North, Griffiths and White JJ
In this matter, The Federal Court of Australia, Court of appeal: North, Griffiths and White JJ ordered that:
The appeal be allowed
Order 1 of the Court’s orders dated 21 September 2017 be set aside
The decision dated 22 May 2017 of the National Native Title Tribunal be set aside
The matter be remitted to the National Native Title Tribunal (NNTT) for re-hearing according to the law: confined to the issue of whether or not s 36(2) Native Title Act 1993 (Cth) (NTA) applies
The implementation and operation of the decision dated 14 June 2017 of the NNTT be stayed until further order
The first respondents notify the Court in writing in terms of the decision of the NNTT in terms of order 4 within 72 hours of the order being published
The Court is to determine on the papers the validity of the decision of the NNTT arising from order 4 above
The parties were provided with liberty to apply on the giving of 48 hour’s notice
The first and second respondents to pay the appellants’ costs of the appeal as agreed or assessed.
North and Griffiths JJ
In this matter the Full federal Court heard an urgent appeal from Charles on behalf of Mount Jowlaenga Polygon # 2 v Sheffield Resources Limited [2017] FCA 1126.
The central issue in the appeal was whether the primary judge erred in concluding that, on the proper construction of the relevant provisions of the NTA, the obligation to negotiate in good faith pursuant to s 31(1)(b) did not continue to apply to negotiations which took place after a negotiation party made an application under s 35, for the arbitral body to make a determination under s 38 of the NTA. The hearing was expedited after an application from Sheffield Resources Limited (Sheffield).
Relevant provisions of the Native Title Act
[3] Subdivision P of Div 3 of Pt 2 of the NTA contains provisions relating to “the right to negotiate”. ‘The importance of these provisions for native title parties has long been recognised, as has the significance of the correlative obligation on other persons to negotiate in good faith.’ (See North Ganalanja Aboriginal Corporation and Anor for and on behalf of the Waanyi People v The State of Queensland and Ors (1996) 185 CLR 595 at 616 per Brennan CJ, Dawson, Toohey, Gaudron and Gummow JJ).
Griffiths and North JJ noted the overview of Subdivision P, as set out in s 25 of the NTA: subdivision P applies to certain future acts as defined in s 233 NTA done by the Commonwealth, State or a Territory which includes certain conferrals of mining rights. Before the future act is done the parties must negotiate with a view to reaching agreement. If no agreement is reached either, an arbitral body or a Minister can make a determination about the act instead. If the Subdivision P procedures are not complied with, the future act will be invalid in so far as it affects native title. (s 25(4) NTA). Griffiths and North JJ then set out the details and legislative effect of sections 26, 27, 28 and 29 of the NTA.
Section 31 is the key provision of this urgent appeal and is set out in full at paragraph [11] of the written reasons for judgment. A non-exhaustive list of matters which may be subject to the negotiations is set out in section 33 NTA.
Application for arbitral body determination
Section 35 NTA permits the matter to be taken forward at the end of the six month period by way of an arbitral determination if the negotiations do not result in agreement.
Section 36 NTA requires an arbitral body to make a determination as soon as practicable subject to s 37 NTA. If any negotiation party satisfies the arbitral body that the other party did not negotiate in good faith, then the arbitral body must not make the determination on the application. Under s 36A NTA the relevant Minister may make a determination if there has been a delay in the arbitral body making the determination. Section 38 NTA specifies what kind of determinations the arbitral body may make. Section 39 NTA identifies various criteria an arbitral body must take into account when making a determination. Sections 75 and 76 NTA specify the type of applications that can be made and how a negotiation party may make an application for a determination to the arbitral body. The effect of section 139 NTA, is that the NNTT must hold an inquiry into the “right to negotiate application” as defined in s 75. Section 162 requires the NNTT to make a determination about the matters covered in the inquiry. The task of statutory construction must also take into account relevant parts of the Preamble and some of the explicit objects set out in s 3 of the NTA.
[27] The broad features of this legislative scheme, focussing upon the obligation to engage in good faith negotiations and the process for obtaining an arbitral determination, were described by in FMG Pilbara Pty Ltd v Cox [2009] FCAFC 49 (Cox) at [19], [21] and [22] by Spender, Sundberg and McKerracher JJ:
[19] ‘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) 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.’
