Landmark ruling provides guidelines for native title compensation

Fifty years after the historic 'Wave Hill Walk-off' paved the way for land rights, the Federal Court has recently ordered that compensation for economic and non-economic loss be paid to native title claimants. As the first successful litigated native title compensation claim, Mansfield J provided helpful guidelines in calculating compensation, including for the loss of special attachment. 

Background

On 24 August 2016, Mansfield J delivered the judgment in Griffiths v Northern Territory (No 3) [2016] FCA 900 (Griffiths).

The judgment provides Australia’s first successful litigated native title compensation claim.

There has been one previous litigated native title compensation matter and compensation was determined not to be payable (see Jango v Northern Territory of Australia [2007] FCAFC 101). There was, more recently, a native title compensation matter resolved by consent, which determined compensation was payable but the amount was confidential (see De Rose v State of South Australia [2013] FCA 988). MPS Law Principal Solicitor Michael Pagsanjan represented the claimants in that compensation consent determination.  

In Griffiths, the native title compensation application was brought by a compensation claim group for various acts in Timber Creek in the Northern Territory. The relevant native title group were Ngaliwurru and Nungali Peoples and was a set of five descent based Yakpali (country or estate) groups, being Makalamayi, Wunjaiyi, Yanturi, Wantawul and Maiyalaniwung. The acts the subject of the compensation application were all done after the commencement of the Racial Discrimination Act 1975 (Cth). These acts, referred to in Griffiths as ‘determination acts’, extinguished native title in whole or in part, or impaired or suspended native title where native title still existed. The native title holders and the rights and interests but for the determination acts were not in dispute. All of the determination acts were attributable to the Northern Territory Government (see Griffiths at [41]). Significantly, it was not disputed by the parties that an award of solatium was appropriate in the circumstances (see Griffiths at [291]).

By way of brief legislative background, section 61 of the Native Title Act 1993 (Cth) (the NTA) provides that an application can be made to the Federal Court for compensation for any loss, diminution, impairment or other effect on native title rights and interests. Importantly, section 53 of the NTA provides that this is an entitlement to ‘just terms’ compensation. In essence, this is to ensure compliance with the Australian Constitution. Section 51A(a) of the NTA purports to correlate the payment of compensation to the acquisition of that particular land or waters to the freehold estate that is compulsory acquired. However, pursuant to section 51A(2), section 51A(1) must be expressly read with the entitlement to ‘just terms’ compensation as provided by section 53. 

As his Honour succinctly observed “if acts have extinguished native title and are to be validated or allowed, justice requires that compensation on just terms be provided to the holders of native title whose rights have been extinguished” (Griffiths at [94] and [97]).

The final compensation sum was in excess of $3.3 million. However, while that final figure may be significant to the native title party, it is the method that his Honour adopted in reaching those figures that may prove to be most helpful in future compensation claims and negotiations.

 Key Findings

His Honour approached the issue of quantum by assessing economic loss and interest, and separately and additionally, non-economic loss, making orders for compensation including:

  1. 80% of freehold value of the land subject to the determination acts that extinguished non-exclusive native title rights; plus,
  2. Simple interest on that market value of the determination acts from the date of respective acts to the date of the judgment calculated in accordance with Practice Note C16 of the Federal Court Practice Notes (Pre-judgment interest, being 4% above the cash rate published by the Reserve Bank of Australia: See http://www.fedcourt.gov.au/law-and-practice/practice-documents/practice-notes/cm16); plus,
  3. Solatium (or non-economic loss) of $1.3 million.

In making these orders, his Honour’s key findings were as follows.

1.    Native title compensation generally

  • In determining ‘just terms’ more generally, it is helpful (but not obligatory) to refer to the framework provided by the Lands Acquisition Act (NT) (the LAA) (see Griffiths at [89]-[93], [99] and [210]).
  • The application of interest to compensation as assessed at the time of extinguishment is also capable of, and appropriately should be, taken into account in determining whether the compensation is on just terms (see Griffiths at [171]).
  • The assessment of economic loss is separate and additional to the cultural or ceremonial significance of the land, which is treated as a separate element to compensation (see Griffiths at [234]).

