South Blackwater Coal Ltd v Queensland

[2001] NNTTA 23

NATIONAL NATIVE TITLE TRIBUNAL

South Blackwater Coal Ltd/Queensland/Cliff Kina and Others on behalf of the Kangoulu People (QC98/25) and Lindsay Kemp and Others on behalf of the Ghungalu People (QC99/16), [2001] NNTTA 23 (27 March 2001)

Application No:  QF00/3

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

-  and  -

IN THE MATTER of a Future Act Determination Application

South Blackwater Coal Ltd (applicant/grantee party)

-  and  -

The State of Queensland (Government party)

-  and  -

Cliff Kina and Others on behalf of the Kangoulu People (QC98/25) and Lindsay Kemp and Others on behalf of the Ghungalu People (QC99/16) (native title parties)

DECISION ON WHETHER THE TRIBUNAL HAS JURISDICTION TO CONDUCT AN INQUIRY

Tribunal:                  Hon CJ Sumner, Deputy President
Place:  Brisbane
Date:  27 March 2001

Catchwords:             Native title – future act – application for a determination in relation to a mining lease (s 35 Native Title Act 1993 (Cth)) – jurisdiction – whether grantee party has negotiated in good faith – evidentiary onus on native title party to satisfy the Tribunal that other parties have not negotiated in good faith – no obligation to negotiate in good faith after s 35 application is made – negotiations after the s 35 application is made are discretionary not mandatory – a negotiation party is entitled to make a s 35 application six months after the s 29 notice was given – the making of a s 35 application not indicative of a lack of good faith – Tribunal not obliged to but may have regard to the reasonableness of the grantee party’s proposals – uncertainty of the law on compensation for the extinguishment or impairment of native title rights by future acts is a relevant factor – payments of the kind mentioned in s 33(1) Native Title Act 1993 (Cth) within the scope of good faith negotiations – no proposal from native title parties for payments mentioned in s 33(1) and grantee party not required to consider them – grantee party did not adopt an intransigent position – grantee party has negotiated in good faith.

Legislation:Native Title Act ss 31, 33(1), 35, 36(2), 38(2), 51(3), 51A, 53, 240

Cases:Walley v Western Australia (1996) 67 FCR 366

Western Australia v Taylor (1996) 134 FLR 211

Western Australia/Marjorie May Strickland (Maduwongga) & Ors, NNTT WF97/4, Hon CJ Sumner, 10 December 1997

Strickland v Western Australia (1998) 85 FCR 303

Risk v Williamson (1998) 87 FCR 202

Walley v Western Australia [1999] FCA 3, (1999) 87 FCR 565

Western Australia/Leo Winston Thomas & Ors/Anaconda Nickel Ltd, NNTT WF98/7, Hon CJ Sumner, 4 September 1998

Brownley v Western Australia [1999] FCA 1139, (1999) 95 FCR 152

Placer (Granny Smith) Pty Ltd and Granny Smith Mines Limited/Western Australia/Ron Harrington-Smith & Ors on behalf of the Koara people, NNTT WF99/5, Hon CJ Sumner, 21 December 1999.

Western Australia/Arthur Dimer & Ors (Ngadju People); Cyril Barnes & Ors (Central East Goldfields People)/Equs Limited, NNTT WF99/10, Ms Patricia Lane, 9 August 2000

Normandy Pajingo Pty Ltd and Battle Mountain (Australia) Inc/Queensland/Colin McLennan & Ors (Birri People) and James Reid & Ors (Kudjala People), NNTT QF00/2, Hon CJ Sumner, 29 September 2000

Western Australia/West Australian Petroleum Pty Ltd and Shell Development (Australia) Pty Ltd/Leslie Hayes & Ors (Thalanyji People, NNTT WF00/07, Hon CJ Sumner, 9 March 2001

Words & Phrases:     ‘negotiate in good faith’

REASONS FOR DECISION ON WHETHER THE TRIBUNAL HAS JURISDICTION TO CONDUCT AN INQUIRY

Background

1. The State of Queensland (‘the Government party’) proposes, under the Mineral Resources Act 1989 (Qld), to grant mining lease ML70139 to South Blackwater Coal Ltd (‘the grantee party’/‘SBCL’). The mining lease is of 946.2 hectares located 42 kilometres south of Blackwater. On 22 April 1996, the grantee party made an application to the Government party for the grant of the mining lease. On 8 May 2000 the Government party, in accordance with s 29 of the Native Title Act 1993 (Cth) (‘the NTA’), gave notice of the grant. On 8 December 2000 the grantee party, pursuant to s 35 of the NTA, made a future act determination application (‘the s 35 application’) to the National Native Title Tribunal (‘the Tribunal’).

2. The following persons were registered native title claimants over the area of the mining lease on the s 29 notification day and are ‘native title parties’ in respect to this application:

• Cliff Kina, Ernest McAvoy (Junior), Patrick Malone, Paul Hegarty, Royce Richardson, Andrea Landers, Audrey Jacobs, Lillian Harrison, Pricilla Broome, Vassa Hunter on their own behalf and all Kangoulu People under application QC98/25 (Federal Court QG6195/98) which was accepted for registration on 11 May 1998 (‘the Kangoulu native title party’); and

• Lindsay Kemp, Steve Kemp, Timothy Kemp, Reginald White, Marie Kemp, Ada Kemp, Beryl Tyson (nee White), Hazel Kaur (nee Kemp), Margaret Kemp, Patricia Leisha on their own behalf and all Ghungalu People under application QC99/16 (Federal Court QG6226/98) which was accepted for registration on 6 May 1999 (‘the Ghungalu native title party’).

At the hearing the interests of both the native title parties were the same, and they were represented by the same counsel.  They are referred to collectively in these Reasons as ‘the native title parties’.

Good faith negotiations – jurisdiction

1. Before conducting an inquiry and making a determination the Tribunal must be satisfied that it has jurisdiction to do so, and in particular be satisfied that the Government and grantee paries have negotiated in good faith as required by s 31(1)(b) of the NTA. The matter is to be dealt with under the NTA as amended to operate from 30 September 1998 (‘the new NTA’). Section 31(1) contains two obligations and provides:

‘31    Normal negotiation procedure

(1)     Unless the notice includes a statement that the Government party considers the act attracts the expedited procedure:

(a)the Government party must give all native title parties an opportunity to make submissions to it, in writing or orally, regarding the act; and

(b)the negotiation parties must negotiate in good faith with 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.

Note:The native title parties are set out in paragraphs 29(2)(a) and (b) and section 30. If they include a registered native title claimant, the agreement will bind all of the persons in the native title claim group concerned: see subsection 41(2).

Negotiation in good faith

(2)     If any of the negotiation parties refuses or fails to negotiate as mentioned in paragraph (1)(b) about matters unrelated to the effect of the act on the registered native title rights and interests of the native title parties, this does not mean that the negotiation party has not negotiated in good faith for the purposes of that paragraph.

Arbitral body to assist in negotiations

(3)     If any of the negotiation parties requests the arbitral body to do so, the arbitral body must mediate among the parties to assist in obtaining their agreement.’

Section 36(2) of the NTA says that if any negotiation party satisfies the Tribunal that any other negotiation party (other than a native title party) did not negotiate in good faith, the Tribunal must not make a determination. 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 native title parties contended that the grantee party had not fulfilled its obligation to negotiate in good faith. No contention was made in relation to the Government party nor in relation to the obligation contained in s 31(1)(a).

The hearing

1. Directions were made for the production and exchange of contentions and documents relating to the good faith issue and a hearing conducted on 12 March 2001 in Brisbane.  The grantee party was represented by Graham Hiley QC instructed by James Minchinton and Darren Fooks of Clayton Utz, Lawyers; the Government party by Michael Liddy instructed by Jody Cosgrove of Crown Law; and the native title parties by Michael Maurice QC instructed by Sean Bowden of Sean Bowden and Associates.

Statements were filed by the native title parties from:

• Sean Michael Bowden, solicitor with Sean Bowden and Associates, who assisted the native title parties in the negotiations.

Statements were filed by the grantee party from:

• Raymond Thomas Coyne, Statutory Mine Manager, South Blackwater Coal Opencut Mine, South Blackwater Coal Ltd.

