White Mining (NSW) Pty Ltd v Franks

[2011] NNTTA 72

NATIONAL NATIVE TITLE TRIBUNAL

White Mining (NSW) Pty Ltd, Austral-Asia Coal Holdings Pty Ltd & ICRA Ashton Pty Ltd/Scott Franks & Anor (Plains Clans of the Wonnarua People)/New South Wales, [2011] NNTTA 72            (28 April 2011)

Application No:        NF 11/1

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

and

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

White Mining (NSW) Pty Ltd, Austral-Asia Coal Holdings Pty Ltd and ICRA Ashton Pty Ltd  (grantee party)

and

Scott Franks and Robert Lester on behalf of the Plains Clans of the Wonnarua People  (native title party)

and

State of New South Wales  (government party)

FUTURE ACT DETERMINATION

Tribunal:       John Sosso 

Place:             Brisbane
Date:              28 April 2011

Hearing Dates:                  25 February, 5 April 2011

Representatives:                

Grantee party:                   Mr Brendan Tobin, McCullough Robertson Lawyers

Native title party:              Mr Eddy Neumann, Eddy Neumann Lawyers

Government party:           Ms Natasa Najdovski, NSW Crown Solicitor’s Office

Catchwords:   Native title – future act – proposed grant of Mining Lease – future act determination application – whether grantee party has negotiated in good faith –negotiations with other Aboriginal persons – sending negotiators with authority to negotiate – adopting a  non-negotiable position – cultural heritage – charitable trust – grantee party negotiated in good faith

Legislation:    Native Title Act 1993 (Cth) – ss. 29, 30A, 31, 35, 36, 38, 39, 75, 109, 151

Cases:Brownley  v Western Australia (No 1) (1999) 95 FCR 152

Cameron v Hoolihan (2005) 196 FLR 37

FMG Pilbara Pty Ltd/Cheedy & Ors on behalf of the Yindjibarndi People/Western Australia WF08/31 [2009] NNTTA 38 (24 April 2009) Member O’Dea

FMG Pilbara Pty Ltd v Cox (2009) 175 FCR 141

Gregory Wayne Down/Cyril Barnes & Ors on behalf of Wongatha People/Western Australia WF04/9 [2004] NNTTA 91 (1 October 2004) Deputy President Franklyn

Little v Western Australia [2001] FCA 1706

Raymond Dann & Ors (Amangu People)/Western Australia/Empire Oil Company (WA) Limited WF06/21 [2006] NNTTA 153 (24 November 2006) Member Sosso

Strategic Minerals Corporation NL/Allan Kynuna & Ors on behalf of the  Woolgar Group/Queensland QF03/1 [2003] NNTTA 83 (9 July 2003) Deputy President Sumner

Strickland v Minister for Lands for Western Australia (1998) 85 FCR 303

Townson Holdings Pty Ltd & Anor/Ron Harrington & Ors on behalf of the Wongatha People & Anor/Western Australia WF 03/2 [2003] NNTTA 82 (9 July 2003) Deputy President Sumner

Walley v Western Australia (1999) 87 FCR 565

Western Australia v Dimer (2000)  163 FLR 426

REASONS FOR DECISION

1. On 11 June 2010 the State of New South Wales (‘the government party’) gave notice under s. 29 of the Native Title Act1993 (Cth) (‘the Act’) of its intention to grant Mining Lease Application MLA 351 (‘the proposed tenement’) to White Mining (NSW) Pty Ltd, Austral-Asia Coal Holdings Pty Ltd and ICRA Ashton Pty Ltd (collectively referred to as ‘the grantee party’). For the purposes of s. 29(4), 2 July 2010 was specified as the notification day.

2. The notice described the proposed tenement as being located approximately 4 kilometres south south-east of Ravensworth and comprising an area of 215 hectares. The proposed tenement would authorise the mining of coal by open cut methods for a term of 21 years. The grantee party advised in its Statement of Contentions lodged on 22 March 2011 (at para 2.1), that the proposed tenement is one of a number of mining lease applications that comprise the South East Open Cut Project. In addition, the grantee party advised that the corporate entities comprising the grantee party authorised the operator of the Ashton Coal joint venture, Ashton Coal Operations Pty Ltd (‘ACOL’), to do all things necessary to obtain approvals for the grant of the proposed tenement, including addressing any native title issues. The grantee party lodged an affidavit of Mr Peter Stuart Barton, a Director of White Mining (NSW) Pty Ltd and ACOL.  Annexed to his affidavit is a letter signed on 13 December 2010 pursuant to which the joint venture companies:

   “... authorise Ashton Coal Operations Pty Limited (ACOL), as the operator of the Ashton Coal Mine, to manage matters related to the grant of MLA 351 including:

   (a)negotiating a native title agreement with the native title party for MLA 351; and

   (b)settling a native title agreement with the native title party, which is subject to final approval and sign off by the JV Participants.”

3. The proposed tenement is partly overlapped by the Plains Clans of the Wonnarua People native title determination application (NC10/3), which was accepted for registration pursuant to s.190A on 2 November 2010.

4. On 11 February 2011 a future act determination application was lodged with the Tribunal pursuant to ss.35 and 75 of the Act by McCullough Robertson Lawyers on behalf of the grantee party. The application was made more than six months after the notification day – s. 35(1)(a).

5. On 15 February 2011 Deputy President Sumner appointed me as the Member to constitute the Tribunal for the purpose of conducting the future act determination application inquiry.

6. On 25 February 2011 I convened a Preliminary Conference during the course of which the native title party contended that the grantee party had not negotiated in good faith.  There was no submission that the government party had failed to negotiate in good faith.

7. Subsection 31(1)(b) requires that the negotiation parties negotiate in good faith with a view to obtaining the agreement of the native title party to the doing of the future act or the doing of the future act subject to conditions to be complied with by any of the parties. The term “negotiation parties” is defined by s.30A to include the government party, the native title party and the grantee party. Any negotiation party may apply to the Tribunal for a determination pursuant to s. 38 if at least six months has passed since the notification day and no agreement of the kind mentioned in s. 31(1)(b) has been made.

8. If any negotiation party satisfies the Tribunal that any other negotiation party (other than the native title party) did not negotiate in good faith, the Tribunal must not make a determination pursuant to s. 38 – s. 36(2). The implications of s. 36(2) were explained by the Full Federal Court in  FMG Pilbara Pty Ltd v Cox (2009) 175 FCR 141 (at 143/[11]) as follows:

   “... the statutory prohibition at s 36(2) affects the ‘power’ of the Tribunal to make an arbitral determination rather than its ‘jurisdiction’. The prohibition on the exercise of the power only arises when the good faith point is 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. The power to make a determination is a function of the jurisdiction conferred on the Tribunal.”

9. Directions were made on 25 February 2011 requiring the native title party on or before 11 March 2011 to provide to the Tribunal and each of the other parties a statement of contentions and supporting documentary evidence in relation to whether the grantee party had negotiated in good faith. The government and grantee parties were required to provide their own contentions on the good faith challenge by 18 March 2011 and the native title party was to reply by 25 March 2011.  A hearing, if necessary, in relation to whether the grantee party had negotiated in good faith was listed for the week commencing 28 March 2011.

10. On 11 March 2011 the legal representative of the native title party sought an extension of time, the reason for the extension being as follows: “Mr Neumann had dental problems yesterday and was required to spend many hours at the dentist and that Mr Neumann is today caught up in an injunction hearing where he has been required to give evidence and which is now expected to last all day.”

11. The extension of time was supported by the grantee party and on 14 March 2011 the Directions were amended by extending the time for compliance by the native title party to 15 March 2011 and for the grantee party to 22 March 2011.

12. On 29 March 2011 the Tribunal contacted each of the parties concerning the need for listing a good faith hearing.  Mr O’Reilly of the Tribunal formally inquired of each of the parties whether they sought the convening of a hearing, or whether the Tribunal could proceed and make a determination “on the papers”.

13. Both the grantee and government parties submitted that the Tribunal should proceed and make a determination “on the papers”.  Mr Neumann, on behalf of the native title party, replied on 30 March 2011 requesting a hearing in respect of whether the grantee party had negotiated in good faith.

14. A Directions Hearing was convened on 5 April 2011 to hear from the parties and determine whether a hearing was required. The Tribunal is required by s. 109(1) to “pursue the objective of carrying out its functions in a fair, just, economical, informal and prompt way.”  In carrying out its functions the Tribunal is “not bound by technicalities, legal forms or rules of evidence” - s. 109(3). Consideration also must be given to s. 151(2) which provides, so far as is relevant to a future act determination application hearing:

    “(2)  The Tribunal may: ...

    (b) make a determination in relation to a right to negotiate application;

    by considering, without holding a hearing, the documents or other material lodged with or provided to the Tribunal.  However, the Tribunal must hold a hearing if it appears to the Tribunal that the issues for determination cannot be adequately determined in the absence of the parties.”

15. This provision was considered by Nicholson J in Little v Western Australia [2001] FCA 1706 where His Honour said (at [55]):

    “The third particular is whether there was a denial of procedural fairness in the Tribunal deciding to determine the application on the papers without giving the Council a reasonable opportunity to make submissions on that issue. The power of the Tribunal to so determine arising as it does from s 151(2) of the Act is a power which arises in the Tribunal ‘without holding a hearing’. The patent intention of the power is that the Tribunal can decide to proceed on the papers if it is satisfied that the issues for determination can be adequately determined in the absence of the parties. There is no express qualification of this power. The power is not circumscribed by reference to the consent of the parties. If the Tribunal was correct that it should not hear further evidence, there was no reason for it not to be satisfied that the determination could be adequately dealt with in the absence of the parties. The clear legislative intent behind the power is that in those circumstances the Tribunal should be able to act on the papers. The qualification of s 142 by the provisions of s 151(2) makes this apparent.”

16. At the Directions Hearing of 5 April 2011 Mr Neumann outlined the reasons for seeking a hearing on the issue of good faith rather than proceeding by a determination “on the papers”.  Essentially two reasons were advanced by Mr Neumann.  First, he wished to cross-examine some of the persons who had provided affidavit evidence in support of the grantee party on the issue of the extent of their authority to negotiate.  The second, related to the fact that, in his submission, some of the material submitted by the grantee party was hearsay and therefore inadmissible.  He specifically denied that the purpose of the cross-examination related to issues of credibility of witnesses.

17. On the question of the admissibility of evidence, Mr Neumann was referred to s. 109(3), which provides that the Tribunal is not bound by legal forms or rules of evidence. It was pointed out that while the Tribunal is not bound by the rules of evidence, nonetheless the weight that will be accorded evidence submitted will invariably be guided to the general principles of the law of evidence.