2.    What is the relevant date to assess economic loss?

  • The relevant date at which acts should be valued for economic loss is the earlier date at which the act is deemed to be valid, which is when the act took place, rather than the later date of the legislation that validated them (see Griffiths at [121]). This is consistent with Sackville J in Jango v Northern Territory (2006) 152 FCA 150 (see Griffiths at [122]-[127]), upheld on appeal in Jango v Northern Territory (2007) 159 FCR 531 (see, also, Griffiths at [167], [169] and [172]).

3.    What is the economic loss?

  • In assessing the relevance of market value to economic loss, the loss of exclusive native title rights should not necessarily be valued less than freehold value, even though it is different to freehold title (see Griffiths at [213]), with his Honour commenting that (at [214]):

Indeed, having regard to the express purposes of the NTA, and the recognition of the Aboriginal peoples as the original inhabitants of Australia, it would be erroneous to treat the nature of their original interests in land as other than the equivalent of freehold and the economic value of those interests as other than the equivalent of freehold interests.

  • In relation to non-exclusive rights, his Honour states that (at [220]):

Non-exclusive native title confers on the holder a bundle of rights in relation to the area. The nature of the interest in land denoted by the term non-exclusive native title is both defined and limited by this collection of rights. But just as it is not appropriate to treat exclusive native title as valued at less than freehold, so it is not routinely appropriate to treat non-exclusive native title rights as valued in the same way as if those rights were held by a non-indigenous person, or to reduce the value of those rights because they are inalienable even though that may be the proper analysis if the rights were held by a non-indigenous person.

  • However, freehold value is an appropriate starting point in valuing the loss of exclusive or non-exclusive native title rights because section 51A puts it as the ‘upper limit’ (see Griffiths at [225]), such that ‘it is necessary to arrive at a value which is less than the freehold value and which nevertheless recognises and gives effect to the nature of those rights’ (see Griffiths at [226]). His Honour found that (at [231]):

But for the invalid determination acts, the native title rights which were held which were permanent, and in a practical sense very substantial.  To accommodate the fact that they were non-exclusive, clearly some reduction from the freehold value is necessary. If that were not so, they would have the same value as exclusive native title rights when plainly they do not. However, in my view, the deduction should not be great in the present circumstances.

  • In ensuring compliance with the requirement that compensation is on ‘just terms’, ‘the entitlement to interest in circumstances where the market value is to be determined at the date of the compensable acts necessarily includes interest on that market value to provide for compensation on fair terms’ (see Griffiths at [254]).
  • The NTA is silent about interest and does not preclude compound interest, where appropriate (Griffiths at [252]). If there was evidence that the claim group would have applied funds, if received at or about the time of the compensable acts, to business or trade and it would have been successful, the Court could award compound interest (Griffiths at [253] and [263]). However, such evidence was not apparent in this matter (see Griffiths at [274]-[278]), such that ‘the appropriate interest calculation is simple interest at the rate specified in the Practice Note CM 16’ (Griffiths at [279]).

4.    What is the non-economic loss?

  • This is a similar principle to the ‘intangible disadvantage’ element in the LAA (see Griffiths at [292] and [298]), but can also be described as ‘solatium’ (see Griffiths at [300]). Whatever the terminology, it is about ‘the compensation component which represents the loss or diminution of connection or traditional attachment to the land’ (see Griffiths at [300]).
  • The assessment of non-economic loss is ‘complex’ and ‘intuitive’, but ‘must be assessed having regard to the spiritual and usufructuary significance and area of the land affected, but relative to other land that remained available to the Claim Group for the exercise of the native title rights and interests’ (see Griffiths at [302]).
  • The claimants law and customs are relevant to the assessment (see Griffiths at [317]). His Honour accordingly found (at [318]):

[a]n evaluation of what are the relevant compensable intangible disadvantages, with a view to assessing an amount that is fair and reasonable, requires an appreciation of the relevant effects on the native title holders concerned, which, may include elements of ‘loss of amenities’ or ‘pain and suffering’ or reputational damage.  In that respect, evidence about the relationship with country and the effect of acts on that will be paramount.