• Darren Bradley Fooks, Partner, Clayton Utz representing South Blackwater Coal Ltd

Legal principles

1. The Federal Court and Tribunal considered the obligation to negotiate in good faith under the NTA prior to its amendment (‘the old NTA’) (when the obligation was only imposed on the Government party) in a number of matters. Although the obligation to negotiate in good faith is now imposed on all parties, the principles enunciated under the old NTA are still relevant. The principles were summarised in Placer (Granny Smith) & Anor/Western Australia/Harrington-Smith & Ors, NNTT WF99/5, Hon CJ Sumner, 21 December 1999 (at 9):

   ‘On the assumption that it is normally the native title party that will assert that the other negotiation parties have not negotiated in good faith the position, in summary, is that the Tribunal must be satisfied that the Government and grantee parties have negotiated in good faith with the native title parties with a view to obtaining the agreement of the native title parties to the granting of the mining leases with or without conditions.  Negotiation involves ‘communicating, having discussions of conferring with a view to reaching an agreement’ (Western Australia v Taylor (1996) 134 FLR 211 at 219 (‘Njamal’).  Good faith requires the parties 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 Tribunal must look at the conduct of the Government and grantee parties as a whole but may have regard to certain indicia which were outlined in Njamal as a guide to whether the obligation has been fulfilled.  One of  these indicia is whether the negotiation party has done what a reasonable person would do in the circumstances.  There is no requirement that the Tribunal be satisfied that the Government party has made reasonable offers or concessions to reach agreement but it is permitted to have regard to the reasonableness or otherwise of them if it assists in the overall assessment of a party’s negotiating behaviour.  Lack of good faith in the negotiations by the native title party will be relevant to whether the other parties have fulfilled their obligation and may impose a lesser standard on them.’

This approach under the new NTA was endorsed by the Tribunal in Western Australia/Arthur Dimer & Ors (Ngadju People); Cyril Barnes & Ors (Central East Goldfields People)/Equs Limited, NNTT WF99/10, Ms Patricia Lane, 9 August 2000.  Member Lane also said:

• that each party must act both honestly and reasonably with a view to reaching agreement about whether the act can proceed (at 25); and

• all parties are required to adhere to the same standard of negotiating behaviour but what they do to satisfy the obligation must be judged by reference to the interest they seek to advance in negotiations, the behaviour of the other negotiation parties and the circumstances in which the negotiations take place (at 26). The Government party is not, as a result of the amendments to the NTA, now subject to a lesser standard than previously (at 27).

1. The Njamal indicia are:

1. unreasonable delay in initiating communications in the first instance;

2. failure to make proposals in the first place;

3. the unexplained failure to communicate with the other parties within a reasonable time:

4. failure to contact one or more of the other parties;

5. failure to follow up a lack of response from the other parties;

6. failure to attempt to organise a meeting between the native title a grantee parties;

7. failure to take reasonable steps to facilitate and engage in discussions between the parties;

8. failing to respond to reasonable requests for relevant information within a reasonable time;

9. stalling negotiations be unexplained delays in responding to correspondence or telephone calls;

10. unnecessary postponement of meetings;

11. sending negotiators without authority to do more than argue of listen;

12. refusing to agree on trivial matters eg a refusal to incorporate statutory provisions into an agreements;

13. shifting position just as agreement seems in sight;

14. adopting a rigid non-negotiable position;

15. failure to make counter proposals;

16. unilateral conduct which harms the negotiating process eg issuing inappropriate press releases;

17. refusal to sign a written agreements in respect of the negotiation process or otherwise;

18. failure to do what a reasonable person would do in the circumstances (Njamal at 224-225).

Other relevant factors have been identified by the Tribunal and are enunciated in Western Australia/Marjorie May Strickland (Maduwongga) & Ors, NNTT WF97/4, Hon CJ Sumner, 10 December 1997 and were considered (and modified in respect of whether there is an obligation on the Government party to make reasonable substantive offers) in subsequent Federal Court decisions (see below).

Does s 35(3) of the Native Title Act impose an obligation to negotiate in good faith after the s 35 application has been made?

1. Section 35(1) of the NTA permits any negotiation party to apply to the arbitral body (the Tribunal in this case) for a determination under s 38 in relation to the act (that is, a future act to which the right to negotiate provisions apply (Subdivision P, Division 3 of Part 2)) if six months has passed since the notification day specified in the s 29 notice; and no agreement of the kind mentioned in s 31(1)(b) has been made.

Section 35(3) says:

‘Negotiations for an agreement

(3)     Even though the application 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 under section 36A or 38.  If they make such an agreement before such a determination is made, the application is taken to have been withdrawn.’

1. The native title parties contended that:

• s 35(3) means that the duty on the grantee party to negotiate in good faith is not terminated by the making of the s 35 application and that the period in which the Tribunal is to consider whether the good faith negotiations have occurred is the period up to the time of making a determination (that is, including any period between the making of the s 35 application and the determination). Where negotiations have not broken down (which is accepted by all parties to be the case here), it is inappropriate to decide the good faith question as a preliminary issue. The hearing should be adjourned to enable negotiations to continue and, if necessary, any decisions about good faith negotiations should be made as part of the inquiry proper.

• s 31(1)(b) does not limit the period in which good faith negotiations must take place. The duty should only cease when there is nothing more to negotiate about because an agreement has been reached, or a determination made or when it is clear that further negotiations are futile. The purpose of the ‘special right to negotiate’ expressed in the Preamble to the NTA which requires ‘every reasonable effort’ to be made to secure agreement of the native title holders is better served by such an interpretation, as is the underlying policy of the law generally, and the NTA in particular, in encouraging the resolution of disputes by negotiation.

• once negotiations cease important opportunities for the native title party to secure benefits (such as payments based on the amount of profits, income derived or thing produced (s 33(1) NTA) are lost as such benefits can only be obtained by negotiation and agreement. They are prohibited under a s 38 determination (s 38(2)). If the obligation to negotiate in good faith does not continue after a s 35 application is made then the continuation of negotiations is something solely within the gift to the grantee party.

In support of these contentions, the native title parties argued that as a matter of statutory interpretation the word ‘may’ in s 35(3) should be interpreted as ‘must’. It referred to the established law (see Pearce and Geddes Statutory Interpretation in Australia, Fourth Edition, Chapter 11) that ‘may’ does not always mean that a power is discretionary. In the context of particular statutes, taking account of their purpose and the consequence of holding a provision to be mandatory or directory an obligation can be imposed by the use of word ‘may’. The important context and purpose here is the central role of negotiations in the scheme of the NTA, the native title parties argued.

1. I cannot accept the native title parties’ contentions. While the importance of negotiations cannot be denied it is also clear from the terms of the NTA that the process of notification, negotiation and determination which are part of the right to negotiate is to occur within specified time limits. These were described by the Prime Minister in his Second Reading Speech as ‘tight but fair’ (House of Representatives, Hansard, 16 November 1993, p 2880). The Tribunal has said on numerous occasions that right to negotiate inquiries are to be conducted in a timely manner. Section 35(1) permits an application to be made six months after the giving of a s 29 notice. The Tribunal must take all reasonable steps to make a determination as soon as practicable (s 36) and a report to the Minister if it does not do so within six months (s 36(3)). The NTA attempts to achieve a balance between ensuring that indigenous interests in land are respected while enabling the broader interests of the community to be served by the orderly and timely grant of mining titles. The right to negotiate which is to be exercised within specified time limits reflects that balance. In my view there is nothing in the context or purpose of the NTA which points conclusively to the position argued for by the native title parties. The requirement to negotiate is subject to a time limit, which can be activated by any negotiation party opting for arbitration after the time has elapsed.

2. Section 35(3) was inserted in the new NTA by the 1998 amendments The Supplementary Explanatory Memorandum says:

   ‘This amendment to section 35 in the Bill makes it clear that negotiations for acts covered by the right to negotiate may continue even after one of the parties has applied to the arbitral body for a determination. The fact that negotiations are continuing should not delay the determination by the arbitral body. The parties are free to reach an agreement until such time as a determination is made under sections 34A, 36A or 38 in the Bill.’

Resort to the normal rules of statutory construction does not support the native title parties’ contentions. Section 31(1)(b) uses the mandatory word ‘must’ and clearly imposes a legal obligation which is a jurisdictional pre-condition to the making of a s 35 application. In Walley v Western Australia (1996) 67 FCR 366 (Carr J at 381) the Federal Court (on 20 June 1996) said:

‘The situation, as I see it, is that Parliament has dictated in the clearest mandatory terms (including the use of the word “must”) that a certain process or activity should take place as part of the procedure leading to the possible doing of a future act.  That process (negotiating in good faith) is of central importance.  Then there is provision for the next stage of that procedure – an application to the Tribunal for a determination of that matter in the absence of any such agreement.’

