McKerracher J
In this matter McKerracher J considered the construction of the dispute resolution clause in a development deed between Onslow Salt and the Thalanyji people. His Honour ordered that Onslow Salt’s application for a stay of proceedings be dismissed and that the company pay the applicant’s costs. His Honour noted that none of the matters represented findings of the Court, but were taken purely from the statement of claim, comprising some ninety (90) pages.
The Buurabalayji Thalanyji Aboriginal Corporation (BTAC) commenced proceedings, on various grounds, against Onslow Salt Pty Ltd and the State of Western Australia. Central to the dispute was a deed, described as a development deed, executed by Onslow Salt and various native title claimants (who are now represented by BTAC) in March 1996. Onslow Salt complained that BTAC, by commencing proceedings, failed to comply with the requirements of a dispute resolution clause (DRC) within the deed. Onslow Salt sought a stay of the proceedings.
The complaint that BTAC did not confer or refer the dispute to an expert in the manner and terms designated in the DRC was not disputed. However, the requirement to do so was challenged. It was contended that the nature of the dispute is not one to which the DRC is directed and further that it would be impossible on any realistic assessment for an expert to resolve the issues that arose in the dispute.
The statement of claim
Since September 2008, BTAC has held the non-exclusive native title rights and interests of the Thalanyji people on trust. By the Onslow Salt Agreement entered into on 2 November 1992 between Onslow Salt and the State, and ratified by the Onslow Solar Salt Agreement Act 1992 (Cth), the State agreed to grant a mining lease to Onslow Salt under the Mining Act 1978 (WA) for evaporites in respect of the land in the salt mining area as described under the Agreement. The Agreement was designated as being one of the ‘Other Interests’ in the determination area, specifically, tenement AM 7000273 (the Mining Lease), held by Onslow Salt from the date of grant, being 16 April 1996.
By clause 7 of the Agreement, Onslow Salt was entitled to submit, for approval by the Minister, additional proposals to allow it to significantly expand, modify or otherwise vary its activities beyond approved activities or for the development of the area specified in that clause. Any such mining lease was to be substantially in the form of the schedule to the Onslow Salt Agreement. Onslow Salt was to pay rent and could surrender to the State any portion of the salt mining area with the approval of the Minister. It was to pay royalties to the State on all salt produced and transported under the Onslow Salt Agreement. Under circumstances described in the Onslow Salt Agreement, the State could resume any part of the salt mining area.
It was argued that the power of the Minister to approve any additional proposal under cl 7 of the Agreement was subject to conditions, implied by law, that such power could only be validly exercised to approve a genuine and accurate additional proposal submitted to the Minister; in a bona fide manner and not for any ulterior or improper purpose; and subject to the terms and conditions of the Mining Lease.
On 14 April 1996, the Minister, pursuant to the Agreement, granted the Mining Lease which covered the salt mining area. The salt mining area is located to the southwest of the town of Onslow, near the coast. The Thalanyji native title area covers the salt mining area.
It was further argued that Chevron Australia Pty Ltd had planned for and, since 2011, operated the land based part of its Wheatstone liquefied natural gas project (Wheatstone Project) adjacent to and to the west of the salt mining area in the Ashburton North Strategic and Industrial Area (ANSIA).
Since 18 September 2008 BTAC has been a party to the deed pursuant to s 24EA(1)(b) of the Native Title Act 1993 (Cth) (NTA). In addition, there was a land agreement, under which Onslow Salt agreed to surrender part of the area covered by the Mining Lease to Chevron to be used by the latter as part of its Wheatstone Project. Such a surrender had to take place upon Chevron notifying Onslow Salt that it required the whole or a specified portion of the surrender area. Chevron was to pay Onslow Salt $250,000 (GST exclusive) on the effective date of the Land Agreement being 12 January 2010. A further $400,000 (GST exclusive) would be payable upon the satisfaction of other parts of the agreement. Chevron was also under positive obligations to mitigate flooding and Onslow Salt was required to surrender the whole of the required area to the State on 12 September 2012.
