotiate directly with the Named Applicants in the absence of their legal advisors. For the reasons outlined at [69] above, I am not satisfied this contention is made out in the evidence. That is not to say Sheffield’s conduct is free from reproach. In fact, it appears from Sheffield’s submissions that it accepts its behaviour around the 26 October letter was less than ideal negotiating behaviour (for example see [132] and [133]).
More broadly, Mount Jowlaenga contends Sheffield’s conduct in contacting Named Applicants directly undermined Mount Jowlaenga’s representatives, breached its obligations under the Negotiation Protocol and showed disregard for Mount Jowlaenga’s right to legal representation. I do not accept that contention. Although the terms of the Negotiation Protocol imply that negotiations would take place between the parties’ authorised representatives, I accept that Sheffield was not seeking to negotiate with the Named Applicants directly. While contacting the Named Applicants was not ideal behaviour for a negotiation party in the circumstances, I am not satisfied they were in breach of their obligation to negotiate in good faith.
I accept that direct contact undertaken with manipulative intent might indicate bad faith. However, I do not consider this to be such a case. Although I have concerns about the advice provided to Sheffield’s directors and management at the meeting which preceded the dispatch of the 26 October letter, it is clear that Sheffield understood they were taking a risk. As I have already discussed, that risk related to the possible damage to Sheffield’s relationship with KRED rather than the possibility of an adverse finding in a good faith inquiry. In the circumstances, it is clear the letters were an attempt to manage (or minimise any damage from) what might otherwise have been interpreted as an ‘agreement ending’ step taken by Sheffield in lodging the FADA.
The sending of the 7 March letter is also relevant to Sheffield’s conduct, as it was voluntary step taken by Sheffield and contained a commercial offer designed to advance negotiations with Mount Jowlaenga. In my view, the letter was provocative and possibly mischievous. However, as it was sent to KRED and not directly to the Named Applicants, I am unable to characterise it as other than less than ideal negotiating behaviour.

Determination

Having reheard the matter, I am not satisfied Sheffield did not negotiate in good faith.

JR McNamara

Member
27 August 2018

ANNEXURE A

Excerpt from Mr Bruce McFadzean affidavit

…

As previously deposed by in the Initial Proceedings … Wayne Bergmann had been publicly denigrating Sheffield on radio and social media during the period when the parties were participating in mediation sessions with the [Tribunal] and I was very concerned as to the effect this would have on Traditional Owners, the local community, other stakeholders, and company investors.
On 7 July 2016, Wayne Groeneveld and myself met with Melissa Hartman and Raelene Belotti at their request regarding Aboriginal business and employment opportunities from the Thunderbird Project. Melissa Hartman is the Chief Executive of Morgul who provide Aboriginal business support and mentoring in the Kimberley. Raelene Belotti is an Aboriginal woman who was at that time working for the catering services company Catercare, focussed on Aboriginal employment in the catering industry. In this meeting it was communicated to me that “the people on the ground do not know what is going on”.
In particular, I recall that I met Peter Yu, a senior and respected Aboriginal leader, on 26 August 2016 in Broome as I was leave another meeting at his office. During our conversation he asked me if I had heard what Wayne Bergmann had said about Sheffield on ABC radio and whether it was true. I was very concerned that senior members of the Kimberley Aboriginal Community might believe what had been said and I assured him that it was not true.
On 30 August 2016 I was advised by Kim Pervan that she had spoken with Jerome Manado, who communicated the KRED/Wayne Bergmann was not sharing information with the Bindunburr people. I know Jerome to be a sibling of two of the [Mount Jowlaenga] Named Applicants and had attended heritage surveys on behalf of the Bindunburr people. Jerome also questioned why Sheffield was talking to the Shires and Nyikina people and excluding Bindunburr people. Further emails I received on 31 August 2016 from David Boyd and Kim Pervan support these communications.
It was a source of great concern to myself and the Sheffield Board that there was such an apparent lack of knowledge amongst the local communities about the Project

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It was accordingly decided by the Board that Sheffield would lodge a FADA but would, at the same time, request the [Tribunal] to provide mediation assistance by way of the s 150 conference process so that it might still be possible to reach agreement.
I instructed Christine Lovitt to prepare and lodge a FADA and to simultaneously request the [Tribunal] to provide assistance by way the of s 150 process.