Parliament was aware of the judicial interpretation of s 31(1)(b) and, had it wished to impose the obligation argued for by the native title parties, could have made its intentions clear in s 35(3) by specifying that ‘the negotiation parties must continue to negotiate in good faith with a view to obtaining an agreement’ (my emphasis). I think it is obvious that Parliament was merely making it clear that there was nothing to prevent negotiations continuing after the s 35 application was made, even though the obligation to negotiate in good faith had ceased. The Explanatory Memorandum contains nothing to suggest otherwise. The reference to continuing negotiations not delaying a determination, supports an interpretation which gives effect to ensuring the timely disposition of s 35 applications and the appropriateness of making a decision on the good faith issue now. Interpreting s 35(3) in a way which requires good faith negotiations to continue after the s 35 application is made does not serve the purpose of the NTA of providing a mechanism to bring disputes about the grant of mining titles to finality.

In my view the scheme of the NTA is that negotiations in good faith must occur before (but not after) the s 35 application is made. The reference in Walley to ‘the next stage’ of the right to negotiate procedure being arbitration supports my conclusion.

1. The native title parties acknowledged that the Tribunal decided in Njamal (at 216) that the obligation to negotiate in good faith ceases once the condition precedent of negotiating in good faith has been satisfied and a s 35 application has been made but contended that a more recent Tribunal decision had modified this position. It relied on Western Australia/Arthur Dimer & Ors (Ngadju People) and Cyril Barnes & Ors (Central East Goldfields People)/Equs Limited, NNTT WF99/10, Ms PM Lane, 9 August 2000 (at 36-38):

   ‘Section 36(2) requires the Tribunal to cease to hear the matter if any negotiation party (in this case, the native title party) satisfies the Tribunal that there has been no negotiation in good faith. No party may lodge a s.35 application until 6 months has elapsed from the date of the s.29 notice, but there is no period prescribed within which negotiations must occur. It is open to the parties to continue negotiating after a s.35 application has been lodged: (s.35(3)). I do not think that the provisions in s.36 impose an obligation on the Tribunal to draw a veil across the parties’ negotiations at the moment the s.35 application is lodged. As I put to Ms Gaunt at the hearing, to do so would require the conclusion that the intention of Parliament was that even if the grantee party had not negotiated in good faith at the time of lodging the s.35 application, subsequent conduct involving good faith negotiation could not be used to support a contention by the grantee party that the Tribunal’s jurisdiction was properly attracted. This would mean, that even if negotiation in good faith had occurred, the Tribunal could not have regard to it and would be obliged to dismiss the application for lack of jurisdiction. Although the note to s.36(2) might seem to consistent with this construction, as it reminds the reader that the parties may lodge a fresh s.35 application, it does not seem to me that the existence of the note ought to compel a conclusion that the tribunal must ignore facts relevant to the existence of its jurisdiction occurring after the s.35 application is lodged.  [My emphasis]

   The effect of s.36(2) is to impose an evidentiary obligation on a party seeking to assert that a grantee party or Government party has not negotiated in good faith. (see Placer (Granny Smith)/Western Australia/Harrington-Smith NNTT Wf99/5 Hon CJ Sumner, 21 December 1999). It is up to the native title party to satisfy the Tribunal that other parties have failed to negotiate in good faith, and they may put forward evidence of matters occurring after the s.35 application is lodged. However, the practical utility of this may be limited. The fact that negotiations cease at or shortly before the lodgement of the s.35 application cannot of itself be adverse to a grantee party who seeks to invoke the tribunal’s jurisdiction. If the grantee party wishes to give evidence of post-application conduct to respond to contentions of a native title party, the Tribunal ought not to be precluded from having regard to that evidence, particularly where the result of doing so may be to save the parties the expense of further proceedings on the same issue. If, however, the grantee chooses not to respond, this cannot be used against them.

   If the grantee party does not continue negotiations after lodging the s.35 application, or put any evidence in reply about negotiations after lodgement, it must be taken to be content to rest its case for the tribunal’s jurisdiction on whatever happened prior to the application being made. If that is inadequate, the result will inevitably be that the parties must either engage in fresh negotiations, or lodge a further application under s.35. I do not think that any adverse inference can be drawn from the grantee parties continued refusal to reply to the compensation letter of 13 December 1999 after lodgment of the s.35 application. Their failure to respond to it in a substantial way prior to the termination of negotiations may however, be relevant to the question of good faith negotiation.’

The native title parties relied particularly on the passage emphasised by me in italics. Taken overall I do not think this passage supports the native title parties’ contention and if it did I would respectfully disagree with Member Lane. In my view, Member Lane was saying nothing more than that a party’s conduct after a s 35 application is made may be relevant to whether a party has negotiated in good faith before it was made. With this I agree.

1. In RMG Services Pty LtdvThe Barngarla Families and Others [1999] SAERDC 37 (29 June 1999) the South Australian Environment Resources and Development Court held that, on the making of an application for a determination, the obligation to negotiate in good faith, (or any obligation to negotiate) ceases (para 24). It also said that the right to negotiate provisions fall ‘into two distinct stages’, that is, negotiations and arbitration (para 22). South Australia’s alternative legislative provisions for the right to negotiate which are permitted under the NTA are required to be consistent with those set out in the NTA. This case is a relevant authority and confirms my conclusion.

Background Facts

1. The South Blackwater Mine is located approximately 42 kilometres south of Blackwater within the Bowen Basin of Central Queensland. The mining and processing of coking and thermal coal has been conducted on several mining leases since 1970, using both open cut and underground methods.

2. Seeking to add additional coal reserves to its operations, SBCL made application for two additional mining leases namely South Marshmead (MLA70139) and Kennedy (MLA70167) (previously ‘Humboldt’).  These applications are to mine coal located south of the current mine workings.  Kennedy, is the southern-most lease and is located on the Memooloo and Gamadero pastoral properties, both of which are held under freehold title.  The South Marshmead application, to which the present proceedings relate, is adjacent to the current mine and is over both the Gamadero and Terang properties.  Terang is a pastoral leasehold property over which the relevant native title claims have been registered.

3. The South Marshmead application covers a total area of land of 946.2 hectares, the Terang leasehold property (PH37/237) being approximately 355 hectares of the total mining lease application.  SBCL proposes to carry out mining operations on both the Kennedy and South Marshmead mining leases.  Initial use of South Marshmead will be restricted to providing access to the Kennedy lease where open cut operations will commence prior to any further development of South Marshmead.  The coal reserves within South Marshmead are proposed to be mined at a later date via an open cut method covering an area of approximately 190 hectares.  Rockland Creek flows through the area of both the Kennedy and South Marshmead mining lease applications.  The creek winds its way south west, crossing South Marshmead in the north west corner and then south across the Kennedy lease.  Mining operations on Kennedy will significantly impact upon parts of this creek.

The negotiations generally

1. Preliminary negotiations between the parties commenced in late 1999 with a view to establishing an Indigenous Land Use Agreement (‘ILUA’) for South Marshmead and other future acts which may be proposed for the area.  SBCL appointed Rick Farley to act for it in the conduct of the negotiations.  The first meetings occurred in October 1999 when Rick Farley met with representatives of the Gurang Land Council and the native title parties at introductory meetings held on 12, 13, 18 & 20 October 1999.  SBCL’s proposals for the Kennedy and South Marshmead leases were outlined at these meetings.  In November 1999, a Steering Committee of representatives of the native title parties was established and further meetings with Mr Farley and representatives of SBCL were held on 6 and 27 November 1999.  Further meetings took place on 18 December 1999, 28 January and 30 January 2000.  These meetings discussed a draft framework agreement provided by SBCL, the provision of a final Cultural Heritage Investigation Management Agreement (‘CHIMA’) and the commencement of drafting on an ILUA.  On 3 February 2000, SBCL entered into a framework agreement with Nghally, Ghangalu, Thooneida Aboriginal Corporation, who represent the Ghangalu People and the Central Western Ghangalu Aboriginal Corporation (on behalf of the Ghangalu People) for the purposes of negotiating an ILUA.  The quantum of monetary compensation in relation to the ILUA was discussed in February 2000, with initial figures of $500,000 and $2.5 million being put forward in relation to the ILUA by SBCL and the native title parties respectively.

2. On 8 May 2000, the Government party formally commenced the right to negotiate process in relation to MLA70139 (South Marshmead) by giving a s 29 notice. The first meeting after this was held in Rockhampton on 24 May 2000. It involved representatives from SBCL, Ghangalu People, Kangoulu People and the Gurang Land Council. Patricia Leisha of the Ghangalu People acted as coordinator. The meeting involved considerable discussion regarding the CHIMA and the Cultural Heritage Management Plan as well as the results of the cultural heritage investigation and survey which had identified cultural heritage material. In addition, the negotiations centred on the nature of the offers that the native title parties considered SBCL should make. The native title parties considered the amount of compensation offered to be a sticking point in negotiations and raised the possibility of larger payments over a period of years.