18. On the question of the authority of the negotiators, it became clear that any issues that Mr Neumann wished to explore could be done by providing the native title party with an opportunity to make submissions on the material already before the Tribunal. Accordingly, the Directions were amended to enable the native title party to provide to the Tribunal and the other parties by 8 April 2011 further submissions on the good faith issue. Further, the government and grantee parties were granted an opportunity to reply by 12 April 2011.

19. I was satisfied that, subject to granting this further opportunity for making submissions, the Tribunal was in a position to make a determination on the papers and that holding a formal hearing was not necessary, as the issues for determination could be adequately dealt with in the absence of the parties.

20. Subsequently, supplementary Contentions were lodged by both the native title and grantee parties.

Material before the Tribunal

1. The basis upon which the native title party contends that the grantee party did not negotiate in good faith is set out in the Contentions lodged by Mr Neumann and dated 15 March 2011.  Those Contentions are set out in full below:

   “1.   The Native Title party contends that the Grantee Party has not negotiated in good faith.

   2.    Prior to commencing negotiations with the Native Title Party the Grantee Party engaged in negotiations with other Aboriginal persons who were not registered Native Title Claimants (letter MCR to ENL dated 3 December 2010 copy attached).  The Grantee Party has refused to reveal the content and/or substance of the negotiations to the Native Title Party. 

   3.    The Grantee Party claims the negotiations referred to in paragraph 2 were part of a transparent process but asserts that the discussions were confidential and therefore cannot be revealed to the Native Title Party.

   4.    The Native Title Party replies that the process could not be transparent if the negotiations cannot be revealed by the Grantee party.

   5.    Furthermore, this stance of the Grantee Party conflicts with the statement of the Grantee party before the Native Title Party became a registered claimant that if more than on[e] claimant group became registered only one ancillary agreement would be executed.

   6.    The negotiating team for the Grantee Party did not have standing to negotiate.  The negotiating team only had authority to bring offers made by the Grantee Party to the table and take offers made by the Native Title Party back to the Grantee party for instructions.

   7.    The Native Title Party requested a letter from the Grantee Party in respect of the authority of Grantee Party’s negotiating team (ENL to MCR dated 29 November 2010 copy attached).  The only document provided to date is an undated photocopy which has the incorrect ACN for White Mining (NSW) Pty Ltd (see letter MCR to ENL dated 17 December 2010 copy attached)

   8.    The parties held their first meeting on 19 November 2010 and 19 November 2010, the Grantee Party made a written offer for the consent of the Grantee Party (MCR to ENL 19 November 2010 copy attached).

   9.    The Native Title Party replied by letter dated 29 November 2010 (letter ENL to MCR dated 29 November 2010 copy attached) and made a counter offer by letter dated 8 December 2010 (see ENL to MCR dated 8 December 2010 copy attached).

   10.   On 17 December 2010, the Grantee Party made a counter offer (see MCR letter to ENL 17 December 2010 copy attached).

   11.   On 25 January 2011, the Native Title Party made a counter offer (see ENL letter to MCR dated 25 January 2011 copy attached).

   12.   On 28 January 2011 the Grantee Party made its final offer (see MCR letter to ENL dated 28 January 2011 copy attached).

   13.   The negotiations occurred at a time when the Native Title Party has requested the provision to it of the Aboriginal Cultural Heritage survey carried out in respect of MLA 351.  No such plan or report has yet been provided by the Grantee Party however the Grantee Party lodged a report with the New South Wales Government as part of the approval process.  The only survey that occurred involving Aboriginal Stakeholders was in 2008 in the context of the proposed mine being underground mining only and not an open cut.

   14.   The first time the Grantee provided information concerning Cultural Heritage survey of the subject area was in its application for future act determination at page ES17 of the Executive Summary of the Environmental Assessment Report attached to the Application, which reports that:

   “The results of the survey indicate the study area has been well utilised by Aboriginal people.  The site is of very high cultural significance.

   The majority of sites will be impacted directly by the open cut, second to the open cut in impact is the RON Facility Area on the alluvial terrace.  Numerous sites are located on the fringe of disturbance with expected impacts to be determined during the detailed design and construction to be documented in an Aboriginal Cultural Heritage Management Plan (“ACHMP”) developed for the SEOC in consultation with Aboriginal stakeholders and government agencies.”

   15.   The Native Title Party has called for a satisfactory Cultural Heritage Management Plan and process including Cultural Heritage Survey by the Native Title Party with an Archaeologist of its choosing as soon as possible (letter ENL to MCR dated 8 December 2010 copy attached).

   16.   The Grantee party has agreed but has provided no timing on the agreement or survey and the agreement will be subject to DECC Guidelines.

   17.   The Grantee has been inflexible in its negotiations in that it has refused to negotiate in respect of the matters set out in section 33(1) The Native Title Act 1993, specifically refusing to negotiate any royalty type payment (letter MCR to ENL dated 17 December 2010 copy attached).

   18.   The Grantee has also refused to reveal the reason for this stance or to discuss the matter with the Native Title Party (letter MCR to ENL dated 17 December 2010 copy attached).

   19.   The Grantee Party’s offers, particularly the first offer, are paternalistic and patronising in so far they require the establishment of a particular trust and for the Grantee Party or persons other than members of the Native Title Party to be involved in the administration of the trust.

   20.   The Grantee Party has been aware of the Aboriginal cultural significance of the subject area and was aware that there was no registered Native Title Claim until the Native Title party’s claim was registered.

   21.   The offer made by the Grantee party has not taken into account the significance of the area in question to the Native Title Party and the fact that what is proposed is destruction of sites and dreaming tracks due to the open cut nature of the mine.”

2. In the Supplementary Submissions of the native title party lodged on 8 April 2011, the issues of adopting a non-negotiable position and sending negotiators without authority to do more than argue or listen were expanded upon.  The native title party contended that the grantee party, by refusing to negotiate about royalties and not being prepared to explain the reason why it would not do so, adopted a rigid non-negotiable position on an important aspect of the negotiations. As to the second point, it was the contention of the native title party that the grantee party’s negotiators lacked authority to make concessions binding on the joint venture parties and this constituted a failure to negotiate in good faith.

3. The grantee party also lodged with the Tribunal Contentions.  So far as is presently relevant, the grantee party advised that a negotiation and advisory team was assembled to undertake the good faith negotiations. The team comprised legal representatives from McCullough Robertson Lawyers (Ms Lyndal Hanrahan and Ms Skye Morrison), independent native title consultant, Mr Tony Hanrahan from National Management Consultants Pty Ltd and Mr Peter Barton and Ms Lisa Richards from ACOL.

1. Following the notification of the proposed tenement, the negotiation team attempted to identify potential native title parties. At this stage there were no registered native title determination applications overlapping the area of the proposed tenement.  The grantee party identified three parties who asserted native title interests. Having regard to tight time frames and a desire to progress matters as quickly as possible, ACOL proposed a strategy for commencing early engagement and discussions with those potential native title parties who identified having and asserting an interest within the area of the proposed tenement.  Detailed information about the discussions that occurred is set out in the affidavit of Mr Hanrahan.

2. The progress of those negotiations are set out later when dealing with each of the contentions of the native title party that there was a failure by the grantee party to negotiate in good faith.

3. The grantee party provided to the Tribunal and the other parties Contentions together with Affidavits and supporting documentation from Angela Besant, Tony Hanrahan and Peter Barton. The grantee party also lodged on 12 April 2011 a response to the supplementary submissions made by the native title party on 8 April 2011.

4. The thrust of the grantee party’s reply to the native title party is set out in the “Conclusion” in the grantee party’s Contentions as follows:

   “Based on the contentions provided in response to the native title party’s statement, it is clear that ACOL (Ashton Coal  Operations Pty Ltd) has acted in good faith in its attempt to reach agreement with the native title party.

   ACOL has:

   (a)communicated, had discussions with, conferred and demonstrated a willingness to compromise honestly, reasonably and with a genuine view to reaching agreement about the grant of MLA 351;

   (b)with the government party, given the native title party the opportunity to be heard, listened to and involved in negotiations and accommodated the native title party’s convenience in scheduling and rescheduling meetings;

   (c)facilitated and paid the PCWP (Plains Clans of the Wonnarua People)  representatives’ costs to allow the parties to meet multiple times to negotiate regarding MLA 351;

   (d)arranged and paid for the PCWP “heads of family” to meet and discuss the proposed offers made by ACOL;

   (e)contributed to PCWP’s legal costs regarding the RTN process;

   (f)continued to be prompt and regular with its communication with PCWP;

   (g)ensured that the authorised representatives were meeting with the  PCWP;

   (h)provided genuine offers (and revised offers) to the PCWP and given due consideration to any counter offers provided by the PCWP;

   (i)resisted engaging in communication with the media or in the public domain in relation to matters properly dealt with between the parties; and

   (j)remained professional and respectful both during and outside the RTN meetings.”

Legal principles

1. Section 31 provides that unless a s. 29 notice includes a statement that the government party considers that the future act attracts the expedited procedure:

   (a)   the government party must give the native title party an opportunity to make submissions to it regarding the act; and

   (b)   the negotiation parties must negotiate in good faith with a view to obtaining the agreement of the native title party to the doing of the act.

2. A minimum six month period is prescribed after notification before arbitration can be sought.  However, once the six month period has elapsed it is open to any of the negotiation parties to exercise their statutory right to seek a future act determination.  The negotiations do not need to have reached any particular “stage” before a party seeks arbitration.  This was explained by the Full Federal Court in FMG Pilbara Pty Ltd v Cox (2009) 175 FCR 141 (at 145/[19]) as follows:

   “The expression ‘negotiate in good faith’ is to be construed in its natural and ordinary meaning and in the context of the Act as a whole: Strickland v Minister for Lands for Western Australia (1998) 85 FCR 303 at 319. Accordingly, the act of lodging an application under s 35, taken alone, cannot be relied upon in order to establish bad faith in the negotiating process (Strickland 85 FCR at 322). If negotiations reach a standoff, notwithstanding attempts in good faith to negotiate within the relevant six-month period, there are no further obligations after the completion of the six-month period on a party which wishes to lodge a notice under s 35 of the Act. There is no need, for example, to give further warning of the intention to do so.”

3. The Full Court also highlighted that the requirement of good faith negotiations is directed towards “the quality of a party’s conduct.”, namely (145/[20]): “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 negotiations.”

4. Nonetheless, while negotiations are not required to have reached any particular stage before a future act determination is sought “it is not sufficient for good faith negotiations to merely ‘go through the motions’ with a closed mind or a rigid or predetermined position” – (146/[24]).

