Federal Court awards $3.3 million to native title claimants in first litigated compensation claim under the Native Title Act

31 August 2016

The Native Title Act 1993 (Cth) (NTA) provides a system for the recognition of native title rights and interests across Australia. Where various types of acts have extinguished, or partially extinguished, native title, the NTA provides for compensation on just terms.

The decision of Mansfield J in Griffiths v Northern Territory of Australia (No 3) [2016] FCA 900 (Timber Creek) delivered on Wednesday, 24 August 2016, concerned a compensation application for the extinguishment of native title rights and interests within the small township of Timber Creek in the Northern Territory, which is situated about 600 kilometres south of Darwin. The native title holders to that area are the Ngaliwurru and Nungali People.

Compensation was claimed for around 60 “valid” past and intermediate period land grants and public works, covering about 23 square kilometres, attributable to the Territory, which took place after the commencement of the Racial Discrimination Act 1975 (Cth) between 1980 and 1996 and which either extinguished native title in its entirety, or impaired or suspended native title in areas where native title continues to exist. The application also concerned an action for damages in relation to three additional land grants attributable to the Territory that were “invalid” future acts1.

Timber Creek is a landmark decision, being the first litigated compensation claim to be determined by the Federal Court since the NTA commenced over 22 years ago2.

What were the main issues raised and considered?

Importantly to the facts of the case and the consideration of compensation, the Timber Creek decision follows a number of previous determinations in relation to native title at Timber Creek. In Griffiths v Northern Territory of Australia [2007] FCAFC 178, the Full Court of the Federal Court on appeal determined that exclusive native title exists in relation to certain lands within Timber Creek, and that non-exclusive native title exists in relation to Timber Creek itself (including its beds and banks). Certain lots within the town of Timber Creek were not considered in the earlier determinations for various reasons.

In Griffiths v Northern Territory of Australia [2014] FCA 256, Mansfield J determined the Territory’s liability to pay compensation, with the assessment of compensation determined in the Timber Creek decision. In Timber Creek, it was agreed between the parties that native title existed (or continues to exist) in relation to the land the subject of the compensation application, and that at the time each compensable act occurred, native title existed in the relevant parcel of affected land.

All of the compensable acts were attributable to the Territory. Read with the provisions of the NTA, the Territory’s Validation (Native Title) Act (NT) (VNTA) which commenced on 10 March 1994 had the effect that past acts attributable to the Territory were validated, that is, were held to be and to have always been valid. Following the 1998 amendments to the NTA, the VNTA was amended on 1 October 1998 to provide for the validation of intermediate period acts and the confirmation of extinguishment of native title by previous exclusive possession acts.

There were four main issues in dispute in the Timber Creek case, those being:

  • What was the valuation date for the purposes of assessing compensation/what was the date from which compensation would be payable?
  • What was the value to be ascribed to the native title rights and interests that were extinguished?
  • What was the manner and extent to which traditional attachment to the land should be reflected in the award of compensation (referred to in the judgement as solatium)?
  • In relation to the assessment of pre-judgement interest, should interest be calculated on a simple basis or compounded basis and, if on a compounded basis, at what rate should it be calculated?

Very briefly, Mansfield J held as follows in relation to those four questions:

  • The NTA does not provide for the date on which an entitlement to compensation arises. The question is whether compensation is to be assessed as at the actual date of each of the acts that extinguished native title, or at the date of the validation of that act by the relevant legislation (in this case, the VNTA). Because the relevant legislative provisions deem the extinguishing acts to have been valid from the time of the acts, or to have been done at the time of the act, it is the date of the act itself (ie. the date the relevant act was done or the date when the construction or establishment of a relevant public work began) which fixes the date at which compensation is to be assessed.
  • Exclusive native title should, as a starting point, be valued at the equivalent freehold value. Non-exclusive native title should be valued at a rate less than freehold value that recognises and gives effect to the nature of the rights held. The appropriate valuation of non-exclusive native title rights and interests is 80% of the freehold value. That percentage does not reflect an allowance for the elements which are related to the cultural or ceremonial significance of the land, or the very real attachment to the land that the native title claimants or native title holders have – that is a separate and significant element of the entitlement to compensation (see point below).
  • It was not contested that an award in the form of solatium ought be granted – the issue before the Court was how to quantify the essentially spiritual relationship which Aboriginal people have with country and how to translate the spiritual or religious hurt into compensation. Mansfield J held that this was appropriately considered under the descriptor of “intangible disadvantages” under Schedule 2 r 9 of the Lands Acquisition Act (NT). Solatium should be assessed having regard to the communal native title and collective ownership of the native title rights and interests; reflect the loss or diminution of traditional attachment to the land arising from the extinguishment or impairment in question (rather than earlier or subsequent events); and must be assessed having regard to, in this case, the non-exclusive nature of the native title rights and interests in question. The process of assessment is complex but essentially an intuitive one. Evidence about relationship to country and the effect of acts on that connection are paramount. The proper question is simply to consider what, if any, non-economic effect there was upon pre-existing native title by the compensable acts. In this case, the compensation was to be assessed on the basis of the past three decades or so of the loss of cultural and spiritual relationship with the lots affected by the compensable acts, and for an extensive time into the future. Three particular considerations were taken into account in this assessment:
    • the building of infrastructure on Dreaming lines;
    • the extent to which compensable acts affected not simply the precise geographical area of the lot over which the act related, but in a more general way to related areas so as to have impaired the native title rights and interests more generally; and
    • and the fact that each compensable act to some degree diminished the geographical area over which native title rights within the Timber Creek township and land more generally could be exercised, having adversely affected the spiritual connection with particular allotments and the native title holders’ broader connection with their country.
  • Interest is awarded as part of the compensation payment, not interest on the compensation. Whilst the NTA is silent on the issue of the calculation of interest it does not preclude, where appropriate, the imposition of compound interest which it is open to the Court to award.  It will depend on the evidence presented in each case, including in relation to the potential investment or commercial application that might have been made to the compensation by the particular claim group.  In this case, the appropriate interest calculation is simple interest at the rate specified in Practice Note CM 16 of the Federal Court Practice Notes.
How much compensation was awarded?

Mansfield J assessed compensation payable by the Territory as follows:

  • Economic value of the extinguished native title rights: $512,000
  • Interest on the above sum: $1,488,261
  • Allowance for solatium: $1,300,000

Totalling $3,300,261.

Mansfield J also awarded damages of $48,597 (including interest) for the three acts attributable to the Territory that were invalid future acts. In doing so, Mansfield J noted that each act purported to extinguish native title (when the acts were done, in 1998) but because the acts were done invalidly, the acts did not have that effect. As there are no provisions in the NTA that deal with compensation for invalid future acts, these matters are governed by the general law, which Mansfield J found the Federal Court had the jurisdiction to determine.

All compensation and damages are to be paid to, held and invested by, and distributed to the native title holders by their prescribed body corporate, Top End (Default PBC/CLA) Aboriginal Corporation RNTBC.

What does it all mean?

Given its importance, the decision in Timber Creek will almost certainly be appealed. However, in the short term it sets a precedent for the determination of the small number of other native title compensation applications that are currently before the Court and potentially opens the door to a vast range of other compensation claims by native title claimants throughout Australia. It is also likely to be used as a tool by native title claimants and native title holders when negotiating agreements for future acts, such as mining projects, to assess appropriate compensation for the surrender or impairment of their native title.

The NTA states that the Commonwealth is liable for compensation for acts attributable to it, and the States and Territories are liable for compensation for acts attributable to them. Other bodies such as local governments continue to be liable to pay compensation for compulsory acquisition of native title.

In some specific circumstances, however, liability may be passed to project proponents, either by legislation (see for example section 24A of the Petroleum and Geothermal Energy Resources Act 1967 (WA) and section 125A of the Mining Act 1978 (WA)) or through certain contractual arrangements. It is important for project proponents to closely review existing and proposed contracts and tenements, and to continue to be aware of native title as a live issue, both in relation to ensuring the validity of proposed future acts and when considering their exposure to pay compensation for the extinguishment or impairment of native title, moving forward.

This article was written by Philip Hunter, Partner and Lara McQuaid, Senior Associate.

1Those being the grant of freehold interests by the Territory in 1998, which each have a residential dwelling built on them.
2In the relatively recent case of De Rose v State of South Australia [2013] FCA 998, a compensation amount was reached by agreement, with compensation payable by the State of South Australia.

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