Two further agreements were pleaded as the Ostensible Agreements, being the ostensible fill agreement and the ostensible varied Land Agreement. The ostensible varied Land Agreement provided for payments by Chevron to Onslow Salt of $15 million (GST exclusive) payable within 20 business days of the date upon which Onslow Salt complies with its obligations under relevant clauses of the Land Agreement. A total of $60 million (GST exclusive) was payable after Chevron had made its final investment decision (FID) to proceed with the Wheatstone project.
It was pleaded that the Ostensible Agreements were ‘sham agreements’ as their true purpose was to provide Chevron with fill for the Wheatstone Project and there was never any flood risk which required treatment. It was said that the true agreement, described in the statement of claim as ‘the real fill extraction agreement’, was for Chevron to be able to remove 10 million cubic metres of fill material from the salt mining area in return for payment of $75 million to Onslow Salt. It was pleaded that in furtherance of the Ostensible Agreements, Onslow Salt applied on or about 18 January 2012 to the Minister for approval of the additional proposal.
According to the statement of claim, the additional proposal application did not disclose, as was the fact, that the sole or substantial purpose of the additional proposal was to supply Chevron with fill material. It was further pleaded that a report dated January 2012 (2012 Flood Mitigation Report), in effect, stated that hydrological modelling indicated that for all modelling scenarios, flood water mitigation works would assist to manage flooding impacts. This statement was said to be misleading or deceptive in that any such risk was minimal only and, in any event, flood mitigation works would have no or only a negligible impact on flood events. The additional proposal application did not disclose the fact that Chevron was planning to pay Onslow Salt $75 million for the fill, but represented, in effect, that Chevron would remove the fill to some undisclosed destination at its own cost without making any payment to Onslow Salt and simply as a contractor for Onslow Salt.
It was further pleaded that on 13 February 2012, the Minister purportedly approved the additional proposal application under the power granted to him in cl 6(1)(a) of the Onslow Salt Agreement. This purported approval, it was said, is contrary to the terms of the Onslow Salt Agreement and beyond the power granted to the Minister. It was also said that it was contrary to the Mining Lease, which only provided for the mining of salt by Onslow Salt in the salt mining area and did not permit the quarrying, mining and monetising of a significant volume of material.
It was pleaded that Chevron, sometime after, excavated and removed up to 10 million cubic metres of fill material from the salt mine site and deposited it at its Wheatstone Project and duly made payments of $70 million or $75 million between 13 February 2012 and 31 March 2012.
BTAC pleaded that as the real fill extraction agreement was in fact a future act, the only way of lawfully implementing it was by the future act process under the NTA. Further, as it was a future act, the State breached its obligation under s 29(1) and s 29(2)(a) NTA owed to BTAC by failing to give it notice of the real fill extraction agreement. Consequently, on a proper construction of the NTA, the State committed the tort of breach of statutory duty with regard to BTAC. The relevant future act proceeded, it was said, without notification to BTAC and in negation of BTAC’s procedural rights, as defined under s 253 NTA, to enter into and conclude bona fide negotiations with the State and Onslow Salt and to enter into an Indigenous Land Use Agreement (ILUA) under the NTA with Onslow Salt and/or the State. In consequence, loss and damage was sustained, being loss of a chance on the part of BTAC to negotiate with Onslow Salt to enter into an ILUA to consent to the relevant future act by which it would have received payment at the level of about $12 million.
It was also contended that there was intentional interference by Onslow Salt with the native title rights held by BTAC because the Minister’s approval was void and Onslow Salt had no other authority or permission to implement or allow the excavation works. Consequently BTAC pleaded that Onslow Salt’s conduct constituted a tortious interference with the native title rights and economic interests held by BTAC.