5. Accordingly, there is no obligation placed on the parties to have actually negotiated about the doing of the future act. The obligation is to negotiate in good faith with a view to obtaining an agreement on the doing of the future act. Member O’Dea in FMG Pilbara Pty Ltd/Cheedy/Western Australia [2009] NNTTA 38 pointed out (at [67]) that there is no obligation:

   “... to negotiate in any physical sense for a period of six months. What is required is that the parties negotiate in good faith with a view to obtaining an agreement with the native title party to the doing of the Act upon conditions and those negotiations are confined to matters related to the doing of the Act on the registered native title rights and interests of the native title party. The actual period of negotiation which would need to take place in order to establish that the parties had negotiated in good faith, is not necessarily related to the length of time spent negotiating. Rather it is the quality of the process that will be determinative of the question of whether the parties have engaged in the process in good faith.”

6. It is incorrect to assume, nonetheless, that when arbitration is sought after the six month period has elapsed and negotiations have not advanced in a “physical sense” that it invariably follows that the Tribunal will find that the parties have negotiated in good faith.  Whilst is not relevant to look at the stage of the negotiations to assess whether the obligation to negotiate in good faith has been met, it is relevant to ascertain whether a party has been misled into negotiating preliminary issues or if another party has deliberately engaged in a stalling process such that by the time the six month period has elapsed, there was never any real intention to reach an accord.  As the Full Court recognised, it is central to a good faith assessment to have regard to a negotiation party’s state of mind as manifested by its conduct.  A party will fail to negotiate in good faith if it proposes a course of action which could be characterised as stalling, and then seeking arbitration after six months when the other party or parties reasonably would have expected that negotiations be on-going. In short, while good faith is not evaluated on the basis of the “status”, “stage” or “substance” of negotiations, it is evaluated on how negotiations are conducted. Consequently, if a party has deliberately taken advantage of another party’s understandable misapprehension that the negotiations would lead to an accord and delays in putting offers on the table or engaging in substantive negotiations to “buy time” so that the six months would elapse and arbitration could be sought, then the Tribunal will find that there have not been good faith negotiations.

7. The Full Court also held (at 148/[38]):

   “The Act does not dictate the content and manner of negotiations by compelling parties to negotiate in a particular way or over specified matters. Providing what was discussed and proposed was conducted in good faith and was with a view to obtaining agreement about the doing of the future act, the requirements of s 31(1)(b) will be satisfied.”

8. The most useful and succinct statement of what constitutes negotiating in good faith is provided by Deputy President Sumner in Placer (Granny Smith) v Western Australia (1999) 163 FLR 87 at 93-94. It should be noted that the references to the government party in the quotation below should be read (following the passage of the 1998 amendments to the Act), as applying to all negotiation parties:

   “Negotiation involves ‘communicating, having discussions or conferring with a view to reaching an agreement’: Western Australia v Taylor (1996) 134 FLR 211 at 219. Good faith requires the Government 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 Tribunal must look at the conduct of the Government party as a whole but may have regard to certain indicia which were outlined in Western Australia v Taylor 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 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 parties have fulfilled their obligation and may impose a lesser standard on them.”

9. Deputy President Sumner referred to the good faith negotiating indicia which were outlined in Western Australia v Taylor (1996) 134 FLR 211 at 219. These indicia were set out in full in the judgment of Nicholson J in Strickland v Minister for Lands for Western Australia (1998) 85 FCR 303 at 312 – 313 with apparent approval. The indicia of failing to negotiate in good faith are as follows:

   (i)     unreasonable delay in initiating communications in the first instance;

   (ii)     failure to make proposals in the first place;

   (iii)the unexplained failure to communicate with the other parties within a reasonable time;

   (iv)    failure to contact one or more of the other parties;

   (v)     failure to follow up a lack of response from the other parties;

   (vi)failure to attempt to organize a meeting between the native title and grantee parties;

   (vii)failure to take reasonable steps to facilitate and engage in discussions between the parties;

   (viii)failing to respond to reasonable requests for relevant information within a reasonable time;

   (ix)stalling negotiations by unexplained delays in responding to correspondence or telephone calls;

   (x)     unnecessary postponement of meetings;

   (xi)    sending negotiators without authority to do more than argue or listen;

   (xii)refusing to agree on trivial matters, for example a refusal to incorporate statutory provisions into an agreement;

   (xiii)  shifting position just as agreement seems in sight;

   (xiv)  adopting a rigid non-negotiable position;

   (xv)   failure to make counter-proposals;

   (xvi)unilateral conduct which harms the negotiating process, for example, using inappropriate press releases;

   (xvii)refusal to sign a written agreement in respect of the negotiation process or otherwise;

   (xviii)failure to do what a reasonable person would do in the circumstances.

10. It is important to note that these indicia are only that.  They are simply a guide to assist the Tribunal when evaluating evidence about the negotiations.  When assessing whether a party has negotiated in good faith the Tribunal will consider all of the material before it and not make a decision mechanistically on the basis that a party has not met all of the indicia or even most of them. The correct approach was summed up by Member Lane in Western Australia v Dimer (2000) 163 FLR 426 (at 441) as follows:

    “In determining whether parties have negotiated in good faith, the criteria developed in Njamal will be relevant.  But these criteria do not constitute a checklist or series of conditions.  It is not necessary that parties engage in all of the activities described there in order to negotiate in good faith. Likewise, the failure to do one or more of the things described in the criteria will not require the Tribunal to find that the parties have not negotiated in good faith.”

11. Finally, when determining whether the parties have negotiated in good faith, a contextual evaluation is required.  The approach taken by one party is normally influenced by the approach taken by another.  For example, if a native title party refuses to negotiate, a lesser negotiating standard would normally be required of the government and grantee parties.  Similarly, if a grantee party is a small miner with few resources and limited capacity to make offers or give concessions,  what would be regarded as negotiating in good faith could be different to that of a large mining company with the capacity to make substantial offers and concessions.  Likewise, the standard of negotiating will be influenced by the external environment.  Negotiation parties do not operate in a vacuum, and when evaluating conduct it is important to appreciate and factor in the broader environment.  It would be unrealistic to impose on parties altruistic or artificial standards of behaviour removed from the financial, regulatory and interpersonal reality that they face.

Good Faith Issues

1. The native title party raised a number of matters in its Contentions relating to the conduct of the grantee party which it submitted would result in a determination that the grantee party  had not negotiated in good faith.  Each of these matters is dealt with below.

Negotiations with other Aboriginal Persons

1. The first matter raised by the native title party was that the grantee party, prior to commencing negotiations with the native title party, had engaged in negotiations with other Aboriginal persons who were not registered native title claimants and further, that the grantee party had refused to reveal the content and/or substance of those negotiations to the native title party.

2. In response the grantee party lodged with the Tribunal an Affidavit of Mr Anthony John Hanrahan which sets out at great length the history and strategy adopted by the grantee party in negotiating with Aboriginal persons in relation to the proposed tenement. So far as is relevant, Mr Hanrahan deposed as follows:

   “17  On 27 May 2010, ACOL submitted MLA 351.

   18 Prior to the lodgement of MLA 351, it was determined, for timing and commercial reasons, that ACOL would commence early engagement and preliminary discussions with those parties who claimed to assert native title rights and interests in the MLA 351 area and who indicated that they may or would lodge a native title determination application (NTDA) in accordance with the Native Title Act over the area of the land subject to MLA 351.

   19    At this point of time there were no existing registered native title claimants within the MLA 351 area.

   20 It is important to note, however, that ACOL and its affiliates had a prior presence in the area as a consequence to the establishment and operation of the North East Open Cut operations and had been involved in previous consultations with various Aboriginal community groups within the Hunter Valley. ACOL made it widely known throughout the Hunter Valley Aboriginal community that it was proposing to commence a new project which might trigger the operation of the RTN process under the Native Title Act. General discussions had been held with various individuals and groups regarding the new SEOC project.

   21    Accordingly, as the lead negotiator and person responsible for native title issues, I made contact with the National Native Title Tribunal (NNTT) immediately prior to the lodgement of MLA 351.  A meeting between a NNTT case officer, Ms Nicole Maher, and myself was arranged to take place in the NNTT office on 31 May 2010.

   22    The purpose of the meeting with Ms Maher was to advise the NNTT that ACOL had lodged MLA 351 and that it was keen to deal with native title issues as soon as possible.  I advised Ms Maher that ACOL proposed to commence preliminary negotiations with all potential native title parties who were able to be identified at this early stage, as soon as possible.”

3. Mr Hanrahan then outlines discussions he had with Ms Maher and Ms Melaine Brown, the Titles Administrator of Industry and Investment NSW. The thrust of Mr Hanrahan’s affidavit is that the grantee party was keen to identify and engage with potential native title parties at the first opportunity and, to that end, he engaged in ongoing searches to ascertain if any native title determination applications had been filed. He specifically deposed that although the grantee party was of the view that it was likely that more than one native title determination application would be filed, and that the grantee party was keen to engage with all potential parties “those negotiations would only continue with the claim group or groups (if any) whose claims became registered under the Native Title Act” – (para 24(d)).

4. Mr Hanrahan then deposed:

   “31  ... the Wonnarua People and the Wonnarua National Aboriginal Corporation (WNAC) are a party to the existing native title agreement over lands associated with ACOL’s existing North Eastern Open Cut and underground mine...Given the Wonnarua People’s native title interest in the adjacent lands to the SEOC project, it was considered highly likely that this group would submit a NTDA in the MLA 351 area.

   32    On 23 June 2010, ACOL sent letters to Mr Scott Franks and also to Mr Victor Perry and Mr Tom Miller on behalf of the Wonnarua People. ...

   33 On or about 28 June 2010, I am informed and verily believe that Mr Franks contacted the (then) General Manager of ACOL, Mr Peter Barton, and indicated that he would be lodging a NTDA in response to the section 29 notice issued by I & I and that he had appointed Mr Eddy Neumann, lawyer of Eddy Neumann Lawyers, to act for him.

   34 Subsequently a letter was sent to Mr Neumann on 6 July 2010. The letter was sent by McCullough Robertson, on behalf of ACOL, inviting Mr Neumann on behalf of his client, Mr Franks, to commence early discussions and negotiations. The letter also indicated that the finalisation or outcome of those negotiations were subject to Mr Neumann’s client becoming a registered native title claimant under the Native Title Act in regard to the area, the subject of MLA 351. ...”

