FEDERAL COURT OF AUSTRALIA

Onslow Salt Pty Ltd v Buurabalayji Thalanyji Aboriginal Corporation [2018] FCAFC 118

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The appellant pay the first respondent's costs of and incidental to the appeal, to be taxed in default of agreement.

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

REASONS FOR JUDGMENT

THE COURT:

1    Buurabalayji Thalanyji Aboriginal Corporation (Corporation) is the holder as trustee of native title rights on behalf of the Thalanyji people for an area to the south of Onslow in Western Australia.

2    Under the terms of a state agreement, Onslow Salt Pty Ltd was granted a mining lease over an area located to the south west of Onslow and near the coast. The mining lease area is within the native title area.

3    In July 2017, the Corporation commenced proceedings against Onslow Salt and the State of Western Australia concerning activities in the native title area.

4    Onslow Salt complained that the proceedings had been commenced in breach of the requirements of a dispute resolution clause. It made an application for a stay of the proceedings on that basis. The application was refused: Buurabalayji Thalanyji Aboriginal Corporation v Onslow Salt Pty Ltd [2017] FCA 1240. Leave was given for Onslow Salt to appeal against that decision. We heard the appeal on 18 July 2018 and made orders dismissing the appeal with costs. These are our reasons for those orders.

The nature of the proceedings

5    In the proceedings before the primary judge, the Corporation claimed, amongst other things, that:

(1)    in 2011, Onslow Salt entered into agreements with Chevron Australia Pty Ltd;

(2)    the agreements purported to provide for flood mitigation works to be undertaken by Chevron which involved the removal of up to 10 million cubic metres of fill from the salt mining area;

(3)    the agreements were a sham;

(4)    what had actually been agreed was that Onslow Salt would grant a licence to Chevron to excavate fill for Chevron's Wheatstone project;

(5)    an approval was required from the relevant Minister for work to be undertaken in the mining area;

(6)    a purported approval was obtained from the Minister under the terms of the state agreement for flood mitigation works;

(7)    the approval was invalid;

(8)    acting on the purported approval, Onslow Salt allowed Chevron to remove fill from the mining lease area and received at least $70 million from Chevron;

(9)    the approval of the removal of fill could only proceed with notification to the Corporation and negotiation of an indigenous land use agreement under the Native Title Act 1993 (Cth) with Onslow Salt or the State;

(10)    the purpose of Onslow Salt in making the sham agreement was to avoid negotiation of an indigenous land use agreement with the Corporation;

(11)    the State knew of the purpose of Onslow Salt and the failure by the State to notify the Corporation occurred in breach of a statutory duty;

(12)    alternatively, if the State did not know of the purpose of the agreement then Onslow Salt engaged in misleading and deceptive conduct in obtaining the approval from the Minister without disclosing the true purpose;

(13)    even if it did not know of the purpose of Onslow Salt, the State had a statutory duty in dealing with native title rights and in breach of that duty negligently failed to notify the Corporation; and

(14)    by its conduct in seeking and obtaining the approval in the manner in which it did, Onslow Salt tortiously interfered with the native title rights and economic interests of the Corporation.

6    There was also a claim under the terms of a Development Deed between the native title claimants for the Thalanyji people and Onslow Salt. It was said that pursuant to the Native Title Act, the Corporation had become a party to the Development Deed. The failure to notify the Corporation of the real purpose of Onslow Salt in its dealings with Chevron was alleged to be a breach of the Development Deed.

7    The Corporation sought a declaration that the purported approval is void and of no effect and damages against the State and Onslow Salt.

8    It can be seen that at the heart of the proceedings brought by the Corporation are claims that there were native title rights at the relevant time and that public law relief should be granted in respect of the purported approval.

The dispute resolution clause

9    The recitals to the Development Deed record, amongst other things, that the native title claimants (now represented by the Corporation) and Onslow Salt 'wish to set out the terms upon which the Salt Project is to proceed' in the then native title claim area (of which the native title area forms part). The Salt Project is defined to mean the development and operation of solar salt production, harvesting, processing and shipping facilities within the native title claim area. The Deed includes a provision which states that the operation and enjoyment of native title rights and interests over the Project Area is agreed to be suspended for the duration of the Salt Project.

