FEDERAL COURT OF AUSTRALIA

Juru Enterprises Ltd v Adani Australia Company Pty Ltd [2018] FCA 870

ORDERS

THE COURT NOTES THAT:

1.    The first respondent filed a submitting notice on 30 June 2017.

2.    The special administrators of the second respondent informed the Court, by letter dated 19 April 2018, that the second respondent relies on the defence that its special administrators prepared and filed on 19 April 2018, but will not take part in the hearing of the proceedings on the basis that the second respondent has a substantial deficiency of assets over liabilities and is likely to be placed into liquidation.

THE COURT ORDERS THAT:

3.    The trial proceed in the absence of both respondents pursuant to Federal Court Rules 2011 r 30.2(1).

THE COURT DECLARES THAT:

4.    The applicant, Juru Enterprises Limited, is the Juru nominated body for the purposes of the ancillary agreement made between Margaret Smallwood, Tracey Lampton, Loretta Prior, Ray Gaston, Andrew Morrell, Janet Lymburner and Lenora Aldridge acting for and on their own behalf and on behalf of the Native Title Claim Group and Adani Abbot Point Terminal Pty Ltd, Adani Abbot Point Terminal Holdings Pty Ltd, Mundra Port Holdings Pty Ltd and Mundra Port Pty Ltd, and has held that position since the making of the ancillary agreement on 6 May 2013.

THE COURT ORDERS THAT:

5.    The second respondent pay the applicant’s costs of and incidental to the proceeding, provided that no action be taken to enforce any entitlement to costs without leave of the Court other than the submission to the administrators or a liquidator of the second respondent of a proof of debt.

6.    The applicant be granted leave to file and serve an interlocutory application for an order that a third party pay its costs of the proceedings, together with any evidence in support, on or before 14 June 2018.

7.    If any interlocutory application is filed pursuant to order 6:

(a)    each respondent to it file and serve any affidavits on which that respondent propose to rely in opposition to the application, on or before 5 July 2018;

(b)    the applicant file any evidence in reply and its outline of submissions, limited to 3 pages, on or before 9 July 2018;

(c)    each respondent file and serve an outline of submissions, limited to three pages, on or before 11 July 2018; and

(d)    the interlocutory application is returnable for hearing on 13 July 2018.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM THE TRANSCRIPT)

RARES J:

1    This is the final hearing of an application by Juru Enterprises Limited for a declaration that it is the Juru nominated body for the purposes of the ancillary agreement dated 6 May 2013 between it, “Margaret Smallwood, Tracey Lampton, Loretta Prior, Ray Gaston, Andrew Morrell, Janet Lymburner and Lenora Aldridge on their own behalf and on behalf of the Native Title Claim Group” (Applicant), on the one part and on the other part Adani Abbot Point Terminal Pty Ltd, Adani Abbot Point Terminal Holdings Pty Ltd, Mundra Port Holdings Pty Ltd and Mundra Port Pty Ltd (Adani).

2    The ancillary agreement defined “Native Title Claim Group” in cl 1.1 as meaning the members of the claim group for the claimant application that I subsequently determined by consent on 11 July 2014. That claim group was known as the Juru People. Their claim was entered into the Register of Native Title Claims by the National Native Title Tribunal on 27 May 2011. I granted three consent determinations of native title in favour of the Claim Group, the first on 26 July 2011 (Prior on behalf of the Juru (Cape Upstart) People v State of Queensland (No 2) [2011] FCA 819), the second (and presently relevant one) on 11 July 2014 (Lampton on behalf of the Juru People v State of Queensland [2014] FCA 736) and the third on 22 June 2015 (Lampton on behalf of the Juru People v State of Queensland [2015] FCA 609).

Background

3    The ancillary agreement came into existence pursuant to an indigenous land use agreement (ILUA) between the same parties, other than Juru Enterprises, and the State of Queensland, made on 23 March 2013. Under the ancillary agreement, Juru Enterprises was designated as the Juru nominated body within the meaning of the definition of that term as at 6 May 2013, being the commencement date of the ancillary agreement. The ancillary agreement provided in cl 7 that Adani would pay moneys, described as the “benefit payment”, to the Juru nominated body, being a body that satisfied a number of specific requirements in order for it to be capable of being nominated to that role under the ancillary agreement. Clause 1.1 defined the “Juru Nominated Body Requirements” as those specified in cl 7.2(a) of the ancillary agreement. Relevantly, cl 7.2(a) and (b) provided:

7.2    Juru Nominated Body Requirements

(a)    Upon its establishment and at all times during the Term, the Juru Nominated Body must be either:

