Oil Basins Ltd v Watson [2014] FCAFC 154

Western Australia
Federal Court

Siopis, McKerracher and Barker JJ

In this matter, the Full Federal Court dismissed an appeal against Gilmour J’s decision in Watson v Western Australia (No 3) [2014] FCA 127.  

In that case, Gilmour J awarded indemnity costs against Oil Basins because of its “thoroughly unreasonable conduct” as a respondent party to the Nyikina Mangala people’s application for native title. 

Oil Basins’ Interest in the Claim Area

The Nyikina Mangala people applied in 1998 to be recognised as the native title holders of their traditional country, in the Kimberley region of Western Australia.

In December 2007, Oil Basins became the preferred applicant for an exploration permit over part of the claim area. The State gave notice of this as a future act, under s 29 of the Native Title Act 1993 (Cth) (NTA) and, Oil Basins conducted future act negotiations with the Nyikina Mangala people from early 2008. 

In May 2012, Oil Basins claimed a breakdown in the future act proceedings and asked the National Native Title Tribunal to issue a permit. This was granted, subject to conditions, on 1 February 2013, providing Oil Basins with what the Court noted at [32] “would seem an iron-clad protection” of “its interests under the permit.”

Oil Basins’ Joinder to the Claim

In October 2012, the Court ordered that the application for native title by the Nyikina Mangala People be referred to mediation and it was listed for hearing in early July 2013. 

Later in October 2012, Oil Basins applied to be joined as a respondent and, against the applicant’s objection, were joined on 15 February 2013 (see Watson v State of Western Australia [2013] FCA 238 or click here to see the NTRU’s summary of that decision). The Full Federal Court noted, at [20]:

counsel … for Oil Basins told the primary judge that, in her experience, parties such as Oil Basins “take very little part in the proceeding and that such part as they play, does not significantly add to the length or cost of a trial”.

Prior to Oil Basins being joined to the proceedings, the State had already notified all respondents (the Commonwealth, Telstra and several pastoralists) that it was prepared to move to a consent determination. Upon its joinder, the State sent Oil Basins a copy of the notification. The State’s decision took into account connection evidence from the expert anthropologist for the applicant, Dr Kingsley Palmer, the State’s anthropologist’s report, Dr David Martin (provided to Oil Basins in December 2012) and from various research, interviews and discussions.

The State had engaged with issues raised in the expert reports about whether the Nyikina and Mangala constituted a single society. This issue was resolved between the expert anthropologists and, on 7 March 2013, the State advised the respondents, including Oil Basins, that senior counsel (the Solicitor General of the State, Mr Grant Donaldson SC) had advised that the claim would likely succeed if contested. The State also wrote to Oil Basins, explaining how the State came to offer to settle the proceedings. 

The Court noted that the State would not provide Oil Basins with details of certain information it had received on a without prejudice basis and in confidential mediation. The State also directed Oil Basins to the Kimberley Land Council (KLC) for any further information on connection issues (lawyers employed by the KLC were the legal representative of the Nyikina Mangala people in the proceeding).

Oil Basins approached the Kimberley Land Council (KLC) on the issue of whether Nyikina and the Mangala People were one society. Oil Basins said it would not consent to a determination except on an informed basis and sought from KLC Dr Palmer’s report and some of the information that the State had denied Oil Basins on the basis of confidentiality and privilege.

On 21 March 2013, the KLC provided Oil Basins with some relevant information from Dr Palmer’s report as well as identifying caselaw and other information upon which the State was satisfied about the Nyikina Mangala people’s connection to the claim area. The KLC also redirected Oil Basins to the State Solicitor’s Office if it had further issues with connection evidence.

On 2 April 2013, the KLC provided Oil Basins with another three documents authored by Dr Palmer and Dr Martin and, the same day, the State provided tenure information.

On 19 April 2013, a mediation report was provided to the Court, setting out that the State was prepared to resolve the matter by way of a consent determination and that the Commonwealth, Telstra and the pastoral respondents were willing to follow the State’s lead. During April 2013, all parties filed documents with the Court, moving toward a consent determination. Oil Basins continued to put the claimants to proof on all connection issues necessary to establish native title.

Order to limit Oil Basins’ participation and award of costs

In early May 2013, the Nyikina Mangala claimants sought to have Oil Basins removed as a party under s 84(9) NTA or, as an alternative, that its participation be limited to extinguishment and determination issues concerning the permit. Shortly after, Oil Basins wrote to the KLC, maintaining that connection remained in issue.

During several hearings between 15 May and 13 August 2013, Oil Basins assured the Court that it would amend its response and look only to participate in the proceedings regarding extinguishment and not challenge connection. The Full Federal Court noted at [74] that:

the claimants put it squarely in issue that Oil Basins by its conduct in putting connection in issue had acted unreasonably and caused the claimants to incur costs in the conduct of the proceeding, that is to say, in the course of preparing for the on country hearing that was to commence on 2 July 2013, when all other respondent parties had, at material times, accepted connection and obviated the need for a hearing and the considerable expense associated with it.