It was also pleaded that there was a tortious conspiracy between the State and Onslow Salt, relying upon the knowledge of the Minister. It was asserted that the additional proposal application by Onslow Salt to the Minister and his approval constituted a course of concerted conduct involving Onslow Salt and the State and an agreement or understanding between Onslow Salt and the State with the purpose and aim of negating the procedural rights of BTAC under s 253 NTA to conclude bona fide negotiations for an ILUA.
As an alternative plea, BTAC also argued that if the Minister did not have the knowledge as pleaded in para 52.2 of the statement of claim, Onslow Salt’s conduct with respect to the State was misleading or deceptive. It was said to be misleading and deceptive conduct within the meaning of s 18 of the Australian Consumer Law. If the Minister did not have the knowledge, it was pleaded that Onslow Salt engaged in misleading and deceptive conduct causing the Minister to grant the purported approval and not to give the notice under s 29(1) and s 29(2)(a) NTA to BTAC of the relevant future act causing BTAC the loss and damage pleaded
It was also pleaded that the State owed BTAC a duty of care at common law in dealing with native title rights and interests and in breach of the duty of care the State failed to give BTAC any notice of the real fill extraction agreement as a future act and did so negligently. It was also pleaded there was misleading or deceptive conduct by Onslow Salt with respect to BTAC. Finally, it was asserted that there was a breach of the deed due to the failure by Onslow Salt to consult BTAC in regards to the safeguarding and monitoring of the environment.
A variety of relief was sought, including a declaration that the purported approval of the Minister is void and of no effect at law, a declaration that in causing the fill to be removed from the salt mining area, Onslow Salt acted without any valid authorisation or permission, and damages against Onslow Salt and the State.
Onslow Salt’s contentions
Pursuant to cl 2.4 of the deed, Onslow Salt did not admit that native title existed over the claim area, but agreed that if it does exist, the deed would not operate so as to extinguish it. By cl 2.5, in light of the prospective benefits and opportunities afforded by the project to the native title claimants agreed to the suspension of the operation and enjoyment of native title over the salt mining area whether currently the subject of the claim or not, for the duration of the project and Onslow Salt Agreement and until Onslow Salt declares in writing to the native title claimants that the salt mining area is no longer required by it for the project or any related reason.
By cl 4.1, the native title claimants agreed to grant any mining lease and any related interests at the request of Onslow Salt, to execute an agreement with Onslow Salt and the State allowing the grant of the mining leases and related interests in the form of a schedule to the deed and to the production of the deed and any agreement thereunder to the National Native Title Tribunal. The native title claimants also agreed to assist Onslow Salt to contest any competing native title claim by third parties and agreed to execute a supplementary deed to be prepared by Onslow Salt to address certain matters of detail.
In response, Onslow Salt agreed to pay into a trust account held for the native title claimants the sum of $50,000 on the project commencement date and on each anniversary, while Onslow Salt held or operates the mining leases and related interests, a further sum calculated by reference to a formula. The main purpose of the trust was to assist with the development of economic educational and cultural programs for the benefit of the Thalanyji people. Undertakings were given by Onslow Salt for employment and training of members of the local community, particularly, the Thalanyji people and, in particular, in relation to the Thalanyji recycling business.
Onslow Salt also undertook to contribute various community amenities, to assist with the social and economic development of the local community and to support a proposal to upgrade the existing school. Obligations were specified in relation to sites of significance and the effect of the Aboriginal Heritage Act 1972 (WA). There was to be a liaison officer and certain obligations on the part of the Thalanyji people in relation to dialogue generally and specifically concerning heritage and cultural issues. Onslow Salt undertook to use its best endeavours to ensure the project was conducted so as to comply with the then existent environmental proposal and to otherwise conserve and protect the environment associated with the salt mining area by minimising pollution and waste. In particular, by cl 11.2, Onslow Salt undertook to consult with the native title claimants and the local community in regards to Onslow Salt’s compliance with the environmental proposal and the possible involvement with the Thalanyji people and the local community in safeguarding and monitoring the environment associated with the salt mining area.
