Full Federal Court hands down appeal decision in Timber Creek native title case

On 20 July 2017, the Full Court of the Federal Court (consisting of Justice North, Barker and Mortimer) gave judgment in the case Northern Territory of Australia v Griffiths [2017] FCAFC 106. 

The decision considered six major issues with respect to the assessment of compensation for the extinguishment or impairment of native title.

The background of the case

In 2007, the Full Court of the Federal Court found that the Ngaliwurru and Nungali Peoples (the Claim Group) were entitled to both exclusive and non-exclusive native title rights over land and waters in and around the township of Timber Creek.

In 2014, Justice Mansfield determined that the Northern Territory was liable to pay compensation, pursuant to the compensation scheme provided by the Native Title Act 1993 (Cwlth) (NTA).

In Griffiths v Northern Territory of Australia (No 3) [2016] FCA 900 Justice Mansfield (the primary judge), assessed that compensation. His decision was appealed to the Full Federal Court.

The primary decision

Despite numerous cases considering the operation of the NTA, the primary judge’s decision was the first to ever consider and apply the compensation scheme under section 61 of the NTA applying to the extinguishment or impairment of native title.

There had been an earlier Federal Court order for compensation, but it involved mediation and a confidential compensation agreement. Our article "Compensation for Extinguishment or Impairment of Native Title: The Federal Court Timber Creek Decision 24 August 2016" discusses this in more detail.

The primary judge awarded the Claim Group compensation totalling $3.3 million, for the extinguishment or impairment of the Claim Group’s native title rights and interests arising from compensable ‘acts’. The acts were, with a few exceptions, ‘previous exclusive possession acts’ within the meaning of section 23B of the NTA and category D past acts within the meaning of section 232 of the NTA.

In short, the primary judge’s decision assessed the compensation payable by the Northern Territory as follows:

(a) Economic value of the extinguished native title rights: $512,400;

(b) Interest on the sum of $512,400 amounting to $1,488,261; and

(c) Allowance for solatium (or non-economic loss) of $1,300,000;

Total $3,300,661.

The appeal

The Full Federal Court considered six major issues, which arose in relation to the primary judge’s reasoning. These were:

1. Assessment of compensation in relation economic loss.

2. Assessment of the freehold value of the relevant lots over which native title had existed.

3. Assessment of pre-judgment interest payable on the compensation awarded for economic loss.

4. Calculation of non-economic loss (or ‘solatium’).

5. Role of the Prescribed Body Corporate (PBC) in allocating the award within and amongst the Claim Group.

6. Declarations with respect to damages in relation to three invalid ‘future acts’.

The Full Federal Court largely upheld the primary judge’s decision, however some of the grounds of appeal were upheld. The Full Federal Court found:

• the extent of native title rights and interests should be assessed by reference to the legal content of the rights rather than the way in which rights were exercisable;

• the value of the economic loss to the Claim Group should not include an allowance for the benefit of the extinguishment to the Northern Territory which upon extinguishment of native title acquired an unfettered title to the land in question. This approach was prone to inflate the figure for compensation;

• the primary judge’s errors, including those noted above, had the effect of overvaluing the economic loss of the Claim Group and, balancing the nature of the restrictions on the Claim Group’s non-exclusive native title rights and interests, the economic value of those interests was 65% of the freehold value of the land;

• in agreeing with the primary judge in relation to interest, whilst the scheme for payment of compensation under the NTA does not exclude an award of compound interest in an appropriate case, the Claim Group failed to establish that the primary judge erred in awarding simple, rather than compound, interest;

• the primary judge erred in including an amount of interest in respect of lot 47 beyond 28 August 2006, being the date of an earlier determination of exclusive native title rights and interests over most of the land in the township of Timber Creek. The Claim Group ceased to suffer any loss from the compensable (extinguishing) act on the date of that determination of native title.

• on the basis that the primary judge provided no reasons for awarding damages for trespass to the land subject of three invalid future acts, (i.e., invalid for want of compliance with the future act provisions of the NTA), the primary judge erred in finding that damages were payable.

Key takeaways

The takeaway messages in our article about the primary judge’s decision continue to apply to the Full Federal Court Timber Creek Decision 24 August 2016 decision.

In addition:

• The Claim Group’s economic loss was valued at 65% of the value of freehold title. However, the assessment of economic loss in future cases will vary, case by case.

• Both the primary judge’s and the Full Federal Court’s decisions will remain as a guide, but as a guide only, for the assessment for compensation for the extinguishment or impairment of native title in a variety of circumstances

• The task of State Governments in assessing likely compensation exposure for existing determination areas will be vast.

• As of late September 2017, the NNTT’s published statistics with respect to native title determinations indicated there had been 401 native title determinations made by a Court or other recognised body, of which 335 determined that native title existed either exclusively or non-exclusively. Only 66 determinations found that native title did not exist. To some extent, the “stage has been set” for those 335 determinations and a State Government’s liability for compensation for the extinguishment or impairment of native title. The extent of that liability will vary case by case.

• Claimants who do not have the benefit of a native title determination (which typically will identify areas of prior extinguishment) will still need to be able to prove they once did hold native title rights that have been extinguished or impaired in order to pursue a compensation claim.

• There will continue to be limited opportunity for State Governments to pass on their compensation liability to third parties in relation to the effects previous exclusive possession acts, save perhaps in some instances by increasing rents and royalties.

• Future acts undertaken by Government on behalf of third parties will provide greater opportunity to pass on compensation liability for extinguishment or the effects of the non-extinguishment principle (by which native title is temporarily supressed for the duration of the future act).

• ILUA’s involving payment of compensation for future acts (or for the surrender of native title), and S.31 Deeds and ancillary agreements providing for consents to the ‘right to mine’ under the NTA, should, and typically would, provide that compensation payable is in satisfaction of all rights to compensation under the NTA.

• There is potential for a different approach to the Court’s assessment of compensation to be taken in the future, as the Full Federal Court suggested a possible different approach, namely moving away from valuing economic and non-economic components but instead endeavouring to place a value on the extinguishment as “one indissoluble whole”. That remains to be seen.

• The Full Federal Court held that simple interest was payable (although it also said that compound interest may be payable in some circumstances).

• Once a determination of exclusive native title is made, interest does not accrue after that date.

• The Full Federal Court did not decide the merits of claims for damages for trespass for the effects of invalid future acts, however it did overturn the primary judge’s ruling for damages in this case. The possibility of liability for damages for trespass arising from invalid future acts therefore remains.