This article was written by Scott Singleton and Nick Testro.
On 20 July 2017, the Full Federal Court handed down its appeal judgment in relation to a 2016 decision of the Federal Court, in which the Northern Territory was held liable to pay to the Ngaliwurri and Nungali Peoples $3.3 million in compensation under the Native Title Act 1993 (Cth) (NTA). The compensation was payable for the extinguishment and impairment of the Claim Group’s native title rights and interests, as well as damages for common law trespass for three invalid future acts.
The Full Federal Court ultimately dismissed most grounds of the primary parties’ appeals. However, the Full Federal Court’s decision is important for the three key points of appeal that were allowed, namely:
- At first instance, Justice Mansfield did not apply an adequate discount on compensation for economic loss, having regard to the non-exclusive nature of the native title. The Full Federal Court found that the discount factor should have been 65% of freehold value (down from Justice Mansfield’s 80%), having greater regard to the native title holders’ inability to control access to and determine use of the land, and the inalienable nature of native title.
- The Full Federal Court held that where native title rights and interests are revived by a statutory mechanism under the NTA, interest on damages awarded for prior extinguishment will not be payable on and from the date of revival.
- Their Honours also overturned the primary judge’s decision to award damages for trespass for three invalid future acts, finding that there was no sufficient basis for the decision. Uncertainty therefore remains around the methodology for calculating compensation for invalid acts.
Equally important is what the Full Federal Court endorsed in Justice Mansfield’s judgment. In particular, the Full Federal Court found favour with His Honour’s intuitive approach to determining compensation, both for the evaluation of discounting factors on economic loss and for non-economic loss quantum generally.
As these matters remain at the forefront of developments in native title, an appeal by any or all parties to the High Court would seem likely.
Following the Ngaliwurru and Nungali Peoples determination of native title, in which their native title rights and interests were recognised in the Timber Creek area in the Northern Territory, the group lodged a claim for compensation in 2011 under section 61 of the NTA. Justice Mansfield’s decision at first instance (in August 2016) on the question of compensation quantum was handed down in August 2016 in the matter of Griffiths v Northern Territory (No 3)  FCA 900. You can read our full alert on the decision here. Justice Mansfield’s decision was the first litigated determination of native title compensation quantum, and so was a pioneering decision that established a number of important guiding principles in this area.
The six issues raised in the appeal were as follows:
- the methodology employed and findings in relation to economic loss;
- the weighting given by and the assessment of the court in relation to the valuation evidence of the freehold lots;
- the quantum of prejudgment interest payable on the economic loss component of the compensation;
- the methodology and findings in relation to non-economic loss;
- the allocation of compensation by the prescribed body corporate to members of the native title parties; and
- the finding that three invalid future acts entitled the native title group to damages for trespass.
Summary of decision
The Full Federal Court largely dismissed the various appeal issues, upholding the core principles relied on by Justice Mansfield to reach his decision and the findings that resulted from the application of those principles. However, two important grounds of appeal were accepted and upheld.
In summary, the Full Federal Court’s key findings are as follows:
- Justice Mansfield’s description of the Claim Group’s native title rights and interests as “very substantial” was an overestimation of their value in light of the statutory powers held by the Northern Territory following the extinguishment of the Claim Group’s right to control access and make decisions about the land in the late 1800s. The Court also found that “it was necessary to discount the Claim Group rights and interests because those rights were inalienable”, and that account should not be taken of the value to the Northern Territory of the surrender of the native title rights.
- The Court held that the primary judge appears to have impermissibly taken account of the “deep spiritual attachment to the land” of the Claim Group in determining economic loss, and by doing so, “overvalued the economic value of the rights and double counted the non-economic factors”. The Court was careful in emphasising the need to distinguish between economic and non-economic loss (though their Honours queried whether this was in fact a useful approach at all given native title’s distinctiveness, and whether it would be more appropriate to value native title “as best as can be done on the one indissoluble whole”).
- In relation to the economic loss component for non-exclusive native title rights and interest, the Court applied its own evaluative judgment in light of the above considerations and found that the discount factor should have been 65% of the value of freehold (rather than 80%, as Justice Mansfield had found).
- Although the Court agreed with Justice Mansfield that compound interest may be appropriate in some circumstances, the argument was not made out in this case, and the primary judge’s finding that interest should be payable on a simple basis was reasonably based.
- In relation to Lot 47, the Court allowed the Commonwealth’s appeal that interest should not have been payable from the date native title was determined to have revived under section 47B of the NTA in 2006, as the Claim Group was able to fully enjoy their native title rights from the determination date (and had in fact started to earn income from the parcel from 2011 under a stock agistment agreement).
- The Court considered at length the reasons of Justice Mansfield underpinning his decision relating to non-economic loss. The Full Court rejected the arguments of the Northern Territory and the Commonwealth, including by finding that Justice Mansfield had sufficiently taken account of prior extinguishment of native title over the area in question and that the Claim Group’s “acceptance of certain acts on certain lots did not diminish the general sense of loss”. The Full Court found in favour of one of the key bases on which Justice Mansfield approached his task, namely, that the judge had “properly approached the matter as an intuitive evaluation on the basis of the evidence and arguments before him”. Their Honours found that the judge was required to make an assessment of just terms as provided for by the NTA, and this he did. They drew on analogies with sentencing in criminal law in support of their finding. The Court ultimately found that the figure of $1.3 million reached for the non-economic loss component of compensation was “within the permissible range on the evidence before” Justice Mansfield.
- One of the important outcomes of the decision was the Court’s finding in relation to the three invalid future acts. Justice Mansfield had awarded damages for trespass on the basis of three future acts that had not been done in compliance with the NTA (and so were invalid). Justice Mansfield applied the same formula for calculating compensation quantum as he did for acts that had been done validly (with only minimal reasons to support the finding). The potential consequences of this approach for NTA future act compliance in general were potentially very significant. It was probably unsurprising then that the Full Court overturned the decision on the basis that “the primary judge provided no reasons for awarding damages”. The Court observed that there were a number of complex and novel issues that needed to be properly and fully considered in relation to invalid future acts that were not addressed by Justice Mansfield. However, by overturning this part of his judgment, their Honours noted that as “the Court has not ruled on the merits of the claim, the Claim Group may be able to agitate the matter in further proceedings”.
The Court has ordered the parties to file an agreed form of orders to reflect the reasons for judgment by 4 August 2017.