3. In July 2000, at the request of SBCL, under s 31(3) of the NTA, Patricia Lane a Member of the Tribunal was appointed as a mediator. Tribunal mediation meetings were convened on 31 August, 5 October and 17 October 2000. At the first of these meetings specific issues such as employment, rights to land and compensation were raised. Ms Lane also identified the potential difficulty in developing and agreeing on terms of reference for future negotiations.

At the second Tribunal mediation meeting of 5 October 2000 the BHP takeover bid for SBCL  and its possible impact on the future of South Blackwater Coal Mine and the status of the CHIMA (which had been signed by SBCL) were raised as preliminary issues.  Concerns were raised regarding the formation and membership of a sub-committee proposed as part of a framework agreement for future negotiations which identified issues of substance for consideration.  Discussions were held on SBCL’s offer, including the possibility of apprenticeships, training employment opportunities, business opportunities, land and housing, and the method of arriving at a valuation of $500,000 by SBCL.

The final Tribunal mediation meeting discussed aspects of SBCL’s offer document (see below), as well as the CHIMA, the process of granting a mining lease and its relationship with an Environmental Management Overview Strategy (‘EMOS’).

1. In Brisbane on 24 November 2000, a meeting was held at the Native Title Services section of the Department of Premier and Cabinet which included representatives from SBCL, the Government party, the native title parties and Stephen Hooper from BHP. Discussions included arrangements for a site visit proposed at a previous meeting but which had yet to be undertaken, some further cultural heritage investigations, the level of compensation and the possibility of arbitration. Negotiations have continued between the parties since the s 35 application was lodged and the site visit to consider heritage issues was undertaken in January 2001. Negotiations are still continuing.

2. The following two letters from Clayton Utz summarise the content of SBCL’s offer at 12 October 2000.

Letter from Clayton Utz to Sean Bowden and Mr Brett Mackie (Gurang Land Council) dated 12 October 2000

‘Offer made by SBCL

Unfortunately, at our meeting on 5 October 2000, SBCL was not able to fully explain all of its offer before the meeting was ended.  Accordingly, that offer is detailed in the attachment to this letter.  Please note that this offer is in relation to MLA70139 only.  This offer is not in relation to the ‘whole of project’.

Relationship

It is the hope of SBCL to form an effective, long term relationship with the TOs.  SBCL has endeavoured to develop an offer for settlement of this matter based on merging what the TOs want from the Right To Negotiate (“RTN”) area contained within MLA 70139 with SBCL’s desire to maintain SBCL’s open cut project and employment of its open cut workforce.

Therefore SBCL has developed the below offer based on what SBCL can actually guarantee it can supply. SBCL has purposely left out “whishy washy” elements that exist in certain other S29 agreements, such as “best endeavour clauses”. SBCL has done so, because SBCL will perform on the promises that it makes and does not want to create expectations that are not fulfilled.

RTN Area

The area of land under RTN is 355 hectares.  SBCL believes it is important to remember this when considering the offer and comparing it to other areas under negotiation.

Offer from SBCL

In developing the attached offer, SBCL has endeavoured to increase the benefits to be supplied to the TOs, beyond the fixed amount of cash that SBCL is able to pay to the TOs in settlement of this matter.

Total Consideration

In total, SBCL estimates the gross benefits to the TOs at:

·     Money  $350,000

(This is a cash payment to be made within 60 days after commencement of any development or operations on ML70139);

·     Training Fund  $100,000

(SBCL proposes providing a further amount of $10,000 per year for 10 years for a training fund.  It is anticipated that the TOs and the State will then be able to ‘leverage’ the benefit of these payments with other Government funded schemes in order to increase the value to the TOs.);

·     Apprenticeships  $540,000

(The apprenticeships cost SBCL an average $45,000 per year in direct payment to the training company and site bonus payments that are paid to the apprentices of $5,000 per year.  It is anticipated that the apprenticeships will continue for 12 years – 3 apprenticeships of 4 years each.  This amounts to $540,000 in cost to SBCL.  However, SBCL estimates that SBCL will receive up to $200,000 in benefits from work carried out by 3 consecutive apprentices.  Therefore, this element of the offer results in an estimated net cost to SBCL of $340,000, but a gross benefit to the TOs of $540,000.  Gross wages to be earned by the apprentices including the above $5,000 per year bonus payment is approximately $32,000 per year, or a total of $384,000);

·     Supply of Houses  $     50,000

(The 2 houses on offer have an estimated market value of $25,000 each.  SBCL will absorb the $30,000 current carrying value it has on the houses).

TOTAL  $1,040,000

In addition, the TOs will receive the presently unquantified benefits from the other elements of SBCL’s offer, such as the keeping place, aboriginal policies and cultural awareness at SBCL and the positive discrimination weighting offered in relation to contracting and tendering.  SBCL looks forward to hearing what the State is able to bring to the table, next week.

Conclusion

We hope that this letter will be taken in the positive manner in which it is intended and be met with a positive response.  If we can assist in consideration of the above issues, please let us know.’

Attachment to letter from Clayton Utz to Sean Bowden and Mr Brett Mackie (Gurang Land Council) dated 12 October 2000:

‘SECTION 29

SOUTH MARSHMEAD ML 70139 ONLY

SBCL Initiatives

Initiatives put forward by SBCL in this document are on the basis of an overall agreement package being agreed between the parties.  Any such agreement will be subject to final approval being given at QCT board level.

TERM.

The agreement initiatives will commence on or at prescribed times after the grant of ML 70139.

INDIGENOUS CULTURE

Ø  A Cultural Heritage Management Plan will be developed and implemented.

·     A Keeping Place for artefacts removed from the lease area will be included as part of the CHMP.

·     SBCL will consider any reasonable request for combined funding of an Area Keeping Place.

Ø  An employee Cultural Awareness program will be implemented, consisting of Quarterly, 4 hour sessions, until all the workforce has been covered followed by twice yearly sessions.

·     SBCL will pay reasonable costs associated with delivery of these sessions.

Ø  SBCL will develop and implement appropriate policies and procedures directed towards support and assistance of Indigenous personnel in the workplace

·     An internal communication network for indigenous people will be fostered.

HOUSING AND LAND

Ø  SBCL will release 2 nominated residences currently under contract with the Department of Housing.

·     The State will transfer Title to these residences to the Indigenous Corporations to be held on trust for the Traditional Owners, subject to the transfers obtaining all necessary Ministerial consents.  The Ministerial consents may be obtained over the next few weeks.

Ø  SBCL looks forward to the State’s input in relation to USL.  This is not a SBCL offer item

TRAINING

Ø  SBCL will provide 3 internal Apprenticeships during the 10 year period from the commencement of the agreement

·     These will be for either Mechanical or Electrical trades.

·     Candidates will be required to meet normal entry requirements, and be subject to all normal site, and Apprenticeship Board requirements.

Ø  A bursary will be established to which SBCL will contribute $10,000 per year for a 10 year period from the commencement of any development operations at ML70139.

·     The financial administration of this will be via a joint SBCL, CWGAC amd NGTAC committee, and shall be for the provision of education and training opportunities for aboriginal people

·     The CWGAC and NGTAC will decide who will receive the training opportunities provided by this fund, and the types of training accessed.

·     Applicable State assistance through Training Subsidies or Grants will be sourced and used to supplement the fund, in order to increase the overall value to the indigenous people..

·SBCL looks forward to the benefits that the State can supply in this regard.

CONTRACTING OPPORTUNITIES

Ø  At the commencement of the agreement and periodically thereafter SBCL will provide to the CWGAC and NGTAC a list of upcoming contracts that they may be able to tender for having regard to the skills and resources available to them.

·     The aboriginal peoples shall supply to the SBCL contracts coordinator details of resources, qualifications and skills, so that wherever possible they may be included in an invitation to tender

·     Any business opportunity gained by the NGTAC and CWGAC must be independent of SBCL and gained on merit.  Notwithstanding this SBCL shall assist the aboriginal peoples where possible to recognise and secure such opportunities that may be available

·     SBCL will provide assistance to nominated people in relation to the Tendering Process.

·     SBCL will include the following clause into tender documents.  In the evaluation and consideration of tenders submitted for contracts at the South Blackwater Open Cut Mine, SBCL will apply a positive weighting in relation to those companies providing supporting documentation, that they have an Indigenous Employment Policy, or are in a Joint Venture arrangement with an Indigenous group.

COMPENSATION

Ø  In addition to the above items, Compensation to the CWGA and NGTAC in the form of monetary payment shall be a single payment of A$350,000 to an account as nominated by the CWGA and NGTAC.  That payment will be made within 60 days after commencement of any development operations on ML 70139.