5. Mr Hanrahan then deposed that direct contact was made with Mr Franks who indicated that he did not wish to meet with ACOL before filing a native title determination application. The grantee party determined to continue to undertake preliminary negotiations with potential native title parties and to keep Mr Franks updated about this strategy. To this end on 27 July 2010 correspondence was forwarded to the three representatives of the potential native title parties: Mr Franks, Mr Perry and Ms Margaret Matthews. Initial meetings were held on 28 July 2010 with Mr Victor Perry and Mr Laurie Perry on behalf of the Wonnarua People and on 29 July 2010 with Ms Matthews, Mr John Matthews and Mr Frank Edwards. On 4 August 2010 the grantee party wrote to Ms. Matthews indicating it was willing to meet her reasonable legal costs in respect of the filing of a native title determination application in relation to the proposed tenement and her involvement in the negotiation process. A letter in the same terms was sent on that day to Mr Franks and on 29 July 2010 to Mr Laurie Perry.

1. Mr Hanrahan went on to depose:

   “45  On 16 August 2010 two separate meetings were held:

   (a)  between the Wonnarua People representatives and ACOL representatives in McCullough Robertson’s Newcastle offices; and

   (b)  between Ms Matthews and ACOL representatives in Muswellbrook, New South Wales. The meeting was joined via telephone by Melanie Brown from I & I. As she had done with other potential native title parties, Ms Brown informed the parties that if either party felt that discussions were not taking place in good faith they should contact her immediately.

   46    On 19 August 2010, I had a telephone conversation with Mr Neumann and was able to confirm ACOL would meet Mr Franks’ claim groups’ legal costs in relation to the lodgement of native title claims in respect of MLA 351. At the time, I indicated to Mr Neumann that ACOL was prepared to pay up to $35,000 towards legal costs in relation to MLA 351.

   47    ACOL made a decision to assist in the funding of legal costs for all potential native title parties up to $35,000 per group.  In addition, ACOL was prepared to pay meeting costs incurred by those claim groups, subject to being provided with a budget for the various meetings. My understanding of the meeting costs that would be met by ACOL included hall hire, assistance with travel, mileage/travel allowance and catering.

   48    On 23 August 2010, Mr Neumann indicated by email that he was happy to conduct a meeting with ACOL on 26 August 2010 and indicated that his estimate of legal costs in acting on behalf of Mr Franks’ claimant group to seek registration of their claim was between $80,000 and $100,000. ...”

2. It is later deposed that the grantee party would only meet Mr Neumann’s legal costs up to $35,000 (para 50). On 6 September 2010 Mr Damien Bidjara-Barnes, then General Counsel for NTSCORP, wrote to McCullough Robertson Lawyers expressing concern about the strategy of the grantee party in providing assistance to multiple parties. Mr Bidjara-Barnes was concerned that “this strategy may unfairly prejudice all native title parties in meeting the requirements of the registration test” and “unnecessarily inflames the relationships within the Hunter Valley Aboriginal community.” To deal with these perceived drawbacks Mr Bidjara-Barnes advised that “NSTCORP has notified and advertised a meeting to consider matters relevant to the registration test, the nature of the mining project and to consider authorising a native title claim over MLA 351. The meeting will be held on 13 and 14 September 2010.”  The grantee party determined in these circumstances it was appropriate to postpone the continuation of discussions with all separate identified potential native title parties “as to do otherwise could be taken as creating or fuelling divisions amongst the separate groups” (para 52).

3. It would appear that NTSCORP advertised and facilitated an authorisation meeting in Singleton on 13 and 14 September 2010. Attached to Mr Hanrahan’s affidavit (TH-20) is correspondence dated 16 September 2010 from Mr Brendan Tobin, Partner of McCullough Robertson, to Mr Bidjara-Barnes.  The letter concludes as follows:

   “Following the completion of the authorisation meeting, ACOL has been advised separately and independently by each of the three parties that:

   (a)  they do not intend to lodge a single claim that involves all three interests; and

   (b)  that they so not wish for NTSCORP to act on their behalf.

   Given that it is almost two weeks away from the end of the third month of the RTN notification period, the date by which potential claimants must lodge a native title claim, the interested parties have now urgently requested that the limited funding ACOL was prepared to contribute recommence as soon as possible. Accordingly, unless we receive confirmation from NTSCORP that it intends to act on behalf of the interested groups by the end of this week, our client will agree to continue to provide the previously agreed limited amount of funding to the interested parties starting Monday next week.”

4. On 21 September 2010 Ms Lyndal Hanrahan, Senior Associate of McCullough Robertson emailed Mr Neumann and Mr David Podger who, it would appear, was acting on behalf of the Wonnarua Nation Aboriginal Corporation. In both letters Ms Hanrahan advised that ACOL agreed to provide limited funding in accordance with previous correspondence dated 2 September 2010 and to assist in the filing of native title determination applications.  A letter in similar terms was also forwarded on 21 September to Ms Margaret Matthews by Ms Lisa Richards of ACOL.

5. On 1 October 2010 the Wonnarua People filed a native title determination application with the Federal Court.  The persons comprising the Applicant were Mr Victor Perry and Ms Sandra Miller. On 5 October 2010 the Plains Clan of the Wonnarua People filed a native title determination application with the Federal Court. The persons comprising the Applicant were Mr Scott McCain Franks and Mr Robert John Lester.  A native title determination application was not filed by Ms Matthews.  Mr Hanrahan deposed (at para 60): “Mr Franks advised ACOL that Ms Matthews’ interests had been incorporated into the PCWP’s claim. Accordingly, ACOL continued to negotiate with those two groups who had lodged a NTDA.”

6. Mr Hanrahan deposes (at paras 61 – 63) to the various attempts to organise a meeting with Mr Neumann’s clients during the period 18 – 22 October 2010. While these attempts proved unsuccessful, a meeting was held with representatives of the Wonnarua People in Newcastle on 25 October 2010 (para 64). On 2 November 2010 the registration test was applied to both Wonnarua native title determination applications. The Delegate who considered the Plains Clans of the Wonnarua People application accepted the claim for registration pursuant to s.190A of the Act. However, the Delegate who considered the Wonnarua People native title determination application did not accept the claim pursuant to s. 190A as the application did not satisfy all the conditions prescribed by s. 190B of the Act. Mr Hanrahan deposed (at para 68):“On 5 November 2010, McCullough Robertson sent an email to Mr Podger confirming the decision of the NNTT not to register the claim by Mr Perry and Ms Miller on behalf of the Wonnarua People and advising that ACOL’s negotiations with the Wonnarua People must cease.”

7. The grantee party’s response to the contentions of the native title party is contained in its Statement of Contentions which was lodged with the Tribunal on 22 March 2011. With respect to the suggestion that the grantee party had not negotiated in good faith because it had engaged with other Aboriginal interests, the grantee party contended (at para 4.2(a)):

   “(a) ACOL was open, transparent, and it is submitted entirely proper in its communications and dealing with PCWP (and other representatives of Indigenous groups). ACOL made it clear from the outset that its approach was to commence early engagement with all potential native title parties notwithstanding the claims of those groups were not registered. ACOL confirmed at its first meeting with PCWP that:

   (i)ACOL had adopted a strategy that involved early engagement and discussion with potential native title parties;

   (ii)all discussions with potential native title parties were conditional upon the party concerned becoming a native title party (within the meaning of Subdivision P of Division 3 of Part 2 of the Native Title Act);

   (iii)no agreement had been reached with any other interested party; and

   (iv) all discussions with other parties (regarding MLA 351) ceased, following confirmation that PCWP were the native title party.”

8. The obligation imposed on the negotiation parties is to negotiate in good faith once a notice has been issued in accordance with the requirements of s. 29. A native title party for the purposes of the right to negotiate is “a registered native title claimant in relation to any of the land or waters that will be affected by the act” – s. 30(1)(a).  In this matter the grantee party commenced negotiations before any native title determination application had been filed with the Federal Court, let alone such an application having been registration tested.  In so doing the grantee party was attempting to engage with any indigenous interests which, in its opinion, had a realistic opportunity of becoming a native title party.   This approach carried with it some potential problems which were properly highlighted by NTSCORP.  However, from a different perspective, the grantee party was simply wishing to expedite the negotiation process and identify indigenous interests and engage with them. 

9. There is no obligation on a native title party to engage in good faith negotiations before the notification day, or after that day but before an application is accepted for registration. However, conversely, it would be odd if a grantee party which exceeds its statutory obligations should be penalised for so doing.

10. The right to negotiate regime was recognised by the Full Federal Court in FMG Pilbara Pty Ltd v Cox (2009) 175 FCR 141 (at 145/[18]) as “an element of the protection of native title which is one of the main objects of the Act and that it is not to be narrowly construed.” Yet where there are no extant registered native title determination applications in relation to the area to which a s. 29 notice issues, those persons asserting native title must file a claimant application within three months of the notification day, and then have their claim registered within four months of that day – ss. 13(1), 61(1) and 30. Assuming that each of those hurdles is passed, this may then result in a native title party only having two months to negotiate before one of the other negotiation parties exercises its right to seek a future act determination application. This is exactly the scenario that confronted the grantee party in this matter.

11. Rather than sit on its hands, the grantee party engaged proactively with potential native title parties. In doing so, the grantee party went beyond the good faith obligations imposed by the Act. Accordingly, the actions of the grantee party were designed to maximise indigenous input and could not be characterised as engaging in bad faith negotiations.

12. The second limb of the native title party’s contentions related to the refusal by the grantee party to reveal the content and/or substance of the negotiations it had engaged in with the other Aboriginal interests. In response the grantee party in its Contentions lodged with the Tribunal on 22 March 2011 stated (at 4.3):

    “(a) As referred to in paragraphs #1 to #5 of the PCWP’s statement of contentions, the PCWP requested ACOL to provide PCWP with details regarding the content of the discussions with the other parties during the four month notification period.

    (b)At meetings with ACOL, the PCWP representatives expressed a concern that the Hunter Valley Aboriginal community were suggesting that a ‘deal’ had been reached with ACOL and that particular dollar amounts had been agreed to.

    (c)In response to PCWP’s concern, ACOL confirmed that:

    (i)  at the outset of each of the meetings with the potential native title parties, the parties agreed that the content of the meetings (not the process) would be confidential and ACOL could not now breach that confidentiality; and

    (ii) no agreement or ‘deals’ had been reached between ACOL and any party in relation to the grant of MLA 351 or matters related to the application for or grant of that mining lease.  ACOL could not control any community rumours of misconceptions which might have arisen from matters discussed in the group meetings of the various prospective native title parties.