Onslow Salt sought a stay of the proceedings on the basis that:
by the DRC, the parties agreed to conferral and to expert determination of any ‘dispute, question or difference’. This terminology is so broad, Onslow Salt says, that the dispute clearly falls within the clause;
where parties have, by contract, agreed to follow a particular dispute resolution procedure, they must adhere to that procedure unless the party wishing to abandon it can show good reason for that course: Savcor Pty Ltd v New South Wales (2001) 52 NSWLR 587 (at [42]). Onslow Salt says that no cogent reason is advanced as to why the dispute resolution procedure should not be followed by BTAC; and
BTAC had not established that it will suffer any prejudice by reason of the proceeding being stayed and the DRC being followed. There is no compelling reason for this dispute immediately to be ‘determined’ by this Court instead of by an expert as agreed between the parties.
The State was not a party to the deed, but Onslow Salt noted that the DRC does not preclude third parties from participating in the expert determination process. McKerracher observed at [49] that ‘Onslow Salt submitted, and it is so, that the Court had a wide discretionary power to stay legal proceedings, pending compliance with a DRC. The starting point is a “strong bias” in favour of contracting parties being held to the terms of their bargain: Huddart Parker Ltd v Ship Mill Hill (1950) 81 CLR 502 (at 508-509), more recently confirmed in Savcor (at [42]), Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563 (at [21]) and Lipman Pty Ltd v Emergency Services Superannuation Board [2011] NSWCA 163 (at [6]-[7]). Onslow Salt pointed out that in Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 (at [26]-[36]), in which a party to a domestic dispute attempted to bring judicial proceedings instead of proceeding with an expert determination, it was held by Gillard J (at [36]) that the Court had jurisdiction to stay the proceedings before it on the simple basis that a “contract is a contract” and (at [134]) “they put it in place, it binds them”. There were two obligations, at least, on BTAC if the DRC was binding. The first was to confer in relation to it and the second was to refer the dispute for consideration by an independent expert.’
His Honour further stated at [51]: ‘It is common ground that where the parties to a commercial contract agree to a particular dispute resolution procedure, they must adhere to that procedure unless the party wishing to abandon it in favour of recourse to the courts can show good cause: Savcor (at [42]). The matter was considered in Mineral Resources Ltd v Pilbara Minerals Ltd [2016] WASC 338 (at [103]) where Banks-Smith J held that the contracting party had bargained away its right to have its day in court in favour of the finality of an expert determination and that in that particular case, on the relevant facts, the second plaintiff had not met the heavy onus of establishing why a stay should be refused.’
Onslow Salt submitted that the circumstances in which a stay would not be granted would be rare, but such a circumstance may be where it would be unjust to deprive a plaintiff of the right to have its claim determined judicially.
While the State is not a party to the deed, Onslow Salt noted that it and the State are parties to the Onslow Salt Agreement. Under the deed, the contractual relationship between Onslow Salt and BTAC is established as well as the terms on which the project is to proceed in the claim area and the terms on which the respective current and future interests of Onslow Salt and BTAC will be exercised. Thus, it is that one of the things achieved under the deed was the suspension of the operation and enjoyment of native title over the salt mining area, without any admission of its existence.
There can be no doubt, Onslow Salt contended, that the dispute falls within the ambit of the DRC. It applies to disputes, questions or differences between Onslow Salt and BTAC with respect to ‘any matter’. The parties agreed that this does not mean any matter at large, but any matter arising under or affected by the deed. Onslow Salt contended that having regard to the purpose and subject matter of the deed and the breadth of the DRC, BTAC’s allegations must fall within the scope of it. Its broad scope demonstrates that the parties did not intend to limit the issues that would be subject to expert determination, Onslow Salt said, relying on Cable & Wireless Plc v IBM United Kingdom Ltd [2002] 2 All ER (Comm) 1041 (at 1052).