BENEFITS TO SBCL

Ø  In consideration of the above, the NGTAC and CWGAC will provide all consents and assistance necessary in order to have the agreement registered as an ILUA and as an agreement under the RTN procedure for MLA 70139.

Ø  The Traditional owners will give all necessary approvals and the like for all ‘future acts’ for ML70139.’

Letter from Clayton Utz to Sean Bowden dated 12 October 2000:

‘South Blackwater Coal Ltd – MLA 70139

Thank you for your letter of 9 October 2000.  I refer to the points raised in your letter as follows.  The sections below which are in italics, are quotes from your letter:

“I refer to your letter of 25 September 2000, which I received 3 October 2000.”

My letter of 25 September 2000 was faxed to your office on that day.  On 3 October, you telephoned me about other matters and I enquired as to your thoughts on my letter of 25 September 2000.  You indicated that you were on holidays and that your office had not forwarded the letter on to you, so I faxed a another copy of the letter to your Gold Coast hotel on 3 October 2000.

“The request you refer to in your letter as a request for “adjournment of arbitration” was a request for an extension of the negotiating period.”

SBCL has always stated that if negotiations have not been successful by the commencement of arbitration, it wants to continue negotiating, if necessary, up until the day that there is a determination under arbitration.  Our mediator, Pat Lane, has indicated this is not an uncommon practice.

If that is what you seek, then SBCL agrees to this being undertaken.

I note that you “remain concerned” about whether the parties have been able to fulfil “good faith negotiations” and that you and your client remain committed (as is SBCL) to resolving this matter by way of negotiation.  As SBCL has stated a number of times, its best outcome is a negotiated outcome.  SBCL may have further mining lease applications in the near future that could also require native title resolution.  If we were to proceed to an arbitrated outcome in this case, the potential that future matters would be resolved by negotiation would not be high.  Therefore, SBCL in particular, remains committed to trying to find a negotiated resolution of this issue.

“At this late point my clients are still awaiting information from your client with respect to matters fundamental to the negotiations.”

Could you please provide a detailed list of the information that you have previously requested, that remains outstanding?

It is SBCL’s understanding that there is only two items outstanding, namely:

1.The reply in relation to the Employment and Training Clauses originally drafted by Brett Modina from the Northern Land Council; and

2.The list of contracts that SBCL was to provide on 5 October 2000.

As to the draft “Employment and Business Opportunities” document, SBCL has previously replied to you on the Employment and Training Clauses verbally:-

1.At the meeting between Cecile Walter and you and me at Clayton Utz offices on 3 August 2000;

2.During the pre-negotiation discussion between Pat Lane, you and me during the night of 30 August 2000;

3.At the negotiation meeting held on 31 August 2000; and

4.A number of times during telephone conversations between you and me.

SBCL’s response has consistently been that:-

1.The Employment and Training Clauses document is an 18 page list of standard clauses which were prepared by Brett Madina from the Northern Land Council, as a model for use in ILUAs developed for Northern Australia;

2.The standard clauses do not fit the negotiations undertaken to date.  For example, all SBCL employees apart from apprentices have multiple qualifications in specific areas.  As well, MLA 70139 is an extension to an existing operation as opposed to commencement of a new operation.  The standard clauses assume that SBCL has a new mining operation which will have many employment positions that can be filled by Indigenous People.  Due to the above, this is simply not the case.  There are many other “misalignments” between the standard clauses Sen Bowden has provided and SBCL’s operations/negotiations;

3.The negotiations to date have concentrated on the “broad issues”.  SBCL suggests that the negotiations are not ready to “dive into the detail” by having the parties review the terms of clauses at negotiation meetings.  SBCL fears that this could slow down or interfere with the negotiations, as opposed to assisting the negotiations; and

4.In particular, the Employment and Training Clauses are in places vague and uncertain.  Therefore, the benefits that would flow to the TOs from theses clauses are uncertain.  It would not be a difficult task for an employer to find ways to ‘minimise the cost’ to the employer in implementing these clauses, which would necessarily minimise the benefits to the TOs.  SBCL does not want to enter into an agreement where the benefits to flow to the TOs would so much be in question.  SBCL prefers to form an agreement with the TOs that provides quantifiable benefits to them.

SBCL’s suggestion is that the parties concentrate on creating options and finding mechanisms for reaching broad agreement on the issues, as opposed to getting caught up in the detail at this point.

In any event, at the meeting on 5 October 2000, (where you indicate your clients expected a response on the standard clauses) you did not attend the meeting, and nor did you provide your clients with a copy of the standard clauses so that they could discuss those clauses at the meeting.  Therefore, your clients requested that any discussion on the “Employment and Business Opportunities” document be deferred until a later date.

However, your letter of 9 October 2000 asks for a more formal response in relation to those clauses and I attach that response.

As to the list of contracts, SBCL has previously apologised for the delay in providing this item.  Whilst SBCL has been endeavouring to develop the list of contracts, SBCL’s contract manager has recently been called away from the office to have surgery.  However, at the meeting on 5 October 2000, SBCL was still committed to getting that list to the TOs as soon as possible.  SBCL has had other people working on the list and the list is attached.

“I would be grateful if you could provide my clients with the written response dealing with…Land Issues as agreed at the 31 August mediation meeting.”

Our client provided that response at the meeting of 5 October 2000.  That is, it is ready and willing to give 2 houses to your clients, but we will not be giving any of the pastoral holdings or other leaseholds that the QCT Group holds, because, firstly, the QCT Group uses those properties as income producing cattle operations and, secondly, because the value of any of those pastoral holdings exceeds the compensation that SBCL is able to pay in this matter.

“…the fact that SBCL has failed to factor in the alleged “hardship” to its offer of compensation or benefits is clear indication that the company gives no real weight to the allegation.”

I think what you are referring to there is that because SBCL is suffering hardship, it should pay your clients more to settle the matter.  SBCL has learned from bitter experience in the past, that paying “ransom or convenience money” in one negotiation creates a reputation of being open to paying ‘over the mark’ generally and in future negotiations, there is always the expectation that the company would pay “over the mark” just to get the deal done.  SBCL cannot afford to take this position.

However, please note that SBCL has moved its position a number of times in this negotiation.  For example, SBCL originally offered a cash consideration of $500,000 for MLA70139, and all of the other future mining lease areas at SBCL’s operations, which amounted to 1,600ha of land.  This is the “whole of project” approach.  Since then, whilst the cash amount has remained the same ($500,000) the area over which SBCL has attempted to apply this amount of compensation has definitely reduced.  The area over which SBCL now offers $450,000 cash plus other benefits, is only the 355ha of native title land the subject of MLA70139.  This has effectively increased the offered amount from $312.50 p/ha (142% of the estimated freehold land value of $220 p/ha) to $1267.60 p/ha (576% of the estimated freehold land value of $220p/ha).  In fact, SBCL estimates the value of its offer to be approximately $1,040,000, which works out at 1331% of the estimated freehold land value of $220p/ha

As well, SBCL has moved its position by responding specifically on the issues your clients have asked (namely cultural heritage, land and employment) and in particular has offered a full CHIMA and has developed proposals in relation to the other issues which your clients may find attractive.

“The other allegation has been that jobs would be lost if MLA70139 were not granted by June 2000.  This allegation has been proven to be incorrect.”

Could you please advise what proof you have?  If it is the takeover documents produced by Metcoal Limited, this would hardly amount to being proof.  An allegation by Metcoal that it will be able to eliminate inefficiencies at the South Blackwater Mine is not unusual for subjective allegations that are made in takeover documents.  However, the case remains that due to the near exhaustion of reserves for open cut mining in the current leases jobs have already been lost at South Blackwater Mine.  The potential for further job losses increases with every day’s delay in the process of obtaining and developing additional mining leases..

“To assist my clients in better understanding SBCL’s position, could you provide us with:-

1.the feasibility study with respect to MLA70139;

2.advice as to whether a decision to commence operations on MLA70139 has been made;

3.advice as to when it is proposed to commence operations on MLA70139;

4.advice as to how many jobs will be lost, and when.”

A formal feasibility study document has not been produced for MLA 70139.  Due to its size , location and development cost this was not a requirement stipulated by the board of directors.  Normal project development planning and costing including geo technical work was undertaken.

Stripping and mining on ML 70139 has been an integral part of SBCL’s mine planning for several years.  A complete mine plan with strip layouts and environmental controls has been in place for some time.  Planning for commencement of coal mining on this lease will be scheduled to compliment stripping and mining elsewhere.

You will recall that at the meeting in Rockhampton on 31 August Ray Coyne stated that it is certain that one dragline will now have to cease operations.  The length of time that it will be forced to stop for is as yet unknown.  When this is determined, the effect that this will have on permanent workforce numbers will be able to be quantified.

