FEDERAL COURT OF AUSTRALIA

Brown v The State of South Australia [2010] FCA 875

THE COURT ANSWERS THE FOLLOWING QUESTION:

Are Coomedown Resources Pty Ltd and Scorpion Exploration Pty Ltd entitled, as a matter of law, to require, as a term or terms of a proposed determination of native title rights and interests, that any compensation subsequently payable by them in respect of extinguished or impaired native title rights or interests should be applied in a specified way, or should not be applied by the prescribed body corporate by distributing the compensation to the claim group?

ANSWER:

No

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR DECISION

INTRODUCTION

1                     This is an application under ss 13 and 61 of the Native Title Act 1993 (Cth) (the NT Act) for the determination of native title in favour of the native title claim group on whose behalf the applicant has brought the claim.  Presently, subject to ongoing negotiations which the Court is informed are progressing well, it is anticipated that the matter will be able to be the subject of a determination by consent in accordance with s 86G of the NT Act in the relatively near future.

2                     Coombedown Resources Pty Ltd (Coombedown) and Scorpion Exploration Pty Ltd (Scorpion) (the Mining Respondents) are two respondent parties to the application.  They each hold mining interests which include exploration licences within the claim area, granted pursuant to the Mining Act 1971 (SA) (the Mining Act).

3                     Part 9B of that Act controls what they may do to carry out on the claim area mining operations which may affect the native title rights and interests of the claim group.  In substance, in such circumstance, they may not carry out mining operations on the land if those activities will affect the continued existence, enjoyment or exercise of native title rights and interests unless there is either:

(a)                an indigenous land use agreement (ILUA) registered under the NT Act which provides that statutory rights to negotiate are not intended to apply to mining operations, or

(b)               an agreement or determination authorising them to do so under Part 9B of the Mining Act. 

Part 9B then establishes a structure under which the terms on which the mining operations may be carried out are agreed or determined.  It clearly contemplates, inter alia, the native title holders being paid based on profits or income derived from the mining operations: s 63Q.  They describe such payments as “private compensation payments”.

4                     In fact, there is in existence an agreement of 18 June 2001 between Coombedown and another entity (the joint venturers), the applicant in this proceeding, and Antakirinja Land Management Aboriginal Corporation (ALMAC) relating to the claim area or part of it.  It addresses present and future mining operations by the joint venturers on the claim area, and (inter alia) what the joint venturers will provide to ALMAC for the benefit of its members, how they will undertake environmental protection and rehabilitation, and payments they will make to the applicant.  It also provides that they will not oppose the applicant’s claim in this proceeding.  It is not necessary to refer to all the terms of the agreement.  It records that its detailed terms are confidential.  It is unclear whether the Mining Respondents are successors to the joint venturers, or whether there are any similar agreements in place.

5                     There is no evidence to suggest that there is a registered ILUA between the applicant and the Mining Respondents, or any other agreement or determination made under Pt 9B of the Mining Act.

THE ISSUE

6                     The Mining Respondents have raised the question whether they, or the mining interest group of respondents, are entitled as a matter of law to require, as a term of a proposed determination of native title rights and interests, that any compensation subsequently payable by them in respect of extinguished or impaired native title rights and interests should be applied in a specified way, or should not be applied by the prescribed body corporate by distributing the compensation to the claim group.  I assume the question extends to private compensation payments.

7                     The Mining Respondents point out that any extinguishment or impairment of native title rights and interests by their mining operations may have long term or permanent adverse consequences to native title rights and interests.  Both the present and future holders of those rights and interests may therefore be affected.  Their proposed term is intended to ensure that compensation payments made by them are secured for the benefit of both the present and future holders of those rights and interests.

8                     It has not been argued whether the question to be answered has a wider import.  The answer may apply to other objectives of other respondents to this claim, and to respondents generally to native title claims under the NT Act who seek to resolve issues such as those relating to compensation for past extinguishment, or to the consequences of future acts (as addressed in Div 3 of Pt 2 of the NT Act).  I do not need to determine whether that is the case.  In that regard, however, I draw attention to my observations in [36] – [39] below.

