Government Party fails to negotiate in good faith in the right to negotiate process

What you need to know

• The NNTT has determined that the State of Western Australia did not negotiate in good faith in a right to negotiate process about the compulsory acquisition of native title (Marine Produce Australia Limited and Western Australia v Mayala People [2018] NNTTA 28).
• This is the first time in almost 20 years that a State Government's "good faith" in the right to negotiate process under the Native Title Act 1993 (Cth) has been successfully challenged. In fact, this is only the tenth successful good faith challenge against any party since 2000. 
• The decision serves as an important reminder to all State and Territory Governments that they are under the same obligation to negotiate in good faith as the other negotiation parties.  The Government party cannot just "go through the motions" – it must consider its obligations in the particular context of each RTN Process.  
• Clearly, the Government party has a greater role to play where the future act is the compulsorily acquisition of native title rather than the grant of a mining or petroleum tenement.  However, even in the resources context, the Government party needs to ensure that it meets the "good faith" standard.
• The Government party's behaviour presents a risk for grantee parties.  In light of that risk, a grantee party should be mindful of the Government party's role in the negotiations and, if necessary, take steps to manage or mitigate that risk. It is likely that, following this decision, native title parties may pay more attention to the role and actions of the Government party in meeting its good faith obligations.

What you need to do

• Grantee parties need to manage the risk of the Government party's negotiating behaviour triggering a good faith challenge, on top of their own obligations to negotiate in good faith.  It is likely that, following this decision, native title parties may pay more attention to the role and actions of the Government party in meeting its good faith obligations.
• Proponents likely to be involved in the RTN process should ensure that the relevant State Government has considered, and if necessary updated, its RTN negotiation policy/approach in light of this decision.

Quick recap of the RTN Process and "good faith"

The right to negotiate process in the Native Title Act 1993 (Cth) (NTA) applies to "future acts" including the creation of a right to mine and certain compulsory acquisitions of native title (RTN). 

It requires the State, 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 unless the State and the grantee party have negotiated in good faith.

This RTN was about a compulsory acquisition

The State of Western Australia gave notice of its intention to compulsorily acquire native title rights and interests in respect of Barnicoat Island.  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 Mayala People have a registered native title claim encompassing Barnicoat Island and were the native title party for the RTN.  

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.

Grantee Party did negotiate in good faith

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

The first ground was that the parties negotiated about an indigenous land use agreement (ILUA) to avoid extinguishing native title, not about the future act itself, which was the compulsory acquisition of native title. The NNTT rejected this ground because the grantee party and the State were following the clear preference of the native title party for an ILUA.

None of the remaining grounds against the grantee party were made out. The NNTT held that, while some of the evidence revealed some "less than satisfactory" and "regrettable" conduct by the grantee party, it did not amount to a failure to negotiate in good faith in the context of the negotiations as a whole. The NNTT took into account that the grantee party did not have legal representation and had a negotiator who has inexperienced in native title negotiations.  

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 in the NOITT [notice of intention to take] process 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 an RTN for the grant of a mining lease and an 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 right to negotiate 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]).  

Insights

This is the first time in almost 20 years that a State's "good faith" in the RTN process has been successfully challenged. In fact, this is only the tenth successful good faith challenge against any party since 2000. 

It is important to note that this decision is not a departure from previous decisions and does not create any new law on the meaning of "negotiation in good faith" in the RTN environment.  

Put simply, the decision serves as an important reminder to all State and Territory Governments that they are under the same obligation to negotiate in good faith as the other negotiation parties.  The Government party cannot just "go through the motions" – it must consider its obligations in the particular context of each RTN Process.  

Clearly, the Government party has a greater role to play where the future act is the compulsorily acquisition of native title rather than the grant of a mining or petroleum tenement.  However, even in the resources context, the Government party needs to ensure that it meets the "good faith" standard.

The Government party's behaviour presents a risk for grantee parties.  In light of that risk, a grantee party should be mindful of the Government party's role in the negotiations and, if necessary, take steps to manage or mitigate that risk.  

Grantee parties need to manage the risk of the Government party's negotiating behaviour triggering a good faith challenge, on top of their own obligations to negotiate in good faith.  It is likely that, following this decision, native title parties may pay more attention to the role and actions of the Government party in meeting its good faith obligations.  

Proponents likely to be involved in the RTN process should ensure that the relevant State Government has considered, and if necessary updated, its RTN negotiation policy/approach in light of this decision.

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.

Authors: Andrew Gay, Partner; Nerida Cooley, Counsel; Leonie Flynn, Senior Expertise Lawyer