On 13 March 2019, the High Court delivered its first ruling on compensation payable to native title holders for extinguishment of native title under the Native Title Act 1993 (Cth) (“the Act”).
The compensation awarded to the Ngaliwurri and Nungali Peoples (“native title holders”) was $2,530,350.00 which included:-
- where non-exclusive native title rights were held, 50% of the freehold value ($320,250);
- an additional amount for “cultural loss” ($1.3 million);
- simple interest ($910,100).
Statutory right to compensation
Section 50 of the Act enables a native title holder to bring an application before the Federal Court for a determination of compensation entitlements for the extinguishment of native title.
Such an application can only be brought by a person or group who hold native title for extinguishing acts that occur after the introduction of the Racial Discrimination Act 1975.
Therefore, applications for compensation are only likely to be brought after a Court determination that native title exists.
Compensation
In determining the correct approach to calculate compensation payable under the Act, the High Court adopted a two-stage process:-
- Assessment of the economic loss for the loss of native title rights that may be undertaken objectively or by way of an economic assessment (expert evidence from registered property valuers); and
- Assessment of cultural loss
Economic Loss
The Majority held that assessing the value of economic loss was similar to assessing compensation for the compulsory acquisition of land.
These principles require the value of the land to be calculated at its highest and best use, being a value that a willing but not anxious purchaser would pay to a similarly motivated vendor.
The native title holders only held non-exclusive native title where the extinguishing acts occurred. The partial extinguishment of native title from exclusive to non-exclusive occurred prior to 31 October 1975 and was not compensable. The Court compared those non-exclusive native title rights to exclusive native title rights and assessed compensation as a percentage reduction of exclusive rights. That percentage reduction was then applied to the freehold value (as at the date of the extinguishing act) to determine compensation.
The Court found that the economic loss equated to a percentage of the freehold value of not more than 50%, being $320,250.
If exclusive native title rights and interests were extinguished it is likely that compensation would equate to 100% of the freehold value.
Cultural Loss
The Court found that an assessment of cultural loss was required and upheld an award for ‘cultural loss’ of $1.3 million.
Cultural loss was determined by considering a number of separate but inter-related factors:
- The number of compensable acts;
- The ‘connection’ the native title holders had to the land; and
- Any interrelated effects of the acts on that connection.
The Court adopted the view of the trial judge stating:
“the extent to which the compensable acts affected not only the precise geographical area of the lot on which the act took place, and the fact that each of the compensable acts to some degree “chipped away” at the geographical area resulting in incremental detriment to the enjoyment of the native title rights and interests over the entire area leading to a collective diminution of the Claim Group’s cultural and spiritual connection with the land and a sense of failed responsibility, under the traditional laws and customs, to have cared for and looked after the land.”
The effect of a number of compensable acts over an area should be assessed as ‘incremental and cumulative; the ancestral spirits, the land and everything on it are organic parts of one indissoluble whole’.
Interest
The Applicant sought the award of compound interest however the Court could not find a judicial basis for awarding compound interest and the award of simple interest in the amount of $901,100.00 was upheld.
Consequences for Council
The State of Queensland or the Commonwealth of Australia are generally liable for compensation under the Act. The most likely circumstances where a local government may be liable is if it acquires native title rights and interests through compulsory acquisition under the Acquisition of Land Act 1967.
If a local government is considering a compulsory acquisition which includes the compulsory acquisition of native title rights and interests, it should seek legal advice to consider the compensation implications.
The High Court did not determine compensation for other future acts however Council may consider using the methodology adopted by the High Court when considering compensation payments to native title holders for future acts.
For assistance with addressing native title and undertaking infrastructure projects including assessing native title compensation, get in touch with our Native Title team.