Commonwealth v Yunupingu: Compensation for native title rights pre-1975

On 12 March 2025, the High Court of Australia handed down the pivotal decision, Commonwealth v Yunupingu [2025] HCA 6. It dismissed an appeal from the Full Federal Court and found that the Commonwealth Government can be liable for compensation for the extinguishment of native title rights by the acquisition of property that occurred before 1975.

Key takeaways in Commonwealth v Yunupingu

• Prior to this decision, the Commonwealth’s liability to pay compensation under the Native Title Act 1993 (Cth) (NT Act) had only been considered to arise for acts that occurred after 1975 when the Racial Discrimination Act 1975 (Cth) (RD Act) commenced.
  
  
• This decision unlocks the potential for compensation claims to be made by traditional owners against the Commonwealth Government in relation to activities which occurred pre-1975. However, such claims will be complex and require case by case consideration.
  
  
• The High Court made three key findings:
  
  1. The Commonwealth's ‘territories power’, derived from s 122 of the Constitution, does not allow the Commonwealth Parliament to make laws in the territories for the acquisition of property other than on ‘just terms’ within the meaning of s 51 (xxxi) of the Constitution;
  
  2. The extinguishment of native title rights that are recognised by the common law or under Commonwealth legislation before the commencement of the Native Title Act 1993 (Cth) (NTA) is an acquisition of ‘property’ subject to the ‘just terms’ guarantee under s 51(xxxi) of the Constitution; and
  
  3. The grant of a pastoral lease under the Northern Territory Land Act 1899 (SA) in 1903 by the Governor of South Australia did not extinguish any non-exclusive native title rights over minerals on the subject land considered in this case (to the extent that any such rights are ultimately found to exist).

Background

The Gumatj Clan or Estate Group of the Yolngu people seek compensation under the NT Act for claimed ‘past acts’, which include specified appropriations to the Commonwealth and grants to third parties of interests in land in the Gove Peninsula in the Northern Territory. These were made by the Governor-General under the Northern Territory (Administration) Act 1910 (Cth) between 1939 and 1969. The appropriations and grants include the vesting of minerals in the Crown and the grant of leases, including special mineral leases.

The Gumatj Clan assert that each appropriation or grant was invalid at the time it occurred to the extent of any inconsistency with native title rights and interests, as recognised by the common law. If that assertion is proven, then the Gumatj Clan claim the appropriations or grants are ‘past acts’ for which compensation is payable under the NT Act.

The Full Court of the Federal Court held in Yunupingu v Commonwealth (2023) 298 FCR 160 relevantly that:

1. The power of the Commonwealth to make laws for its territories as derived from s 122 of the Constitution does not extend to a power to make laws for the acquisition of property other than on ‘just terms’; and
   
   
2. A Commonwealth grant or act that extinguishes native title rights and interests is capable of being an acquisition of property within the meaning of s 51(xxxi) of the Constitution.

These findings were appealed by the Commonwealth, but the High Court agreed with the Full Federal Court.

The High Court’s findings

The High Court’s findings on the three key legal issues raised in the case are summarised below.

Issue 1: Whether acquisition of property under s 122 must be on ‘just terms’

Section 122 of the Constitution allows the Commonwealth Parliament to make laws for Commonwealth territories. The Commonwealth argued that the power in s 122 extends to a power to enact laws for the acquisition of property other than on ‘just terms’ within the meaning of s 51(xxxi) of the Constitution.

However, the High Court considered that the inclusion of the express guarantee in s 51(xxxi) for an acquisition of property to be on ‘just terms’ removes the scope for another section (eg s 122) to be understood as conferring a power to acquire property but without the same guarantee.

Issue 2: Extinguishment of native title rights constitutes an acquisition of property within s 51(xxxi)

The Commonwealth argued that the legislative extinguishment of a native title right recognised at common law does not involve a ‘taking’ or ‘acquisition’ of property within the meaning of s 51(xxxi) of the Constitution. In particular, the Commonwealth accepted that native title is a property right, but argued that the rights are not ‘taken’ because they are inherently susceptible to extinguishment by the Crown exercising radical title (i.e. the Crown’s ultimate or underlying title). To support its argument, the Commonwealth referred to repeated descriptions of native title as ‘inherently fragile’ in previous High Court decisions.

The High Court rejected the Commonwealth’s argument. The Court emphasised that native title rights and interests are recognised at common law, and that an appropriation to the Commonwealth or grant to a third party will, where inconsistent with the continued existence of native title rights, extinguish common law recognition of native title. This constitutes a ‘taking’ of property for the purpose of s 51(xxxi) of the Constitution, which must occur on ‘just terms’.

Issue 3: Whether the grant of a pastoral lease in 1903 extinguished non-exclusive native title

The Northern Territory formed part of South Australia until 1911 when control of the territory was transferred to the Commonwealth. In 1903, the Governor of South Australia granted a pastoral lease under the Northern Territory Land Act 1899 (SA), which included a provision that ‘reserved and excepted’ all minerals in the land to the Crown. The Gumatj Clan’s claim relies on the continued common law recognition of native title rights and interests, despite the grant of this pastoral lease. The Commonwealth disputed this premise, and raised this issue in its appeal to the High Court.

The High Court rejected the Commonwealth’s argument and said that the provision in the lease was a ‘mere reservation in the Crown’s favour’. Consequently, the grant of the pastoral lease did not extinguish any common law recognition of the Gumatj Clan’s non-exclusive rights in the minerals – to the extent that any are ultimately determined to exist. Given it has long been understood that native title rights do not extend to minerals, this element of the decision draws into focus how the Federal Court, in assessing the Gumatj Clan’s separate native title determination, will ultimately deal with the scope of such historic native title rights and interests (if any).

Implications of the decision around native title compensation

This decision confirms that the Commonwealth Government can be liable to pay compensation under the NT Act in respect of acquisitions of property that occurred before 1975.

There is potential for compensation claims to be made in relation to appropriations or grants of land to third parties by the Commonwealth during the Commonwealth’s administration of the Northern Territory from 1911 to 1978, when the Northern Territory achieved self-government. Commonwealth liability may also arise in respect of appropriations or grants in the Australian Capital Territory (administered by the Commonwealth between 1911 and 1988) and other territorial areas under the Commonwealth’s jurisdiction.

The potential scope of the compensation claims that can ultimately be made remains to be seen, as the prospect of any native title rights being recognised in respect of minerals or other resources, and the meaning of the ‘just terms’ on which the acquisition of property must be made, is yet to be determined by the Courts. (This includes for the Gumatj Clan, whose native title determination application is currently before the Federal Court in separate proceedings which are yet to be determined).

Non-Commonwealth entities, such as those in the energy and resources sector, may choose to investigate whether land used for projects the subject of pre-1975 acts of the Commonwealth would be subject to claims for compensation that may be pursued by traditional owners against the Commonwealth. If so, they may also consider investigating whether liability for native title compensation has been passed through to them from the Commonwealth by legislation or in contract. While such compensation entitlements will not have been on the minds of the parties involved in pre-1975 activities that are now known to have the effect of extinguishing native title, it is nonetheless possible that general pass-through obligations may exist.

In general, there has been limited opportunity for the Commonwealth Government to pass on its compensation liability to third parties in relation to the effects of past acts, other than perhaps in some instances by increasing rents and royalties. The greatest opportunity to pass on compensation liability for extinguishment typically arises in the context of future acts undertaken by governments on behalf of third parties.