North and Griffiths JJ further explained that: [21] ‘The scheme of the relevant provisions of the Act recognises Parliament’s intention that there must be a good faith period of negotiation in relation to the future act before there is any arbitral determination in relation to the future act. The period of six months provided for in s 35 of the Act ensures that there is reasonable time to enable those negotiations to be conducted. At the same time it permits the matter to be taken forward at the end of the six month period by way of an arbitral determination if the negotiations do not result in agreement. The ongoing protection provided for “negotiation parties” as defined by s 30A of the Act is that if any such party satisfies the arbitral body, in this case the Tribunal, that another negotiation party (other than the native title party) did not negotiate in good faith, the arbitral body must not make the determination on the application.’
Background facts summarised
On 8 August 2014 the Executive Director of the Department of Mines and Petroleum at the Government of Western Australia gave notice in accordance with s 29 of the Act, that a lease application (M04/459) under the Mining Act 1978 (WA) may be granted to Sheffield Resources Limited.
Following notification the Mount Jowlaenga Polygon #2 claim group appointed KRED as its lawyer to engage in negotiations with the grantee party for s31 negotiation purposes.
The NNTT member considered that, following the making of the s 35 application, the grantee party did not have a continuing duty to negotiate in good faith: see Sheffield Resources Ltd and Another v Charles and Others on behalf of Mount Jowlaenga Polygon #2 [2017] NNTTA 25. On review, the primary judge affirmed the NNTT’s construction was supported by a textual analysis of the key statutory provisions and by consideration of the effect of adopting the alternative construction. A principal textual consideration was his Honour’s view that s 36(2) was not framed with continuing negotiations in mind because it adopted past tense, i.e. ‘did not negotiate in good faith’. See paragraphs [28]–[39]. For the AIATSIS case note on this decision see What’s New in Native Title – September 2017.
The appeal
[46] The appellant pressed three grounds of appeal:
Ground 1 – focussed on the central issue of construction. The appellant claimed that the primary judge erred in concluding that the good faith obligation imposed by s 31(1)(b) did not attach to voluntary negotiations conducted by a negotiation party after a future act determination application has been made under s 35, but prior to a s 38 arbitral determination.
[50] Their Honours referred to the ‘settled’ approach to statutory construction in Australia, as described by Kiefel CJ, Nettle and Gordon JJ in SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 at [14]:
‘The starting point for the ascertainment of the meaning of a statutory provision is the text of the statute whilst, at the same time, regard is had to its context and purpose. Context should be regarded at this first stage and not at some later stage and it should be regarded in its widest sense.’ Their Honours also referred to the recent observations of Gageler J in ESSO Australia Pty Ltd v The Australian Workers’ Union [2017] HCA 54 at [71].
[52] The preamble to the NTA, as well as the objects of the legislation, set out in s 3, provide important context particularly: ‘In future, acts that affect native title should only be able to be validly done if, typically, they can also be done to freehold land and if, whenever appropriate, every reasonable effort has been made to secure the agreement of the native title holders through a special right to negotiate. It is also important that the broader Australian community be provided with certainty that such acts may be validly done.’
[53] As the primary judge noted the two main objects of the NTA are to (1) provide for the recognition and protection of native title and (2) to establish ways in which dealings affecting native title may proceed and to set standards for those dealings.
[56] Their Honours considered that ten matters supported a different construction from that preferred by the primary judge:
The obligation to negotiate in good faith which is imposed by s 31(1)(b) is defined by reference to a particular possible outcome (i.e. the agreement of each of the native title parties to the doing of the act), but is not explicitly subject to any particular point in time or cut-off date, such as when a s 35 application is made (or accepted).
Although the obligation to negotiate in good faith is imposed on all the negotiation parties, it is explicitly stated to be directed to obtaining the agreement of each of the native title parties to the specified matters. The object of the obligation is directed to protecting the native title parties.
The legislative regime (ss 34, 35(3), 36(4), 38(1A)) contemplates the possibility that the parties may voluntarily continue to negotiate notwithstanding that a s 35 application has been made.
The past tense used in s 36(2) (i.e. ‘did not negotiate...’) is not a determinative factor in favour of the construction preferred by the primary judge. The possibility of post-s 35 application negotiations being voluntarily conducted is contemplated in the legislation and, where that occurs, s 36(2) continues to apply. The issue whether any other negotiation party (other than a native title party) did not negotiate in good faith may involve consideration by the arbitral body of conduct which occurred in negotiations carried out both pre and post the making of the s 35 application.
