In March 2020, the State of Queensland gave notice under the Native Title Act 1993 (Cth) (NTA) of its intention to grant a mining lease to Sunstate Sands Bundaberg Pty Ltd (Sunstate Sands) over 1.75km2 of land situated about 19 kilometres south-east of Bundaberg, Queensland.

A mining lease cannot be granted over an area where native title may be affected, unless either an indigenous land use agreement is in place or the ‘right to negotiate’ future act compliance requirements under the NTA are met.

Right to negotiate

Sunstate Sands commenced the right to negotiate procedure by notice to the First Nations Bailai, Gurang, Gooreng Gooreng, Taribelang Bunda People Aboriginal Corporation (RNTBC). The RNTBC holds native title over the proposed lease area on behalf of the native title holders. The NTA requires that Sunstate Sands and the RNTBC negotiate in good faith in an attempt to reach an agreement.

Sunstate Sands and the RNTBC attended mediation facilitated by the National Native Title Tribunal (NNTT). The NTA requires that the parties try to reach an agreement for a minimum of six months before seeking an arbitrated determination decision.

The parties engaged in negotiations for over 12 months, and two meetings were held in 2020.

On 24 May 2021, Sunstate Sands applied to the NNTT for a determination in relation to the mining lease as a negotiated agreement had not been reached with the RNTBC. RNTBC argued that Sunstate Sands did not negotiate in good faith.

Why the ‘good faith’ negotiations were challenged

The RNTBC argued that Member Shurven of the NNTT, who was allocated the matter, could not determine the issue as Sunstate Sands had not negotiated in good faith with regard to either (1) heritage protection; or (2) commercial terms.

The parties attempted to negotiate an Aboriginal cultural heritage agreement and an ancillary agreement which contained the commercial consideration for providing native title consent to the lease.

Agreement on how Aboriginal cultural heritage would be managed was reached but not signed when Sunstate Sands became aware that a cultural heritage plan was already in existence, as part of an earlier environmental management plan.

Before finalising the heritage management agreement, the RNTBC asked for a copy of this agreement (in July 2020). Sunstate Sands did not provide this for over 12 months and only after it applied to the NNTT in late May 2021 for a determination. The RNTBC contended that Sunstate Sands’ delay in providing details of the existing plan had hindered the negotiations.

Also, in mid-2020, Sunstate Sands also advised the RNTBC that some of the considerations in the ancillary agreement were not economically viable. As a result, the RNTBC asked for financial information to support this assertion. It argued that as Sunstate Sands did not provide sufficient information about its financial position and its projected return on investment, the RNTBC could not assess this contention or provide a viable counter-proposal during the negotiation period.

Determination decision

In deciding whether Sunstate Sands had negotiated in good faith, Member Shurven referred to the legal principles established in earlier cases.[1] These include:

  • the party alleging the lack of good faith is to produce material to support the allegation
  • the expression “negotiate in good faith” is not defined in the NTA. It should be given its ordinary and natural meaning
  • this incorporates a requirement for both subjective honesty of intention and sincerity and an objective standard of the overall reasonableness
  • the requirement for good faith is directed to the quality of a party’s conduct
  • a party is not required to reach any particular stage of negotiation before applying for a future act determination application. However, it is insufficient to merely “go through the motions, and the quality of the conduct must be assessed”
  • the good faith requirements as a whole focus on conduct which is “unreasonable”, “unexplained” or unnecessary”.

Based on her review of its overall conduct, Member Shurven concluded that Sunstate Sands had failed to negotiate in good faith.[2]

With regard to the Aboriginal cultural heritage agreement, the Member found that:

“It is often the case that cultural heritage considerations form a significant focus of native title negotiations. I do not consider it was reasonable for Sunstate Sands to provide the CHMP almost a year after it was initially requested ….”

With regard to the dispute about commercial terms, the Member concluded:

“I am of the view that Sunstate Sands provided reasons why they were unable to provide the financial information …, rather than why the suggested terms were not financially viable for the grantee party. I do not consider the information provided was reasonable in all the circumstances.”

As the Member was not satisfied that Sunstate Sands negotiated in good faith, she concluded that she did not have the power to proceed to make a determination about the mining lease. Therefore, the application was dismissed.

Takeaways

This decision is a reminder that under the NTA “right to negotiate” future act regime, parties must negotiate in good faith with respect to the proposed future grant, regardless of previous agreements and history.

The extent to which a grantee party actively participates, provides information in a timely manner, and gives clear reasons as to why information cannot be provided, are important factors in ensuring that a party acts in good faith.