9                     For the reasons which appear below, I consider that the question should be answered in the negative.

The Contentions of the Mining Respondents

10                  The Mining Respondents reframed the question to be decided by positing two separate issues, namely:

(1)               whether a term requiring the sustainable or equitable application of compensation payments by a prescribed body corporate (a sustainable benefits term) is capable of inclusion in a consent determination; and

(2)               whether a mining respondent is entitled as a matter of law to require a sustainable benefits term in a consent determination directing the use of compensation payments payable to the claim group.

11                  It is argued that the answer to question (1) should be affirmative, because a determination of native title must under s 94A set out the details of the matters mentioned in s 225 of the NT Act, defining a determination of native title, and that a sustainable benefits term falls within the ambit of s 225(d) because it encompasses the relationship between the Mining Respondents (or mining respondents generally) and the native title holders, including “future holders” whose interests are to receive some benefit from compensation monies paid to existing holders through their prescribed body corporate.

12                  Alternatively, it is argued that the answer to question (1) should be affirmative because, at least since the amendments to s 87 of the NT Act by the Native Title Amendment Act 2009 (Cth) (the 2009 Amending Act), such an order may be made on an application for the determination of native title.  The Mining Respondents point out that s 86F(1) empowers parties to a proceeding to negotiate with a view to agreeing upon orders to be made, and that their agreement “may involve matters other than native title”.  They further point out the extensive powers given to the Court by s 87(4)-(7), introduced by the 2009 Amending Act, to make orders beyond, or instead of, a determination of native title.

13                  As to question (2), the Mining Respondents indicate that practical issues have arisen in the past in relation to the application of compensation payments, where apparently agreements were made similar to the agreement referred to above: Adnyamathanha People v State of South Australia [2003] FCA 211; Thomas v Kokatha Peoples Community Inc (SA Supreme Court, Judge Lunn, unreported, 3 December 2007).  They accept that the NT Act does not require that compensation paid to a prescribed body corporate for a native title claim group to be paid on a term which is, or is like, a sustainable benefits term.  Nor does the Mining Act require that monies paid under a native title mining agreement be paid on a term which is, or is like, a sustainable benefits term.  However, they contend that because a prescribed body corporate may be required to hold such monies on trust, it is implicit that the prescribed body corporate should have a responsibility to future generations of the native title holders as well as to the existing or current native title holders.  If that obligation does exist, they take the further step of asserting that they may insist upon a sustainable benefits term as a condition of consenting to the proposed consent determination, because the Court has power to make such an order (the answer to question (1) for which they contend) and should do so as that is simply the enunciation of the obligation of the prescribed body corporate.

14                  The order which the Mining Respondents seek is in the following terms:

Any compensation subsequently payable in respect of the extinguished native title rights and interests shall be held and applied by the prescribed body corporate for the purposes of benefiting the existing members of the native title holders and their descendants.

15                  The applicants oppose the making of such an order.  So, too, does the State of South Australia, and the Commonwealth of Australia, albeit for slightly different reasons.  I will refer to their respective contentions in the following section of these reasons.

CONSIDERATION

16                  In my judgment, there are four steps to be considered in addressing the particular question.  They are:

1.                  whether the Court has power when making a determination of native title rights and interests, whether by consent or after a hearing, to include a sustainable benefits term as a term of the determination if such a term is not agreed by the parties;

2.                  whether the Court has power, in the event of agreement between the parties to include a sustainable benefits term in orders to be made by the Court by consent under ss 86G or 87 of the NT Act, to include as one of the agreed terms the sustainable benefits term;

3.                  whether, even in the event of the parties agreeing upon a sustainable benefits term, it would be appropriate for the Court to make such an order having regard to other provisions of the NT Act and the Native Title (Prescribed Bodies Corporate) Regulations 1999 (Cth) (the Regulations).  The Regulations, by reference, enliven in relation to a prescribed body corporate the provisions of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act); and

4.                  whether a respondent party in the position of the Mining Respondents may require agreement on a sustainable benefits clause as a condition of it otherwise agreeing to the terms of a proposed consent determination of native title rights and interests, that is whether it may withhold its consent in circumstances where there is no genuine or bona fide dispute about the terms of the proposed consent determination.