(i)    an incorporated body:

(A)    whose members or shareholders are restricted by its constitution to the Native Title Claim Group;

(B)    that complies with the standards of accountability required by Laws under which it was established;

(C)    that is not in administration, receivership or liquidation under any Laws applicable to the incorporated body; and

(D)    that the Native Title Claim Group has agreed is the Juru Nominated Body for the purposes of this Agreement; or

(ii)    a trust …

(b)    The Parties acknowledge and agree that, as at the Commencement Date, the Native Title Claim Group has agreed that Juru Enterprises Limited is the Juru Nominated Body for the purposes of this Agreement. (emphasis added)

4    In addition, from time to time, the Juru nominated body could be replaced pursuant to cl 7.3, which provided:

7.3    Nomination of replacement Juru Nominated Body

(a)    The Applicant may, from time to time, replace the Juru Nominated Body with another entity that meets the Juru Nominated Body Requirements (Replacement Juru Nominated Body).

(b)    The Applicant will procure the Replacement Juru Nominated Body to execute a Juru Nominated Body Deed. Upon the commencement of the Juru Nominated Body Deed, the Replacement Juru Nominated Body will be joined as a Party to this Agreement.

(c)    As soon as practicable after the execution of the Juru Nominated Body Deed, the Replacement Juru Nominated Body must provide to Adani a notice (Juru Nominated Body Notice) containing:

(i)    copies of the instrument of Incorporation or establishment of the Replacement Juru Nominated Body and the constitution or trust deed for the Replacement Juru Nominated Body (as the case may be); and

(ii)    the Juru Nominated Body Deed duly executed by the Replacement Juru Nominated Body. (italic emphasis added)

5    As appears in [1] above, the ancillary agreement defined the “Applicant” by reference to the persons making the claim for a determination of native title that I later made on 11 July 2014. In each of the three consent determinations, I determined, pursuant to s 56(2)(b) of the Native Title Act 1993 (Cth), that the Juru People’s native title rights and interests be held in trust by a registered native title body corporate, being the second respondent, Kyburra Munda Yalga Aboriginal Corporation.

6    Subsequently, on 18 October 2017, the Office of the Registrar of Indigenous Corporations appointed special administrators under the Corporations (Aboriginal Torres Strait Islander) Act 2006 (Cth) (the 2006 Act) to Kyburra because of irregularities in the way in which the affairs of Kyburra had been conducted.

7    Under cl 7.4 of the ancillary agreement, Adani had power, if, acting reasonably, it considered that the existing Juru nominated body did not meet the requirements of cl 7.2(a), to suspend paying benefits to it and to approve a replacement “nominated by the Applicant” under cl 7.3, even if the replacement did not comply with some or all of the requirements in cl 7.2(a). There is no evidence that Adani ever exercised its powers under cl 7.4.

8    On 9 March 2017, Kyburra executed a deed (the March 2017 deed) in which it was the only party, but was acting both in its role as the registered native title body corporate and as the incoming Juru nominated body. The deed also asserted (contrary to the admissions subsequently made in Kyburra’s defences as settled originally by senior counsel and later adopted by the administrators) that first, the Claim Group had agreed that Kyburra be the Juru nominated entity for the purposes of the ILUA and the ancillary agreement and secondly, Kyburra had been duly authorised by the Claim Group to enter into the March 2017 deed.

The issue

9    The critical issue in this proceeding is whether, on 9 March 2017, Kyburra validly appointed itself under cl 7.3 as the Juru nominated body in place of Juru Enterprises.

Background

10    On 30 June 2017, Adani filed a notice submitting to any order the Court might make except as to costs.

11    Initially, following service of the originating application, Kyburra appeared, by its solicitors, and filed its original defence, settled by senior counsel, on 30 June 2017. That defence contained a substantial number of admissions.

12    Following their appointment, one of the administrators appeared in the proceedings by leave, personally for Kyburra.

13    After Juru Enterprises filed its second amended statement of claim, on 19 April 2018 the administrators filed Kyburra’s defence to it. That defence repeated substantially all of the defence previously settled by senior counsel, but also added some admissions about the failures of Kyburra to comply, in the period from 4 August 2016 to 23 February 2018, with standards of accountability required by the 2006 Act. Contemporaneously, when filing Kyburra’s defence on 19 April 2018, the administrators wrote to the Court. The letter stated that Kyburra had a deficiency of assets over liabilities, was insolvent, was likely to be placed into liquidation and would take no further part in the proceeding.

