Legal development

Next generation good faith issues – Gomeroi v Santos appeal


    Native Title Year in Review 2023-2024

    What you need to know

    • The Full Federal Court has recently considered next generation good faith issues in a rare opportunity to consider the actions of sophisticated parties in a good faith dispute.
    • In Gomeroi People v Santos NSW Pty Ltd and Santos NSW (Narrabri Gas) Pty Ltd [2024] FCAFC 26 the Full Federal Court unanimously rejected the Gomeroi claimant's five 'good faith' grounds of appeal, and held that Santos had negotiated in good faith.
    • This is the first Full Court decision on good faith for many years and provides a comprehensive analysis of the adequacy of offers and the role of experts. The upshot however, is that the good faith fundamentals have not changed.
    • Meanwhile, some small miners have not learnt from past good faith decisions. In the past 12 months, three good faith challenges have all resulted in a finding that the grantee party failed to negotiate in good faith.

    What you need to do

    • Proponents in a right to negotiate process can take comfort that if they are genuinely trying to reach a deal and their conduct reflects this, they will likely satisfy the good faith standard.
    • Monitor the Australian Law Reform Commission's review into the future act regime, due in December 2025. The Commission will no doubt have something to say about the good faith test and the right to negotiate process more generally.

    Full Federal Court rejects Gomeroi appeal on good faith grounds

    We reported on the good faith challenge brought by the Gomeroi native title party against Santos in relation to the grant of petroleum production leases required for the Narrabri Gas Project in our Native Title Year in Review 2022-2023 article "Santos wins strongly in National Native Title Tribunal, but Full Federal Court will hear Gomeroi appeal". The Tribunal concluded there was no basis for finding Santos had failed to negotiate in good faith. The Gomeroi native title party appealed.

    On 6 March 2024, the Full Federal Court handed down its judgment in the appeal proceedings (Gomeroi People v Santos NSW Pty Ltd and Santos NSW (Narrabri Gas) Pty Ltd [2024] FCAFC 26). The Full Court unanimously rejected the Gomeroi party's five 'good faith' grounds of appeal, but allowed the appeal by majority on the basis that the Tribunal had erred in interpreting and applying the 'public interest' requirement under s 39(1)(e) of the Native Title Act 1993 (Cth).

    In rejecting the Gomeroi's five good faith grounds of appeal, the Full Court found that:

    • Santos' conduct in making offers was not so inherently unreasonable as to indicate an ulterior motive, a lack of honesty or an unwillingness to deal fairly and with an open mind with the Gomeroi; and
    • Santos was correct in negotiating with those Gomeroi claimants on the official Register of Native Title Claims in circumstances where it knew there had been a community vote to change the claimant group but before the Federal Court had ruled on the formal application for change.

    Reasonableness of offers

    Much of the Gomeroi's case relied on assertions that Santos' offers were unreasonable having regard to the Gomeroi's own benchmarking research, and that this indicated an absence of good faith.

    The Full Court made short work of those assertions.

    After reviewing previous authorities, it confirmed that, in some circumstances, the Tribunal may need to make some kind of assessment about whether the position adopted by a negotiation party involved an offer that was objectively unreasonable. However, the Tribunal should not become bogged down in its own assessment of whether an offer was “reasonable”, and divert focus from the good faith constraint. The Full Court accepted, for example, that even a patently unreasonable offer might not indicate a lack of good faith — it all depends on the evidence and the circumstances.

    Negotiated benefits v compensation

    The Full Court made it clear that the right to negotiate about the provision of benefits in the right to negotiate process is distinct from the right to claim compensation for the effect of compensable acts on native title rights and interests. It said at [112]:

    It can be accepted that the ability of native title holders, or registered claimants, to pursue payments as part of their statutory right to negotiate serves a different and wider purpose from the ability to seek compensation for the doing of certain acts under Division 2 of Part 5 of the NTA, although the two purposes are not mutually exclusive and there may be some overlap.

    Managing changes in the Applicant

    Over the seven year duration of the negotiation, the Applicant changed several times. The Gomeroi asserted that Santos has shown a lack of good faith by negotiating with the original Applicant in the year or so between a meeting to authorise a new Applicant and the making of the formal Federal Court orders giving effect to the change.

    The Full Court confirmed the Tribunal's decision that unless and until an order was made to formally change the Applicant, the existing Applicant was the “native title party” with whom Santos, as the "grantee party", must negotiate to discharge the good faith obligation.

    Full Federal Court reinforces familiar good faith test

    Despite thousands of pages of evidence and legal argument, the Full Court did not tamper with the fundamentals of the law relating to good faith, much of which was developed in the 1990s.

    Small miners did not learn the lessons from de Roma

    In 2022, in Kevin Alfred De Roma v Western Yalanji Aboriginal Corporation RNTBC and Another [2022] NNTTA 40, the Tribunal found there was a failure of a mining lease applicant (Mr De Roma) to negotiate in good faith. Of note in the determination was the conduct of Mr De Roma's representative, John Withers, who the Tribunal found showed a pattern of aggressive and unconstructive negotiation correspondence. We discussed this decision in our Native Title Year in Review 2022-2023 article "Small scale miners struggle to satisfy good faith standard in right to negotiate process".

    This year, Mr Withers appeared in two more good faith decisions: as the grantee party in John William Withers and Others v Ewamian People Aboriginal Corporation RNTBC and Another [2023] NNTTA 34 and as the representative of the grantee party in Western Yalanji Aboriginal Corporation RNTBC v Edmund James Fitzgerald and Another [2023] NNTTA 41. Mr Withers was criticised by the Tribunal in a very similar manner to De Roma, being described in Fitzgerald as engaging in "egregious conduct that harmed the negotiation process''.

    Australian Law Reform Commission to report on the future act regime in the Native Title Act

    On 4 June 2024 the Australian Law Reform Commission was asked to report on the future act regime in the Native Title Act.

    The need for reform was flagged in the A Way Forward report in October 2021 (see our Native Title Year in Review 2021-2022 article "Modernisation of cultural heritage protection legislation begins"). However, there was no progress on this front until recently, when the 2024-2025 Federal Budget allocated $500,000 for this review.

    The Terms of Reference do not specifically refer to the good faith obligation or the right to negotiate, but are wide enough to allow the Commission to explore these issues in the context of the future act regime as a whole.

    Recap of the good faith requirement in the right to negotiate process

    In certain circumstances, the grant of a mining or petroleum tenement will attract the right to negotiate (RTN) process under the Native Title Act.

    Where the RTN process applies, the tenement applicant (ie the grantee party) and relevant government party must 'negotiate in good faith' with any native title party for the tenement area, with a view to obtaining the native title party's agreement to the grant of the tenement.

    If agreement has not be reached and at least six months have passed since the notification day specified in the section 29 notice, any of the negotiation parties can apply to the Tribunal for a determination as to whether the tenement may be granted.

    The Tribunal has no jurisdiction to determine the matter where the native title party satisfies the Tribunal that one of the other parties has not negotiated in good faith.

    Want to know more?

    Authors: Joel Moss, Counsel; Clare Lawrence, Partner.

    The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
    Readers should take legal advice before applying it to specific issues or transactions.


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