Compensation

Native title compensation has become an important focus area for the native title sector. The sector has seen an increase in applications and settlements since the High Court’s Timber Creek decision and the negotiation of the South West Native Title Settlement.  

What activities can lead to compensation?

Native title holders are entitled to compensation for activities which diminish or damage their native title rights and interests (Native Title Act 1993 (Cth) (NTA) s 51(1)). Some examples include the grant of a freehold lease or the construction of public works such as a telephone line or a road. Activities may be classified as past acts, intermediate acts or future acts.

Type of Act

Definition

Past Acts

Acts before 1 January 1994 (when the NTA was passed)

Intermediate Acts

Acts occurring between 1 January 1994 and 23 December 1996 when High Court found in Wik Peoples v Queensland [1996] HCA 40 (Wik) that native title and pastoral leases could co-exist. 

Before Wik it was believed that pastoral leases extinguished or removed native title. This meant that some acts which took place on native title land between 1 January 1994 and 23 December 1996 may have actually been unlawful.

Future Acts

Proposals to do work on land or have plans for the land that may affect native title rights and interests, such as mining, granting pastoral leases or declaring a national park.  

Compensation is payable for acts which occurred on or after 31 October 1975 when the Racial Discrimination Act 1975 (Cth) (RDA) came into effect. The RDA does not allow for discrimination on the basis of race, colour, descent or national or ethnic origin (RDA s 10(1)). This means laws cannot be made which are discriminatory against native title holders. It may be possible for compensation to be payable for acts which occurred before 31 October 1975, as under the Australian Constitution the acquisition or taking of land must be on ‘just terms’ (Australian Constitution s 51(xxxi)). There is currently a claim before the Federal Court that is testing this issue (NTD43/2019).

 

The Federal Court hears an application by the Ngaliwurru and Nungali Peoples for compensation for the loss of their native title rights and interests over parts of the Township of Timber Creek, February 2016. Photo courtesy of the Central Land Council.

 

Group of people including judges at a court hearing in 2016 in Timber Creek

Calculating compensation

Compensation claims have only recently come before the courts. The first compensation determination was made in 2013 in De Rose v State of South Australia [2013] FCA 988 by a confidential, not publicly disclosed, settlement agreement. It was not until 2016 with the decision in Griffiths v Northern Territory of Australia (No 3) [2016] FCA 900 (Griffiths) that the court made its first order of compensation. The decision is considered by some to be the most important native title decision since Mabo and Others v Queensland (No 2) (1992) 175 CLR 1 as it contains detailed guidance on how to calculate compensation and suggests that total liability for past acts of extinguishment and impairment of native title rights may be very large. Griffiths was taken before the courts by the Ngaliwurru and Nungali peoples. In 2006 the court determined that they hold exclusive and non-exclusive native title around the town of Timber Creek in the Northern Territory. In 2011 they sought compensation from the Northern Territory government because it granted freehold title and pastoral leases, and constructed schools, water tanks and roads on the land between 1980 and 1996 which diminished or extinguished their native title rights and interests.

In 2016, the Federal Court found that compensation was payable for both economic loss and cultural loss, calculated separately.

Economic loss 

Economic loss is the loss of the value of the land caused by the extinguishment, diminution or impairment of native title. The value of country isn’t thought of in terms of money, but this is what the courts use to compensate native title holders when they have lost rights. It is calculated by reference to the freehold value of the land (NTA s 51A) (what it would be worth if sold on the open market) but must also be on 'just terms' to comply with s 51(xxxi) of the Australian Constitution (NTA s 53(1)). Freehold is the strongest form of land ownership that allows the land holder to possess an area of land for all time, or otherwise do as they wish with it provided that they comply with relevant laws. The Court said that compensation for loss of exclusive native title could be 100 per cent of the freehold value, because exclusive native title is very similar to freehold. In most cases, however, native title is non-exclusive, which means that it co-exists with other (non-indigenous) rights over the same piece of land. Where native title is non-exclusive, economic loss will be less than the freehold value. Judge Mansfield assessed the economic loss of the Ngaliwurru and Nungali peoples to be 80 per cent of the freehold value of the land.

Cultural loss 

Cultural loss refers to spiritual or religious hurt caused by the acts which extinguished, diminished or impaired native title. It does not mean that culture has been 'lost', but the impact it has on people’s culture if they for example can’t access a sacred site or are able to conduct their ceremonies. It is very difficult to calculate cultural loss because the value of culture is not thought of in monetary terms. In awarding compensation for cultural loss, the court considered the native title holders' connection with land and waters by their traditional laws and customs, and how the act effected this connection. Judge Mansfield awarded $1.3 million for cultural loss to the Ngaliwurru and Nungali peoples.

Interest 

Interest is additional money that reflects the change in the value of money over time. This is because economic loss is calculated at the time the acts were done, not when the claim is made. The Court said that simple interest was payable on the economic component of the loss, but not the cultural component. In some cases interest could be paid on a compound interest basis, depending on the evidence. Compound interest is a different way of calculating interest, and leads to a higher sum. The interest in this case was still quite large because a lot of time has passed since 1980-1996 when the acts were done, and 2016 when the court case was won.

The Full Federal Court and High Court calculated compensation in a similar way. However, the Full Federal Court reduced the economic loss to 65% of the freehold value of the land, while the High Court reduced this further still to 50 per cent. The value of the economic loss in each case depends on how similar the native title rights and interests are to the rights of a freehold owner. Where native title holders have exclusive possession, the value of the economic loss will be equivalent to 100 per cent of the freehold value of the land. It does not matter that native title cannot be sold or transferred like freehold can. Neither the Full Federal Court nor the High Court changed the amount of compensation for cultural loss. The High Court confirmed that the compensation payment also compensated for loss to future generations. This is because once compensation has been paid, it can’t be paid again.

In the case of the Ngaliwurru and Nungali peoples in Timber Creek, the final compensation payment came to $2,530,350, broken down as follows:   

  • economic loss: $320,250 

  • interest (on economic loss only): $910,100  

  • cultural loss: $1.3 million  

This area of native title law is likely to develop further in the coming years, with greater guidance on how economic and cultural loss are to be calculated, and the kinds of acts which might lead to compensation.  

Claiming compensation

A claim for compensation is made in the Federal Court by an RNTBC (if there is one) or authorised applicant (NTA s 61(a)). If there is no native title determination over the area where the activities occurred, the Court will also need to decide whether the group holds native title, or, if the acts extinguished native title, that they held native title rights before those acts occurred. The Federal Court will refer the application for mediation, which is where the parties sit down and try to reach an agreement on their own. If the mediation is successful, the Federal Court will make a compensation determination by consent. This is a formalisation of the agreement reached. If the mediation is unsuccessful, the Court will decide whether compensation is payable or not, and if so, how much should be paid.

Further Resources