Findings
McKerracher J stated at [66]: ‘BTAC argues that on the proper construction of the deed, the dispute which is the subject of the proceedings does not fall within the ambit of the DRC. If that construction is incorrect, BTAC argues that in order to do justice between the parties, the stay application should be dismissed on the discretionary grounds identified by Hammerschlag J in Dirty Dancing Investments …and Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] 2 Qd R 563. Particularly in relation to the proper construction of the DRC, BTAC points to Electricity Generation Corporation t/as Verve Energy v Woodside Energy Ltd (2014) 251 CLR 640.’
The central issues in dispute between BTAC and Onslow Salt on the pleading are:
whether Onslow Salt could authorise the removal of fill material by a third party (Chevron) when this was not a future act recognised by the grant of the M273SA;
whether the real fill extraction agreement as defined in the statement of claim, was a future act within the meaning of s 233(1)(c)(i) , which could only be implemented by the grant of the new mining lease;
whether the real fill extraction agreement affected BTAC’s native title rights and interests;
whether the purported approval of the Minister was void and of no effect at law;
whether Onslow Salt entered into and implemented the real fill extraction agreement using the additional proposal procedure for the purpose of avoiding negotiations with BTAC and undermining BTAC’s procedural rights under the NTA;
whether the additional application proposal and the purported approval of the Minister was a cause of concerted conduct or an agreement or understanding between Onslow Salt and the State for the purpose of negating BTAC’s procedural rights under the NTA;
whether Onslow Salt engaged in misleading conduct causing the Minister to grant the purported approval and not to give BTAC notice under s 29(1) and s 29(2)(a) NTA of the relevant future act;
whether Onslow Salt failed to disclose to BTAC the existence of the real fill extraction agreement and the actual nature of the additional application proposal thereby engaging in misleading or deceptive conduct; and
whether, by cl 11.2 of the deed, Onslow Salt had an obligation to consult with and notify BTAC of the real fill extraction agreement and the additional proposal application and, if so, whether the failure to do so breached cl 11.2 of the deed.
His Honour observed at [72]: ‘There is no doubt that the general principles in relation to stay applications in circumstances such as the present are well settled. Courts will generally hold the parties to the bargain in relation to dispute resolution clauses. Such clauses do not oust the discretion of the Court to hear a matter: see Zeke Services at [10]-[15]. Further, there is no suggestion by either party that the DRC purports to oust the jurisdiction of the Court. However, as a general proposition, a stay would not be granted if it would be unjust to deprive an applicant of its right to have its claim judicially determined (Dirty Dancing Investments at [54]), but this will all depend very much on the nature of the dispute, the parties to the dispute, the nature of the agreement in which the dispute resolution clause is contained and the conduct of the actual clause.’
And further at [78]: ‘If a part of these proceedings which relates to the Deed is stayed, the result would be that the balance of the proceedings would be continued against both respondents, but with a separate procedure under the DRC being conducted in tandem with respect to those parts of the proceedings relating to the Deed. After this, BTAC, if the matters were not resolved, would be able to proceed in this Court with its claims relating to the Deed. As BTAC submits, even if all of the proceedings against Onslow Salt were stayed, the proceedings would still continue against the State, with the DRC operating in relation to Onslow Salt only. If the matter was not resolved as a result of that process, BTAC would then continue in this Court with its claims against Onslow Salt.’
At [81]: ‘It is fundamentally important to note that the DRC does not produce a determination or any binding outcome at all. It only produces an opinion. I accept that it does so in relative privacy, which is a factor I most certainly take into account in favour of Onslow Salt. Most of the cases (including Mineral Resources) on which Onslow Salt relies, however, are clauses from which a determination by, not an opinion of, an expert is the outcome. Nothing in cl 15.3 makes the independent expert’s opinion binding on the parties to the Deed, let alone the State. It does not, in fact, provide an alternative method for the binding determination of any dispute between the parties, but simply spells out a private step that needs to be undertaken before the parties may refer a relevant matter to the Court. It is an entirely commendable process which has been recognised and respected by the Courts on many occasions, except where there are exceptional circumstances. The nature of this case falls into that exceptional category.’
McKerracher J ordered that the stay application should be refused.