Legal development

Transparency for Adnyamathanha people over distribution of native title monies

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    Native Title Year in Review 2022-2023

    What you need to know

    • In Adnyamathanha Traditional Lands Association & Ors v Rangelea Holdings Pty Ltd [2023] SASC 51, the South Australian Supreme Court held that the Adnyamathanha common law native title holders were entitled to inspect trust account records associated with the Adnyamathanha Master Trust despite being denied access by the trustee.
    • The court determined that the applicants had a proper interest in the Trust and it was proper to appoint an inspector to investigate the Trust's administration.  It ordered that the trustee immediately produce the financial records for inspection by the applicants, as required by the Trustee Act 1936 (SA). 

    What you need to do

    This decision is a timely reminder that a lack of transparency in the distribution of native title compensation benefits from trusts can give rise to confusion and tension within the native title holder community resulting in lengthy and time consuming litigation.  

    It can be helpful to take steps to ensure that the native title holders, the trustee and the community are clear on how, and for what purpose, trust monies can be distributed and what mechanisms are available to hold that process to account. 

    Trustees should be clear on their obligations in managing and distributing trust monies to ensure they provide beneficiaries with appropriate information and access to accounts when requested. They should also be transparent about how native title monies are managed and distributed amongst the community to help prevent misinformation, mistrust and disputes.  

    Adnyamathanha common law native title holders seek court order for access to trust account records

    The Adnyamathanha Master Trust received money from native title agreements which the trustee then distributed to individual representatives of each sub-group or a representative entity of a sub-group. The representatives would then disburse payments to individual Adnyamathanha common law holders.

    This dispute arose because the applicants raised concerns about irregularities in the lists of Traditional Owners receiving trust distributions, discrepancies in payments amongst individuals within a sub-group and general concerns regarding the lack of transparency about how much money the Trust was receiving or what the Trust was doing with the money. 

    In 2020, the registered native title body corporate for the native title holders was placed under special administration and the special administrator together with various Adnyamathanha people sought to access the Trust's financial records. This request was denied by the trustee on the basis that the Trust was a charitable trust and therefore the applicants did not have rights to inspect the books (unlike individual beneficiaries of a private discretionary trust). 

    In response, the applicants applied to the court under section 60 of the Trustee Act 1936 (SA)  seeking orders for access to the records of the Trust. Section 60 applied to charitable trusts, not discretionary trusts. Therefore, the court was asked to consider whether the:

    • Trust was a private discretionary or charitable trust; and
    • registered native title body corporate and the applicants had standing to seek court orders for access and inspection of the trust books under the Trustee Act or the general jurisdiction of the courts to supervise the administration of trusts.

    Was the Trust a private discretionary trust or charitable trust? 

    The court undertook a detailed analysis of the cases that explain the characteristics of a charitable trust.

    The court acknowledged that a trust which limited the potential beneficiaries to Aboriginal people generally or a specific Aboriginal clan fell within the nationality charitable trust exception. The nationality exception means that a trust can still be charitable, even if it applies to a small sub-set of the community, as long as the trust has a charitable purpose. 

    However, in this instance, the court found that the Trust was a private discretionary trust because: 

    • There were no provisions in the deed which described the Trust as a charitable trust, provided for a particular charitable purpose or required the trustee to have regard to the need which members of the sub-group may have for relief from poverty, to be educated or to engage in spiritual or cultural observances. 
    • The primary purpose of the Trust was the distribution of funds to Adnyamathanha people to spend on their personal advancement as they saw fit. The trustee did not have significant visibility as to what funds were received in the hands of individuals or the use to which the money was put.
    • Language used throughout the trust deed indicated that group members were individual beneficiaries (and not just "mere objects of benefaction" which is the case for charitable trusts). 
    • The trustee was making payments to an eligible entity that did not need to have a charitable purpose.  

    Consequences of finding that the Trust was a private discretionary trust 

    There were several consequences of the court finding that the Trust was a private discretionary trust including: 

    • The applicants did not have standing to apply for court orders under section 60 of the Trustee Act because this applied to charitable trusts.
    • Each of the named sub-group members were entitled as beneficiaries to the due administration of the Trust. 
    • The court was empowered to make orders under the general law to ensure that the trustee administered the Trust in accordance with the Trust requirements. 
    • The trustee had administered the Trust on an incorrect basis (eg that it was a charitable trust when it was not) which could have adverse consequences for the beneficiaries (and the court separately identified that the erroneous treatment of the Trust may have tax consequences).
    • The trustee was bound by a fiduciary duty which it owed to all group members to seek and maintain records. The trustee's refusal to provide any information about its management of the Trust deprived group members of information they would require to determine whether to bring an action against the trustee or an eligible entity who received trust funds from the trustee. 

    The court held that in the absence of an exceptional countervailing consideration, it  has general power to order a trustee to grant access to trust account records. On this basis, the court ordered that the trustee make the trust account records available for inspection by the applicants. The court also appointed an inspector pursuant to section 84C of the Trustee Act to investigate the administration of the Trust. 

    Approach to distributing money 

    The trustee adopted a model of distributing funds to each sub-group entity by a single payment before further distribution to members. On this point, the court commented that:

    • this approach meant that there was no transparency as to any further distribution beyond the sub-group entity; and
    • the nature of the Trust or equitable obligations assumed by the sub-group entity in that context, if any, was problematic (although this was not explored by evidence or submissions in the proceeding).

    These comments are particularly interesting when considered in the broader framework of how native title rights and interests are managed. 

    Registered native title bodies corporate (RNTBC) are appointed to hold native title rights and interests on trust or as agent for the common law holders and must meet the regulatory requirements of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (Cth) (CATSI Act). This includes the requirement for the RNTBC's financial statements and the rule book publicly to be available on the ORIC website.

    However, at the same time, the native title payments flowing from agreements with proponents a RNTBC are commonly held in trusts.  These typically have less transparency and fewer financial reporting obligations. This case shows the difficulties individual beneficiaries can have in holding the trustee to account. 

    Legislative reform 

    The need for greater transparency regarding the use of native title monies is not a new issue.  It was some of the most common feedback received by the National Indigenous Australians Agency (NIAA) during the comprehensive review of the CATSI Act carried out between 2019 and 2021.  

    The CATSI Act Review: Final Report published in February 2021 recommended that the Native Title (Prescribed Bodies Corporate) Regulations 1999 (Cth) be amended to require reporting to common law holders on the management and use of native title monies and non-monetary benefits held on trust.  It was also recommended that the ORIC Registrar consider reflecting consistent reporting requirements in section 336-5 of the CATSI Act.  The NIAA stated in September 2021 that it was working to implement these recommendations, which may lead to further legislative change.  It is not clear whether this is still on the agenda since the change in Government.

    Key insights 

    • Trust structures can be useful for managing money for communities over the long term.  However, they are less transparent when compared to the level of disclosure required by a corporation established under the CATSI Act. 
    • A lack of transparency in the distribution of native title compensation benefits from trusts can give rise to confusion and tension within the native title holder community resulting in lengthy and timing consuming litigation.  
    • Therefore, the RNTBC, the trustee and the community should be clear on how and for what purpose trust monies will be distributed and what mechanisms are available to hold that process to account. 

    Authors: Sophie Westland, Senior Associate and Miranda Aprile, Lawyer.