Australia: High Court hands down landmark native title compensation decision

Last Updated: 25 March 2019
Article by Jenny Humphris and Alex Buck
Most Read Contributor in Australia, March 2019

The High Court has handed down its decision in the Timber Creek native title compensation claim. 

In its decision on 13 March 2019, the Court awarded compensation and interest to the native title holders in an amount of approximately $2.5 million dollars.

Background

The decision relates to a claim for compensation by the Ngaliwurru Nungali People for the impairment and extinguishment of their native title rights and interests caused by the grant of development and Crown leases and freehold and the construction of public works (the compensable acts) over 127 hectares of land in the town of Timber Creek in the Northern Territory.  

In 2007 the Ngaliwurru Nungali People were recognised as holding native title in approximately 2,053 hectares of land in and around Timber Creek. On 2 August 2011 the claim group commenced a claim for compensation against the Territory Government under s 61 of the Native Title Act 1993 in respect of the compensable acts. 

When it first came before the Federal Court, Justice Mansfield awarded $3.3 million in compensation made up of $512,400 for economic loss (assessed as being 80 per cent of the unencumbered freehold value of the affected land); $1.3 million as a result of the loss of spiritual attachment to the land; and $1.4 million in interest. 

The parties appealed and the Full Federal Court upheld Justice Mansfield’s award with the exception of reducing the economic loss component by adopting a calculation of 65 per cent of the unencumbered freehold value of the affected land. Both parties appealed that decision to the High Court.

High Court decision

The High Court upheld the $1.3 million award for spiritual loss, but reduced the award component for the economic value of the native title rights and interests to $320,250. The Court also held that the Northern Territory government was to pay interest on the economic component calculated on a simple interest rate.

Economic loss component

The majority of the High Court judges held that to assess the value of the affected native title rights and interests, it is necessary to first identify the relevant date at which that value is assessed and then the nature of the native title rights and interests affected. They held that the relevant date is when native title is extinguished, that is when the compensable acts (grant of leases etc) was done.

The Court recognised that whilst the claim group were entitled to live on the land and use it for non-commercial purposes, they were not able to control others’ access to or actions on the land. Also the Northern Territory government was entitled to grant co-existent interests in the land including grazing licenses and other licences authorising things to be taken from the land. They held that if native title rights and interests “amount to or come close to a full exclusive title, that the value will be “similar to freehold value”. However where, as here, those native title rights and interests are significantly less than full exclusive title, they “will have an objective economic value significantly less than freehold value”. 

The majority of the Judges held that the relevant test applicable to valuing the loss or impairment of native title was ‘what would a willing but not anxious purchaser have been prepared to pay a willing but not anxious vendor  to obtain their agreement to extinguish native title?’ 

The approach is to first determine the value of a freehold interest in the relevant land and then discount that figure by reference to the limited nature of the claim group’s native title rights. This, the Court acknowledged necessitated making a fairly “broad brushed” estimate of the percentage of freehold value proportionate to the native title. Based on this approach, the Court observed that the economic value of native title in developed areas is likely to be greater than in a remote location. 

The Court held that the Full Federal Court’s assessment of economic value at 65 per cent of freehold value was “manifestly” excessive given that the claim group’s native title rights did not include the right to control access to the land or the right to commercially exploit the land. They held that “any reasonable view” would equate the claim group’s non-exclusive rights to no more than 50 per cent of the freehold value of the land but awarded 50 per cent of freehold value as neither party had argued that it should be less. 

Cultural loss component

In deciding compensation for spiritual loss, the High Court placed particular weight on the fact that the trial judge had the substantial benefit of hearing and seeing first-hand the evidence from the claim group of their connection to the land, the effects under their law and customs of when country is harmed and the effects of the compensable acts on their connection to and their relationship with the country. 

They held that each compensable act (the grant of a lease, the construction of works etc) affected native title rights and interest with respect to the particular land but also with respect to the whole area to which rights and interests had been claimed. The Court likened this to punching holes in a painting. The damage done was not only measured by reference to any one hole but by reference to the entire work. 

The Court upheld the award of $1.3 million for spiritual loss. 

Implications

The decision paves the way for native title holders to apply for compensation for the loss of native title by past or future land dealings and the construction of infrastructure and other activities which diminish or impair native title rights. Generally, the Commonwealth, States and Territories are liable for native title compensation for land dealings and public works that have occurred since the enactment of the Racial Discrimination Act 1975. However parties may be liable for compensation where the State or Territory passes the liability on, for instance for the compulsory acquisition of native title by constructing authorities.

The High Court decision does not answer all of the relevant questions in relation to how to calculate compensation for the loss of native title. It was decided on the factual circumstances and issues before it, many of which were not in dispute, and by reference to the extensive evidence of spiritual loss heard on country by the Trial Judge. 

It is likely that the decision will trigger the commencement of numerous native title compensation claims and that the overall compensation liability of, in particular the Commonwealth, States and Territories, is likely to be significant.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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