Their Honours noted that an interpretation of the heading of s 31, ‘Normal negotiation procedure’ that confines the operation of that section to negotiations conducted prior to when a s 35 application, would prevent the NNTT from mediating any negotiations that take place after the making of an application; notwithstanding that the NTA contemplates that such negotiations may voluntarily occur. Their Honours questioned what purpose is served by freeing post-application negotiations from the standards which apply to negotiations conducted in the period before the making of the s 35 application: ‘Why should the native parties in particular lose the protections which they enjoy in respect of negotiations carried out in that earlier period?’ (at [64]). Their Honours considered that such a construction does not promote the purpose or object of the legislation.
Their Honours considered that in contrast to that of the primary judge, their preferred construction –one which promotes the purpose or object of the NTA (see s15AA Acts Interpretation Act 1901 (Cth)) and gives full effect to ss 31, 34, 36(2), 41A, 39(4) and 40(b) NTA is to regard any post-s35 NTA voluntary negotiations, as negotiations which are carried out under Subdivision P, to which the standards imposed by that subdivision, apply. See paragraph [66] (1)–(5) of the written reasons for judgment.
Their Honours held that the distinction between ‘process’ and ‘construction’ in s 31(1)(b) is still preserved if the word ‘agreement’ in that section is construed as referring not only to the objective of obtaining an agreement before a s 35 application is made, but also an agreement reached after that event and finalised before the making of the s 35 determination.
Their Honours did not consider that Carr J’s observations in Walley v Western Australia [1996] FCA 409 relevant, as the issue did not arise there and importantly provisions such as ss 31,34,35,36,37 and 38 have been significantly amended since Walley was decided as respectfully is the case with respect to Lee J’s decision in Brownley v Western Australia (No 1) [1999] FCA 1139.
Their Honours found it ‘difficult to see how the issue of construction is affected by consideration of the “muddying” ramifications as referred to by the primary judge (see [87]). Those ramifications also arise under the primary judge’s preferred construction, because of the relevance under that analysis of post-s 35 application conduct in informing an assessment of the pre-s 35 application conduct.’
Finally their Honours rejected Sheffield’s submission that their construction of the relevant provisions of the NTA is inconsistent with the Full Court’s decision in Cox v Western Australia [2008] NNTTA 90 on the basis that the issue of a continuing obligation to negotiate in good faith did not arise for determination in that matter. At [71]: ‘The reference in [19] of Cox to there being “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”, is a reference to obligations relating to the arbitral process and not obligations which attach to any ongoing negotiations conducted by the negotiation parties voluntarily and in parallel with the arbitral process.’
[71] Their Honours considered that the obligation to negotiate in good faith applied as a matter of implication where the parties agree to negotiate after an application for determination is made. It was considered significant that s 35(3), which contemplates that the negotiation parties may voluntarily agree to continue to negotiate after the making of a s 35 application, describes the objective of those post-s 35 application negotiations as being to obtain an agreement of the kind mentioned in s 31(1)(b) before an arbitral determination is made.
At [59]: ‘An agreement of that kind is an agreement which results from good faith negotiations as to the doing of the future act with or without conditions. The good faith obligation is an integral part of the process which is directed to the objective of making an agreement with the native title parties. That obligation subsists even though an agreement may not ultimately be reached.’
Ground 2
The second ground presented in the alternative, was that if the primary judge’s construction is correct, it is essential to determine when the obligation of good faith ceased to apply to any continuing negotiations between the negotiating parties and in particular, whether the good faith obligation applied to negotiations between the appellant and Sheffield in relevant period [47]. Given the appellant’s success in relation to ground 1 this ground did not arise for determination.
Ground 3
This ground, which was also expressed in the alternative, was that the primary judge erred if he accepted that a s 35 application is made when a Form 5 is ‘lodged’ with the Registrar, because this ignores the need for the NNTT to accept an application under s 77 of the NTA before it has jurisdiction to entertain a s 35 application. This ground did not arise for determination given the appellant’s success in relation to ground 1.
[75] Griffiths and North JJ held that the appeal should be allowed, with costs.
[76] Their honours did not consider it appropriate for the Court to determine whether or not Sheffield was in breach of its obligation of good faith and remitted the matter to the NNTT, and stayed the NNTT’s decision dated 14 June 2017 pending the decision of the NNTT on the question of good faith on the remitter.
White J
White J considered the two issues raised by the appeal: (1) whether parties engaging in negotiations after a future act determination application (FADA) has been made pursuant to s 35(1) of the NTA are obliged to do so in good faith.