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We were finding it increasingly difficult to deal with [Mount Jowlaenga’s] negotiation team (which at that time comprised three KRED employees and a Sydney based financial advisor) after Wayne Bergmann had used both ABC Radio and various social media platforms to make damaging and non-factual remarks about Sheffield. I was concerned that KRED might use the fact that we had lodged a FADA to say further negative comments about Sheffield and create irreparable damage to our relationship with the Traditional Owners and the community in general.
Sheffield had put enormous effort into building positive relationships with both indigenous and non-indigenous stakeholders in the Kimberley region and to hear and see such comments being made about Sheffield in the public forum which I considered to be disparaging, and non-factual, was extremely distressing for me, our Directors and the management team.
The discussion at the meeting of Directors and management on 14 October 2016 was to the effect that Sheffield did not want the fact that it had decided, reluctantly, to lodge a FADA, to give rise to further unjustified adverse comment in the communities and media. We were extremely concerned that the Traditional Owners would think we had abandoned the deal negotiated to date. We wanted the opportunity to provide an explanation to the Native Title Party as to why we had lodged a FADA and that our offer had not been withdrawn.
Because of the damage that I considered had been done to the relationship between Sheffield’s negotiation team and KRED due to the disparaging remarks that had been made about Sheffield by Wayne Bergmann, I was not confident that KRED would communicate Sheffield’s explanation to the Mt Jowlaenga claimants if it were to be given by Sheffield to KRED. It was also important to me that the explanation be communicated as soon as possible after the lodging of the FADA, and I was not confident that would happen if it was sent to KRED. In discussions with my fellow directors they expressed the same concerns.
From my experience, it has generally been the case that when a mining company lodges a FADA negotiations cease, proposed benefits are off the table, and if the mining lease is granted the mining company is not obliged to provide any benefits to the native title party. The other directors and I wanted [Mount Jowlaenga] to know that this would not be the case, that the offer was still there and that, with the help of the [Tribunal] s 150 conference process, the parties might still be able to reach agreement before the FADA was determined.
Sheffield was not in any position to respond to the disparaging and non-factual public remarks made in the media by Wayne Bergmann because the Negotiation Protocol stipulated that all information relation to the negotiations was confidential.
I was concerned that not only was there misinformation about the project and the company in the wider community, but that there was an information vacuum amongst the Traditional Owners in relation to the Sheffield offer and the project generally. It was very important to us that [Mount Jowlaenga] understood that Sheffield had not ruled out reaching agreement, that the July counter-offer was not being withdrawn, and that we wanted the [Tribuna] to assist the parties to see if agreement could be reached through the s 150 conference process.
It was therefore decided at that 14 October 2016 meeting, having discussed the legal position with Christine Lovitt, that Sheffield would provide its explanation directly to the Named Applicants by writing to each of the Named Applicants. Christine Lovitt’s advice to us was that, based on the conventional understanding and interpretation by both the [Tribunal] and the Courts of the right to negotiate provisions of the Native Title Act at that time, the obligation to negotiate in good faith did not continue to apply after the making of a FADA. She also confirmed that there was no obligation on a grantee party to continue to negotiate at all once a FADA had been made, and that the making of a FADA effectively brought negotiations to an end. She also explained that the lodging of a FADA did not, of itself, prevent a grantee from voluntarily pursuing an agreed outcome should it choose to do so before the FADA was ultimately determined. She indicated that [Tribunal] mediation by way of the s 150 conference process would be the best way to explore the possibility of reaching an agreed outcome.
I accordingly instructed Wayne Groeneveld to write a letter to each of the six Named Applicants:
(a)To explain why Sheffield had lodged a FADA;
(b)to confirm that this did not mean that Sheffield was abandoning the Traditional Owners, but rather that it still stood by its latest offer; and
(c)To advise that Sheffield was prepared to mediate in parallel with the FADA process and had requested the [Tribunal] to assist by way of the s 150 conference process.
The Directors also agreed that a summary of the latest offer, made to KRED in July 2016 and re-iterated in September 2016, was to be included with the letter as we believed the Named Applicants were not aware of the precise terms of that offer. Several factors gave rise to this uncertainty on our part, namely:
(a)Named Applicants had been present at only two of the eight negotiations meetings which took place between KRED and Sheffield representatives (those two occasions being in December 2015 and March 2016) , and , significantly, none were present at the meeting on 25 July 2016 when Sheffield presented its July Counter-Offer; and
(b)As a result of the events outlined in paragraphs 16 to 20 of this Affidavit.
Never at any time did I or to my knowledge any of the other Directors or officers of Sheffield make a decision to try and negotiate an agreement directly with [Mount Jowlaenga]. In all my years in the mining business I knew that great caution had to be exercised when parties were in unequal bargaining positions. That is particularly important in the native title context and the [sic] I would never have recommended that such a strategy be adopted.
It was never my intention that Sheffield would seek to negotiate directly with the Named Applicants or any other members of [Mount Jowlaenga] in the absence of legal representation, and it was for that reason that I had instructed Christine Lovitt to request the [Tribunal] to provide continued mediation assistance to the parties by way of a s 150 conference.