Gilmour J’s judgment on 24 February 2014 found that Oil Basins had acted unreasonably for the purposes of s 85A(2) NTA. His Honour ordered that Oil Basins’ participation be limited to leading evidence and making submissions in respect of the matters listed in s 225(c) and (d) NTA (these matters relate to the nature and extent of native title interests and other interests in the determination area). Oil Basins was also ordered to pay indemnity costs (see Watson v State of Western Australia (No 3) [2014] FCA 127 or the NTRU’s summary here)

Grounds for Appeal

Oil Basins’ appealed against the cost orders. It raised a further 7 interrelated grounds that the primary judge made an error of fact or law by holding that:

  1. Oil Basins was obliged to adopt the decision of the State to concede the claimants’ case on connection. This is despite its beliefs about the existence of deficiencies in the claimants’ case and despite the State refusing to give it access to the anthropological evidence and legal advice of the State which informed the State’s decision.
  2. It was unreasonable for Oil Basins to put connection in issue, in the circumstances where:
    1. The beliefs of Oil Basins about the existence of deficiencies in the claimants’ case.
    2. The evidentiary material available to Oil Basins.
    3. The particular impact of a determination of native title on Oil Basins; and
    4. The State refusing to give Oil Basins access to relevant anthropological evidence and legal advice.
  3. It was unreasonable for Oil Basins subsequently to concede the claimants’ case on connection.
  4. It would not be appropriate for Oil Basins to contest the case on connection simply by testing the claimants’ expert evidence in cross examination and making submissions on the evidence.
  5. None of the matters relied upon by Oil Basins as reasonable grounds for contesting the claimants’ case on connection amounted to a significant deficiency in the case on connection.
  6. Oil Basins had been informed that the State had been advised that the claimants’ claim was very likely to succeed, when Oil Basins had simply been informed that the State had been advised that the claim was likely to succeed.
  7. Oil Basins no longer believed it had reasonable grounds for contesting the case on connection.

Considerations by the Full Federal Court

The Full Federal Court stated, at [152] that Gilmour J did not find, in form, substance or “in effect” that any respondent must adopt the decision of the State.

Their Honours referred to Gilmour J identifying Oil Basins’ misconception about the role of the State’s parens patriae obligations. The Court may place reliance on the State having discharged this obligation when considering the appropriateness of a consent determination. However, the State is under no obligation to share particular information and it would not be appropriate for the State to share material subject to privilege. The Full Federal Court noted, at [151]:

the solicitors for Oil Basins well understood, as indeed Oil Basins must have, that if they wished to lead anthropological evidence in the proceeding or rely on anthropological views going beyond those that had been shared with them, then it was up to Oil Basins to obtain that anthropological advice. At no time did Oil Basins do that.

Their Honours found, at [163]-[166], that the combination of events that saw Oil Basins change its position, from arguing on connection issues on 19 March 2013, to withdrawing its defence on 20 May 2013, justified Gilmour J’s finding that it was unreasonable for Oil Basins to put connection in issue.

Oil Basins was of the opinion that protecting its considerable commercial interests was a legitimate reason to contest the case on connection (see [59] in the original decision and [177] in the appeal). The Full Federal Court, at [154] and at [184] separated the concepts of motivation from reasonable grounds, stating at [184]:

While it may be accepted that there was a motivation for Oil Basins to contest native title, because a determination that native title did not exist on the area over which its permit would apply would mean that Oil Basins would not be required to enter into right to negotiate dealings with the claimants under the NTA in respect of future acts (such as a production licence), as noted above that consideration should not be confused with the question whether it actually had reasonable grounds to contest the claimants’ connection case.

The Full Federal Court noted, at [110]:

  1. Gilmour J described Dr Palmer’s report as “an impressive report by a leading expert”; and
  2. Gilmour J said of Dr Martin’s report, that “It is little wonder that, in light of this, the State altered its position [on connection].”

Their Honours supported Gilmour J’s finding that it was not appropriate that Oil Basins sought to contest connection, simply by testing expert evidence, without seeking expert advice or undertaking its own research. Oil Basins raised no concern about connection when it was joined. Without the benefit of expert advice, Oil Basins formed the view that deficiencies in the expert reports existed. The Full Federal Court noted, at [113], that Oil Basins had been invited to explain, but had not explained what or why it took issue with connection. Furthermore, their Honours said, at [200], that it was:

simply incorrect for Oil Basins to say it could not have obtained its own anthropological report without “full access to and cooperation from the claimants”.

At [202]-[216], the Full Federal Court rejected the appeal ground that Gilmour J had erred in finding that none of the “deficiencies” identified by Oil Basins amounted to even a single deficiency. Oil Basins considered the single society issue as significant and identified that as “the apparent disagreement among experts…” Oil Basins had focussed on a statement by the State that “as a matter of pragmatism” it would not put connection in issue. Oil Basins had been well informed, in various ways that the State was satisfied as to the cogency and sufficiency of the claimants’ connection evidence.

The other grounds for appeal were also dismissed. The Full Federal Court considered, at [219], that the issue over the trial judge using the words “very likely” to succeed, when the State had only said “likely” to succeed was nothing more than a matter of semantics.

Furthermore, their Honours found that the challenge to Gilmour J’s finding that Oil Basins no longer believed it had a reasonable ground for contesting the claimant’s case, was a misstatement of the primary judge’s findings. The issue their Honours considered important, at [223], was that Oil Basins had never reassessed its position in a way that would explain its about face in abandoning its opposition to the case on connection.

The appeal was dismissed with costs.