“I have difficulty with the fact that it is implicit in Metcoal’s offer that SBCL, if controlled by Metcoal, would not proceed with development of MLA70139.”

That is not the suggestion of Metcoal.  Metcoal suggests in its Bidders Statement that Metcoal will undergo a review of SBCL’s operations in order to determine inefficient areas and how to eliminate those inefficient areas and that the most likely “is the integration of the assets and operations of the South Blackwater mine with those of the adjacent … Blackwater open cut mine”.  This would suggest that MLA70139 will be continued.  However, I stress that we cannot at this stage determine what Metcoal will do if its bid for the QCT Group was successful, or indeed whether its bid will be successful.

As we have suggested previously, we propose that negotiations continue as if the Metcoal offer had not been made.  Until we know the outcome of the Metcoal offer, we cannot determine what impact it will have on the negotiations and therefore should continue the good efforts that are being made to resolve this issue.  All parties are endeavouring their best to resolve this matter by way of negotiations and we should continue on that path notwithstanding.

Conclusion

You have not answered the question raised in our letter of 25 September as to whether you can suggest a mechanism as to how to take the time pressures off both parties.  Can I expect a reply?’

Conclusion on the negotiations generally

1. The passage from NNTT WF99/5 (Placer (Granny Smith)) refers to a number of elements in the s 31(1)(b) obligation. I have no doubt that there were negotiations between the parties with a view to reaching agreement. There is no evidence of any lack of honesty or sincerity on the part of the grantee party or its negotiators. The native title parties contended that SBCL’s main objective was to participate in the negotiation process to enable it to invoke the jurisdiction of the Tribunal as soon as reasonably practicable after six months from the date of the s 29 had elapsed. The implication here is that there was no serious or genuine attempt on the part of the grantee to reach an agreement. That contention is not supported by the evidence as the above summary of the negotiations reveals.

2. The native title parties’ other principal contentions were that the grantee party had:

• unreasonably failed to agree to extending the period for negotiations by deciding to lodge the s 35 application when requested by the native title parties not to do so;

• failed to make reasonable offers or behave reasonably and was intransigent throughout the negotiations on the matter of monetary compensation; and

• failed to provide information to support its position on the question of monetary compensation, thus depriving the native title parties the opportunity to negotiation about payment based on profits; income derived or things produced (s 33(1) NTA).

The making of the s 35 application

1. The native title parties contended that the grantee party unreasonably refused to extend the time for negotiations. Mr Bowden had requested the grantee party not to refer the matter to arbitration until further investigations of cultural heritage matters had been carried out. (See letter from Sean Bowden to Clayton Utz of 7 November 2000.) There is nothing in the evidence which suggests a lack of good faith in the lodging of the s 35 application. Any negotiation party is entitled to make a s 35 application once the statutory six months from the date of the s 29 notice has passed. (Strickland v Western Australia (1998) 85 FCR 302 at 322). There are a very limited number of facts which would demonstrate a lack of good faith in the manner in which a s 35 application was lodged. One might be if a firm undertaking not to lodge the application before a certain time had been breached. There is nothing of this kind revealed in this matter. The grantee party made it clear throughout the negotiations that it would resort to arbitration if no agreement was reached. In my view there is a clear entitlement for any negotiation party to make a s 35 application and, except in rare circumstances, the making of it does not reflect adversely on whether the applicant has negotiated in good faith. The sanction if a grantee party prematurely makes the application without fulfilling its good faith negotiation obligation is that the application will be dismissed.

The reasonableness of offers of monetary compensation

1. The native title parties contended that s 31(1)(b) imposes an obligation to make offers of monetary compensation which are reasonable in all the circumstances and unconstrained by reference to the compensation which the native title parties might expect to receive if negotiations fail. Further the native title parties said that the grantee party has an obligation to demonstrate the reasonableness of such offers by providing information which enables the native title parties to independently assess the reasonableness of them.

2. In my view the contention relating to whether reasonable offers must be made misstates the law.  The history of the relevance of reasonable substantive offers to whether a party has negotiated in good faith can be traced through the following decisions – Western Australia/Majorie May Strickland (Maduwongga) & Ors, NNTT WF97/4, Hon CJ Sumner, 10 December 1997 (at 19-20); Strickland (supra) at 321; Western Australia/Leo Winston Thomas & Ors/Anaconda Nickel Ltd, NNTT WF98/7, Hon CJ Sumner, 4 September 1998 (at 13-21); Walley v Western Australia [1999] FCA 3, (1999) 87 FCR 565 (at [15]); Brownley v Western Australia [1999] FCA 1139, (1999) 95 FCR 152 (at 165 [35]). In Strickland (at 318-321) the Court upheld a contention by the Government party that the Tribunal erred in law in finding that the s 31(1)(b) obligation included an obligation (on the Government party only at that time) to make reasonable substantive offers.

The Court said (RD Nicholson J at 321):

‘The reasoning of the Tribunal that negotiations in good faith require “reasonable substantive offers” requires, as submitted for the Government party, a further and unnecessary level of complexity and application to the interpretation of the words of s 31(1)(b). It is not necessary to have resort to any standard outside the words in the section itself. The question is whether the communications and other events as they have fallen out satisfy the legal standard of negotiating in good faith as required by s 31(1)(b).’

In Walley (Carr J at 577 [15]) agreed with this reasoning with one slight reservation:

‘The slight reservation is that I think that if a Tribunal, as part of the overall assessment of whether the Government party has negotiated in good faith, finds it useful to consider whether any particular offer (or all offers for that matter) appears (or appear) to be reasonable, then it is open to the Tribunal to engage in that exercise.  But that is not to say that it will always be obliged to do so.  Much will depend on the circumstances of the particular matter.  The Tribunal will be engaged on a factual assessment of the Government party’s conduct and, in some cases, the reasonableness or unreasonableness of its proposals or offers may be relevant.  In other cases there may be a difference between making reasonable offers and being reasonable in negotiating in good faith.’

In Brownley Lee J agreed with the approach of Carr J in Walley when he said (at 165 [35]):

‘In the context of conduct as a whole, failure to advance reasonable proposals may be shown to be part of a pattern from which an inference may be drawn that a government has not engaged in a genuine attempt to negotiate.  Later in the reasons, dealing specifically with “substantive offers” made by the State, the Tribunal, (applying an understanding of the law it formed from reading the reasons of this Court in Strickland), stated that it was “not permitted to consider the reasonableness of offers unless they were so unreasonable or contemptuous of the process that [the State was] not acting honestly or genuinely with a view to achieving agreement”.  As stated by Carr J in Walley at 576-577, it is not correct to say that the Tribunal is “not permitted” to consider the reasonableness of offers made by government.  If consideration of all conduct relevant to determination of the question whether the State negotiated in good faith was restricted by such a misapprehension, an error of law may be shown to have occurred in the making of the decision sought to be reviewed.’

The Tribunal now applies the law as enunciated in Walley and Brownley.

1. There is no requirement that the Tribunal be satisfied that the grantee party has made reasonable substantive offers, but depending on the circumstances the nature and reasonableness of offers or concessions made can be taken into account. The standard to be applied is contained in the words of the NTA itself - whether a party has negotiated in good faith with a view to obtaining the agreement of the native title party. (Strickland at 321).  A failure to behave reasonably (Njamal indicium xviii) including with respect to the making of offers or concessions may assist the Tribunal to assess whether the standard has been met but this does not amount to a requirement that in every case and every circumstance the Tribunal be satisfied that reasonable substantive offers have been made.

2. The evidence clearly establishes (see letter of 12 October 2000 from Clayton Utz) that offers were made by the grantee party.  This included an offer of monetary compensation.  The offer was based on the freehold value of the land.  Initially a cash offer of $500,000 was made to cover the whole of the future mining leases needed for SBCL’s operations which comprised some 1600 hectares and were the subject of the initial negotiations about an ILUA.  During the negotiations this offer was amended for the payment to be made in relation to MLA 70139 (South Marshmead) and the renewal of a previously granted mining lease.  The offer was further amended for the cash offer of $450,000 and other benefits) to cover only those parts of South Marshmead subject to the native title claim, that is, an area of 355 hectares.  The grantee party contended (letter of 12 October 2000 Clayton Utz to Sean Bowden) that this meant that the offer was effectively increased from $312.50 per hectare (142% of the estimated freehold land value of $220 per hectare) to $1267.60 per hectare (576% of the estimated freehold land value of $220 per hectare).  It further said that the value of its offer was approximately $1,040,000, being 1331% of the estimated freehold value of $220 per hectare.

