Right to negotiate process: Negotiation in good faith

We continue to see challenges to "negotiation in good faith" in the right to negotiate context, particularly in Western Australia.  Last year saw the first case in almost 20 years that a State's good faith has been successfully challenged.

Recap of the right to negotiate process and "good faith"

The right to negotiate (RTN) process in the Native Title Act 1993 (Cth) (Native Title Act) applies to "future acts" including the creation of a right to mine and certain compulsory acquisitions of native title.  It requires the State/Territory, the grantee party and the native title party to negotiate in good faith with a view to obtaining the agreement of the native title party to the doing of the "future act".  

If agreement cannot be reached within 6 months of the notice commencing the process, any of the parties can apply to the National Native Title Tribunal (NNTT) to determine the matter.  The NNTT does not have jurisdiction to determine the matter where the native title party satisfies the NNTT that the State/Territory and/or the grantee party have not negotiated in good faith.

Government Party fails to negotiate in good faith in the RTN process: Marine Produce Australia and Western Australia v Mayala People

The NNTT determined that the State of Western Australia did not negotiate in good faith in a RTN process about the compulsory acquisition of native title (Marine Produce Australia Limited and Western Australia v Mayala People [2018] NNTTA 28).  The purpose of the proposed compulsory acquisition was for the State to grant Marine Produce Australia Limited (the grantee party) a lease for aquaculture purposes.

The parties did not reach an agreement during the negotiation period so the grantee party lodged an application asking the NNTT to determine the matter.  The native title party challenged the jurisdiction of the NNTT to hear the matter on the grounds that neither the grantee party nor the State had negotiated in good faith.  

The grantee party's good faith was also challenged on a number of grounds, but none were successful. 

State of Western Australia did not negotiate in good faith

The NNTT was critical of the State for not taking an active role in the negotiation process.  It said at [190]:

"It is patently wrong that the Government party’s involvement was limited to the issuing of the Combined Notice, providing Mayala with details of the notice and giving them the opportunity to make submissions about the proposed grant of the lease.  The Government party is a negotiation party and is under the same obligation as the other negotiation parties; … Although the content of that obligation may differ depending on the context of the negotiations, the Government party still has a role as a negotiating party, especially where it proposes to compulsorily acquire the native title party’s rights and interests."

The NNTT was not satisfied with the State's argument that the NNTT should take into account that the grantee party was taking a lead role in the negotiations.  It noted that compensation was only one of a range of matters that were open for discussion.  Heritage was clearly a matter of significance to the native title party, as was the issue of maintaining access to the island.  The position adopted by the State meant there was no opportunity for the native title party to discuss how these matters would be addressed following the expiration of the lease. 

The NNTT noted the difference between the State's role in a RTN for the grant of a mining lease and a RTN for the compulsory acquisition of native title.  The NNTT said at [213]: 

"Significantly, if the compulsory acquisition was to proceed and the lease granted to MPA, ultimately the lease will expire.  At that time the full unencumbered ownership of Barnicoat Island would revert to the Government party. This situation is quite different to, for example, mining related RTN matters where the non-extinguishment principle applies and other interests in the land are preserved. "

 Further, at [215], the NNTT held:

"That negotiating position which is similar to that often seen in mining related right to negotiate matters fails to take account of the quite different circumstances and consequences (including benefits) of a compulsory acquisition right to negotiate process."

A second criticism related to delay.  The NNTT held at [192] that failure to respond to a letter from the native title party for four months was "frankly unacceptable on any standard of appropriate negotiation behaviour" (at [192]). 

Update on grantee party "good faith": Muccan Minerals Pty Ltd v Allen on behalf of the Njamal People 

In this third Muccan Minerals case, the NNTT held that Muccan Minerals Pty Ltd had negotiated in good faith, and the mining lease could be granted (Muccan Minerals Pty Ltd v Allen on behalf of the Njamal People [2018] NNTTA 24).  

In both 2014 and 2016, good faith challenges against Muccan Minerals were successful, and the grantee party was sent back to continue to negotiate.  

In this third good faith challenge, the NNTT considered the impact of the Full Court's decision in Charles, on behalf of Mount Jowlaenga Polygon #2 v Sheffield Resources [2017] FCAFC 218 (where the Full Court said if negotiations continue after the referral to the NNTT they need to be in good faith).  President Webb QC said (at [71]): 

"While the Sheffield Full Court appeal did make it clear the obligation to negotiate in good faith continues even after a s 35 application has been made, the Full Court was quite clear that this was in circumstances where parties agree to continue to negotiate... I believe it apparent from Muccan’s conduct that its participation in negotiations ceased upon lodgement of the s 35 applications. Section 35(3) makes it clear that parties may continue to negotiate after a s 35 application is made (and the findings of the Sheffield Full Court appeal make it clear that these voluntary negotiations must be conducted in good faith should they occur). However, there is nothing requiring parties to continue to negotiate after this point. I am not prepared to make any adverse findings regarding Muccan’s behaviour based on this point."

At [80], the NNTT held:

"Having regard to the entirety of Muccan’s conduct in the negotiations, on balance I am satisfied Muccan has fulfilled its obligations under s 31(1)(b), but has certainly done no more than what I regard as the bare minimum. It follows that I have the power to proceed to make a determination on the substantive issue (s 36(2))."

More information about "negotiation in good faith"

For more information about the meaning of "negotiate in good faith" in the RTN process, see "Lessons in good faith: Nothing new, just more examples of what not to do!" on page 21 of our Native Title Year in Review 2015.  The article considers three NNTT decisions in 2015 where the grantee party failed to negotiate in good faith and sets out a convenient summary of the legal principles regarding good faith negotiations.

For a recent Full Court decision on "good faith" see our article "Full Court overturns long held view on "negotiation in good faith" in the RTN context" in our Native Title Year in Review 2017.