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Humphry, Chris --- "Compensation for Native Title: The Theory and the Reality" [1998] MurdochUeJlLaw 2; (1998) 5(1) Murdoch University Electronic Journal of Law

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Compensation for Native Title: The Theory and the Reality

Author: Chris Humphry
Barrister, Hunt and Humphry Solicitors
Issue: Volume 5, Number 1 (March 1998)
Contents

The Theory

Compensation under the Native Title Act
Compulsory Acquisition Act
Similar Compensable Interest Test
Compensation and Land Valuation Principles
Special Attachment To Land
The Compensation Claims Process
The Reality Conclusions
Notes
The Theory
Compensation under the Native Title Act
  1. The Native Title Act 1993 (Cth) provides that holders of Native Title are entitled to compensation for acts, particularly dealings in land, which affect native title(section 48). These acts are divided into "past acts" and "future acts". Generally, a "past act" must have occurred prior to 1 January 1994 and, apart from the Native Title Act, would be invalid by reason of the existence of native title (sections 227, 228). A "future act" will generally have occurred on or after 1 January 1994 (section 233).

  2. Native title holders are entitled compensation on "just terms for any loss, diminution, impairment or other effect of the act on their native title rights and interests" (section 51(1)). This general position is subject to certain qualifications:

  3. The concept of "just terms" is derived from the obligation of the Commonwealth under section 51(xxxi) of The Constitution to pay compensation on just terms for the acquisition of property. The High Court has interpreted this provision as requiring full and adequate compensation, although this may not necessarily require compensation by "full monetary equivalence". Just terms are not necessarily the same thing as the money value of the property acquired. The compensation must amount to fair dealing between the Crown and the individual. This involves consideration of the interests of the community as well as of the land holder[1].
  4. Compulsory Acquisition Act

  5. During 1995 Western Australia amended the Public Works Act to enact the Land Acquisition and Public Works Act ("LAPW Act") to satisfy the definition of a Compulsory Acquisition Act. Accordingly, compensation for the compulsory acquisition of native title rights and interests in Western Australia is determined in accordance with the criteria contained in the LAPW Act. To the extent, however, that the LAPW Act does not provide just terms compensation, the Native Title Act does so (sections 23(3), 51(2)).

  6. Compensation for compulsory acquisition of land under the LAPW Act is based upon:

      1. "just having regard to the circumstances of each case";
        "compensation adequate to meet the special circumstances of the case the court, may determine such compensation as it considers adequate for compulsory taking."[2]

    Similar Compensable Interest Test

  7. The most prevalent example of the operation of the similar compensable interest test in Western Australia is in relation to the grant of mining tenements under the Mining Act 1978. Native title holders have the same entitlement to compensation for the grant of, and the exercise of rights under, a mining tenement as a freehold title holder would have under the Mining Act. This does not mean that native title is to be treated as freehold or that native title holders should receive the same compensation as freehold title holders. Rather, that the same compensation criteria and principles are to be applied.

  8. Under section 123 of the Mining Act, the owner of land where mining occurs is entitled to compensation for "all loss and damage" resulting or arising from mining. Compensation may be recoverable under various criteria including loss of use of the natural surface of the land, damage to the land, severance of the land, loss of an easement or right of way, loss or damage to improvements, social disruption and, in the case of land under cultivation, loss of earnings.

  9. Compensation is not recoverable by the freehold title holder for permitting entry onto land for mining purposes, in respect of the value of any mineral or by reference to any rent, royalty or other amount assessed in respect of mining.

  10. Section 123 of the Mining Act was considered by two differently constituted panels of the National Native Title Tribunal in relation to the first future act applications determined under the Native Title Act (Future Act Determinations WF96/3 and WF96/12 (Waljen) 17 July 1996 and WF96/1, WF96/5 and WF96/11 (Koara) 23 July 1996). Although neither panel determined the amount of compensation they considered that section 123 did not provide exhaustive criteria for compensation and that the section did not preclude compensation for loss or damage to any special or unique relationship that native title holders may have with the land in question. Native title holders are to be compensated for "all loss and damage" they have sustained. The effect of mining upon native title interests may be quite different from the damage sustained by a freehold title holder. The Tribunal noted that social disruption may occur as a result of mining and both panels rejected the argument that compensation under section 123 could not be greater than the freehold value of land.

  11. Section 123 of the Mining Act was intended to place some limit on the level of compensation recoverable by a freehold title holder in relation to mining operations. However, when the section 123 criteria are transposed to native title, there may be little restriction upon compensation for the loss, diminution, impairment or other effect of mining upon native title interests.

  12. Compensation and Land Valuation Principles

  13. When attempting to analyse an appropriate basis for assessing compensation for extinguishment or impairment of native title, there is a tendency to start by applying conventional land valuation principles. However, it is likely that a more flexible approach will be required which will combine principles applicable to valuation and also to the assessment of intangible factors such as occurs when a court assesses general damages, for example in relation to negligence or defamation. Compensation for damage to native title will include monetary and non-monetary components or, as suggested by one commentator, "material" and "non-material" components[3].

