Introduction

The State of South Australia (State) will pay compensation to the De Rose Hill Nguraritja people for the extinguishment of their native title rights and interests following the delivery of the Federal Court’s judgment in De Rose v State of South Australia [2013] FCA 988 (De Rose) on 1 October 2013.

De Rose is significant because it is the first decision in which the Court has ordered the payment of compensation under the Native Title Act 1993 (Cth) (the Act). It is also a reminder to governments and potential land users of the rights of native title holders to be compensated for the extinguishment or impairment of their routine title rights and interests.

However, concerns that De Rose may lead to an opening of the floodgates and a stream of successful compensation claims are unfounded. The provisions in the Act pursuant to which the compensation was ordered have existed in the Act either since its inception or since the amendments made to the Act as a consequence of the Wik decision in 1998. Furthermore, the practical application of De Rose for future compensation claims is limited as this matter proceeded by way of consent determination and the compensation amount is to remain confidential.

Background

The Act contains a right for native title holders to be compensated for certain acts that have extinguished or impaired their native title rights or interests. Native title holders become eligible for compensation when a State, Territory or the Commonwealth act, which has the effect of extinguishing or impairing native title, is validated. This would most commonly occur in situations where a licence or permit is granted, legislation is enacted, or any interest in land or water is created.

This right was enacted in part, as a result of the Racial Discrimination Act 1975 (Cth), which would otherwise make it unlawful to extinguish or impair native title.

The decision

In 2005 the Federal Court made a determination that the De Rose Hill Nguraritja people held native title rights and interests over certain parcels of land located in the far north-west of South Australia but excluded certain areas where extinguishment of native title had occurred.

The Nguraritja people subsequently brought a claim for compensation over parts of the land which, but for the prior extinguishing acts, would have formed part of the land over which they held native title. The particular land the subject of the proceedings included a freehold lot, part of the Stuart Highway corridor and a car park.

The parties attended Court-ordered mediation and were successful in negotiating a settlement which finalised the State’s obligations to the Nguraritja people. The role of the Court was therefore limited to giving effect to the proposed settlement deed. However, the Court was still required to consider whether the proposed compensation was on ‘just terms’ and not in excess of the amount that would be payable if the land had been compulsorily acquired freehold land under constitutionally valid compulsory acquisition legislation.

Compensation amount

As De Rose was the first determination of native title compensation in Australia, the Court looked at the principles applied to consent determinations in the absence of any directly relevant judicial guidance.

Although the private settlement means the judgment does not contain any clear principles as to how compensation should be assessed, the Court observed:

  • the State did not accept that the current freehold value of the extinguished area was necessarily relevant to the value of the native title rights and interests lost;
  • the current freehold value of the land was unable to be agreed upon in any event and the compensation figure was arrived at by exchanging amounts they would be prepared to offer or accept until a mutually agreeable amount was reached; and
  • each of the parties had competent legal representation, the agreement entered into was freely entered into on an informed basis, and each of the parties considered that the figure reached represents ‘just terms’ compensation.

Implications

De Rose is a seminal decision and will likely be relied upon in future compensation applications.

However, it is unlikely that there will be a significant number of successful compensation claims and determinations in the future. Reasons for this include:

  • Firstly, just 37 compensation applications have been filed under the mechanism contained in the Act during the 19 years it has been operational. Almost all of these applications have been withdrawn, discontinued or dismissed, with De Rose being the only application to succeed.
  • Secondly, in order to be entitled to compensation, a claimant must firstly establish that they would have possessed native title rights and interests over the land in the absence of the extinguishing act. This entitlement must be proven by satisfying the test contained in section 223 of the Act, which is a difficult hurdle to overcome.