High Court to decide on native title compensation
Special leave to appeal granted in Timber Creek Case
The High Court has granted special leave to appeal in the Timber Creek compensation case. The Northern Territory, Commonwealth and native title holders were each granted leave to appeal on all three of the major issues in the case (economic loss, non-economic loss and interest).
The trial judge's decision - $3.3 million compensation
In a landmark decision in August 2016, the Federal Court determined that $3,300,261 compensation was payable to the Ngaliwurru and Nungali Peoples for the impact of land grants and public works on their native title rights and interests (Alan Griffiths and Lorraine Jones on behalf of the Ngaliwurru and Nungali Peoples v Northern Territory of Australia [2016] FCA 900) (Timber Creek).
This was the first ever judicial assessment of native title compensation in Australia.
A detailed analysis of the trial judge's decision is contained in our 2016 Native Title Year in Review.
The decision was appealed to the Full Federal Court and almost all issues were re-agitated in the appeal.
Full Court upheld most of the trial judge's findings
In July 2017, the Full Court upheld most of the trial judge's findings (Northern Territory v Griffiths [2017] FCAFC 106).
The Full Court upheld the $1.3 million award for hurt feelings and loss of spiritual attachment (awarded as non-economic loss or solatium) and rejected the Commonwealth and Northern Territory's arguments that the award was manifestly excessive.
However, the Full Court held that the trial judge had overvalued the economic aspects of the native title rights and interests and reduced the award from 80% to 65% of the freehold value of the relevant land at the time of the compensable acts.
The Full Court agreed with the trial judge that only simple interest was payable on the economic loss component of the award and rejected the native title holders' claim for compound interest.
You can read more about the Full Court decision in our 21 July 2017 Native Title Alert Still a long way to go on native title compensation: Insights from the Timber Creek Appeal.
The High Court will hear an appeal from the Full Court's decision
Not surprisingly, applications for special leave to appeal to the High Court were filed by the native title holders, the Northern Territory and the Commonwealth. The applications were heard by Justices Nettle and Gordon on 16 February 2018 and special leave to appeal was granted on all three issues in the case.
The High Court will ultimately decide on the following issues:
- Economic loss: The native title holders argue that there should be no discount from 100% of freehold value. The Commonwealth and the Northern Territory argue for a reduction to 50% of freehold value.
- Interest: The native title holders argue for compound interest at the risk free rate of yields on long term government bonds.
- Non-economic loss: The Commonwealth argues that the award should be reduced from $1.3 million to $230,000. The Northern Territory argues the award should be 10% of the economic loss award ($130,000).
No hearing date has yet been set.
The High Court may consider new issues
Should the Commonwealth (and not the Northern Territory) have been liable for the $1.3 million compensation for hurt feelings and loss of spiritual attachment (awarded as non-economic loss or solatium)?
Western Australia has intervened in the High Court appeal and has indicated that it will make submissions about the interpretation of section 51A and 53 of the Native Title Act 1993 (Cth).
Section 51A of the Native Title Act provides a limit on compensation to the total amount that would be payable for the compulsory acquisition of the freehold estate in the land. Section 51A is subject to section 53, which applies if the amount awarded under section 51A does not amount to "just terms". Section 53 provides that a person is entitled to further compensation to ensure that any "section 51(xxxi) of the Constitution acquisition of a person's property" is made on "just terms". In the Timber Creek case, any section 53 compensation would be payable by the Commonwealth.
Western Australia has indicated that it will argue that the total compensation payable by the Northern Territory should have been limited to the economic loss component of the award and that the Commonwealth should have been liable to pay the amount for non-economic loss (ie the hurt feelings and loss of spiritual attachment which are unique to the extinguishment of native title).
These arguments were not considered by the Full Court because it refused to grant Western Australia leave to intervene in that appeal. This was because the Northern Territory had already agreed to pay the compensation and the trial judge had already rejected the native title holders' claims for additional compensation from the Commonwealth under section 53 of the Native Title Act.
Should the assessment of compensation be more holistic than the economic/non-economic loss approach?
The Full Court questioned the parties' economic/non-economic loss approach to compensation and said that the Native Title Act in fact contemplates compensation of a more holistic nature. The Full Court queried the value of applying the principles of Australian land law to assessing native title compensation. The Court said [at 144]:
"The problem concerning the use of such provisions, even with adaptation, is that they are designed to address the value of land as a material object traded in a market for a like or analogous commodity. Native title rights and interests are of such a different type and significance to the holders that it may well be appropriate to loose the assessment from the shackles of Australian land law and approach the compensation exercise without dividing value into economic and non-economic components. It might rather be more appropriate to seek to place a money value as best as can be done on the one indissoluble whole."
The High Court's approach to these issues is not yet known.
| key points to note |
- The High Court's enthusiasm to consider the Timber Creek appeals was apparent during the hearing of the special leave applications. The High Court rejected the Northern Territory's arguments that some of the native title holder's grounds for appeal were not appropriate because they had insufficient prospects of success.
- Although the grounds for appeal are limited to the calculation of economic loss, non-economic loss and interest, the High Court may follow the Full Court and suggest a more holistic approach to the assessment of compensation.
- If the High Court accepts Western Australia's arguments about the Commonwealth being responsible for the non-economic loss component of any compensation award, then the High Court decision will have significant implications. Not only would the Commonwealth pick up significant liability, the States and Territories would have greater certainty as to their compensation exposure because the calculation of economic loss and interest is far less subjective than the non-economic loss component.
- There are only a handful of native title compensation applications currently on foot and only one has been resolved (by consent) since the Timber Creek decision in August 2016 (Tjayuwara Unmuru Native Title Compensation Claim [2017] FCA 1561). It is likely native title holders have been waiting for the High Court decision so that their compensation claims can be formulated to reflect the High Court's findings about the assessment of compensation.
- Regardless of the outcome, the High Court's decision will deliver certainty and likely trigger more compensation applications around Australia. Certainty in relation to the assessment of compensation and liability as between the States and the Commonwealth should lead to the settlement of many of such claims by negotiation rather than litigation.
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