Keifel CJ, Bell, Gageler, Keane, Nettle, Gordon and Edelman JJ
This is the first decision of the High Court of Australia concerning the right to compensation for extinguishment of native title rights and interests under the Native Title Act 1993 (Cth) (NTA).
The High Court heard 3 appeals about the amount of compensation payable to the Ngaliwurru and Nungali Peoples for loss, diminution, impairment or other effect of certain acts by the Northern Territory of Australia on their native title rights and interests in the area of the township of Timber Creek in the north west of the Northern Territory.
The parties to the proceedings were the Ngaliwurru and Nungali Peoples Claim Group (Claim Group), the Northern Territory of Australia (Northern Territory) and the Commonwealth of Australia (Commonwealth). The Attorneys-General for the States of South Australia, Queensland and Western Australia, Central Desert Native Title Services Limited (CDNTS) and Yamatji Marlpa Aboriginal Corporation (YMAC) were granted leave to intervene in the proceedings.
Background
The matter has a long history and stems from 3 proceedings. See related content.
In 2006 the Claim Group obtained a determination of non-exclusive native title over certain land within the boundaries of Timber Creek which had been preserved under s 47B of the NTA. On appeal the Full Federal Court varied the determination, holding that in the relevant areas the Claim Group's native title was a right to exclusive possession, use and occupation, but otherwise affirmed the trial judge's determination.
In 2011 the Claim Group lodged a compensation application under s 61(1) of the NTA for loss, diminution, impairment or other effect on their native title. The compensation application extended beyond the determination area and included areas in the town where no ruling had been made that native title existed. The parties had agreed that the Claim Group's non-exclusive native title had been extinguished as at 10 March 1994.
The Trial judge determined that historic grants of pastoral leases had partially extinguished native title in the area and the compensation scheme under the NTA did not allow common law extinguishment of exclusive native title to be considered. Accordingly, the Claim Group's compensation was assessed in relation to the following non-exclusive native title rights and interests, exercisable in accordance with traditional laws and customs:
the right to travel over, move about and have access to the application area;
the right to hunt, fish and forage on the application area;
the right to gather and use the natural resources of the land such as food, medicinal plants, wild tobacco, timber, stone and resin;
the right to have access to and use the natural water of the application area;
the right to live on the land, to camp, and to erect shelters and structures;
the right to engage in cultural activities, to conduct ceremonies, to hold meetings, to teach the physical and spiritual attributes of places and areas of importance on or in the land and waters, and to participate in cultural practices related to birth and death, including burial rights;
the right to have access to, maintain and protect sites of significance on the application area; and
the right to share or exchange subsistence and other traditional resources obtained on or from the land and waters (but not for commercial purposes).
The trial judge assessed the Claim Group's non-exclusive native title as 80% of the unencumbered freehold value of the affected land. Simple interest was calculated from the date of extinguishment with $1.3 million payable for non-economic loss. The total compensation awarded was $3,300,661. On appeal, the Full Federal Court reduced the trial judge’s assessment of economic loss to 65% of the unencumbered freehold value of the affected land and affirmed the remaining orders. The total compensation awarded was $2,899,446.
Grounds of Appeal
The Claim Group argued that the Full Federal Court's approach to valuing its native title rights and interests (applying a percentage reduction from full exclusive native title and then applying that percentage reduction to the full freehold value of the land) offended the Racial Discrimination Act 1975 (Cth) (RDA) because the Claim Group's interests were being assessed at a lesser value than the interests of landholders of other races. They also argued that their native title was vulnerable to reduction by the Northern Territory's ability to grant lesser co-existing titles, something the RDA prevented, and compound interest should have been allowed.
The Northern Territory and Commonwealth appealed on various grounds including economic loss should not be assessed at more than 50% of freehold value, interest should not be awarded as part of compensation, the $1.3 million award for non-economic loss was manifestly excessive (the Commonwealth argued that $230,000 was the proper sum) and the Full Federal Court failed to approach the assessment correctly.
CDNTS and YMAC proposed that the High Court value the native title rights and interests according to a restorative or reinstatement approach.
Legal Issues
The Court considered 3 questions:
how the objective economic value of the affected native title right and interests is identified;
whether and on what basis interest is payable on or as part of the compensation for economic loss; and
how the Claim Group’s sense of loss of traditional attachment to the land or connection to country is to be reflected in the award of compensation.
