Show me the numbers Mining companies lose good faith challenges

What you need to know

• In 2021, the National Native Title Tribunal upheld two good faith challenges against mining companies participating in the right to negotiate process.  In both instances, the miner failed to meaningfully respond to the native title party's request for financial information.
• While mining companies are not required to "lay bare" their financial situation, the obligation to negotiate in good faith requires them to actively participate in negotiations, respond to requests for information in a timely manner, and either provide relevant information or explain why the information cannot be provided.
• Two decisions in early 2022 considered the good faith implications of referring matters to the Tribunal for determination when the native title party was not able to arrange claim group meetings because of the COVID-19 pandemic.  In both cases the Tribunal found that the mining company had acted in good faith. 
• Despite these two decisions, only 14 out of 65 good faith decisions have found against the grantee party (which is usually a mining company) or the Government over more than 20 years of the right to negotiate process.  

What you need to do

• Grantee parties involved in the right to negotiate process should actively consider and respond to any request for information from the native title party and if necessary, explain why information cannot be provided.
• Smaller operators should not assume that the good faith requirements around financial information do not apply them in the same way as larger mining companies.
• Native title parties should consider alternative ways to meet if claim group meetings are not possible because of the COVID-19 pandemic or similar events.  

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

The right to negotiate (RTN) process in the Native Title Act 1993 (Cth) applies to the grant of mining leases in certain circumstances.  The negotiating parties are the mining lease applicant (being the grantee party), any relevant native title party and the relevant State Government.  The RTN process requires the parties to negotiate in good faith with a view to obtaining the agreement of the native title party to the grant of the lease.  

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 to determine whether the mining lease may be granted.  

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

Silica miner fails to negotiate in good faith

In Sunstate Sands Bundaberg Pty Ltd and Another v First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Aboriginal Corporation RNTBC [2021] NNTTA 44, the Tribunal found that the mining company (Sunstate Sands) failed to negotiate in good faith, describing Sunstate Sands' behaviour as "unreasonable".

Sunstate Sands began negotiations with the Native Title Holders in mid-2020 in relation to a proposed mining lease that would extend its existing silica mining operations near Coonar Creek, south of Bundaberg.

Negotiations stalled on two occasions:

• firstly, when the Native Title Holders requested a copy of the Cultural Heritage Management Plan (CHMP) covering Sunstate Sands' existing operations; and
• secondly, when the Native Title Holders requested financial information to explain why their offer was not "economically viable" for Sunstate Sands.

When the parties failed to reach agreement and Sunstate Sands lodged a determination application with the Tribunal, the Native Title Holders contended that Sunstate Sands did not negotiate in good faith because it failed to "respond to reasonable requests for relevant information within a reasonable time".

The Tribunal agreed with the Native Title Holders, finding two problems with Sunstate Sands' behaviour.  

• Unreasonable delay in providing copy of Cultural Heritage Management Plan: Sunstate Sands took almost a year to provide a copy of a requested Cultural Heritage Management Plan.  This was unreasonable when it was clear that cultural heritage was important to the Native Title Holders.
• Unreasonable failure to provide sufficient information to explain Sunstate Sands' financial position: Sunstate Sands advised the Native Title Holders that the terms of their latest offer were not "economically viable", but failed to explain why.  

Small-scale gold miner fails to negotiate in good faith

In another case later in 2021, David Trow & Trojon Enterprises Pty Ltd v Aaron Banderson & Another on behalf of the Wagiman People [2021] NNTTA 68, the Tribunal also found that the miner failed to negotiate in good faith.

The proposal was for a small scale alluvial gold mining operation in the Northern Territory. Negotiations reached a sticking point in relation to the trigger for payments.  The Native Title Holders contended that the grantee party failed to negotiate in good faith because it:

• ignored, or unreasonably refused, requests for financial information about the project; and
• failed to explain why the Native Title Holders' proposals were not commercially viable.

The miner proposed that, because its project would be small scale, the terms regarding various payments to the Native Title Holders would be enlivened where the value of saleable minerals produced from the operations in an financial year exceeded $500,000.  The Native Title Holders asked for financial information in order to make an informed assessment of this offer, but were refused.  The miner refused to provide any financial information, arguing that the information sought was "unrelated to the effect of the proposed future act on registered native title rights and interests".

The Tribunal held that failure to provide information, or explain why it could not be provided, impeded the Native Title Holders' ability to participate meaningfully in the negotiations.  On this basis, the Tribunal found that the miner had demonstrated a lack of good faith.  

COVID-19 causes delays to claim group meetings – what does it mean for good faith?

Two decisions in early 2022 considered the good faith implications of referring matters to the Tribunal for determination when the native title party was not able to arrange claim group meetings because of the COVID-19 pandemic.  Both matters involved an application for ministerial consent to explore on land where native title may exist pursuant to an existing exploration licence with the "native title condition".  In both cases the Tribunal found that the explorer had acted in good faith.