  • Solatium need not just be for those losses that arose ‘directly’ from the compensable acts (see Griffiths at [321]-[323]).
  • A ‘parcel-by-parcel’ approach of non-economic loss was not appropriate (see Griffiths at [324]). However, his Honour proceeded to observe that (at 326]):

Any award of compensation for loss or spiritual attachment in respect of land affected by the compensable acts must properly take into account the extent to which the spiritual attachment to that land has already been impaired or affected by the loss or destruction of significant places on nearby land or in Timber Creek. In my view, it is open to the Court to infer from the evidence which does not specifically relate to an act or parcel of land, that a further sense of loss is felt in consequence of the determination acts. 

  • There was evidence in this matter of ‘gut wrenching pain’, ‘anxiety’ and ‘hurt’ (see Griffiths at [328]-[363]), but there was also evidence that ‘the attachment of the claimants to country has not been wholly lost’ (at Griffiths at [364]).
  • After assessing the evidence, his Honour sets out three particular relevant considerations:
    • The construction of infrastructure and the impact on Dreaming which has ‘caused clearly identified distress and concern’ (see Griffiths at [378]).
    • The impact of the acts on the area generally and not just in relation the specific foot-print, and the evidence of the effect of an act upon the capacity to conduct ceremony and spiritual activities on that and adjacent areas (see Griffiths at [379]).
    • The general diminishment of native title rights and connection to country more generally, and the sense of ‘failed responsibility’ to look after the land (see Griffiths at [381]).
  • Those elements have persisted for three decades and will continue 'for an extensive time into the future' and have a 'cumulative effect' (see Griffiths at [382]-[383]).

Other findings

His Honour also made other findings in relation to:

  • The preferred valuations adopted for the purposes of obtaining market value in the proceedings, given the conflicting ‘expert’ reports submitted by the various parties (see Griffiths at [385] to [434]).
  • Whether or not there was a section 51(xxxi) Australian Constitution issue, which there was not (Griffiths at [435]).
  • Compliance with section 94 of the NTA, setting out the requirements to name (either expressly or by method) the people entitled to compensation, the method for determining the amount for each person and a method for dispute resolution. In this matter, this fell the Prescribed Body Corporate (see Griffiths at [436] to [445]).
  • Rejecting the Applicant’s claim to mesne profits analogous to the law of trespass for the period between the determination acts and their validation (see Griffiths at [446] to [448]).
  • The claim for compensation by way of general law in the nature of damages for trespass in relation to invalid future acts, in which his Honour found that the Court had jurisdiction and that compensation was payable (see Griffiths at [449]-[462]).

Commentary

Throughout Griffiths, his Honour made it clear that there is no mathematical equation that can be equally applied to every matter, and, that the requirement for just terms compensation requires an assessment of the evidence of each matter. For example, at [132], in the context of economic loss, his Honour noted that:

It is of course necessary, as the Applicant strongly submitted, that ultimately that approach should reach a level of compensation which is fair and just.  To achieve that end, as I have indicated, the native title holders also receive compensation for the delay in payment by way of interest.

His Honour continued to observe at [233], in the context of his conclusion to use the valuation of 80% of the market value for the loss of non-exclusive rights in relation to economic loss:

As each of the submissions recognised, that is not a decision as a matter of careful calculation. It is an intuitive decision, focusing on the nature of the rights held by the claim group which had been either extinguished or impaired by reason of the determination acts in the particular circumstances

Then again, at [383], in the context of non-economic loss, his Honour found that, 'The selection of an appropriate level of compensation is not a matter of science or of mathematical calculation.'

It is true that what is 'just terms' pursuant to the NTA will always depend on the circumstances. However, Griffiths nevertheless provides a helpful yardstick in evaluating the relevant factors in assessing native title compensation.  

Of most significance is his Honour’s consideration and determination of an award for non-economic loss, or solatium. Those findings provide a solid judicial launching pad for seeking damages for non-economic, or spiritual, loss in accordance with traditional law and custom.

Given the significance of the judgment, the matter may be appealed. Subject to any appeals, there are no glaring reasons why parties shouldn’t rely on the well-articulated principles from Griffiths in future native title compensation issues, where relevant and applicable.

***UPDATE - May 2018 ***

An Application for Special Leave to Appeal to the High Court in relation to this litigation will be heard in mid-2018. 

For more information, contact Michael Pagsanjan on 0456 111 944 or via email at michael@mpslaw.com.au.