  14. The material aspect is the loss of or effect upon the land. Generally, the owner of compulsorily acquired land is entitled the greater of the market value of the land [4] and the value of the land to the owner[5]. The former focuses on a likely arms length agreed sale price assuming a willing buyer and a willing seller. The latter focuses upon any special value to the owner.

  15. These general principles have been refined and developed for the purpose of valuing land which may not be capable of sale or in relation to which there is no apparent market and also to value lesser interests such as leases, easements and licences. However, the market value which may be attributed to a freehold title to land remains the starting point of any attempt to compensate for loss of an interest in land.

  16. It is likely that these principles will be applied or developed in the determination of compensation for loss or impairment of native title rights. The inalienability of native title will not pose a great difficulty. Although the determination will assess the value of the land to the native title holders, the market value of a freehold title to the same land will be a bench mark. This approach has been adopted by the Privy Council, the High Court (in relation to an acquisition of land from traditional owners in New Guinea) and by United States courts.[6]

  17. A particular issue in assessing compensation will arise in relation to native title interests which are less than the rights associated with a freehold title. The nature and content of native title will vary and lesser interests may exist, either under the relevant traditional laws and customs or as a result of actions, such as the grant of a pastoral lease, which have impaired but not wholly extinguished native title rights. In this regard, the necessity of establishing the precise content of native title rights emphasised in The Wik Peoples v The State of Queensland & Ors; The Thayorre People v The State of Queensland & Ors (Wik)[7], will be equally important in compensation claims.

  18. Again, there are precedents relating to the compulsory acquisition of, and compensation for, lesser interests in land. The Spencer principle remains applicable and compensation is assessed on the basis of the amount a willing buyer would pay a willing seller for the interest. There are examples of courts assessing compensation for the compulsory acquisition or loss of leases, easements, licences, riparian rights, fishing rights and even the right to dig for worms for bait.[8] Similarly the courts will develop methods for valuing lesser native title interests.

  19. Special Attachment To Land

  20. In order to properly compensate native title holders for loss or impairment of native title rights, there is little doubt that the courts will make allowance for any special attachment to the land which is established. Australian courts have recognised the special attachment which Aboriginal people have to land (see for example, Gerhardy v Brown (1985) 159 CLR 70). In the Waljen and Koara determinations the Tribunal gave a very clear message that in appropriate circumstances compensation would exceed freehold value and that section 123 of Mining Act did not precluded compensation for loss of special attachment.

  21. The provisions of section 63 of the LAPW Act also provide scope for compensation for loss of special attachment where native title interests are compulsorily acquired.

  22. The only native title determination to date under the Native Title Act occurred by agreement in relation to a small area of land at Crescent Head on the New South Wales coast. The land had been subdivided as vacant Crown land shortly after the Mabo decision. Compensation for this "past act" was negotiated under the Land Acquisition (Just Terms Compensation) Act 1991 (NSW) which is a Compulsory Acquisition Act under the Native Title Act. Following negotiations, compensation was agreed on the basis of the market value of the land (as freehold) plus 50% for loss of special attachment.

  23. When considering compensation for special attachment some analogy may be drawn from the Pastoral Finance principle and provisions for solatium which are contained in most compulsory acquisition legislation. However, a more likely approach is that taken by the courts in respect to the assessment of general damages, which are at large. It can be said that any attempt to put a monetary value on a loss of special attachment or non-material element of native title will be arbitrary and incapable of logical determination. However, the same can be said of the assessment of general damages and the courts have never been shy about placing a monetary value on pain and suffering, libel and slander, trespass and discriminatory behaviour. The courts have valued the loss of a chance to win a beauty contest and assessed damages for the publication of a nude photograph of a leading rugby player.

  24. In personal injuries litigation, courts have held that Aboriginal people may be compensated for such things as inability to complete initiation rites, inability to gain and enjoy full tribal rights, loss of ceremonial function and inability to take part in matters of spiritual and tribal significance (Waljen Future Act Determination at 92). Similarly, the courts are likely to develop precedents for the assessment of compensation for the loss of any special attachment to land which forms part of native title.

  25. The Compensation Claims Process

  26. Compensation applications are processed in the same way as applications for determination of native title (section 63(1)). An application may be lodged by a registered native title body corporate (section 253) or by persons claiming to be entitled to compensation.

  27. The compensation application must be formally 'accepted' unless it is frivolous or vexatious or prima facia cannot be made out or if there is a formal defect (sections 63(1), 64).

    1. Section 63: Following acceptance, the Registrar must notify all parties whose interests may be affected by a determination of the compensation application. Those persons may apply within two months to become parties (section 68).