The decision is contained in a joint judgment of Keifel CJ, Bell, Keane, Nettle, Gordon with separate judgments delivered by Gaegler and Edelman JJ.
Legal Reasoning
The majority considered the background to the proceedings, the compensation framework set out in the NTA and the consequences that flowed for the Claim Group’s native title rights and interests.
The Court found that the majority of the compensable acts were previous exclusive possession acts which had been validated by the NTA and Validation (Native Title) Act 1994 (NT).
The native title holders were entitled to compensation for the extinguishment by each act under s 23J of Div 2B NTA.
In relation to 3 past acts, where the non-extinguishment principle applied, the native title holders were entitled to compensation under ss 20 and 17 NTA;
compensation is only payable in accordance with Div 5 of the NTA and s 51(1) NTA is the core provision.
All parties to the litigation had accepted that the economic value of the native title rights and interests should be determined by application of conventional economic principles and tools of analysis, adapted as necessary to accommodate the unique character of native title rights and interests and the statutory context.
Criteria of Valuation
The Full Federal Court found that the economic value of the Claim Group's native rights should be assessed using the Spencer approach, which asks what price a willing but not anxious purchaser would pay to a willing but not anxious vendor in a hypothetical transaction. The parties to the appeal disagreed about how the Spencer test should be applied.
The majority found that the NTA equates the value of exclusive native title rights and interests with the objective economic value of an unencumbered freehold estate in the land and the Claim Group's non-exclusive native title rights and interests (with no entitlement to exclude others and no right to control the conduct of others on the land) must have a lesser economic value than exclusive native title.
Each of the Claim Group's RDA arguments were rejected, with the majority finding there is no disparity of treatment when assessing the economic value of native title rights and interests in accordance with conventional tools adapted to accommodate the unique character of native title rights and interests and the statutory context.
The majority found nothing discriminatory about treating non-exclusive native title as a lesser interest in land than a full exclusive native title or, for that reason, having a lesser economic value than a freehold estate. The equality of treatment mandated by s 10(1) of the RDA, as reflected in s 51 of the NTA, requires just compensation to include a component for the objective or economic effects of the infringement and a component for non-economic or cultural loss, termed an 'adapted Spencer test':
what the Claim Group could fairly and justly have demanded for their agreement to the infringement of their native title; and
a fair and just assessment, in monetary terms, of the sense of loss of connection to country suffered by the Claim Group by reason of the infringement.
The Court acknowledged that there is a degree of artificiality in applying an adapted Spencer test given the Claim Group would never be interested in selling their native title rights and interests and no one could buy them lawfully but considered it no more more artificial than applying the Spencer test to an assessment of just compensation for other general law interests such as an easement or profit à prendre.
Economic Value
The majority held that the proper approach is to compare the Claim Group's native title rights and interests with the rights and interests of a full exclusive native title, then make an evaluation of the percentage reduction from full exclusive native title and then apply that percentage reduction to full freehold value (as proxy for the economic value of full exclusive native title).
The majority acknowledged that this process requires a fairly broad-brush estimate of the percentage of rights and interests comprising freehold title considered proportionate to the native title rights and interests, but found this is an unavoidable consequence of the NTA statutory scheme.
Significance of inalienability
Although native title rights are inalienable, the majority noted that s 51A of the NTA deems inalienability of full exclusive native title irrelevant to the assessment of economic value and inalienability must therefore be irrelevant for non-exclusive native title too.
Manifestly excessive
The joint judgment considered the Full Federal Court's economic assessment of 65% of freehold value too high because the Claim Group's native title was devoid of rights of admission, exclusion and commercial exploitation. As no party suggested the percentage should be less than 50%, the economic value was accepted as 50% of the freehold value of the land.
Interest on economic loss
The Claim Group argued that equity dictated an award of compound interest. The majority concluded that the award of interest was not compensation for extinguishment, it was compensation for being kept out of the money that the Claim Group should have received at the time of extinguishment. The equitable rule provides for simple interest and this did not appear unjust.
The majority found that any benefit the Northern Territory might have received from the extinguishment of the Claim Group's native title, or from the delay in paying compensation, was a product of the NTA and restitutionary considerations cannot override the NTA by claiming a superior sense of justice to Parliament's. The claim for compound interest was therefore rejected.