3. The native title parties complained that it was unreasonable for the grantee party to base its offer on the freehold value of the land. Value should have been assessed taking account of such factors as the best use of the land including for mining (and not just pastoral use) and the cultural and spiritual value due to the special connection of the native title parties with the land. There has been no judicial decision on the principles applicable to compensation for the extinguishment of native title by compulsory acquisition or for future acts (such as the grant of mining leases) to which the non-extinguishment principle applies. The NTA contains provisions dealing with the issue. There is no doubt that a native title party is entitled to compensation for the extinguishment or impairment of their native title rights by a future act. This is determined by the Federal Court in accordance with Division 5 of Part 2 of the NTA. (A summary of the provisions and the Tribunal’s powers in relation to compensation is contained in Western Australia/Richard Guy Evans & Ors/Anaconda Nickel Ltd & Ors, NNTT WF98/267, WF98/268 & WF98/270, Hon CJ Sumner, 20 August 1999.) A native title party is entitled to compensation for the impairment of native title rights by the grant of a mining lease based on the similar compensable interest test (ss 51(3), 240) which means that it is based on the principles or criteria for determining compensation payable to the holders of freehold title for the grant of a mining lease on their land. Section 51(3) suggests that ‘just terms’ are not applicable to this determination. Section 51A(1) says that an amount of compensation for total extinguishment of native title rights and interests should not exceed ‘the amount that would be payable if the act were instead a compulsory acquisition of a freehold estate’ provided this complies with the requirement to pay compensation on just terms (ss 51A(2), 53). While ‘just terms’ applies to the compulsory acquisition of property (including native title rights and interests) under s 31(xxxi) of the Constitution, whether the grant of a mining lease to which the non-extinguishment principle applies is the ‘acquisition of property’ has not been resolved. It is apparent that the application of these provisions gives rise to issues of some complexity upon which the Courts are yet to pronounce. The uncertain state of the law is a factor which the Courts and Tribunal have said is relevant to whether a party has negotiated in good faith (Njamal at 15, Walley v Western Australian (1999) 87 FCR 565, at 579 [18]).

4. The grantee party’s position is that is was prepared to use freehold value as a base for making an offer but with an uplift factor which resulted in a substantial sum over and above the freehold value.  My finding in relation to this issue is that there was a dispute between the parties on the appropriate method of calculating monetary compensation.  There was correspondence about it between the party’s legal representatives but differences remained which could not be resolved.  This is not indicative of a lack of good faith on the part of the grantee party.  An offer was made which the grantee party regarded as appropriate taking account of its understanding of the law and its own economic interests and that of its shareholders and investors.  It is not my role in this preliminary proceeding to attempt to resolve the outstanding and complex issues relating to compensation for impairment of native title rights in order to decide whether this offer was reasonable.  What can be said is that the offer was a genuine attempt to resolve the issue of compensation and had a reasoned basis to it (albeit one not accepted by the native title parties).

Payments of the kind specified in s 33(1) of the Native Title Act 1993 (Cth)

1. Section 33(1) of the NTA provides:

   ‘Profits, income etc.

   (1)Without limiting the scope of any negotiations, they may, if relevant, include the possibility of including a condition that has the effect that native title parties are to be entitled to payments worked out by reference to:

   (a)     the amount of profits made; or

   (b)     any income derived; or

   (c)     any things produced;

   by any grantee party as a result of doing anything in relation to the land or waters concerned after the act is done.’

Section 38(2) of the NTA says that if agreement is not reached and a matter proceeds to arbitration the Tribunal is prohibited from imposing a condition requiring s 33(1) type payments to be made. Section 33(1) was inserted in the old Act as a result of an amendment moved in the Senate. According to the mover (Senator Chamarette) it was designed to ensure that s 38(2) could not be used to argue that profit sharing could not be agreed as part of negotiations. The Government Minister (Senator Evans) affirmed that there was nothing in the Bill which restricted negotiations over profit based or royalty equivalent payment. (Senate, 16 December 1993, p 5301) and agreed to the amendment. In my view the provision does nothing more than confirm that negotiations for s 33 payments are not prohibited by s 38(2).

1. Of more importance is whether the obligation to negotiate in good faith extends to s 33 type payments.  In this respect there appear to be different views expressed by the Federal Court.  The grantee party contended that the Federal Court’s decision in Risk v Williamson (1998) 87 FCR 202 means that it is not a breach of good faith if a grantee party declines to pay or offer compensation over and above that which is laid down by law. The Court said (O’Loughlin J at 224):

   ‘Before leaving this topic, I consider that it may be of assistance to comment upon a submission that appeared in the written material that was handed up by counsel for the applicant during the hearing.  The particular passage reads as follows:

   “Objectively, the negotiations were frustrated because the [Government party] refused to make an offer which exceeded the existing legal rights of the Applicants.  There was therefore a breach of the good faith negotiations duty by the [Government party].”

   This submission hearkens back to an earlier observation that I made to the effect that counsel seems to be of the opinion that native title claimants have an entitlement to compensation over and above that which is laid down by law. I do not understand the source of this submission and no authority was quoted to support it. I know of no provision in the NTA or elsewhere that would justify an adviser informing a native title claimant that he or she is entitled to expect something that would exceed his or her legal right.’

2. O’Loughlin J’s statement could be interpreted to mean that there is no obligation to negotiate in good faith about s 33(1) type payments. They cannot be the basis of a condition in the Tribunal’s arbitral determination and the application of the ‘similar compensable interest test’ in the NTA means that they are not a basis for determining compensation under Division 5 of Part 2 unless a holder of freehold would be entitled to compensation on the same basis (which I understand not to be the position anywhere in Australia). Any s 33(1) type payments which are agreed could be offset against any future liability for compensation determined under Division 5 but there is nothing at law which requires compensation payments to be determined by reference to the amount of profits, income derived on things produced. It could be argued that if any such payment would exceed a native title party’s right to compensation at law then there is no obligation to negotiate in good faith about them.

3. A contrary view has been expressed by Lee J in Brownley v Western Australia [1999] FCA 1139, (1999) 95 FCR 152 (at 168-170 [50-57]:

   ‘Although not stated directly, the thrust of s 33 is that a grantee party and a Government may agree that a registered native title claimant is entitled to payment from a venture to be established by the grantee party by reason of an act of Government which grants to the grantee party a right to mine, or confers on the grantee party rights or interests, after compulsory acquisition by the State of native title rights and interests. The section suggests that the negotiation of an agreement with the applicants to the doing of an act by the State may have included a requirement that the State grant the mining leases on the condition that Anaconda make payments to the applicants, calculated by reference to profits, income or production of minerals. Such payments may have a compensatory aspect but they may represent more than that. They may be a beneficial interest in an enterprise conducted on land in which native title is claimed, with the intention that holders of such title receive a means of economic advancement related to their interest in the land.

   It is an area of negotiation in which the role of the State could be significant, including, of course, the need for the State to agree to imposing the relevant condition on the grant of the mining lease. Furthermore, the Act is predicated upon the responsibility of Governments to redress the effects upon indigenous persons of dispossession of their lands, and negotiation in respect of the matters provided in s 33 of the Act is directed to that end. The State would be obliged to receive, and consider, such a proposal and to assess what response should be made thereto. No doubt the views of Anaconda would be sought and considered.

   In s 38(2), under the sub-heading "Profit-sharing conditions not to be determined", the Tribunal is instructed that matters for negotiation described in s 33 are not matters able to be made the subject of a condition as part of a determination made by the Tribunal under s 38(1)(c). It is, therefore, a matter to be dealt with by an accord reached between the parties in negotiation, or not at all. Such a provision elevates the requirement that the State, as the party able to impose such a condition, engage in genuine discussion on that issue.

   A matter on which a registered native title claimant is entitled to negotiate, provided for in s 33, is not to be confused with the entitlement of a native title holder set out in s 23 of the Act to compensation for the doing of a permissible future act.

   If the State had a policy that it would not reach an accord with a registered native title claimant to facilitate an agreement with a grantee party for the making of payments described in s 33, and that policy were applied to control the participation of the State in negotiations prescribed in s 31(1)(b), it may be said that the State would not be negotiating in good faith with the native title party.

   If, in negotiations with native title parties for the obtaining of the agreement of those parties to the grant of a mining lease, the State maintained an inflexible position that it "would not pay compensation" and relied upon that position to decline to engage in negotiations in respect of matters provided for in s 33, it may be said that the State would not be participating in negotiations in good faith. The State is not obliged to reach agreement on such a matter but it is required to receive, and consider, a proposal from a registered native title claimant in a manner that has regard to the particular facts of the case and to the merit of the proposal in all the circumstances.’

