On 24 August 2016 the Federal Court of Australia handed down the first ever judicial assessment of native title compensation in Australia, in Griffiths v Northern Territory (No 3)  FCA 900 (Timber Creek). In the landmark decision, the Court ordered the Northern Territory to pay over $3.3 million to the Ngaliwurru and Nungali Peoples, as compensation for the impact of certain acts on their native title rights and interests in the town of Timber Creek.
Importantly, as this case is the first ever litigated native title compensation determination, the Court established new principles for valuing native title compensation in accordance with the Native Title Act 1993 (Cth) (NT Act).
Under the NT Act compensation is payable to native title holders whose native title is extinguished or impaired by certain acts, such as the government’s grant of freehold title or other tenure over Crown land where native title had previously existed.
In 2007, the Federal Court determined that the Ngaliwurru and Nungali People’s native title existed over the town of Timber Creek. Subsequent to this, the native title holders lodged an application for native title compensation under the NT Act, for the effect of around 60 acts attributable to the Northern Territory government on their native title rights and interests. These acts generally relate to land grants and public works in the Timber Creek townsite.
The Court in Timber Creek held that the compensation to be awarded to the Ngaliwurru and Nungali People for the extinguishment and impairment of their native title rights and interests comprised of three distinct components:
- $512,000 for economic loss;
- $1.3 million for non-economic loss; and
- $1,488,261 for interest on the economic loss component of the compensation.
The Court held that economic loss is to be assessed by reference to the freehold value of the land, calculated at the date of the relevant act which extinguished or impaired native title.
The Court also determined that exclusive and non-exclusive native title hold different values. As the Ngaliwurru and Nungali People held non-exclusive native title rights and interests, the Court assessed the economic loss component as being 80% of the freehold value of the land. This percentage was based on the Court’s assessment of the nature of the rights of the Ngaliwurru and Nungali People which existed immediately prior to the acts.
The Court also accepted that the Ngaliwurru and Nungali People were entitled to compensation for the loss of spiritual and cultural relationship with the land, over and above the economic loss component. For example, the Court identified that the construction of a water tank on a significant site had caused particular distress and concern to the native title holders.
The Court cautioned against taking a rigid approach to the assessment of native title compensation, and did not provide a specific formulation or calculation that can be applied generally. However, it made a number of findings on how the assessment of non-economic loss is to be approached.
It was held that the assessment of the compensation payable for the extinguishment or impairment of native title is largely determined on the evidence, assessed with regard to the communal and collective native title ownership. Although the Court held that it was not appropriate to focus on the value of individual parcels of land, there may be particular sites that are of more significance than others.
The Court also found that the Ngaliwurru and Nungali People were entitled to interest on the economic loss component of the compensation, and that it should be assessed as simple interest. However, the Court also left it open for compound interest to be awarded in other compensation cases, if it is determined on the facts to be appropriate.
Although the area in which compensation was claimed in Timber Creek (approximately 23km2) is relatively small having regard to other areas in relation to which native title has been extinguished in Australia, the Court has made it clear that the potential liability arising out of specific acts will be determined on a case by case basis. It is difficult to predict how much compensation will be awarded in other cases, although the Court has offered general guiding principles for valuing native title compensation.
It is possible that one of the parties may seek to appeal Timber Creek. Even if the decision is not appealed, native title compensation is an evolving area of law and it is likely that the Full Federal Court or High Court will eventually be required to consider and determine another compensation matter. All parties that may be involved with native title compensation (native title holders, proponents and governments) should keep a keen eye on further developments in this area of law.
Disclaimer: The information contained in this update is not advice and should not be relied upon as legal advice. Castledine Gregory recommends that if you have a matter in relation to which legal advice is required, you consult with your legal adviser.
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