Australia: De Rose v South Australia - The first approved native title compensation determination

In October, the Federal Court handed down its judgment in De Rose v State of South Australia [2013] FCA 988, the first decision to order the payment of compensation for the extinguishment of native title rights and interests. Although the financial terms of the settlement were agreed by the parties in mediation, and were kept confidential by the Court, the decision is nonetheless significant in identifying a potential liability for both governments and third parties in compensating for extinguished native title.

Background: the Native Title Act and compensation for extinguishment

The Native Title Act 1993 (Cth) (NTA) creates a mechanism for compensating indigenous people for certain acts that have extinguished or impaired their native title rights and interests. This entitlement to compensation arises when the Commonwealth or State or Territory validates certain 'acts' that extinguish native title, described in the NTA as being past, intermediate period or future acts, or previous exclusive and non-exclusive possession acts. Examples of these types of acts include the making of legislation, the grant of a licence or permit, the creation of any interest in land or waters and the exercise of executive power.

The reason that the NTA creates this entitlement to compensation is because the validation of these acts would otherwise be invalid as a result of the operation of the Racial Discrimination Act 1975 (Cth) (RDA).  This is because the RDA protects native title holders against discriminatory extinguishment or impairment of native title. The compensation regime in the NTA addresses this issue.

Generally compensation must be made on 'just terms', taking into account any loss, diminution, impairment or other effect the act has had on native title rights and interests. Compensation is ordinarily payable by the government entity, Commonwealth, State or Territory to which the act is attributable. Compensation is payable only to the extent (if any) that the native title rights and interests were not already extinguished at common law.

The Judgement

In 2005 the Federal Court determined that that the De Rose Hill Nguraritja people held native title over certain parcels of the De Rose Hill pastoral lease, in the Western Desert region of northwest South Australia. Significantly however, the determination excluded certain areas of land where extinguishment of native title had occurred.

A compensation application was later filed by the Nguararitja in relation to three lots where native title had been extinguished, being a freehold lot, a public road (the Stuart Highway) and a car park. Under Court-ordered mediation, the parties came to a negotiated settlement to resolve all of the State's compensation liabilities to the Nguararitja, but required a court order to give effect to the proposed settlement deed. Amongst other procedural requirements, the Court was required to determine whether the proposed compensation was on 'just terms' and did not exceed the amount that would be payable if the land had been freehold land that had been compulsorily acquired.

As this was the first occasion that the Court was required to determine native title compensation, there were no 'directly relevant' prior decisions to help guide the Court. Given this lack of the judicial guidance, the Court instead looked at the principles applied in consent determinations of native title; that is, where indigenous claimants and respondents had come to an agreement about whether native title exists in a particular area and require the court to sanction the agreement. In these native title consent determinations, the primary consideration for the Court is to determine whether there is agreement, and whether this agreement was freely entered into on an informed basis. The Court will not 'embark on its own inquiry of the merits of the claim', but rather has a cursory examination of the proposed agreement, and of the process that led to agreement.

The Court in De Rose imported these considerations used in native title consent determinations and applied them to the current facts. The Court took into consideration the fact that agreement had been reached between the parties, and that the parties had been informed by competent legal representatives, and ultimately endorsed the proposed settlement agreement.

Although the terms of the settlement deed were reproduced in full in the Court's decision, the actual amount paid in compensation was redacted. The Court considered that this was necessary to prevent prejudice to the proper administration of justice, and to avoid tainting other negotiations.

What does this mean for developers and project proponents?

Has De Rose set a precedent for following compensation determinations?

Given that De Rose is a seminal decision, is it likely to be followed by a raft of compensation claims and determinations? The short answer is – it's unlikely.  It is important to appreciate the broader context of compensation determinations and the framework of the NTA before proclaiming that the floodgates have opened.

First of all, the history of compensation determinations indicates that this decision is not likely to be followed by a series of successful compensation claims. In its 19 year history, 37 compensation applications have been filed under the NTA. The De Rose decision is the first successful compensation determination, with all others bar one having been withdrawn, discontinued or dismissed.

The second element to consider is that in any compensation determination, the claimants must overcome the threshold issue of proving they actually possessed native title rights and interests over the relevant land, subject to the extinguishing act. The test for determining the existence of native title under s 223 of the NTA is an onerous one, and is not easily satisfied.

Finally, compensation is only payable for extinguishing acts that occurred after 1975; the date of the introduction of the RDA. This is because prior to the enactment of the RDA, Commonwealth and State governments were free to make grants or do acts that extinguished native title, without requiring these acts to be 'validated' by the NTA. As such, it is only the 'validation' of acts after 1975 by the NTA that enlivens an entitlement to compensation. The majority of acts extinguishing native title are likely to have been committed prior to 1975, meaning that there is no compensation payable. There is no common law right to compensation for the extinguishment of native title rights and interests.

Are third parties liable to pay compensation?

In general, Commonwealth, State and Territory governments are liable for compensation for extinguishment, as they are liable for acts that occurred on or before 23 December 1996, the date of the High Court's decision in Wik Peoples v Queensland (1996) 187 CLR 1.  

However, in some circumstances third parties, such as developers or project proponents, may be liable for compensation for 'future acts'; that is, acts that occur after 23 December 1996. For example, a developer seeking a grant of an interest in Crown land for development, or a project proponent seeking to construct a facility for services to the public, may be liable to pay compensation for extinguishment.

How do I assess a potential liability for compensating extinguishment?

Unfortunately, the NTA provides limited guidance of how to value compensation for extinguishment, and the De Rose decision has not provided any further guidance.  Under the NTA, the valuation of compensation for extinguishment differs depending on the extinguishing act. In most cases, the legislation provides that the amount of compensation must be on 'just terms', and must not exceed the amount that would have been payable if the act that extinguished native title had been the compulsory acquisition of freehold estate (the 'freehold cap'). However, this freehold cap is further subject to the constitutional guarantee under s 51(xxxi) that the acquisition of property by the Commonwealth must be on 'just terms'. Consequently, the only real guidance in the NTA is that compensation must be on 'just terms'.

The De Rose decision does not provide any further clarity in terms of valuation principles. The decision to keep the compensation amount confidential means that it is unclear how the parties valued the native title rights. The Court gave a vague description of the negotiation process, with the parties proposing detailed calculations and formulae to one another, with 'vastly varying results', until ultimately a mutually agreeable amount was reached. The Court also mentions that the State was not prepared to accept that the current freehold value of the extinguished area was necessarily relevant to the value of the native title rights and interests lost.


The De Rose decision indicates that governments and project proponents should appreciate that the extinguishment of native title, either by the court or otherwise 'deemed', does not mean necessarily preclude further liability. There are currently five active compensation applications, four of which are in Western Australia, and the outcome in these decisions in light of De Rose will be noteworthy.

However, the broader implications of De Rose are limited by its facts. Compensation in De Rose was reached by agreement between the parties, and all the Court was required to do was sanction the proposed settlement, and expounded certain considerations in doing so. The decision does not broaden the rights to compensation, but merely confirms that there is a statutory right to compensation.  

Unfortunately, until the Court makes a determination in favour of a claimant group in a contested compensation determination, we are no clearer in assessing compensation for native title rights and interests. Overall, it appears that whilst both the NTA and the parties in the De Rose decision contemplated the freehold value of the land in assessing compensation, the overriding guiding principle is that any compensation must be on "just terms".

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.