In Tritton Resources Pty Ltd v Ngemba/Ngiyampaa, Wangaaypuwan and Wayilwan [2022] NNTTA 24 (23 March 2022) the parties negotiated for over six months and were close to finalising an agreement, which needed a claim group meeting to authorise it.  A scheduled claim group meeting was deferred because of the COVID-19 pandemic and restrictions in NSW.  Further attempts to convene a claim group meeting were unsuccessful and finally the explorer referred the matter to the Tribunal for determination some six months after the originally scheduled claim group meeting.  The native title party challenged the explorer's good faith on the grounds that it was unreasonable not to wait until the native title party could convene a claim group meeting to authorise the agreement.

The Tribunal noted that the central issue was not that the parties were unable to reach agreement.  On the contrary, the native title party intended to put the draft agreement to the claim group in order to seek their consent (or otherwise) to enter into it.  They argued that they were not given a reasonable opportunity to do so.  The explorer argued that it acted reasonably in waiting for a claim group meeting as long as it did so prior to lodging the application, that it is not bound by the claim group’s authorisation conditions.

The Tribunal held that the conduct of both parties in the negotiation phase of this matter (prior to the attempts to arrange authorisation for the agreement) was credit worthy and displayed a state of mind that was focussed on reaching agreement.  The issue is whether the conduct of the explorer, in not agreeing to the native title party's request to further delay lodging the application, negates conduct during agreement negotiations and overall amounts to a lack of good faith due to the unique circumstances, being an inability for the claim group to meet due to COVID-19 restrictions.

All parties agreed that the lodgement of an application to the Tribunal following the conclusion of the six month negotiation period does not, of itself, amount to a lack of good faith.  This issue has been well ventilated in the courts and it is widely understood that a party who lodges an application is not showing a lack of good faith, but simply exercising a statutory right under the Native Title Act.

The Tribunal said at [65] and [66]p;

It appears as though the option of a hybrid or virtual style meeting was not favoured by [claim group] and so was not explored further.  Meetings such as this have become more commonplace for native title groups and prescribed bodies corporate since the emergence of the COVID-19 pandemic although it must be acknowledged that even amongst those who participate in such meetings routinely, in-person meetings appear to be preferred.

Despite the COVID-19 restrictions that native title groups and others are operating in, there may be alternative mechanisms that can be engaged to enable groups to meet and allow for decisions to be made, be they hybrid, virtual or otherwise.  

The Tribunal held that the explorer had met its good faith obligations.  It agreed to delay lodgement of its determination application on several occasions in order to allow the claim group to consider the proposed agreement.  It put forward a number of proposals that provided options to embed the terms of the agreement when a claim group meeting could not occur.  

The Tribunal held that the lack of exploration of a hybrid or virtual claim group meeting may have been a missed opportunity by the native title party.  It noted that although the COVID-19 conditions are unprecedented, "so too is the need to find and implement what may be unprecedented solutions."

The situation was quite different in Jonathan Downes v Gomeroi People [2022] NNTTA 26 (31 March 2022).  

The explorer made an application to the Tribunal for determination because he had "continuously attempted to negotiate for 16 months without success".  The Tribunal noted the repeated efforts by the explorer to reach agreement with the native title party and the distinct lack of engagement by the native title party's legal representative (the NSW Aboriginal Land Council).  

The native title party argued that the explorer's repeated meeting requests were unreasonable in light of the COVID-19 pandemic and the NSW Aboriginal Land Council's inability to meet with its clients to take instructions.  

The Tribunal said that the crux of the native title party's argument was that the explorer should have waited until whenever the native title party was able to hold the necessary meetings to agree and authorise an agreement. The Tribunal said this takes a rather one sided view of the negotiation and that the native title party's legal representatives might have been able to explore alternative ways to meet with its clients. 

The Tribunal said at [177] and [178]:

I must say it beggars belief that at no time did the parties’ representatives meet electronically or on those occasions when [the explorer's representative] was in New South Wales. [His] request to meet with [the NSW Aboriginal Land Council] during his visit in February 2021 also went unanswered.

Gomeroi’s argument now appears to be that [the explorer] should have done nothing but wait until it was ready to engage on this matter. That is not how negotiation works.

More information about good faith

For more information about the meaning of "negotiate in good faith", see our articles in earlier editions of our Native Title Year in Review: You can't just rely on an earlier agreement: the good faith standard in the right to negotiate process requires more (1 April 2021), Right to negotiate process: Negotiation in good faith (10 April 2019), Government Party fails to negotiate in good faith in the right to negotiate process (6 July 2018), Full Court overturns long held view on "negotiation in good faith" in the RTN context (16 May 2018), Lessons in good faith: Nothing new, just more examples of what not to do! (9 May 2016).

Authors: Joel Moss, Senior Associate, Fergus Calwell, Lawyer and Leonie Flynn, Expertise Counsel