Timber Creek Appeal: the next chapter for native title compensation

WHO SHOULD READ THIS

• Proponents, lessees of Crown land and government.

THINGS YOU NEED TO KNOW

• The Full Court of the Federal Court of Australia has largely upheld the primary judge’s decision in the Timber Creek case. The Full Court’s decision provides clarity in relation to the calculation of economic loss and non-economic loss.

WHAT YOU NEED TO DO

• Continue to monitor developments in the native title compensation space, including any appeal to the High Court.

Yesterday the Full Court of the Federal Court delivered the much awaited decision in the Timber Creek appeals.

The decision clarifies the law on compensation in Australia for loss of native title rights and interests, particularly in relation to how economic loss and non-economic loss is to be calculated in an award of compensation. However, there are still questions to be answered in relation to certain aspects of the law on native title compensation.

Background and appeal

In August 2016, the Federal Court delivered its decision regarding compensation payable for loss of native title rights and interests in land in the town of Timber Creek, Northern Territory (primary decision).

Under the primary decision, the Northern Territory Government was ordered to pay approximately $3.3 million to the Ngaliwurru and Nungali People. The Court had considered a range of compensation issues, and ultimately accepted that the Ngaliwurru and Nungali People ought to be compensated for both economic and non-economic loss.

The primary decision was soon appealed by the Northern Territory Government (its appeal supported by the Commonwealth and others). The Ngaliwurru and Nungali People also appealed aspects of the primary decision.

Economic loss

At first instance, economic loss had been assessed at 80% of the freehold value of the land in Timber Creek (the sum of $512,400). That assessment by the primary judge was challenged in the appeal by all parties.

On appeal the Full Court took a different view and held that the economic value – of non-exclusive native title rights and interests – ought to be compensated at 65% of the value of freehold title. In making this assessment, the Full Court had regard to the differences between native title rights and freehold rights, and considered that the primary judge had undervalued those differences.

Interest

Given the long periods of time at play, interest was a significant portion of the compensation amount awarded by the primary judge. In the primary decision, interest had been assessed on economic loss up to the date of judgment as $1,488,261.

On appeal, the issue was whether the interest payable on compensation awarded for economic loss should be simple interest, as found by the primary judge, or compound interest. Although the Full Court agreed with the primary judge that the compensation provisions of the Native Title Act 1993 (Cth) (NTA) do not exclude an award of compound interest, in this case the Full Court held that the award of simple interest was appropriate.

Non-economic loss

One of the questions left unanswered in the primary decision was how the primary judge undertook the complex task of calculating compensation of $1,300,000 payable for non-economic loss.

The Full Court agreed with the primary judge’s ‘in globo’ approach to calculating non-economic loss due to the near impossibility of assessing the compensable acts according to each separate lot. In other words, it was appropriate for the primary judge to determine the nature and extent of the impact of the compensable acts according to the evidence of the claim group’s connection to country, and to consider the effect on the claim group of interference to their country.

Distribution of compensation

The Full Court was also tasked with considering whether the primary judge was wrong in ordering the Prescribed Body Corporate (PBC) for the Ngaliwurru and Nungali People to allocate the compensation monies within the claim group.

The Full Court confirmed that the PBC had the power to hold and invest the compensation money for the claim group under the NTA and Native Title (Prescribed Body Corporate) Regulations 1999 (Cth), and therefore accepted the primary judge’s approach.

Damages for invalid future acts

Finally, the primary judge had awarded damages in the sum of $48,597 for invalid future acts, namely three residential lots that purported to extinguish native title from 1998, but did not in fact have that effect.

The Full Court ordered that the primary judge’s ruling to award damages be set aside. Importantly, based on the way in which the appeal of the award of damages was argued, and the lack of reasons for the award of damages provided by the primary judge, the Full Court could not make a ruling on the merits of the claim for damages.

Unfortunately, the law on damages being awarded for invalid future acts is still uncertain. This may be the subject of future native title compensation proceedings.

Implications

Although the Full Court is yet to make orders in relation to the appeals, the decision will have significant implications for government and industry (particularly where liability has been passed on to land users) in relation to the payment of compensation for loss of native title rights and interests.

We expect that the Full Court’s decision will be appealed to the High Court to finally determine the award of compensation in Timber Creek, and to provide further clarity in Australia on compensation for loss of native title.

Any such appeal to the High Court is likely to halt the progression of other native title compensation proceedings that have already been filed with the Federal Court.

Proponents, lessees and government should monitor any appeal to the High Court for clarification on how native title compensation is determined in Australia.

This publication covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. It is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.