    (d)In addition, to the extent that ACOL can provide details without compromising its agreement to not disclose the content of confidential discussions with other parties, ACOL confirms that any discussions on ACOL’s behalf with the other potential native title parties regarding potential compensation for MLA 351 did not involve terms more favourable or beneficial to the then prospective native title parties than those that were initially offered by ACOL to the PCWP at the first meeting.  In this respect ACOL has taken a consistent and equitable approach to the parties it has engaged with.”

13. The Tribunal has determined on a number of occasions that prior dealings may be relevant to the issue of whether a party has negotiated in good faith. – Cameron v Hoolihan (2005) 196 FLR 37 at [47]. Limiting the inquiry to conduct that occurs after the notification would be wholly artificial and could lead to inferences and findings that fail to properly take into account the relationship between the parties and why matters transpired as they did during the negotiation phase. However, the assessment required of the Tribunal is whether the parties have negotiated in good faith during the relevant six month (or in this case shorter) period.

14. The contentions of the native title party confuse two issues. The first is that there is no obligation on the grantee party to disclose negotiations conducted with other persons outside of the negotiation period prescribed by the Act. The second is that there were no negotiations with other Aboriginal interests during the negotiation period.

15. In these circumstances it is irrelevant to the good faith issue what was discussed with the other Aboriginal interests prior to the negotiation period, and the understandable and quite proper insistence by the grantee party that those discussions remain private and confidential, do not reflect adversely on its negotiations with the native title party.

Sending Negotiators With Authority to Negotiate

1. The native title party next contends that the grantee party has not negotiated in good faith because its negotiation team did not have the standing to negotiate.

2. The grantee party in its Statement of Contentions lodged on 22 March 2010 submitted that the ACOL negotiation team had the requisite authority and decision making power. In support of that proposition reference was made to the Letter of Authority executed by the Ashton Coal Joint Venture participants at a meeting held on 13 December 2010, which is annexed to the affidavit of Mr Barton and previously referred to at [2]. In its Contentions, the grantee party made the following submissions (at 4.1):

   “(b)At the parties’ first meeting, the native title party queried whether ACOL had the proper authority to negotiate on behalf of the Grantee Party and, in particular, queried why the MLA 351 applicants were not sitting at the negotiation table.

   (c)     ACOL explained that it was the ‘operator’ for the Ashton Coal joint venture and was charged with a number of responsibilities in this role, including ensuring the relevant approvals are obtained for the joint venture’s mining lease applications.  Relevantly, ACOL explained that its role extends to addressing native title prior to the grant of MLA 351. The arrangement that exists amongst the joint venture participants in relation to the Ashton Coal project are commonplace in ventures of this kind.  It is submitted that an alternative arrangement, where joint venture parties (and/or the boards of those parties) were all actively involved in the RTN process would be cumbersome, uncommercial and far from conducive of satisfactory outcomes.

   (d)    At the second meeting, this issue was again raised by the native title party and the ACOL negotiation team agreed to provide PCWP with a written authority from the Grantee Party confirming ACOL’s authority to undertake these native title negotiations on behalf of the Grantee party.  As a result of PCWP’s request, a copy of a written authority was signed by representatives of the Grantee party at a joint venture meeting and was sent to Mr Neumann on 17 December 2010.  A copy of the written authority is referred to at paragraph 100 of Mr Hanrahan’s affidavit.”

3. In its Contentions in Reply dated 29 March 2011 the native title party focused largely on the role of Mr Peter Barton. In the grantee party’s Statement of Contentions lodged on 22 March 2011, it is stated at para 2.2 that ACOL’s representatives, Mr Peter Barton (the then General Manager) and Ms Lisa Richards assembled a negotiation and advisory team. At paragraph 2.11 of the grantee party’s Contentions, it is stated that the first meeting between the grantee party’s negotiation team and the native title party on 19 November 2010 did not include Mr Barton because “he had since been promoted to a new role within Yancoal”. The native title party incorrectly characterises this as recognising that “Peter Barton did not agree to meet with the Native Title Party”.  Reference is then made to the fact that Mr Barton did not attend meetings held on 8 December 2010 and 14 January 2011.  The native title party then contends (at 1.4): “No one of the status as General Manager participated in the meetings on behalf of the grantee party”.

4. The fact that Mr Barton did not attend these meetings is, on the face of it, not relevant.    Mr Barton did not attend the meetings because he had assumed a different role within Yancoal. In those circumstances his presence at the meetings would have been inappropriate. Further, the issue is not whether people holding particular positions within the corporate entity comprising the grantee party attend meetings, but rather whether the persons who attend the meetings on behalf of the grantee party have the requisite authority to engage in substantive negotiations and not simply listen or argue.

5. The next issue is whether, by their conduct, the persons representing the grantee party manifestly and objectively conducted themselves as if they had such authority. In other words, the mere fact that the grantee party has produced a Letter of Authority is not of itself conclusive of the issue at hand. For example, a grantee party could send negotiators who had the paper authority to engage and negotiate, but who conduct themselves in such a way that they fail to negotiate and do no more than argue and listen.  In short the Tribunal will assess the question of good faith negotiations having regard both to the paper authority that a negotiator has and the manner in which the negotiator conducts the negotiations.

6. The native title party in its Supplementary Submissions dated 8 April 2011, conceded that the grantee party’s negotiating team did, at one level, have authority to do more than simply argue or listen, but “ultimately that is all they can effectively do.”  It was submitted (at para 7) that “any terms the negotiating team agree to can be set at nought by the joint venture parties.”  Reference was made to the lack of senior management on the negotiating team and that Lisa Richards, the only ACOL employee on the team conceded at one meeting that she did “not have the power to make all decisions here and now.”

7. The grantee party in its “Response to supplementary submissions made by the native title party on 8 April 2011” made the following submissions:

   “3.2 The grantee party negotiation team had the delegated authority to negotiate and settle an agreement with the native title party. During the second negotiation meeting on 8 December 2010 (referred to in paragraph 97 of the affidavit of Mr Hanrahan dated 22 March 2011) the grantee party representatives were able to respond immediately to particular points outlined in the native title party’s counter offer (delivered to the grantee party at the meeting) and reach agreement in principle on issues regarding cultural heritage and commercial contracts at that same meeting.  Agreement in principle on these particular issues was reaffirmed in a letter on 17 December 2010, referred to in paragraph 101 of the affidavit of Mr Hanrahan dated 22 March 2011. Accordingly, the grantee party submits that this demonstrates an ability to do more than ‘argue or listen’ at the negotiation table.”

1. A perusal of the correspondence and minutes of the meetings annexed to Mr Hanrahan’s affidavit leads to the conclusion that the negotiating team did have the requisite authority to negotiate with the native title party. It is the case that the negotiating team did not have the authority to conclude an agreement. The Letter of Authority annexed to Mr Barton’s letter clearly authorised Ashton Coal Operations Pty Limited to manage all matters related to the grant of the proposed tenement, including negotiating and settling a native title agreement.  The Letter of Authority also is clear on the point that any agreement reached “is subject to final approval and sign off by the JV Participants.”

2. Three issues arise in this context. The first is whether the negotiating team comprised persons who, in reality, could not strike a deal because either they were junior employees or had no actual authority being non-employees. The second is whether the negotiating team in actuality failed to negotiate with the native title party. The final issue is that even if both of those hurdles were crossed, whether the inability of Ashton Coal Operations Pty Limited itself to conclude an agreement, undermines the whole negotiating process.

3. As to the first, as I have already indicated, it is not the status of persons on a negotiating team but their authority to negotiate which is critical. Obviously if a grantee party sends to meetings junior employees and contractors, this could lead, in some circumstances, together with other factors, to the conclusion that it was not serious about reaching an accord with the native title party. However, of and by itself, the failure of the grantee party to send to the negotiations, members of senior management of Ashton Coal Operations Pty Limited is not an indication that it was not serious about reaching an accord with the native title party.

4. On the second point, the minutes of the meetings between the negotiating team and the native title party, indicate that offers and counter offers were made, agreement in principle was reached on issues relating to cultural heritage and commercial contracts. The minutes do not give the impression that the meetings were “static” with the negotiating team simply listening and then leaving the meetings to get instructions. In short, they do not give the impression of “set piece” meetings where the negotiating team operated as merely a conduit back to senior management.  Clearly the negotiating team indicated on some matters that they would have to go back and get instructions, and this of itself is unexceptional.   Good faith negotiations take place in a commercial environment. Normal rules of commercial behaviour apply.  It would be unusual if a negotiating team could unilaterally reach an “in principle” accord to a counter offer put on the table at a meeting without first seeking instructions.  Authority to negotiate should not be confused with authority to unilaterally strike “in principle” agreements.

5. In this context it is instructive to deal with the meeting of 8 December 2010. Annexed to Mr Hanrahan’s affidavit (TH-51) is a letter dated 8 December 2010 from Mr Neumann to Ms Lyndal Hanrahan. It sets out the native title party’s counter offer to the grantee party’s offer of 19 November 2010.  The letter, though short, deals with a cultural heritage management plan, preferred status in commercial contracts for the mine and a four part compensation package involving an initial payment of money, an annual payment of money, a royalty payment and the method of managing the compensation package. It would be totally unrealistic to assume that a counter offer of this significance and complexity tabled at a meeting could have been the subject of an immediate “in principle” agreement by the grantee party negotiators. It would be normal commercial negotiating practice for such a counter offer to be the subject of discussions and clarification at the meeting, with the negotiators then seeking instructions from senior management. The fact that the grantee party  negotiators were up front at the 8 December 2010 that they needed to seek instructions on the counter offer was no indication of any lack of good faith negotiating. In fact a comprehensive counter offer was set out in correspondence dated 17 December 2010 from Mr Brendan Tobin of McCullough Robertson Lawyers to Mr Neumann.

6. As to the third point the grantee party contended in its Response to the supplementary submissions of the native title party (at 3.6):“the grantee party contends that the negotiation team had the authority to negotiate, despite the negotiation representatives needing to obtain final board approval from the joint venture participants who comprise the grantee party.”

7. In support of that proposition, the grantee party relied on findings by Deputy President Sumner in Western Australia/Thomas (Waljen) & Ors/Anaconda Nickel [1998] NNTTA 8. In that matter Deputy President Sumner held that it is generally appropriate for one government department to conduct negotiations on behalf of the government party. It is not necessary as a matter of standard practice for negotiations to be conducted by Ministers of the Crown, although this may be necessary in some cases. Further, the fact that the Department of Minerals and Energy negotiators needed to obtain instructions on occasion from the Department of Premier and Cabinet did not mean that the negotiators had no authority to negotiate.

