The Full Federal Court of Appeal majority’s (2-1) decision in Charles, on behalf of Mount Jowlaenga Polygon #2 v Sheffield Resources Limited  FCAFC 218 confirms that the obligation to negotiate in good faith continues to apply to voluntary negotiations that occur after an application for arbitral determination has been made.
Part 2, Division 3 Subdivision P of the Native Title Act 1993 (Cth) (the Act) outlines the framework for the right to negotiate by the native title parties in respect of certain future acts. Section 31 contains an express obligation that the negotiation parties must negotiate in good faith with a view to obtaining agreement of each native title party. Section 35 allows a negotiation party to apply to the National Native Title Tribunal for a determination in relation to the future act following a minimum period of 6 months of good faith negotiation.
The essential findings of the Court’s decision can be summarised as follows:
- The obligation to negotiate in good faith is not removed upon a section 35 application being made by a negotiating party.
- Any post-section 35 application voluntary negotiations should be treated as negotiations carried out under Subdivision P. As a result the standards imposed by that subdivision (including the obligation to negotiate in good faith) continue to apply.
On 8 August 2014 the Department of Mines and Petroleum of the Government of Western Australia gave notice of a lease application applied for by Sheffield Resources Limited (Sheffield). The grant of this lease would constitute a future act as defined in the Act. The Mount Jowlaenga Polygon #2 claim group, who claimed native title in the lease application area, appointed KRED Enterprises Pty Ltd (KRED) as its lawyers to engage in negotiations. On 24 October 2016 Sheffield made an application under section 35 for a determination in relation to the mining lease. Shortly after doing so, Sheffield contacted three members of the native title party directly stating a previous agreement put to (and rejected by) KRED was still open. This was said to be against the negotiation protocol agreed between KRED and Sheffield in which no direct contact with native title party members would be made. This conduct was the basis for the native title’s contentions that Sheffield did not negotiate in good faith.
On 22 May 2017 the National Native Title Tribunal (NNTT) handed down its decision in Sheffield Resources Ltd and Another v Charlies and Others on behalf of Mount Jowlaenga Polygon #2  NNTTA 25. The member of the NNTT concluded that Sheffield had conducted relevant negotiations in good faith. A future act determination was made on 14 June 2017 in Sheffield Resources Ltd and Another v Charlies and Others on Behalf of Mount Jowlaenga Polygon #2  NNTTA 34.
The native title party appealed to the Federal Court. In Charles, on behalf of Mount Jowlaenga Polygon #2 v Sheffield Resources Limited  FCA 1126 the primary judge affirmed the view taken by the NNTT that the obligation to negotiate in good faith did not continue after making a section 35 application.
The native title party appealed to the Full Federal Court contending the primary judge erred in concluding that the good faith obligation imposed by section 31 did not attach to voluntary negotiations conducted after a section 35 application is made but prior to a section 38 determination.
The majority (North and Griffiths JJ, White J dissenting) confirmed Subdivision P maintained the obligation to negotiate in good faith beyond the commencement of a section 35 application.
The majority made a number of observations. The obligation to negotiate in good faith is defined by reference to an outcome: the agreement of each of the native title parties to the doing of the act, not by reference to any point in time.
The obligation is directed at protecting the interests of native title parties. The Act contemplates the possibility that the parties may voluntarily continue to negotiate after a section 35 application has been made. The Act’s use of past-tense language in section 36(2) refers to the fact that the Tribunal may consider conduct in negotiations that occurred pre and post-making of a section 35 application.
The interpretation that best promotes the purposes and objects of the Act is to consider any voluntary negotiations that occur after a section 35 application as negotiations carried out under Subdivision P.
Result and Implications
The appeal was allowed. The 22 May 2017 decision was set aside and remitted to the NNTT to rehear the issue of whether Sheffield negotiated in good faith.
As a result of the decision, negotiation parties will need to be aware that any voluntary continuation of negotiations following the lodgement of a section 35 application will need to comply with the ‘good faith’ requirements prescribed by the Act.
For further information, please contact Graham Castledine.
Disclaimer: The information contained in this update is not advice and should not be relied upon as legal advice. Castledine Gregory recommends that if you have a matter in relation to which legal advice is required, you consult with your legal adviser.
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