17                  As to the first issue, in my view the position is clear. 

18                  The application is for the determination of native title rights over the claim area.  It is an application where, on the information before the Court, the issue of connection (an expression commonly used to describe the matters the native title claim group must show to establish that the common law recognises them as the holders of native title rights and interests as defined in s 223 of the NT Act) is likely to be resolved by consent.  There is in the application no claim for compensation as a result of any partial or total extinguishment of any of the native title rights and interests which the claim group might otherwise enjoy.  The consent determination will, no doubt record the manner in which and the extent to which those rights have been extinguished.  In due course, that may lead to an application for compensation under ss 50(2) and 61 of the NT Act or to an agreement on the question of compensation. 

19                  In those circumstances, I do not accept that s 94A of the NT Act provides a foundation for the Court having power to include a sustainable benefits term in the determination.

20                  Section 94A requires a determination of native title to set out details of the matters mentioned in s 225 of the Act.  Section 225 provides:

A determination of native title is a determination whether or not native title exists in relation to a particular area (the determination area) of land or waters and, if it does exist, a determination of:

(a)        who the persons, or each group of persons, holding the common or group rights comprising the native title are; and

(b)               the nature and extent of the native title rights and interests in relation to the determination area; and

(c)               the nature and extent of any other interests in relation to the determination area; and

(d)               the relationship between the rights and interests in paragraphs (b) and (c) (taking into account the effect of this Act); and

(e)               to the extent that the land or waters in the determination area are not covered by a non-exclusive agricultural lease or a non-exclusive pastoral lease – whether the native title rights and interests confer possession, occupation, use and enjoyment of that land or waters on the native title holders to the exclusion of all others.

Note:                      The determination may deal with the matters in paragraphs (c) and (d) by referring to a particular kind or particular kinds of non-native title interests.

21                  The wording of s 225(d) does not encompass the making of a sustainable benefits term to be included in such a determination.  A sustainable benefits term would not address the relationship between the interests of the Mining Respondents and the interests of the native title holders.  It is argued that it does so by directly recognising the continuing effect of any extinguishment and the entitlement of future holders to receive some benefit from the compensation moneys paid to existing holders through their prescribed body corporate.  However, even though a determination of native title rights and interests will recognise that some native title rights and interests may have been extinguished either partially or wholly (and set out the extent of which those rights and interests have been extinguished), it is a further and separate step to inquire into whether the extinguishing acts themselves gave rise to a right to compensation at all.  It is yet a further step to quantify that compensation.  It is yet a further and more remote step for a party to be entitled to insist upon orders as to how the native title holders whose rights have been extinguished should apply any compensation, once there is an entitlement to it and it is quantified.

22                  Section 225(d) is not concerned with the interests of the native title holders per se, but the relationship between those interests and the interests of other respondents, including the Mining Respondents insofar as their respective interests in relation to the claim area intersect.  That is a more confined inquiry.  Neither s 225(b) or 225(c) are concerned with compensation payments. 

23                  As to question two, again the answer is, in my view, clear. 

24                  The power of the Court under ss 86G and 87, including subs 87(4)-(7) added by the 2009 Amending Act, is extensive.  Section 87 now contemplates that, in an application under s 61 of the NT Act for determination of native title, the Court may make such orders as it considers appropriate even if it does not proceed to make a determination of native title.  Such orders as the parties agree may include orders which do not relate directly to the determination of native title rights and interests.  They may be confined to orders which do not directly relate to the determination of native title rights and interests.  No party argued that, if the parties are agreed, they could not include a sustainable benefits term in the terms of the consent determination of native title rights and interests as a supplementary term pursuant to s 87 of the Act.  Indeed, it is difficult to see that the parties to an application under s 61 could not agree upon any of the matters encompassed within the coverage of an ILUA: see ss 24BB, 24CB and 24DB.  Nor is there any apparent reason why the range of matters which may be the subject of an agreement incorporated into Court orders under s 87 is confined to those matters, although they are widely expressed. The only step the Court must take to include the terms of an agreement is to be satisfied that it is appropriate to do so: s 87(1A).