10    The Deed contains a dispute resolution clause which provides:

If there is a dispute question or difference between the Parties with respect to any matter then the Parties shall forthwith confer in an effort to settle the dispute question or difference but if they fail to agree within thirty (30) days after first conferring or if a Party refuses to confer then the dispute question or difference shall be referred by either or both Parties to an independent expert …

11    The clause further provides that the expert is to decide whether to receive written or oral submissions, provided that no more than a month will be allowed for submissions. The expert must then express an opinion 'within a reasonable period from the date of reference' and furnish the parties with a copy.

12    The clause provides expressly that no party shall be entitled to commence or maintain any action or proceeding until the dispute, question or difference has been considered by the expert.

13    After the provision of an opinion under the agreed mechanism, there is no further obligation expressed in the dispute resolution clause for the parties to meet to resolve or negotiate after the opinion has been provided. So, the clause provides for a form of advisory opinion.

14    It is common ground that the opinion, if and when provided, would not operate as a determination or adjudication of the dispute.

Relevant principles

15    The power of the Court to stay proceedings is discretionary. The discretion is wide. In considering whether to grant a stay, parties are to be held to their agreed dispute resolution procedures, unless good reason be shown. The onus of showing good reason is on the party opposing the stay. Each case is to be considered on its own facts and circumstances.

16    A stay will be refused if it would be unjust to deprive a party of its right to have its claim determined judicially. Matters that have been identified as reasons that may, in the particular circumstances, cause the Court to refuse to grant a stay include:

(1)    the agreed process would deal with only part of the dispute;

(2)    there would be duplication of effort if the agreed process was to be followed in the particular case;

(3)    the refusal of a stay would result in a multiplicity of proceedings;

(4)    in the case of an expert determination, the dispute is inapt for determination by an expert because it does not involve the application of specialist knowledge to matters to be observed or investigated by the expert or is outside the expert's field of expertise; and

(5)    the agreed procedures are inappropriate or inadequate for the nature of the dispute.

17    To these matters we would add circumstances where there is a wider public interest in the dispute being dealt with in the courts. Although the decided cases show that the agreement of the parties to commit to a dispute resolution process is a considerable factor in favour of granting a stay, the agreement of the parties cannot oust the jurisdiction of the courts. Where there are interests beyond those of the parties then that may be a significant factor as to why a stay should be refused. In the present case, the fact that the relief sought included a claim to public law relief in respect of a decision by a Minister is such a factor.

18    As to the significance of the court proceedings involving parties who had not joined in the agreed dispute resolution mechanism, some care must be taken. In cases where one of the matters raised before the Court is dependent upon the determination of other matters required to be submitted to arbitration, even though all parties before the Court are not parties to the arbitration agreement, the Court may stay the whole proceedings until that matter is determined. It may also stay the court proceedings where they are ancillary to the matters to be arbitrated. Or, it may form the view that the arbitral claims should be held in abeyance pending the determination of the court proceedings on the basis that the issues to be submitted to arbitration are subsidiary or less substantial: see Recyclers of Australia Pty Ltd v Hettinga Equipment Inc [2000] FCA 547; (2000) 100 FCR 420 at [65]-[66] approved of in Hancock Prospecting Pty Ltd v Rinehart [2017] FCAFC 170 at [333]-[334]. Similarly, in cases where the agreed mechanism provided for something other than arbitration, the Court should give consideration to whether it is appropriate for the court proceedings to be stayed while an agreed dispute resolution mechanism is carried into effect even though it may not be a process in which all parties have agreed to participate or are otherwise willing to participate.