14    Because of the admissions made in the original defence, and repeated in the current defence, Juru Enterprises has not needed to tender a deal of material. Kyburra admitted in its defences that it had entered into a deed of assumption, as provided in cl 19 of the ILUA and had delivered that deed to Adani. The deed of assumption provided that Kyburra had assumed the rights and obligations of the applicant in the proceedings in which the Juru People claimed and obtained the consent determinations. Thus, for the purposes of construing the ILUA and the ancillary agreement, references to the “Applicant” must now be understood as being references to Kyburra, by force of the operation of the deed of assumption. The significance of that substitution for present purposes is its effect on the construction of cl 7.3 of the ancillary agreement that originally entitled the “Applicant”, but now its substitute, Kyburra, to exercise the power to replace the Juru nominated body.

15    Kyburra made the following further admissions in both of its defences, namely:

    the March 2017 deed recorded that, pursuant to cl 7.3 of the ancillary agreement, Kyburra could, and did, appoint, a new Juru nominated body, being itself; and

    it delivered the March 2017 deed to Adani in about April 2017 and, thus, represented that it was the replacement Juru nominated body.

16    Critically, both versions of Kyburra’s defence pleaded that:

    the Claim Group had ceased to exist on 11 July 2014, being the date on which I made the second of the consent determinations; and

    the Claim Group first, had not agreed that Kyburra was or would be the Juru nominated body for the purposes of the ancillary agreement and, secondly, had had no role in appointing Kyburra as the Juru nominated body for the purposes of the ancillary agreement.

Consideration

17    The last two admissions demonstrated that the Claim Group had not agreed, in accordance with cl 7.2(a)(i)(D) of the ancillary agreement, that Kyburra become the Juru nominated body for the purposes of the ancillary agreement. That admission has the consequence that is fatal to the March 2017 deed having any operation at all. That is because, the “Native Title Claim Group”, as defined in the ancillary agreement, has the meaning of that expression in the ILUA, “the members of the Native Title Claim Group for the Native Title Claim” (i.e. the Juru People themselves, or as s 56(2) of the Native Title Act describes such persons, the native title holders or common law holders of native title).

18    I am of opinion that on Kyburra’s admissions in the pleadings, there has been no compliance with cl 7.2(a)(i)(D). That is because the Claim Group, or common law holders, being the Juru People themselves, have not agreed to an incorporated body, being Kyburra, replacing Juru Enterprises as the Juru nominated body within the meaning of cl 7, read as a whole. The agreement of the Claim Group to any replacement of the Juru nominated body was an essential step prescribed in the criteria in cll 1.1 and 7.2(a) as one of the Juru nominated body requirements that had to be satisfied by any Juru nominated body to be eligible for appointment.

19    Moreover, Kyburra admitted in its current defence that, from 4 August 2016 to 23 February 2018, it had:

    failed accurately to report publicly its gross operating income of $982,380 and $447,535 respectively in the financial years ended 30 June 2015 and 2016, and so failed to comply with s 322-10(1) of the 2006 Act;

    not lodged audited financial statements prior to 31 December 2015 and 2016 in respect of the years of income ending 30 June 2015 and 2016; and

    not kept financial records that correctly recorded and explained its financial transactions, position and performance, as required by s 322-10 and r 59 of Kyburra’s rule book under the 2006 Act.

20    Accordingly, at the times at which Kyburra executed and delivered the March 2017 deed to Adani and up to, at least, 23 February 2018, it did not satisfy the Juru nominated body requirements in cl 7.2(a)(i)(B) and (C). Therefore it was incapable of being, or becoming, the Juru nominated body. That is because, first, Kyburra had not complied with the standards of accountability required by laws under which it was established and, secondly, it was and remains in administration.

21    There is no evidence that Adani has determined that Kyburra substantially complied with the Juru nominated body requirements for the purposes of cl 7.4 and there is no likelihood of it doing so, given the circumstances of Kyburra’s administration and likely liquidation. In those circumstances I am satisfied that Kyburra did not comply with the preconditions under cl 7.2(a)(i)(B) and (C) necessary for it to become the Juru nominated body.

Conclusion

22    For these reasons, I will make a declaration on the basis of each ground on which Juru Enterprises sought declaratory relief to confirm its continuing occupation of the position as Juru nominated body under the ancillary agreement.

23    In addition, I will grant Juru Enterprises leave to file and serve an interlocutory application for an order that a third party pay its costs of the proceeding and make orders to prepare any such interlocutory application for hearing on 13 July 2018.

Associate:

Dated:    8 June 2018