25                  Before s 87 was amended by the 2009 Amending Act, it was not uncommon for a consent determination to be made at the same time as an ILUA under Div 3 of Pt 2 of the NT Act in anticipation of it being registered by the Native Title Registrar, to give effect to terms the parties might otherwise agree.  As noted, the range of those topics is quite extensive.  It is clear that those topics may now be dealt with by being included in the terms of the proposed consent determination under ss 86G and 87.  Obviously, if agreement on such matters is reached before the determination is to be made, as contemplated by Div 3 of Pt 2 of the NT Act in certain circumstances, the appropriate course may be to execute and have registered an ILUA under Pt 8A of the NT Act.  The registration is subject to its removal in certain circumstances: s 199C.

26                  However, the parties are not agreed that a sustainable benefits term should be included.  Absent such agreement, there is no basis upon which the Mining Respondents are entitled as a matter of law to have such a term included in the proposed consent determination under ss 86G or 87 of the NT Act.  In other words, the short answer to this step in my analysis is that, notwithstanding the capacity of the parties to agree upon a sustainable benefits term either as part of an ILUA or as part of a consent determination, the Mining Respondents may not insist upon such a term being included in the proposed determination where the applicant does not agree to it.

27                  That is probably sufficient to dispose of the issue raised by the Mining Respondents.

28                  However, I also turn to the third of the four steps or matters I referred to in [16] above.

29                  When making a determination of native title rights and interests, the Court must also satisfy the requirements of Pt 2 Div 6 of the NT Act.  Section 55 requires the Court, when making such a determination to determine whether the native title is to be held on trust, and if so by whom.  Generally, under s 56(2) the native title holders will nominate in writing within a specified period a prescribed body corporate to be the trustee of the native title rights and interests, and the determination will declare that the prescribed body corporate holds the rights and interests from time to time comprising the native title in trust for the holders of the native title rights and interests.

30                  Under s 56(3), the prescribed body corporate then holds the native title rights and interests in trust for those persons in accordance with the Regulations.  The Regulations also enliven certain financial accountability obligations imposed under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (the CATSI Act) prescribed under the Act.  The powers and functions of a prescribed body corporate are otherwise set out in ss 56, 57 and 58 of the NT Act. 

31                  The NT Act therefore establishes a detailed regime under which the native title holders through their prescribed body corporate should hold the benefit of the native title rights and interests.  Whilst a party such as one of the Mining Respondents may wish to better secure for future generations of the native title holders the benefits of compensation payable under the NT Act or legislation such as the Mining Act, it is important to note that a prescribed body corporate is constrained by the provisions of the NT Act, and the Regulations as to the application of any compensation entitlements.  The future act regime itself under Div 3 of Pt 2 of the NT Act also does not expressly contemplate that those who may, by reason of a future act, be obliged to negotiate with the holders of native title rights and interests through the applicant authorised to bring the native title determination application, should apply those funds in a particular way.

32                  I also observe that the proposed sustainable benefits term set out in [14] above is not worded in a way which enables its obligations to be readily understood of enforced.  It would be a matter of judgment whether a prescribed body corporate would or could not be complying with its terms by deciding to apply particular funds available to it in a particular way.  Any orders made by a Court should convey clearly what it is that the entity subject to the order is required to do: Melway Publishing Pty Ltd v Robert Hicks Pty Ltd (2001) 205 CLR 1.  Such orders must be capable of being understood by those to whom it applies, and others who might be affected by their compliance including in the present context members (including future members) of the claim group: Australian Competition and Consumer Commission v Dataline.Net.Au Pty Ltd (in liq) (2007) 161 FCR 513; Australian Federation of Construction Contractors v Australian Building Construction Employees’ and Builders Labourers’ Federation (1984) 73 FLR 61.

33                  I suspect that, underlying the Mining Respondents’ contention, is a series of more precise expectations of how any compensation should be applied and that the formulation set out in [14] above was more to focus the issue than to reflect the precise terms of the order they would ultimately seek.