19    In all cases, against the refusal of a stay is the weighty consideration that the parties should be held to their bargain. As we have noted, the Court will respect the terms of any agreement between the parties committing to alternative processes for the resolution of disputes. This means that the Court should not lightly refuse to grant a stay in circumstances where the clause relied upon is enforceable. This has been described in some cases as giving rise to a heavy onus on the party opposing the stay. It has also been said that ordinarily that onus can be discharged only by showing that the dispute resolution mechanism does not apply. We would prefer to say that in most cases the existence of an enforceable agreement to submit to a dispute resolution process will be a weighty consideration against the refusal of a stay. As Dixon J stated in Huddart Parker Ltd v The Ship Mill Hill [1950] HCA 43; (1950) 81 CLR 502 at 509, there is 'a strong bias in favour of maintaining the special bargain'. This reflects the importance of giving effect to the terms of any enforceable contract the parties have made. However, the onus remains the same in any case where a stay is sought and falls upon the party opposing the stay.

20    As to enforceability, in the older cases there are examples where the Court has concluded that a particular clause was not enforceable in respect of a particular dispute as a matter of public policy because of a view about the unfair or unjust nature of the process that would follow if the clause was enforced and a party held out of court. As to these cases, some care needs to be taken in view of the modern approach of the courts which recognises the advantage of encouraging and supporting the resolution of disputes through a range of alternative mechanisms that parties may agree to follow before commencing court proceedings as well as processes for the actual determination of disputes outside the courts.

21    A stay may be granted until an agreed process of conciliation, mediation or good faith negotiation has been completed even if the outcome will not be a binding determination of the dispute.

22    Finally, the approach on an application for a stay by reason of an agreed dispute resolution mechanism may need to accommodate relevant statutory provisions such as the Commercial Arbitration Act 2010 (Cth) where, for example, parties who claim 'through or under' entities who are parties to an arbitration agreement may be referred to arbitration: Hancock Prospecting at [289]-[323].

23    As to these general principles, in addition to the cases cited above, see: Hooper Bailie Associated Ltd v Natcon Group Pty Ltd (1992) 28 NSWLR 194 at 201-211; Badgin Nominees Pty Ltd v Oneida Ltd [1998] VSC 188 at [33]-[78]; Computershare Ltd v Perpetual Registrars [2000] VSC 233 at [17]; Savcor Pty Ltd v State of New South Wales [2001] NSWSC 596; (2001) 52 NSWLR 587 at [32]-[34], [40]-[49]; Straits Exploration (Australia) Pty Ltd v Murchison United NL [2005] WASCA 241; (2005) 31 WAR 187 at [14]-[15]; Zeke Services Pty Ltd v Traffic Technologies Ltd [2005] QSC 135; [2005] 2 Qd R 563 at [19]-[26]; Dance With Mr D Ltd v Dirty Dancing Investments Pty Ltd [2009] NSWSC 332 at [43], [52]-[54]; Mineral Resources Ltd v Pilbara Minerals Ltd [2016] WASC 338 at [54] and Raskin v Mediterranean Olives Estate Ltd [2017] VSC 94 at [44]-[56].

24    It is to be noted that there may be an important difference as to the jurisdiction of the Court between granting a stay to require, in effect, a dispute to be submitted for determination (by arbitration or some other agreed process such as expert determination) on the one hand and a stay to require, in effect, a party to submit to an agreed process to facilitate resolution by agreement (such as by negotiation in good faith, mediation or conciliation) on the other hand. The former may be seen to operate as an ouster of the jurisdiction of the Court to determine the rights and obligations of the parties. The latter only suspends access to the Court until the agreed process has been followed. If a party then undertakes the agreed process and no agreement is reached, the jurisdiction of the Court may still be invoked.

25    Although we have stated the principles in general terms, there remains an important difference between these two instances. Indeed, as to a stay granted to require a party to submit to a determination outside the courts there remains an issue as to whether the Court has an inherent jurisdiction to grant a stay (there being a statutory jurisdiction to do so in the case of an agreement to arbitrate). On several occasions the High Court has ruled that the jurisdiction to grant a stay to refer a matter to arbitration is only statutory: see the analysis by Finkelstein J with reference to the relevant authorities in BHPB Freight Pty Ltd v Cosco Oceania Chartering Pty Ltd [2008] FCA 551 at [28]-[45].

