Now we know Full Court ends discussion on NSW statutory lease classes no extinguishment

What you need to know

• This was a test case brought by the State of NSW (in the context of the Ngemba native title claim) to get some certainty as to the effect on native title of eight different types of statutory leases.
• The Full Court explained the core requirements of an exclusive possession grant for a statutory lease in the Native Title Act context of exclusive possession determines extinguishment.
• The lower court's findings of extinguishment by some classes of statutory leases still stands.  

What you need to do

• Consider the Full Court's findings when analysing whether statutory leases and other interests are grants of exclusive possession that extinguish native title.
• Unless extinguishment is clear, assume that native title may continue to exist and ensure compliance with the Native Title Act 1993 (Cth).

Full Court confirms that certain NSW statutory leases did not extinguish native title

In Attorney General of New South Wales v Ohlsen on behalf of the Ngemba/Ngiyampaa People [2022] FCAFC 38 the Full Federal Court dismissed the State's appeal and upheld the primary judge's findings that certain historical statutory leases do not extinguish native title. 

The appeal arose in the context of separate questions referred in the Ngemba/Ngiyampaa native title claim.

The interests in question were:

• statutory leases including Scrub Leases, Settlement Leases, Improvement Leases, Homestead Leases, 18th Section Leases, Western Lands Leases for a Term, Special Leases for a Term, Special Leases for Grazing; and
• a reservation for a temporary common

The Court was asked to consider whether each lease extinguished native title as a grant of exclusive possession, a "Scheduled Interest" or a "commercial lease" under the Native Title Act 1993 (Cth).

The primary judge found that many of the leases had not extinguished native title and were not grants of exclusive possession (Ohlsen on behalf of the Ngemba/Ngiyampaa People v Attorney General of New South Wales [2021] FCA 169).  The Full Court agreed with the primary judge on all findings that were the subject of the appeal.  The primary judge's extinguishment findings in relation to some classes of statutory leases were not appealed.

Full Court's findings about exclusive possession

The Full Court considered previous authorities on the meaning of exclusive possession in the context of the Native Title Act and focused particularly on the High Court's decision in WA v Brown [2014] HCA 8.

The Full Court held that the core assessment is whether what was conferred by the grant could be characterised as being "a right to exclude anyone and everyone for any reason or no reason", including by an assessment of whether a lessee was granted a right to use the land as the lessee saw fit.

The Full Court noted that many leases granting exclusive possession have some restrictions on use.  Broad reservations permitting the grantor and others to pass through or use the land in limited circumstances may not be inconsistent with exclusive possession.

Whether reservations or conditions are inconsistent with exclusive possession depends on the circumstances of the grant in question, including the nature of the right granted and the extent to which any such reservation precludes the grantee to use the land.

Findings about each category of lease

The primary judge (whose approach was approved by the Full Court) took into account a number of factors when considering whether the statutory leases were grants of exclusive possession, including:

• the size of the lease areas;
• the precarious nature of the interests granted;
• third party rights of entry and other limitations on the rights of the lessee; and 
• the purpose of the leases.

Scheduled interests

The following leases were held to be Scheduled interests under the Native Title Act that extinguished native title. These findings were not appealed:

• Conversion of Settlement Leases to Conditional Leases.   Scheduled interest under conditional lease category.
• Western Lands Lease for grazing and recreation (pony club) purposes.  Scheduled interest under the "equestrian grounds" category.
• Special Lease for "irrigation purposes".  Scheduled interest under the “agriculture”, “agriculture or any similar purpose” and/or “cultivation” categories.  The Court looked at the ordinary meaning of "agriculture" and "cultivate" and "irrigation" in its findings. 
• Special Lease for "grazing and dairying purposes".  Scheduled interest under the “dairying” category. The Court held that grazing dairy cows was integral to dairying in the Australian climate.

Interestingly, the Full Court concluded that several Scheduled Interests which have the effect of extinguishing native title by virtue of the Native Title Act did not confer exclusive possession so would not have extinguished native title at common law. This will likely add to the State's compensation burden.

Impact of this decision

The State of NSW ran this matter as a test case for extinguishment of native title by statutory leases that did not otherwise fulfil the criteria for extinguishment (as "Scheduled Interest" etc).  The Full Court's dismissal of all of the State's grounds for appeal clearly resolves this issue in NSW and other States will similar types of statutory leases.

To prove exclusive possession in the context of a statutory lease under the Native Title Act, the Full Court held that the core assessment is:

• can the grant be characterised as "a right to exclude anyone and everyone for any reason or no reason"; and
• is the lessee granted a right to use the land as the lessee sees fit.

This test will make it difficult to argue that a statutory lease for limited purposes that does not otherwise meet the criteria for extinguishment under the Native Title Act (eg as  Scheduled interest or commercial lease) is a grant of exclusive possession that extinguishes native title.

It is hard to believe there are any more unsettled extinguishment questions.  However, novel circumstances will no doubt arise requiring further judicial guidance.  In the meantime, compensation arising from extinguishment will be the subject of judicial attention.

Authors: Leonie Flynn, Expertise Counsel and Clare Lawrence, Partner.