Three points on native title compensation

The High Court has today handed down its first decision on native title compensation. This judgment was in relation to Timber Creek.

In the coming days and months, several detailed articles will be written and presented by preeminent lawyers and academics on the High Court’s judgment. Indeed, Timber Creek will now be the yardstick for all future native title compensation claims.

In the following short plain-English summary, we highlight three key points from Timber Creek.

1. The High Court has reduced the amount of compensation, but only slightly and in relation to economic loss

The High Court agreed that just terms native title compensation should comprise of economic loss, simple interest and non-economic loss. These principles are important.

In Timber Creek, compensation was awarded for the loss of non-exclusive native title rights. The High Court awarded economic loss calculated at 50% of the freehold value of land. This was reduced from 65% found by the Full Court, and reduced from 80% found by the original trial judge. The High Court then considered that simple interest in accordance with the Court rates was appropriate, particularly since there was no evidence that an earlier payment would have been invested. Finally, and of most significance in our view, the High Court agreed that the previous award of non-economic loss for spiritual loss in the amount of $1.3 million was appropriate.

2. The High Court’s agreement on the calculation of non-economic loss for spiritual attachment is a win for native title holders and will need to be properly considered by stakeholders

The High Court rightly observed that the calculation of non-economic loss requires the ‘spiritual hurt’ to be translated into compensation. Spiritual loss is more than just the loss of ‘enjoyment’ of land.

The High Court further agreed with the lower Courts’ approaches to assessing non-economic loss, summarising the steps as (at [218]):

…identification of the compensable acts; identification of the native title holders' connection with the land or waters by their laws and customs; and then consideration of the particular and inter-related effects of the compensable acts on that connection.

The High Court found that compensation should be assessed on a whole, likening the effect of the compensable acts in this matter to ‘holes in a single painting’, commenting (at [219]):

It was as if a series of holes was punched in separate parts of the one painting. The damage done was not to be measured by reference to the hole, or any one hole, but by reference to the entire work.

These findings are significant and will require stakeholders to actively explore and compensate for ‘spiritual hurt’ on a whole, where native title compensation is payable.

 3. The High Court knows each case depends on its facts 

The High Court commented that the inquiries and calculations on native title compensation will always vary. Indeed, at [217], the High Court stated:

The inquiries will vary according to the compensable act, the identity of the native title holders, the native title holders' connection with the land or waters by their laws and customs and the effect of the compensable acts on that connection. Thus, what might be an appropriate award of compensation will vary according to the results of those separate but inter-related inquiries.

In Timber Creek, there was significant evidence proving the loss suffered by the native title holders. Such evidence may be difficult to obtain in other compensation claims. Moreover, compensation for the economic loss of exclusive native title rights will no doubt be approached using a different calculation.

In addition, important facts were agreed in Timber Creek, narrowing the issues in dispute. The reality of a negotiation – or future litigation – is that parties may be unwilling to agree to such facts.

Interestingly, the High Court seemed to prefer a pragmatic approach to land valuations when assessing economic loss, commenting that ‘simplicity’ in calculating land valuations should be encouraged. In our respectful view, this goal of simplicity, in an area where there are often imbalances of power and under-resourced parties, should be adopted in future native title compensation matters.

The full text of the judgment is available on the High Court website.

For more information, contact Michael Pagsanjan.