8. Reliance was also placed on Western Australia/Strickland (Maduwongga) Brian and Dave Champion & Ors/WMC Resources Ltd [1998] NNTTA 13 where Member Lane determined that the fact that ultimate decision making authority for the government party in Cabinet does not mean that government officers do not have the necessary authority to engage in negotiations. The only way negotiations can proceed in any sensible practical fashion is through the nomination of officers.

9. After referring to these determinations the grantee party contended (paras 3.8 - 3.9):

   “3.8Similarly, the grantee party contends that the negotiation team does not need to be the ultimate decision making authority. The grantee party has taken a practical approach to the negotiations and sent negotiators with authority to negotiate.

   3.9In addition, not unlike the grantee party’s approach to negotiation meetings, during the negotiation process the native title party requested meetings with the native title party’s ‘heads of family’ to discuss proposed offers made by the grantee party.  The native title party was reluctant to give a response to an offer made by the grantee party at a meeting until the ‘heads of family members’ had been consulted and agreed upon a response to the grantee party’s offer.  Accordingly, it is submitted that this is no different to the grantee party negotiation representatives seeking final board approval before a final agreement is settled and executed.”

10. As Member Lane pointed out, complex commercial negotiations are usually undertaken by nominated officers with the requisite authority and expertise. Those officers are given authority to negotiate; only rarely authority to reach a final accord. In this matter the negotiators did not have authority to reach a final accord. Nor, for that matter, did their employer Ashton Coal Operations Pty Ltd. The fact that the ultimate decision making authority belongs to other corporate entities does not mean that the negotiators were not capable of negotiating in good faith.

11. The fact that an agreement in principle reached by the negotiators could be set aside by the joint venture entities does not result in a finding of bad faith negotiations. There is no obligation imposed on any negotiation party to send to the negotiations persons who can strike a deal. The key issue which arises is whether the persons attending the meetings have been delegated sufficient authority to negotiate. In other words, are they armed with the authority to put offers, to respond to counter offers, explore issues and raise problems, solutions and scenarios. The fact that members of a negotiation team do not have authority or power to make all decisions is not determinative of the question of good faith negotiations. It should be noted that the obligation imposed by the Act is to negotiate in good faith with the view to obtaining an agreement: there is, accordingly, no compulsion to reach an agreement.

Adopting a non-negotiable position

1. The native title party contends that the grantee party was inflexible in its negotiations in that it refused to negotiate any royalty type payment. In its Contentions in Reply dated 29 March 2011 the native title party made the following submissions:

   “3.1 The grantee party asserts that it is entitled to refuse to consider a royalty type payment as compensation (paragraph 4.4 of the grantees party’ (sic) submissions). However the grantee party refused to provide reasons why it refused to consider a royalty type payment no reasons were given for this refusal.

   3.2 It is the Native Title party’s contentions that this refusal to give reasons or to engage on the issue of royalty type compensation payment contradicts the assertion by the grantee party that it has negotiated in good faith.

   3.3 That is all the more so the case here given the refusal of the grantee party to disclose the content of discussions with other aboriginal groups and given the number of recorded aboriginal interests as set out in annexure AB-4 of Besant.”

2. The native title party further refined its submissions in its Supplementary Submissions of 8 April 2011. It was contended that by refusing to negotiate about royalty payments and not being prepared to explain the reason why it would not do so, the grantee party was adopting a rigid non-negotiable position. The native title party submitted that because the Tribunal cannot impose a royalty payment as a condition, it must be dealt with by the parties or not at all.  The native title party then contended (at paras 5 and 6):

   “... such a provision elevates the requirement that the grantee party engage in genuine discussion on that issue.  Failure to do so  on the basis of a pre-determined policy position constitutes a failure to approach the negotiations ‘with an open mind and a genuine desire to reach agreement as opposed to simply adopting a rigid pre-determined position and not demonstrating any preparedness to shift’ ...

   Although a grantee party is not obliged to agree on s 33 type payments ... the grantee party’s failure to put forward a rationale for refusing to do so ... evidences a failure to negotiate in good faith.”

3. In order to deal fully with this issue it is necessary to briefly set out the history of compensation offers and counter offers. In response to a request from the native title party that the grantee party table at the initial negotiation meeting its “offer”, Mr Brendan Tobin of McCullough Robertson Lawyers wrote to Mr Neumann on 19 November 2010 with a detailed offer. Included in that offer was the proposed payment to the native title party of $70,000 five business days following the date on which the proposed tenement was granted to a charitable trust, together with a further six annual payments of $70,000 five business days following the date of the grant of the proposed tenement.

4. In Mr Neumann’s letter of 8 December 2010 previously referred to, the native title party made its counter offer. It sought a royalty payment of 1.25% per annum to be paid after the commencement of coal production.  In addition to this, the native title party also sought an initial payment of $70,000 and an annual payment of $35,000 until production commenced.

5. Mr Tobin of McCullough Robertson responded to Mr Neumann on 17 December 2010. So far as is relevant Mr Tobin said:

   “17In response to this counter offer, ACOL advises that it will agree to provide a financial benefit as part of the compensation package.  However, our clients do not agree to pay this on a ‘royalty basis’.

   18 Our client has reconsidered and revised its initial offer and is prepared to increase its offer. ACOL will agree to make the following payment after all parties execute an ancillary agreement and section 31 deed:

   (a)  an initial payment of $70,000 on execution;

   (b)   $100,000 per annum for the term of active mining on the SEOC Project area (current mine life of 7 years). If for any reason mining operations are suspended, payments will not be made during that period.  Payments will commence on the latter of five business days following the anniversary of the grant of a mining lease in satisfaction of MLA 351 and receipt of a tax invoice.”

6. As will be seen the compensation package offered by the grantee party increased from an initial payment of $70,000 and $420,000 over 6 years to an initial payment of $70,000 and $700,000 over 7 years. The native title party, nonetheless contended in its Supplementary Submissions that the increase in the quantum of proposed compensation could not excuse what it characterised as a rigid non-negotiable position concern royalty payments.

7. Annexed to Mr Hanrahan’s affidavit (TH-57) are the minutes of the negotiation meeting which took place on 27 January 2011. During the course of that meeting the issue of royalty payments was raised. Set out below are relevant extracts from those minutes.  The reference to TH is to Mr Hanrahan and EN to Mr Neumann:

   “5.17 In relation to point no. 6 of Eddy Neumann’s letter of 25 January 2011, TH stated that there will be no royalty.  That decision comes from ACOL’s senior management.  EN asked why. TH stated that ACOL senior management have explicitly said ‘no’ to a royalty. He stated that we were able to negotiate an increase from ACOL’s first offer but a royalty remains out of the question.

   5.18 EN stated that it is hard to understand if PCWP don’t know what the reasons are as to why a requested royalty has been rejected. TH stated that he was not privy to those discussions.

8. Point 6 in the letter of Mr Neumann of 25 January 2011 to Mr Tobin was as follows: “Our clients cannot however see why a royalty basis is not appropriate but in the interest of reaching agreement are prepared to accept a reduction in the annual payment after production from 1.25% to 1%.”

9. The grantee party in its initial Statement of Contentions lodged on 22 March 2011 contended that in response to the native title party’s request for royalty payments (para 4.4(a)(i)): “ACOL gave due consideration to this offer. However, the Grantee Party, did not agree to this request to pay a royalty. Instead, ACOL reviewed its initial offer and increased the annual dollar amounts offered in the financial compensation package.” Further, the grantee party contended (para 4.4(a)(ii)) that there was no obligation on the grantee party to agree to a royalty payment, and to, in effect capitulate, on a fundamental point.

10. In its Response to the supplementary submissions, the grantee party further contended that it should not be required to provide the native title party with an opportunity for close examination and interrogation of the reasons why it rejected a royalty payment.  Nonetheless the grantee party went on to contend (para 2.1(c)):

    “That said, the commercial reasons related to annual lump sum payment instead of a royalty payment are quite obvious.  For example, the party entitled to a royalty payment will most likely be entitled to greater information of a commercially sensitive nature to ensure their payment is correct.  This would include tonnages, costs of production and mining rates, amongst other things.  The grantee party is of the view that such information should only be circulated at the highest level and should not be in the public domain.”

11. Finally the grantee party contends that the Tribunal should look at its negotiations holistically (para 2.4):

    “However, on the remote chance that the grantee party’s submissions are not supported, the grantee party alternatively argues that any perceived ‘rigidness’ by the native title party in the grantee party’s approach (specifically regarding the form in which compensation should be paid) should not be viewed in isolation of the grantee party’s overall approach to and conduct in the negotiations. This is one factor from a (non-exhaustive) list of at least 18 relevant factors which were referred to in the case of Western Australia v Taylor (1996) 134 FLR 211 (Njamal) and referred to again in Townson. The approach to good faith needs to be considered ‘holistically’. Accordingly, the overall approach of the grantee party needs to be taken into account. The grantee party has been flexible in its ability to meet with the native title party, it has been prompt in its communication, facilitated meetings between the parties and internal meetings for the native title party and its claim group members, made several offers and done all things reasonable in attempt to reach agreement.”

12. The native title party properly conceded that a grantee party is not obliged to agree to a s.33 royalty type payment.  This has previously been determined by the Tribunal – Townson Holdings Pty Ltd & Anor/Ron Harrington & ors on behalf of the Wongatha People & Anor/Western Australia WF03/2 [2003] NNTTA 82 at [60] – and is clear from the wording of s. 33. Subsection 33(1) states: “Without limiting the scope of any negotiations, they may, if relevant, include...” a royalty type payment. In short, the parties are given a statutory base for negotiating a royalty payment, but there is no obligation on either the government or grantee party to agree to such a payment if requested by a native title party.  Failure to agree to a royalty type payment of itself is no indication of lack of good faith in the negotiations.

13. Further, there is no foundation in the contention of the native title party that because the Tribunal cannot impose a royalty type payment when making a determination that this “elevates the requirement that the grantee party engage in genuine discussion on that issue”. There is an obligation on each of the negotiation parties to engage in genuine discussions and with an open mind. However, there is no obligation on a party to capitulate and agree to a proposition from another party which is against its interests or to which it has an inherent objection. In this regard reference can be made to Strickland v Minister for Lands for Western Australia (1998) 85 FCR 303 where Nicholson J held (at 312): “Negotiating in good faith does not mean the Government party has an obligation to capitulate or accept the other side’s proposition or mean that a negotiated agreement must be reached between the parties.”

14. There is no added obligation placed on a grantee party to negotiate royalty payments during the negotiation phase merely because they cannot be imposed by the Tribunal pursuant to s. 38. There is no statutory foundation for imposing on any of the negotiation parties an obligation to “elevate” any issue over any other during negotiations.