[80] North and Griffiths JJ answered the question in the affirmative but White J reached a contrary conclusion. [81] The second issue would only arise if the first question were to have been answered in the negative and concerns the precise time at which the obligation to negotiate in good faith concludes.
White J adopted (1) the factual circumstances giving rise to the appeal (2) the relevant provisions of the NTA and (3) the appellant’s ground of appeal as set out by North and Griffiths JJ in their written reasons for judgment.
Negotiating in good faith
[94] Negotiating in good faith has been said to involve acting honestly, without ulterior motive or purpose, with an open mind, willingness to listen, willingness to compromise, an active and open participation of the other parties, and the making of every reasonable effort to reach an agreement: Brownley v Western Australia [1999] FCA 1139. Delay, obfuscation, intransigence and pettifoggery have been said to be indicia of a want of good faith: Brownley at [25].
White J considered at [98] that the making of a future act determination application (FADA) ‘seems implicitly to end the obligation to negotiate in good faith imposed by s 31(1) (b). That is the effect of s 35(3) which permits, but does not oblige, the negotiating parties to continue to negotiate.’
Identifying the issue for construction
His Honour characterised the ‘real’ question raised by the appellants’ first ground of appeal as whether a failure by a negotiation party to negotiate in good faith after a FADA has been made is a failure of the kind to which s 36(2) refers, so as to preclude the arbitral body, on satisfaction that there has been such a failure, from making a determination. In the alternative, that the issue bears on whether an ‘agreement of the kind mentioned in s 31(1) (b)’ has been made. The submission was that an essential element of the agreement to which s 31(1) (b) refers is that it be the product of good faith negotiation.
His Honour did not accept the appellant’s position, asserting firstly that [102] that s 31(1)(b) ‘is more naturally to be understood as referring to an agreement having the specified content, without the inclusion of a requirement as to the process by which the agreement is reached’ and [104] secondly that the obligation is good faith with a view to an agreement of a specified kind and therefore the mandatory obligation relates to the conduct of the parties in the negotiation and not the product of the negotiation. [105] Thirdly, White J considered that Parliament could have included an express statement as such, but did not elect to do so. Fourthly, [106] his Honour also considered that ‘considerable uncertainty’ into the operation of the Subdivision P NTA scheme may follow such a construction of the provision. Such uncertainty could arise if one of the parties to an agreement later took the view that it was not a product of good faith negotiation and then sought arbitration. [107] Fifthly, His Honour found this to be in line with the Carr J’s decision in Walley.
[108] – [109] Finally, his Honour did not regard the submission concerning the effect of an agreement on a FADA, for which s 35(3) provides, as being a persuasive indication. ‘All it means is that the secondary (arbitral) process by which a future act may be permitted comes to an end. It is not as though that denies the arbitral body some supervisory role with respect to the agreement, because it did not have such a role in any event. The position is no different from that which would have applied had the parties reached agreement during the mandatory period of good faith negotiation.
Accordingly, White J accepted the submission of the first respondent (Sheffield) that the primary issue : whether a failure to negotiate in good faith after a FADA has been made operates, by reason of s 36(2), to preclude an arbitral body from making a determination on the application. Unless the arbitral body is satisfied of that fact, it is bound to conduct an inquiry and to make a determination of the FADA – see ss 38(1), 139(b) and 162 of the NT Act.’
First issue – Ground 1 statutory construction
[112] Firstly White J considered it significant that any negotiations occurring after a FADA has been made are voluntary, and that the NTA regards voluntary negotiation differently to the mandatory negotiation in good faith under s 31. Section 35(3) is permissive in that it provides that the negotiation parties may continue to negotiate even after the FADA has been made. This is in contrast with s 31(1) (b) which provides that the negotiation parties must negotiate in good faith. Section 35 does not contain any ancillary provisions relating to the negotiation. In particular, there are no counterparts in s 35 to ss 31(2), (3) and (4). His Honour considered the inference may readily be drawn that the legislature did not consider provisions of that kind to be necessary in respect of the voluntary negotiations contemplated by s 35(3) as there is no obligatory element of good faith in such negotiations.
Secondly, his Honour found that [115] the expression ‘did not’ in s 36(2), was significant as it is expressed in the past tense – and as referring to the particular time in the past when good faith negotiation was required and not those that may occur pursuant to s 35(3).