Cultural Value
The majority found that s 51(1) of the NTA required an assessment of the spiritual relationship of the Ngalwirru and Nungali Peoples with their country and to translate the spiritual hurt into compensation. This required:
identification of compensable acts;
identification of the native title holders' connection with the land or waters by their laws and customs; and
consideration of the particular and inter-related effects of the compensable acts on that connection.
Collateral detriment effects on native title must also be taken into account when awarding compensation.
The majority rejected the use of words like ‘solatium’, drawn from English common law, as a distraction from the statutory task of assessing just terms for the acquisition of native title rights and interests that arise under traditional laws and customs which owe their origins and nature to a different belief system. What is required is a monetary figure as a result of a social judgment of what is an appropriate award for what has been done. The trial judge's award of $1.3 million for cultural loss was not inconsistent with acceptable community standards.
Decision of Gageler J
Justice Gageler agreed with the proposed orders and reasoning in the joint judgment but disagreed with the method of assessing the economic value of the Claim Group's non-exclusive native title. His Honour adopted a framework which recognises two components to the economic value of native title:
Usage Value, which is the value of the commercial exploitation of the native title right in perpetuity (if any), and
Negotiation Value, which is the value that a native title holder can extract from someone who wants a grant of ordinary title over the land in order to put the land to its highest and best commercial use.
As the trial judge found that the Claim Group's non-exclusive native title had no significant Usage Value, the economic value is confined to the Negotiation Value. Treating the Usage Value as close to zero, Gageler J considered it appropriate to assess the economic value of the Claim Group's native title as 50% of the full value of freehold title.
Decision of Edelman J
Justice Edelman agreed with the conclusions in the joint judgment but found that the litigation parties' assumption that cultural loss should be assessed at the date of judgment was an error and this may have and could lead to an erroneous compensation award in other cases due to significant delay between the act that causes extinguishment and the award of compensation.
His Honour considered it absurd that the Northern Territory should compensate a native title claimant solely by reference to the ordinary value of the native title to a non-Aboriginal person and criticised the valuation methodology adopted by the parties in the litigation. The parties had divided the compensation into two components:
economic loss valued at the date of extinguishment; and
solatium focused on the cultural or ceremonial significance of the land valued at the date of judgment.
Edelman J stated that neither dimension is dependent upon the particular subjective distress or mental suffering arising from the disruption to a person's life that follows the compulsory, rather than voluntary, nature of the deprivation of their rights.
The loss of the cultural value and the exchange value of the native title rights occurs immediately upon extinguishment. However, pain and suffering that is consequential upon the compulsory acquisition or extinguishment might occur slowly or gradually and is measured at the date of judgment. Although the parties used the language of "solatium", no separate claim was made for subjective mental suffering based only on the consequences of the compulsory nature of the extinguishment. His Honour doubted that the award for cultural loss included an amount for the additional distress caused by the compulsory manner of the acquisition.
Exchange Value
Edelman J noted that the Spencer test is not a mandated legal rule. It was not appropriate to attempt to value the reasonable price for the land on the basis of what the Claim Group might have been prepared to pay to acquire different land at a different location to which their attachment would have been different. His Honour determined that the assessment of value should be by reference only to the price that the Northern Territory would reasonably be prepared to pay to extinguish the native title. On this basis Edelman J found that the exchange value of the Claim Group's native title is 50% of the freehold value of the land.
Cultural Value
Edelman J agreed with the joint judgment's basis for the award of cultural loss but considered the combined amount awarded was less than an award for a compulsory acquisition of freehold because the freehold value would usually have a solatium component (up to 10%) added to reflect the compulsory nature of the acquisition. This was not properly pleaded in the case. His Honour considered the cultural value of the Claim Group's rights was immense and the award was conservative.
Interest
Edelman J concluded that although the obligation to award compensation on ‘just terms’ under s 51 of the NTA includes the power to award interest it does not extend to compound interest ‘on’ an award of compensation as this would destabilise centuries of precedent and stability can be achieved without sacrificing a fair rate by adopting the rate from the Federal Court Practice Note.
Orders
The High Court made orders allowing 2 of the appeals in part, dismissed the third appeal, and varied the Full Federal Court's orders to provide:
$320,250 compensation for economic loss;
$910,100 interest on that sum; and
$1.3 million dollars compensation for cultural loss.
The total compensation awarded was $2,530,350, with post-judgment interest on this amount accruing from 25 August 2016.