26    Where, as here, the dispute resolution mechanism will not result in a determination then the same concerns as to ouster do not arise. The modern approach of the courts sees no policy concern in relation to giving effect to such clauses, quite the contrary.

27    In the recent cases, a similar approach has been applied in deciding whether a stay should be granted in the case of an agreed procedure for determination of a dispute as that applied where there is an agreed procedure to facilitate the resolution of a dispute by agreement between the parties. No submission was advanced to the effect that the jurisdiction in a case of the present kind was different in character to that which is exercised where there is an agreed procedure for determination of a dispute. We are satisfied that there is a jurisdiction to grant a stay in a case where there is a dispute resolution mechanism of the kind in this case. It has been recognised in many cases. We leave for another day whether there may be any significance for the considerations that may be brought to account in deciding whether to grant a stay that may flow from a close consideration of the particular jurisdiction that applies given the character of dispute resolution mechanism which is relied upon to support the stay in any particular case.

Alleged errors

28    On the appeal, Onslow Salt accepted that House v The King [1936] HCA 40; (1936) 55 CLR 499 applies and it must demonstrate that the primary judge's discretionary decision was guided by a wrong principle or irrelevant material or was unreasonable in result.

29    Onslow Salt raised two matters in support of the appeal. First, it alleged that the primary judge formed an incorrect view as to the scope of the agreed dispute mechanism by finding that it was limited to simpler, more specific issues arising under the Development Deed. Second, the primary judge found it to be fundamentally important that the agreed dispute mechanism did not produce a determination or any binding outcome which was said to be in error because it was an irrelevant matter when it came to considering whether to grant a stay.

The scope of the agreed dispute mechanism

30    In the course of recording the arguments advanced by Onslow Salt, his Honour set out at [53] a passage from Dance With Mr D Ltd at [53]-[54]. The quoted passage noted that the Court has a wide discretionary power to stay proceedings where the parties have agreed to have the dispute determined by an expert. It then set out examples of when a stay may be refused because it would be unjust to deprive the plaintiff of the right to have its claims determined judicially.

31    Later, the primary judge referred to that case and others as 'examples … in which a stay has been declined in accordance with the interests of justice': at [73]. Although ultimately it was concluded in Dance With Mr D Ltd that the plaintiff had failed to establish good reasons for the exercise of the Court's discretion to refuse a stay (at [86]), in context, we take the reference to that case to be a reference to the matters stated in the passage quoted earlier in his Honour's reasons.

32    His Honour then said that 'in addition to the question of whether declining the stay would be in the interests of justice, there is the further question of whether the [dispute resolution clause] applies in the relevant circumstances and, if so, whether it has been breached'. This is a reference to a separate argument advanced by the Corporation before the primary judge that the dispute resolution clause did not apply to the subject matter of the proceedings in this Court. (On the appeal, the Corporation accepted that its argument to that effect had been rejected and it did not raise any notice of contention in that regard).

33    Thereafter, his Honour dealt with various considerations that could only be required to be considered if the dispute resolution clause applied (as well as various authorities in which those considerations had been identified as good reasons for refusing to stay the proceedings despite an enforceable agreement to a dispute resolution mechanism): at [75]-[77]. His Honour found expressly that many of those points were 'directly applicable to this present situation': at [78]. He concluded his reasons by stating that the clause in the Development Deed provided for 'an entirely commendable process which has been recognised and respected by the Courts on many occasions, except where there are exceptional circumstances' and then stated that 'this case falls into that exceptional category': at [81]. By this process of reasoning, it is evident that his Honour decided the case on the basis that the clause applied, but the Court's discretion should be exercised against the grant of a stay.