[116] Thirdly, White J considered that the task of statutory construction requires a court to strive to give meaning to every word in the provision: Project Blue Sky Inc v Australian Broadcasting Authority [1998] HCA 28 at [71]. In the present case, this required effect to be given to the express reference to the negotiation in good faith ‘mentioned in s 31(1)(b)’ in 36(2), which indicated to his Honour that s 31(2) refers to the single composite obligation to negotiate in good faith imposed by s 31(1)(b). In addition, it is significant that, while referring expressly to the negotiation mentioned in s 31(1) (b), s 36(2), it does not refer at all to the negotiations mentioned in s 35(3).
[118] Fourthly, his Honour stated that the construction for which the appellants contend also involved the prospect of improbable consequences. As counsel for Sheffield pointed out, it could mean that an arbitral body may be precluded from making a determination in the case of a grantee party who had, before making a FADA, negotiated in good faith only because that party’s subsequent conduct in negotiation had not been in good faith.
[120] Fifthly, his Honour agreed with the primary judge that a requirement that negotiations after the making of an FADA be in good faith, has the potential to complicate the arbitral process. It would mean that an issue about a party’s good faith in negotiations could be raised at any time during the arbitral process (including after the arbitral body had reserved its decision) in respect of any negotiation conduct by a party, thereby giving rise to additional issues, and delay in the arbitral determination.
[122] Sixthly, White J stated that the Parliament could easily have stipulated that any negotiations occurring after the making of the FADA be in good faith, but did not do so.
[123] Finally White J held that ‘the course of decision making in the Tribunal is consistent with the construction which I consider appropriate.’ His honour held that earlier NNTT decisions supported his Honour’s construction, citing South Blackwater Coal Ltd v Queensland [2001] NNTTA 23 at [11]; Cameron v Hoolihan [2005] NNTTA 84 at [38] and Cox v Western Australia [2008] NNTTA 90 at [19].
His Honour rejected the argument that the heading to s 31 suggests that good faith negotiation is the ‘normal’ procedure, stating that the counterpart to s 31 is the expedited procedure for which s 32 provides.
White J also rejected the appellants’ submission that the provision in s 35(3) for the parties to ‘continue to negotiate’ connoted implicitly the continuation of the negotiations required by s 31(1) (b) and the same terms and conditions, including the obligation of good faith. His Honour held that had it been intended that the term ‘continue to negotiate’ should have the effect for which the appellants contend, the legislature would have added words like ‘in accordance with paragraph 31(1)(b)’ immediately after that term.
In his Honour’s view, the Court should not read into s 35(3) words which the legislature has not itself chosen to use.
The Court agreed with the primary Judge [130] ‘that evidence of the negotiations occurring after the making of a FADA may in some cases be probative of whether a party was negotiating in good faith before the FADA was made. ‘I also agree that it should be an ordinary expectation that parties will in fact negotiate in good faith. However, a failure by a party to do so after the making of a FADA does not require the arbitral body to refuse to make the determination.’
Second issue – when a FADA is made
The second issue of the appeal concerned the time at which the obligation imposed by s 31(1) (b) concludes and at which continued negotiations become a matter of choice for the parties. It turns on when the application is ‘made’ within the meaning of s 35 (3).
The appellants contended that, when the arbitral body is the Tribunal, an application is ‘made’ when it is accepted by the Tribunal (which in this case occurred on 1 November 2016). Sheffield contended that, at least in relation to the Tribunal, an application which conforms with the statutory requirements is made when it is given to the Registrar (which in this case was 24 October 2016).
[133] The difference between the two dates was said to be significant because some of the conduct on which the appellants relied for their claim that Sheffield did not negotiate in good faith, occurred in the period between 24 October and 1 November 2016. His Honour found it unclear whether the issue was raised before the primary judge, however, Sheffield did not submit that it was not open to the appellants to agitate this ground on the appeal to this Court.
[136] Based upon a reading of ss 75–77 of the NTA, his Honour found that an application for the purposes of s 35(1) is made when an application complying with the requirements of s 76 is given to the Registrar and the Tribunal determines to accept it, as required by s 77.
[143] White J made the following conclusion:
Although the parties made submissions concerning the appropriate orders in the event that the appellants succeeded on the primary issue, they did not address the orders which would be appropriate in the circumstance that the appellants failed on the primary issue but succeeded on the second issue. In those circumstances, had my view about the appropriate disposition of the appeal prevailed, I would hear from the parties as to the orders which are appropriate to give effect to these reasons.