34                  However, as I have noted, the parties may agree upon a term of a determination such as the sustainable benefits term and the Court may include it in its orders.

35                  The fourth of the matters referred to in [16] above does not directly arise.  The Mining Respondents asked whether, as a matter of law, they could insist upon a term such as the sustainable benefits term, in the anticipated consent determination.  The contentions did not suggest that their insistence on such a term, in the absence of genuine agreement to it, could be pressed on the basis that they would not otherwise consent to the proposed determination.  The agreement briefly referred to at [4] would appear to preclude that course in any event.

36                  Appropriately, the Mining Respondents did not contend, and none of the other respondents contended, that it would be appropriate for a respondent party to endeavour to impede the proper recognition of native title rights and interests by seeking to secure agreement on an unrelated matter, such as a sustainable benefits term, when there was no bona fide dispute about the existence of the native title rights and interests asserted.

37                  The High Court to date has declined to decide whether, in negotiating an agreement, negotiating parties owe each other a duty of good faith: Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 240 CLR 45.  However, such a duty has been found to exist in a variety of circumstances where there is an existing relationship: see eg Pacific Brands Sport and Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 at [64] per Finkelstein J; Vodafone Pacific Ltd v Mobile Innovations Ltd [2004] NSWCA 15; Burger King Corporation v Hungry Jack’s Pty Ltd [2001] NSWCA 187; Renard Constructions (ME) Pty Ltd v Minister for Public Works (1992) 26 NSWLR 234.  The circumstances in which the applicant and the respondent parties to an application under s 61 of the NT Act come to negotiate about the outcome of the claim may well suffice as a sufficient relationship to enforce such a duty on them.  That would almost certainly be true of the relationship between the applicant and the relevant State or Territory: cp Taku River Tlingit First Nation v British Columbia (Project Assessment Director) (2004) 245 DLR (4th) 193 at [24].

38                  In the context of negotiations to reach agreement in relation to a matter concerning the grant of native title under the NT Act, a Court might readily infer such a duty.  Resolution of claims by agreement is clearly a core aim of the NT Act.  The aspirational statements in the Preamble point that way.  In the context of the future act negotiations under Div 3 of Pt 2 of the NT Act, the obligation to negotiate in good faith is explicit: ss 31(1)(b) and 36(2): see eg Walley v Western Australia (1996) 67 FCR 366 at 376 per Carr J; Brownley v Western Australia (No 1) (1999) 95 FCR 152.  In mediation under the NT Act, similarly, the parties are expected to mediate in good faith: s 94P(1) and 94Q.  If there is no bona fide dispute about issues concerning a proposed consent determination, it would be a breach of any obligation to negotiate in good faith to use the carrot of consent to the determination as leverage to secure agreement on other matters such as a sustainable benefits term.

39                  Of course, that is not to say that matters consequential upon or related to the recognition of native title rights and interests may not be the subject of negotiation.  It is generally in the interests of all concerned if such matters can be addressed and agreed at the same time.  If, as here, agreement on a sustained benefits term could not be reached after negotiation, it is appropriate that the consent determination be made (together with any other agreements to be reflected in the orders).

40                  There may also be circumstances in which, after appropriate inquiry, the State (and presumably other respondents) are not satisfied that the claimed native title rights and interests are established in the claim group, or in which there is an issue as to whether such native title rights and interests as existed at settlement had persisted so that they may (subject to extinguishment) be enjoyed by the present claim group.  In such circumstances, the parties may entirely appropriate negotiate for a mix of accepted native title rights and interests and other orders, or indeed for other non-native title outcomes.  They will be doing so in good faith, having regard to their respective and real perceptions and undertakings about their strengths and weaknesses on the various matters under consideration.  If that negotiation leads to proposed orders to be made by the Court under s 87, if satisfied it is appropriate to make them, that is an outcome which the NT Act contemplates and provides for.  As is implicit in the submissions, this is clearly not such a case.

41                  For the reasons given, the orders of the Court will simply record the question posed in [6] above, and that the answer to the question is “no”.

Associate:

Dated:         13 August 2010