15. Nonetheless the thrust of the native title party’s objection to the negotiating stance of the grantee party over royalty payments lies not so much in the refusal to agree to such payments, but the failure to put forward a rationale for refusing to do so. It was the refusal of the grantee party to explain why royalty payments were not negotiable from its perspective that is the core of the native title party’s concerns.

16. One of the indicia of good faith negotiations is responding to reasonable requests for information within a reasonable time. From the material before the Tribunal it would appear that the native title party requested a royalty type payment, the quantum of which changed as the negotiations proceeded.  The grantee party refused this request, and from the minutes of the 27 January 2011 meeting failed to provide any substantive reason for this stance despite an explicit request from Mr Neumann. The stance adopted by the grantee party was not satisfactory.  It was unhelpful and counter-productive to the overall negotiations. Moreover, it was unnecessary.  The grantee party has provided to the Tribunal a short and reasonable explanation of why it would not agree to a royalty payment.  If such a reason could be produced during arbitration proceedings, then the same reason could and should have been provided during the negotiation phase.

1. Nonetheless, as the grantee party contended, the Tribunal when assessing if a party has negotiated in good faith will look at the overall negotiations and the totality of a negotiation party’s conduct in the context of those negotiations. As Deputy President Sumner observed in Strategic Minerals Corporation NL/Allan Kynun & Ors on behalf of the Woolgar Group/Queensland [2003] NNTTA 83 at [184]: “The negotiating behaviour of the grantee party must be looked at in the context of the negotiations as a whole.  It will often be the case that there are aspects of negotiations which are not ideal.” Further, the Tribunal will have heed to the overarching obligation imposed by s. 31(1)(b) which was described by Member Lane in Western Australia v Dimer (2000) 163 FLR 426 at 445 as: “to act honestly and reasonably with a view to reaching an agreement on whether or not the act should go ahead.”

2. The overall performance of the grantee party in these negotiations could be described as “textbook”. It approached the negotiations in a proactive and open manner. It engaged with the native title party in a reasonable and fair way. If there is a criticism of the grantee party’s approach it would be that it was perhaps too enthusiastic, and in the process, as NTSCORP highlighted, may have inadvertently created some intra-indigenous problems which could have been avoided. The failure to provide a substantive reason for rejecting a royalty type payment constituted a lapse in good faith negotiations. However it was not, in the overall scheme of the negotiations, a lapse that undermined the negotiations or coloured the overall tenor of those negotiations.  I am not satisfied that the failure to provide reasons for rejecting a royalty payment of and by itself could substantiate a finding of bad faith negotiations by the grantee party.

Cultural Heritage Survey

1. The final matter raised by the native title concerned a request by the native title party for a cultural heritage survey conducted in respect of the proposed tenement. In the native title party’s Statement of Contentions (at para 13) it is contended that whilst a report had not been provided to the native title party,  a report had been lodged with the New South Wales Government as part of the approval process. The native title party contended that the only survey involving Aboriginal stakeholders was carried out in 2008 in the context of a proposed underground, and not open-cut mine.

2. Annexed to the future act determination application was the Executive Summary of an environmental assessment report commissioned by Ashton Coal. In its Statement of Contentions, the native title party drew the Tribunal’s attention to page 17 of the Executive Summary where, under the heading “Aboriginal Heritage” the following material is disclosed:

   “Community consultation with Aboriginal stakeholder groups and individuals was undertaken in accordance with the DECCW guidelines.  An archaeological field survey of the SEOC footprint and surrounding lands was conducted during December 2008 by a qualified archaeologist and local aboriginal community representatives who identified 85 sites.

   The results of the survey indicate that the study area has been well utilised by Aboriginal people.  The site is of very high cultural significance.

   The majority of the sites will be impacted directly by the open cut, second to the open cut in impact is the ROM facility area on the alluvial terrace. Numerous sites are located on the fringe of disturbance, with expected impacts to be determined during detailed design and construction to be documented in an Aboriginal Cultural Heritage Management Plan (ACHMP) developed for the SEOC in consultation with the Aboriginal stakeholders and government agencies.”

3. The native title party contended that this was the first time it had received information from the grantee party about a cultural heritage survey. In Mr Neumann’s letter of 8 December 2010 to Ms Hanrahan outlining the native title party’s “assessment of a fair agreement” was the following proposal:

   “Satisfactory cultural heritage management plan and process including cultural heritage survey by Applicants with Archaeologist of their choosing as soon as possible.”

4. In response Mr Tobin wrote to Mr Neumann on 17 December 2010 and said:

   “7    Consistent with our initial feedback at the RTN meeting on 8 December 2010, our client recognises the importance of cultural heritage issues to the PCWP and our client confirms that it is willing to work with the PCWP in relation to cultural heritage issues over MLA  351.

   8     However, as ACOL mentioned at the last RTN meeting, ACOL’s commitment to address cultural heritage with the PCWP must take into account other factors and commercial and legislative constraints including; the DEECW (consultation) requirements and any other legal requirements, existing arrangements, the current status of planning approvals and the associated cultural heritage work and surveys undertaken prior to PCWP registration.

   9     ACOL has an obligation under the DECCW Aboriginal cultural heritage consultation requirements for proponents 2010 (“the Requirements”) to provide the opportunity for Aboriginal people who hold cultural knowledge relevant to determining the significance of Aboriginal objects or places, as relevant to the proposed area, to be involved in consultation.   Until there is an approved native title determination, ACOL is required to follow the Requirements in identifying Aboriginal people who may hold the relevant cultural knowledge.

   10    ACOL is willing to develop a cultural heritage management plan with the PCWP that considers PCWP’s issues and concerns and takes into account those other matters ACOL indicated at our meeting and we have identified above at paragraph 8.”

[100]   In its Statement of Contentions lodged with the Tribunal on 22 March 2011, the grantee party contended as follows (4.5(a)):

“(i) In relation to paragraphs #13 and #14, ACOL disagrees with these statements made. In particular, ACOL confirms that a regime, separate to this native title process, has been complied with to address ACOL’s cultural heritage obligations in accordance with its project requirements.  Attached is a copy of Angela Besant’s affidavit that sets out the process that has been adhered to and addresses the claims asserted in PWCPs’ statement of contentions.

(ii) Specifically, in relation to the comments made in paragraphs #15 and #16, ACOL confirms that the parties were broadly in agreement with how cultural heritage was to be addressed over MLA 351.  ACOL agreed to carry out a survey and enter into an Aboriginal heritage management agreement, subject to the conditions outlined in its letter dated 17 December 2010 (referred to at paragraph 101 of Mr Hanrahan’s affidavit).  The reason that there had been no discussion regarding the timing of this survey or drafting of the agreement was because the parties were still in the middle of reaching agreement in principle regarding the other elements of the negotiation.”

[101]  Reference is made by the grantee party to the affidavit of Angela Besant which was sworn on 21 March 2011. Ms Besant is the principal archaeologist of Insite Heritage Pty Ltd which company was commissioned by ACOL to conduct an Aboriginal archaeological assessment for the area selected for the proposed South East Open Cut Project (“SEOC”), which area is covered by the proposed tenement. Ms Besant was the project coordinator for the assessment, which was included in the Environmental Assessment for the SEOC.  The Aboriginal Archaeological Assessment Report for the SEOC Project was dated 5 November 2009 and is annexed to Ms Besant’s affidavit.

[102]   Ms Besant deposes in great detail to the process of consultation that was adopted in the preparation of the report.  Included in that process was public notification of the assessment and inviting registrations of interest.  Mr Scott Franks was involved in three expressions of interest (including Biami Pty Ltd and Yarrawalk Enterprises), all of which were listed under Tocomwall Pty Ltd.

[103]  Ms Besant deposed (para 10) that all registered parties were contacted and invited to participate in field work; and that between 15 to 19 December 2009 field work was conducted and  attended by Yarrawalk Enterprises. Following this a draft copy of the Aboriginal Archaeological Assessment Report which was sent  to all stakeholders, including Biami Pty Ltd and Yarrawalk Enterprises, for review and comment. On 19 October 2009 correspondence was forwarded to all registered stakeholders inviting them to attend at the Ashton mine for a field inspection and discuss geomorphology findings.  Ms Besant deposed (para 13)  that on 27 October 2009 the field inspection and geomorphic discussion was attended by Mr Danny Franks representing his father, Mr Scott Franks.

[104]   Finally the Aboriginal Assessment Report was placed on public exhibition and is publicly available from ACOL’s website as part of the Environmental Assessment.

[105]   The native title party did not contest the accuracy of the matters outlined in Ms Besant’s affidavit. Rather, in the Contentions in Reply, the native title party contends that good faith goes beyond compliance with legal obligations.  In particular it was contended (para 4.2) that it was not sufficient to simply place on a website the report, but to provide it directly to the registered native title claimants.

[106]   The protection of cultural heritage is often a core issue in right to negotiate dialogue. Subparagaph 39(1)(a)(v) specifically enjoins the Tribunal to take into account the probable effect of the doing of the proposed future act on  “any area or site, on the land or waters concerned, of particular significance to the native title parties in accordance with their traditions.” However, while the negotiation of a cultural heritage survey or study is an appropriate matter for negotiation, the failure to reach agreement is not of itself evidence of bad faith negotiations. In Gregory Wayne Down/Cyril Barnes & Ors on behalf of Wongatha People/Western Australia [2004] NNTTA 91 Deputy President Franklyn made the following observations (at [12.3]):

“The letter states that the Native Title party has offered to undertake the same (i.e. an Aboriginal heritage survey of the proposed tenement)  at the cost of the Grantee, which offer was not agreed to by the Grantee. It contends that by refusing to meet the costs of the survey the Grantee is not acting in good faith and that the survey must be undertaken prior to the completion of the negotiation process. In the absence of agreement to the contrary there is no requirement at law or otherwise for an Aboriginal heritage survey to be carried out by and/or at the cost of the Grantee. Nor is there any requirement that such a survey must be undertaken prior to the completion of the negotiation process. The carrying out of an Aboriginal heritage survey is, however a common issue often agreed upon in the negotiation process, but there is no obligation on one party to agree to the same or to terms imposed in respect thereof by the other which it has reasonably based concerns, which may include the cost of the survey. Lack of such agreement is not of itself evidence of lack of good faith.”

See also  Raymond Dann & Ors (Amangu People)/Western Australia/Empire Oil Company (WA) Limited [2006] NNTTA 153 at [77].