4. Lee J draws a distinction between a native title party’s entitlement to compensation under the NTA and s 33(1) type payments. He found, after specifically considering s 33(1), that the obligation to negotiate in good faith extends to the type of payments referred to therein. The Tribunal has, therefore, accepted this view of the law which means that a grantee party must receive and consider a proposal in a manner which has regard to the particular facts of the case and to the merit of the proposal in all the circumstances without being under any obligation to reach agreement (Western Australia/Arthur Dimer & Ors (Ngadju People); Cyril Barnes & Ors (Central East Goldfields People)/Equs Limited, NNTT WF99/10, Ms Patricia Lane, 9 August 2000 (at 40); Western Australia/West Australian Petroleum Pty Ltd and Shell Development (Australia) Pty Ltd/Leslie Hayes & Ors (Thalanyji People), NNTT WF00/07, Hon CJ Sumner, 9 March 2001 (at 22-25 [32-39])).

5. It is obvious that consideration of whether the obligation has been satisfied will be highly fact specific. This is apparent from the qualified terms of s 33(1). The negotiations are not required to include consideration of such payments but they ‘may, if relevant, include the possibility of’ doing so (my emphasis).  Reasons for a party not being found to have failed to negotiate in good faith over such payments are found in Normandy Pajingo Pty Ltd and Battle Mountain (Australia) Inc/Queensland/Colin McLennan & Ors (Birri People) and James Reid & Ors (Kudjala People), NNTT QF00/2, Hon CJ Sumner, 29 September 2000 (at 33 (para 30) and Western Australia/West Australian Petroleum Pty Ltd and Shell Development (Australia) Pty Ltd/Leslie Hayes & Ors (Thalanyji People), NNTT WF00/7, Hon CJ Sumner, 9 March 2001 (at 25 (para 39)).

6. In the present matter the native title parties contended that it had not been given an opportunity to consider s 33 type payment because of the failure of the grantee party to respond to certain requests made to it.  At the meeting on 24 May 2000, in response to a statement from Jim Randell (then Manager Director of SBCL) that the project would not be viable and that investors would not invest in it if SBCL paid in excess of $500,000 compensation, Mr Bowden suggested that payments could be staggered over the life of the mine and lessen the impact on investors.  A request was made for figures showing the impact of staggered payments over a 10 year period.  Mr Randell said he would get back to Mr Bowden on the issue as a method of increasing the offer.  I find that SBCL did not respond to the native title parties specifically on this issue, although for the reasons stated above I have found that they did increase their offer.

7. The native title parties contend that this failure flawed the negotiation process because it denied them the opportunity to negotiate, in particular, about s 33 type payments.  The recollections and the participants’ written records of this meeting and subsequent references to it do not support this contention.  There is no basis either explicitly or by inference, for finding that the request for information was made to enable negotiations about s 33 type payments.  There is no evidence of the native title parties placing before the grantee party a specific proposal for settlement based on s 33 payments, or any suggestion that the request made at the 24 May 2000 meeting was directed to that purpose.  Staggered (‘delayed’ in Rick Farley’s notes of the meeting) payments do not necessarily mean s 33 type payments and could equally relate to a method of paying an agreed up front amount.  In the circumstances of this case, there can be no criticism of the grantee party for not negotiating about s 33 type payments.

8. The criticism which can justifiably be levelled is that the grantee party undertook to consider and advise Mr Bowden about the staggered payments issue but did not do so.  The grantee party’s position during the negotiations (and at the hearing) was that it had provided all relevant and reasonable information.  It may be that it now regards the information requested by Mr Bowden as irrelevant.  Even if that is the grantee party’s position, there was a failure to meet a commitment to respond to the staggered payment request from Mr Bowden.  In my view this behaviour is a relevant and adverse factor to the grantee party.  The question is what weight should be given to it in the overall circumstances of the case.  I have concluded that this lapse is not of such weight as to negate the positive aspects of the grantee party’s behaviour.  Negotiations over monetary compensation and other issues continued and the request was not renewed by Mr Bowden.

Intransigence; the adoption of a rigid non-negotiable position

1. Although the grantee party did not change its view on the appropriate basis for calculation of compensation it did not adopt an intransigent approach to the quantum of it (see above) as on two occasions it varied its position by offering the same or a similar amount of compensation in return for the native title parties’ agreement to a more limited number of future acts, with its final position being that its package of benefits was offered only in relation to the grant of South Marshmead.  Other aspects of the negotiations also indicate a willingness to provide a package of benefits to meet the native title party’s requests.  Negotiations occurred and there is substantial agreement on measures for a ‘keeping place’ for articles of cultural significance, Aboriginal policies and cultural awareness training within SBCL and preference in contracting and tendering.

The apprenticeship issue

1. The native title parties contended that the grantee party’s offer of employing apprentices from the native title claim groups was ‘posturing’ because it was not an extra cost to the grantee party yet was claimed to be.  The offer relating to apprenticeships is contained in the letter from Clayton Utz to Sean Bowden and Brett Mackie of 12 October 2000 quoted above.  I have no doubt that the offer was a benefit to the native title parties which would have been secured by the agreement (even if there can be some legitimate questions about the precise value of it).  The question is whether the grantee improperly represented this as an additional cost to it when it really only intended giving preference to the employment of claimants without any additional cost to itself.  The letter refers to both an increase in ‘benefits’ of the proposal to the native title party and ‘net cost’ to SBCL.  The minutes of a Tribunal mediation meeting before Member Pat Lane on 5 October 2000 reveal that SBCL at that stage were unsure whether the apprenticeships offered would be additional or absorbed in existing arrangements.

1. There are a number of reasons for not giving great weight to this issue.  First, there was no intentional deception on the part of the grantee party.  The grantee had previously said that it was unsure of what internal arrangements would be made in relation to the apprenticeships.  Second, there is no evidence that the native title parties were misled in a way which undermined or side-tracked the negotiations.  Third, it was a binding commitment which would remain in place even if the policy on employing apprentices generally changed and finally, whatever the nett cost to the grantee party it was clearly an additional benefit to the native title party.

Cultural heritage issues

1. It is acknowledged by all parties that the two sticking points in the negotiations were the issues of monetary compensation and cultural heritage.  The native title parties contended that the development of the coal deposits on MLA 70167 (Kennedy) would mean the disturbance and destruction of areas and items of significant cultural heritage to them.  It then said that during the negotiations and by making the decision to go to arbitration, SBCL had failed to have reasonable regard to the potential for this disturbance and destruction. 

2. There is no doubt that legitimate issues relating to cultural heritage are still being negotiated although most, but not all, relate directly to Kennedy not South Marshmead.  There is a question whether the cultural heritage issues on Kennedy are sufficiently connected to the grant of South Marshmead as to come within the scope of good faith negotiations.  However, there is no need to resolve this question at this time as I cannot find anything in the grantee party’s behaviour which suggests that it was not negotiating in good faith about these issues.

3. Since late 1999, when the negotiations began, cultural heritage issues have been discussed including as part of a negotiating framework agreement.  A Cultural Heritage Investigation Management Agreement (CHIMA) was proposed to deal with these issues.  By the time of the meeting at Rockhampton on 24 May 2000 it was agreed that the CHIMA was largely uncontentious, although some amendments were still required.  At a meeting on 17 October 2000, Mr Bowden informed SBCL that there were further cultural heritage works to be investigated and a procedure to do this was agreed.  These investigations were pursued in early 2001 involving traditional owners and have been the subject of further negotiations.  On 24 October 2000 Sean Bowden sent to Clayton Utz a Preliminary Archaeological Fieldwork Report (Final Version) prepared by Dr Luke Godwin (who had been paid by SBCL to carry out an archaeological assessment into the relevant areas).

4. Although there has been a delay in finalising the heritage issues, this is through no fault of the grantee party. The process, I understand is for the parties to agree to a CHIMA which will form the basis of a Cultural Heritage Management Agreement (CHMA) which will contain binding commitments from the grantee party to be included in an EMOS which will be approved by the Minister before MLA 70139 is granted. The grantee party has been aware of its obligations in this respect and has factored it into the negotiations from the outset. I have already said that making the s 35 application did not evidence any failure to negotiate in good faith and there is nothing in relation to the cultural heritage issues which calls that into question. The fact that the grantee party acknowledges that outstanding heritage issues exist and is prepared to negotiate about them after making the s 35 application is corroborative of its good faith in negotiating about these issues before the application was made.

Decision

1. The grantee party has fulfilled its obligation to negotiate in good faith as required by s 31(1)(b) of the Native Title Act 1993 (Cth) and the Tribunal has jurisdiction to conduct an inquiry and make a determination.

Hon CJ Sumner

Deputy President

27 March 2001