Court decision

Australia's first High Court determination of compensation for native title

By Jonathan Fulcher / 14 March 2019

Yesterday, the High Court handed down its decision on the appeals by the Ngaliwurru and Nungali peoples, the Northern Territory and the Commonwealth in relation to the first ever litigated native title compensation decision: Northern Territory of Australia v Griffiths [2019] HCA 7.  

The High Court allowed the appeal from the Full Federal Court in part and found the quantum of compensation in this case to be $2,530,350. This is a reduction from the Full Federal Court award of $2,899,446 and the Federal Court award of $3,300,661. 

Essentially, the High Court determined that, in this case:

  • The economic value of the non-exclusive native title rights was 50% of the freehold value of the land. This is a reduction from 65% as determined by the Full Federal Court and from 80% as determined by the Federal Court at first instance.
  • Simple interest is payable. This is an affirmation of the Full Federal Court decision.
  • The amount of compensation payable for cultural loss is $1.3 million. This is the same amount awarded by the Federal Court and the Full Federal Court.

This decision is significant as it provides guidance on the liability of the Commonwealth, States and Territories which has never been quantified except by confidential negotiation.  

Background and Litigation history 

The Native Title Act 1993 (Cth) provides that compensation is payable to native title holders for certain acts that impair or extinguish their native title rights or interests where there has been a determination of native title. However, the Native Title Act provides very limited guidance on how to calculate this compensation. The Act only specifies that compensation must:

  • consist only of payment money; 
  • be provided on ‘just terms’; and 
  • subject to the ‘just terms’ stipulation, be a maximum of the freehold value of the land.

The primary judge, Justice Mansfield, originally awarded the Ngaliwurru and Nungali peoples $3.3m in August 2016. You can read our analysis of the initial decision here. The Full Federal Court on 20 July 2017 reduced the award to $2.8 million due to errors in the primary judge’s assessment of economic loss. You can read our analysis of the Full Federal Court decision here.  

How to quantify economic value of the affected native title rights and interests 

The High Court determined that the objective economic value of exclusive native title rights to and interests in land , in general, equates to the objective economic value of an unencumbered freehold estate in that land. In this case, the High Court found that the objective economic value of the non-exclusive native title rights and interests of the Claim Group could be no more than 50% of the freehold value of the land. However, the High Court has left it open for the value of exclusive native title rights to and interests in land to be more or less than 50% in other circumstances.

The High Court explained that the Claim Group’s interest could be valued at less than the unencumbered freehold value of the land because: 

“Whether or not the value of any given native title is to be equated to freehold value for the purposes of assessing just compensation must depend on the exact incidents of the native title rights and interests. If the native title rights and interests amount or come close to a full exclusive title, it is naturally to be expected that the native title rights and interests will have an objective economic value similar to freehold value. By contrast, if the native title rights and interests are significantly less than a full exclusive title, it is only to be expected that they will have an objective economic value significantly less than freehold value.”

The High Court determined that there is nothing discriminatory about treating non-exclusive native title as a lesser interest in land than a full exclusive native title or, for that reason, as having a lesser economic value than a freehold estate.

The High Court considered that the Federal Full Courts estimate of 65% was “plainly too high relative to the limited extent of the native title rights and interests” and that the first instance courts estimate of 80% was “manifestly excessive”.  

The High Court differed from the Federal Court and Full Federal Court calculations because the claim groups rights and interests in the land were limited. Specifically, the majority described the claim groups rights and interests as “essentially usufructuary, ceremonial and non-exclusive”. This was because the Claim Group had:

  • no entitlement to exclude others from entering onto the land; 
  • no right to control the conduct of others on the land; 
  • no right to exploit the land for commercial purposes; and 
  • no right to grant co-existing rights and interests on the land. 

Whether interest is payable 

The High Court agreed with the Full Federal Court and determined that the interest is payable on the compensation for economic loss, and in the circumstances of this case, on a simple interest basis at a rate sufficient to compensate the Claim Group for being deprived of using their compensation amount between the date at which compensation was assessed and the date of judgment.

The Claim Group argued that equity required they be paid compound interest. The High Court found that the Claim Group was not entitled to compound interest on the basis that there was no authority that supported payment of compounding interest for a compulsory acquisition. 

Equity allows for compound interest to be claimed for recovery of money obtained by fraud or withheld in breach of fiduciary duty. The High Court determined there was no fraud and that the Crown did not have a fiduciary duty.  

A plaintiff may be able to claim restitution of a defendant’s ‘unjust enrichment’ and that claim may include a claim for compound interest. However, the High Court found that the Claim Group did not make a claim for restitution of benefits.  Further, the benefits derived by the Northern Territory were facilitated by statute and therefore could not amount to ‘unjust enrichment’. 

Cultural loss

The High Court determined that the compensation for loss or diminution of traditional attachment to the land or connection to country and for loss of rights to gain spiritual sustenance from the land is the amount which society would rightly regard as an appropriate award for the loss. The High Court found that the award for the cultural loss of $1.3 million made by the Federal Court and affirmed by the Full Federal Court was not manifestly excessive and no error was demonstrated in the necessary analysis undertaken to arrive at that monetary figure.

The High Court described compensation for cultural loss as follows:

“Compensation for the non-economic effect of compensable acts is compensation for that aspect of the value of land to native title holders which is inherent in the thing that has been lost, diminished, impaired or otherwise affected by the compensable acts. It is not just about hurt feelings, although the strength of feeling may have evidentiary value in determining the extent of it. It is compensation for a particular effect of a compensable act – what is better described as "cultural loss".”

Put simply, the Native Title Act requires a determination of the spiritual relationship the Claim Group had with their country and translation of that spiritual hurt from compensable acts into compensation.

The basis of the assessment included that: 

  • the award was on an in globo basis to the Claim Group with the distribution of the award being a matter for the members;
  • the award reflected the number of native title holders at the time native title was determined to have existed; and
  • the assessment of the effects of the acts causing cultural loss could not be divorced from the content of the traditional laws and customs acknowledged and observed by the Claim Group.

Implications

This is the first High Court determination quantifying compensation for native title. 

This decision raises the prospect of significant liability crystallising for the Commonwealth, States and Territories in areas of land that have been determined to be subject to native title. Now that there is an example of the quantum of compensation payable, the way government conducts negotiations will undoubtedly be affected.

However, as noted in our previous articles, it is appropriate to remember compensation will only be payable where:

  • exclusive native title rights and interests do not  continue to exist; 
  • the native title claimant has proven they have met statutory requirements for demonstrating continued connection to the land; and 
  • the extinguishment of those rights occurred after 31 October 1975.

The reason for a lack in compensation determinations to date is because previous applications for compensation have failed as claimants were unable to demonstrate that they are the holder of native title rights and interests. The National Native Title Tribunal's website shows that, other than Timber Creek, only 41 compensation applications have ever been made in Australia. Of these, 35 have been discontinued, withdrawn or had a determination that native title does not exist.  

However, as at today, there are 377 native title determinations recognising that native title holders have met statutory requirements for demonstrating a continued connection to the land over a total area of 2,836,842 square kilometres. Now that the High Court has provided some guidance on how compensation is determined, it is reasonable to expect an increase in those native title holders seeking compensation for extinguishment of their native title.

If you would like to discuss any aspects of the case or would like further information,please contact HopgoodGanim Lawyers’ Native Title and Cultural Heritage team.

Authors
Jonathan Fulcher
Partner
Jonathan is a Partner and the head of our leading Resources and Energy practice in Brisbane and is also the leader of our Native Title practice.
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