[107]  In this matter so far as cultural heritage issues, the grantee party has engaged in a professional and proactive way with not only the registered native title claimants, but prior to the notification date with indigenous and interested persons. The grantee party quite properly is keen to ensure that its broader legal obligations concerning cultural heritage are not impaired by any agreement reached with the native title party to facilitate the grant of the proposed tenement. The grantee party has established a separate legal regime to address its cultural heritage legal obligations imposed by Part 3A of the Environmental Planning and Assessment Act 1974 (NSW). Annexed to Mr Hanrahan’s affidavit (TH-58) are the minutes of the meeting of 27 January 2011 between representatives of the grantee, government and native title parties. Outlined at paragraphs 5.3 – 5.10 of those minutes is a detailed discussion on cultural heritage wherein the grantee party approached this matter in a conciliatory and sensible fashion. Any objective reading of the correspondence between the grantee and native title parties and the minutes of the meeting of 27 January 2011 would lead to the conclusion that the grantee party has engaged with the native title party in an open, transparent and flexible manner. 

[108] The grantee party, in fact, went beyond its statutory obligations. It did not need to concede as much as it did. The previous determinations of the Tribunal illustrate this proposition. In this matter the grantee party has agreed in principle to enter into an Aboriginal heritage management agreement. The drafting of the agreement is still to take place, but the principles underpinning it have been broadly agreed upon. There is nothing in the material before the Tribunal that would establish a finding that the grantee has been dishonest, misleading, engaged in sharp practice, engaged in “sham negotiations” or withheld any relevant material from the native title party. The native title party’s contentions on cultural heritage suggest a standard of conduct and negotiations that far exceed that required by the Act. I find that so far as cultural heritage, the grantee party has fulfilled its obligations to negotiate in good faith.

Other Issues

[109]   Finally, in its Statement of Contentions, the native title party contended (at para 19) that the grantee party’s offers, in particular its first offer, were “paternalistic and patronising in so far as they require the establishment of a particular trust and for the Grantee Party or persons other than members of the Native Title Party to be involved in the administration of the trust.

[110]  Annexed to Mr Hanrahan’s affidavit (TH-36) is an email from Mr Neumann to Ms Hanrahan of 10 November 2010 sent in anticipation of the first meeting of the negotiation parties. In this email Mr  Neumann said:

“Further to our correspondence concerning an RTN timetable, our clients would welcome your client putting its offer on the table at the first meeting. We obviously also need to allow for up to two claim group meetings. Please let us have your advices as soon as possible in relation to the first meeting so that a date can be locked in.”

[111]   On the same day  Ms Hanrahan responded to Mr Neumann (TH-38) stating that the grantee party was prepared to provide an offer for the native title party’s consideration on 19 November 2010, and requesting a response in writing by  25 November 2010. A draft agenda was also included in the letter, and proposed agenda item 8 was: “Ashton Coal to discuss content of proposed package.”

[112]  On 19 November 2010 Mr Tobin wrote to Mr Neumann (TH-43) outlining the initial offer of the grantee party. As previously mentioned this involved an initial payment of $70,000 together with an additional six annual payments of $70,000. The initial and further payments were proposed to be paid into an established charitable trust. The trust was proposed to be established by the native title party with legal and financial assistance from the grantee party. The grantee party proposed that initially the trust be comprised of an equal number of representatives from the grantee and native title parties. The uses of the trust were suggested to be health, education, employment, economic and community development and community capacity building.

[113]  The minutes of the first meeting of the negotiation parties held on 19 November 2010 (TH-45) disclose only a very cursory discussion about the proposed offer of the grantee party, and no mention of any concerns with the proposed charitable trust. The minutes of the next meeting convened on 8 December 2010 (TH-50) do not contain any references to the proposed charitable trust. At the third and last meeting of the negotiation parties convened on 27 January 2011 (TH-57) there was a very short discussion of the proposed charitable trust between Mr Hanrahan (TH) and Mr Scott Franks (SF) (at para 5.43):

“TH stated that in terms of the trust, ACOL will agree to withdraw from control of the trust, but still wants a charitable trust arrangement in place for the benefit of the claim group. SF stated that they did not like the idea of a trust and wanted unencumbered funds.  TH discussed ACOL’s desire to ensure funds were used for the good of the community and also discussed the perpetuity issues to ensure funds continue to be distributed in the event that something happened to SF or RL.”

[114]  In its Statement of Contentions lodged with the Tribunal on 22 March 2011 the grantee party contended (at para 4.6):

“(a) In response to paragraphs #19 to #21 of the PCWP’s statement of contentions, the following statements are made:

(i)            Despite PCWP’s comments in paragraph #19, ACOL was asked by the  PCWP to prepare an offer for PCWP’s consideration.  Without any more guidance from PCWP than this request, ACOL prepared what it thought was  a reasonable and fair offer which incorporated elements of cultural heritage, traineeships and apprenticeships, a financial component and a preference for compensation to be distributed into a trust.

(ii)           Verbal feedback regarding the suggested trust structure was provided by the PCWP at the second meeting. However, there was no suggested alternative framework or entity to receive the funds.

(iii)          Accordingly, in ACOL’s revised offer it suggested an alternative trust structure, whereby there was no ACOL involvement. Again, although the  PCWP verbally disagreed with this proposal at the third meeting, there was no alternative entity suggested to receive the funds.

(iv)           In ACOL’s letter dated 28 January 2011, referred to at paragraph 113 of Mr Hanrahan’s affidavit, ACOL confirmed that its preference was to pay the financial benefit in a charitable trust.  ACOL noted that PCWP expressed that it wished to receive the compensation ‘unencumbered’. It is not totally clear what was meant by ’unencumbered’ and ACOL is still yet to receive an alternative nominated entity in which the financial benefits can be paid.”

[115]  In contending that the grantee party’s proposed trust arrangements were “paternalistic and patronising” it would appear that the native title party is inviting the Tribunal to assess the reasonableness of the proposal. In a series of decisions the Federal Court has ruled that it is impermissible for the Tribunal, as a general rule, to determine good faith on the basis of evaluating the reasonableness of the offers submitted by a negotiation party.  The leading decision in this regard is Strickland v Minister for Lands for Western Australia (1998) 85 FCR 303 where Nicholson J held (at 321):

“I accept the submissions on behalf of the Government party it is not for a court or Tribunal to assess the reasonableness of each offer. What is required is the court or Tribunal apply the test of ‘negotiating in good faith’, in accordance with the common understandings encompassing subjective and objective elements, to the total conduct constituting the negotiations.  All those circumstances must be considered against the legal requirements of the phrase ‘negotiating in good faith’.

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).”

[116]  This interpretation was followed by Carr J in Walley v Western Australia (1999) 87 FCR 565, with a slight reservation (at 577/[15]):

“I respectfully agree with and, with one slight reservation, adopting the reasoning in the above passages. 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 words there may be difference between making reasonable offers and being reasonable in negotiating in good faith.”

[117]   Accepting the approach outlined by Carr J (it was followed by Lee J in Brownley v Western Australia (No 1) (1999) 95 FCR 152 at 164-165/[34]-[35]), it is not open to the Tribunal to determine the question of good faith on the basis of whether the proposed charitable trust arrangements constituted a reasonable and substantive offer. However, it is open to the Tribunal to assess whether the grantee party has acted reasonably in the negotiations on the basis of the offers and counter offers it put forward.

[118]  In this matter the grantee party has acted reasonably. It was asked to put forward an offer for the first meeting without any guidance by the native title party on the contents of that offer. The grantee party put forward a comprehensive offer. It then engaged in an open and proactive manner with the native title party. It modified its offer and attempted to explain its position. There were no suggestions by the native title party that the charitable trust arrangements were unacceptable until the third meeting on 27 January 2011. In any event, the grantee party modified its proposal by withdrawing the suggestion that it have any representation on the trust.  Throughout the grantee party acted in a totally reasonable and honest manner and fulfilled its obligation to negotiate in good faith so far as the issue of the charitable trust is concerned.

Conclusion

[119] The requirement to negotiate in good faith imposed by s. 31 is aimed at ensuring that there is a fair process in place to encourage open and honest dialogue between the negotiation parties. The Act does not require that the Tribunal evaluate the reasonableness of each proposal or counter-proposal or that negotiations have reached any particular stage. Rather, the Tribunal is required to determine if there has been a genuine attempt by the negotiation parties to reach an agreement to allow the doing of the proposed future act, and that this been assessed by evaluating the action of the parties and not their subjective intentions – Brownley v Western Australia (No 1) (1999) 95 FCR 152 at 163 per Lee J. In this matter I make the following findings:

(a)   the grantee party acted promptly in initiating communications with the native title party and its legal representative;

(b)   the grantee party, at the request of the native title party, provided a comprehensive offer for consideration at the first meeting of the negotiation parties;

(c)   the grantee party responded promptly to counter-offers and other communications received from the native title party;

(d)   the grantee party not only attended all meetings of the negotiation parties, but organised the meetings, provided catering and provided the funds to enable the native title party representatives to attend;

(e)   the grantee party invested considerable time, money and energy in an effort to reach a negotiated outcome;

(f)    the grantee party did not refuse to negotiate on any trivial or inconsequential issue;

(g)   the grantee party did not engage in obstructive or unreasonable behaviour;

(h)   the grantee party did not stall the negotiations, indeed it was assiduous in its attempt to engage with the native title party and progress discussions;

(i)     the grantee party did not attempt to postpone to delay meetings or other negotiations, indeed it was the prime mover in ensuring that the meetings took place as promptly as they did;

(j)     the grantee party, despite suggestions to the contrary, sent negotiators to the meetings who had authority to do more than simply listen an argue;

(k)   the grantee party did not shift its position when agreement was in sight, in fact it compromised throughout in an endeavour to reach an accord with the native title party;

(l)     the grantee party did not adopt a rigid non-negotiable position overall. On all questions other than royalty type payments, the grantee party showed considerable flexibility in its dealings with the native title party;

(m) the grantee party made prompt and considered counter-proposals;

(n)   the grantee party did not precipitately seek arbitration;

(o)   the grantee party did not act dishonestly;

(p)   the grantee party acted reasonably, and specifically its proposal for a charitable trust was unobjectionable;

(q)   the grantee party did not seek to mislead or deceive the native title party;

(r)    the grantee party did not respond appropriately to the reasonable requests of the native title party for information as to why it rejected outright a royalty type payment. The failure to provide a reason for refusing to agree to a royalty type payment constituted a lapse in good faith negotiations but did not colour the overall professional and positive negotiations that the grantee party otherwise engaged in; and

(s)    overall the grantee party’s offers, negotiating position and behaviour were reasonable and professional.

Determination

[120] 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 power to conduct an inquiry and make a determination pursuant to s. 38. .

John Sosso

Deputy President