34    Onslow Salt placed emphasis upon passages in the reasons of the primary judge at [75], [76] and [80] where his Honour described the relevant clause as not contemplating 'the extremely complex factual matters raised in the lengthy pleading', as 'limited to simpler, more specific issues arising under the Deed' and as 'meant to provide a quick possible resolution to problems arising under the tasks identified in the Deed'. It was said that these statements indicated that his Honour had approached the matter on the basis that the dispute mechanism did not apply to the particular case. For reasons we have given, his Honour dealt with the matter on the basis that the clause applied, but there were exceptional circumstances as to why the stay should be refused. In context, the passages referred to were statements as to why the agreed mechanism was not apt for the present dispute.

35    Therefore, there was no error by the primary judge as to the scope of the dispute resolution clause.

The significance of the agreed mechanism not being binding

36    The primary judge stated that it was 'fundamentally important to note that the [dispute resolution clause] does not produce a determination or any binding outcome at all': at [81]. Onslow Salt submitted that it was irrelevant to consider whether the agreed mechanism, if performed, would produce a binding outcome. It said that if the clause may aid in the parties reaching a resolution then there was no significance in the fact that it did not provide for a binding result. Alternatively, the exercise of discretion was approached on the basis that the non-binding nature of the clause was a matter of fundamental importance to discretion when that was an error of principle.

37    In our view, it is relevant to consider whether the agreed mechanism will produce a binding outcome in the exercise of the Court's discretion whether to grant a stay. In many cases, it may not be a significant factor. This is particularly so where the agreed mechanism requires good faith negotiation or bona fide participation in a process of conciliation or mediation. It may also be so where the clause requires a meeting between senior executives before commencing court proceedings. However where, as here, the agreed mechanism will result in nothing more than an advisory opinion with no express obligation to meet or confer after it has been provided then the weight to be afforded the commitment to such a clause when deciding whether to exercise the discretion to refuse a stay is properly regarded as being less than where there is an agreement to binding arbitration or expert determination.

38    To say, as the primary judge did, that it is fundamentally important to note the non-binding aspect of the agreed mechanism and that it only produces an opinion, is not to say the non-binding aspect is of fundamental importance to the whole discretion. Rather, it is fundamentally important to the weight to be given to the clause itself in the exercise of discretion. In particular, the earlier reference to many of the points raised in Raskin v Mediterranean Olives Estates Ltd being 'directly applicable' (at [78]) shows that his Honour regarded other considerations as being important.

39    In any event, for the following reasons, no error as to the exercise of that discretion has been demonstrated.

40    First, as the primary judge correctly found, the mechanism chosen by the parties is entirely inapposite for the dispute the subject of the proceedings. The issues in the proceedings require a detailed consideration of complex factual issues to determine the actual purposes of Onslow Salt and Chevron. The expert will receive only submissions within a strict timeframe and then be required to provide an opinion. There is no procedure by which there will be disclosure of relevant documents or examination of witnesses. There is no procedure by which documents or submissions might be obtained from Chevron. Further, the proceedings raise novel questions about tortious interference with native title rights about which an opinion would carry little authoritative value.

41    Second, as was the case in Raskin v Mediterranean Olives Estates Ltd, the proceedings raise claims against a third party, in this case the State. The claim against the State is a public law claim which arises from factual circumstances that are interwoven with those relied upon for the claim against Onslow Salt. There is no basis for a stay of proceedings against the State. Even if the State may be willing to participate in the expert process, there are public interest reasons why the whole of a dispute of that character should be addressed by the Court openly and without delay.

42    Third, the agreed mechanism will not result in a binding determination of the dispute between Onslow Salt and the Corporation. Nor does it require the parties after the opinion has been provided to meet in good faith or engage in some other process designed to facilitate resolution of the dispute.

43    Fourth, contrary to a submission advanced by Onslow Salt, this is not a case where the 'mere inclusion of some additional cause of action' operates to bypass the agreed mechanism. There is no indication that claims other than the claim under the Development Deed have been advanced to frustrate the rights of Onslow Salt under the dispute resolution clause.

44    The primary judge was correct to refuse to grant a stay. As the appeal was unsuccessful, and no submission was advanced to support a different exercise of discretion, costs should follow the event.

Associate:

Dated:    2 August 2018