  28. If a compensation application is unopposed the Tribunal will hold an inquiry to decide whether it should make a determination consistent with the application. The Tribunal may do so if it is satisfied that a prima facia case has been made out and if it appears just and equitable to make the determination (section 70(1)). When an application is opposed the Tribunal can only make a compensation determination if the parties reach agreement. If not the claim must referred to the Federal Court (sections 71, 73, 74) for decision as a contested litigation. It should be noted that the Tribunal's constitutional ability to make a determination in relation to an unopposed or agreed application is doubtful in view of the High Court decision in Brandy v Equal Opportunities Commission.[8]

  29. Where the application is opposed the applicants will be required to prove in the Federal Court :

  30. This will, of course, be as formidable and expensive a task as proving native title through a native title application. The task will be even more difficult if compensation is claimed for a past act which occurred years ago.

  31. The Reality

    Compensation Claims

  32. Native title claimants are presently much more inclined to make claims to land than for compensation. This is reflected in the statistics. Since 1 January 1994 only 9 compensation claims have been lodged with the National Native Title Tribunal of which only 6 have been accepted. On the other hand, by 1 August 1997, 558 native title applications had been lodged throughout Australia.

  33. Compensation claims may increase over time. In the meantime the clarification of compensation principles by the courts is likely to be a slow process.

  34. Native Title Act and Future Acts

  35. The real action concerning 'compensation' for damage to native title interests has been in the area of future acts, particularly in connection with the Native Title Act right to negotiate procedure.

  36. Since 1 January 1994, dealings in land which affect native title ("future acts") have been regulated by the Native Title Act. Generally, a future act onshore can only validly be carried out if it could also be carried out on freehold land. If so, the act is a "permissible future act". Even then, to be valid the procedural requirements of the Native Title Act must be complied with (sections 23, 226, 227, 233, 235). If the act could not be carried out on freehold land it is an "impermissible future act" and is invalid.

  37. The Native Title Act generally requires that the person doing the permissible future act (for example, a Minister granting a title), must follow the same procedures as if the native title holders held freehold title over the land the subject of the intended grant (section 23(6)). However, if the future act is the grant of a "right to mine" or the compulsory acquisition of land for a non-government purpose ("third party compulsory acquisition"), the right to negotiate procedure applies (sections 26-44). These procedures are equally applicable in relation to land where native title has been determined and to land where a native title has been claimed and the claim has been "accepted", although not determined.

  38. Right to Negotiate Procedure

  39. Under the right to negotiate procedure:

  40. The flow chart contained in Annexure 1 shows the right to negotiate procedure.

  41. During the statutory negotiation period, the State is required to negotiate in good faith with the native title party. This is a pre-requisite to a Tribunal application.[9]

  42. An expedited procedure is available in the case of low impact titles. Where the State considers that a proposed mining tenement in relation to which notice is given under section 29 does not interfere with the community life of, or sites of particular significance to, the native title holders or involve major disturbance to the land, the State can include in the notice issued under section 29 a statement that it considers that the act attracts the expedited procedure (sections 32, 237).

  43. If no objection to that statement is made by a registered native title claimant within 2 months of the date of the notice, the State may validly grant the tenement without undertaking the right to negotiate procedures. If an objection is received, the Tribunal must determine whether the expedited procedure applies. If it is determined that the expedited procedure does apply, the State may do the act without reference to the right to negotiate procedures. If the Tribunal determines that the act does not attract the expedited procedure the matter becomes subject to the right to negotiate.

  44. When the Tribunal makes a determination approving a future act it may impose conditions. These may include a condition that the government or grantee party pays compensation. If native title has not yet been determined the compensation must be paid into trust pending that determination (section 41(1)). In these circumstances the Act does not specify the criteria for determining compensation. Accordingly, compensation is at large.[10]

  45. In these circumstances, the determination operates as a pre-estimate of the compensation which may ultimately be awarded in a compensation claim. Accordingly, the Tribunal is likely to apply the principles of section 51 (referred to in paragraph 1 above).[11]

  46. Overlapping Claims

  47. One of the principal objectives of the Native Title Act was to establish ways in which future dealings affecting native title may proceed and to set standards for those dealings (section 3). During the second reading speech the then Prime Minister said that a key aspect of the Act was to provide:

    1. "a just and practical regime governing future grants and acts affecting native title"
      and that:
      "[the] emphasis on Aboriginal people having a right to be asked about actions affecting their land accords with their deeply felt attachment to land. But it is also in line with any principle of fair play. It is not a veto."

  48. No one would dispute the need to regulate future acts which affect native title nor that the right to negotiate procedure provides a fair method of regulation once a determination has been made in relation to the existence of native title to an area.

  49. The procedure can operate unfairly and unjustly, however, in relation to areas where native title claims have been lodged but not yet determined. In spite of the provisions of section 63 of the Act, there is little practical restriction on the number of overlapping claims which may be lodged to an area. In the North Eastern Goldfields there is a kaleidoscope of 24 claims affecting the same area. Some people are claimants in more than one claim. Under the Act, all claimants have the same right to negotiate as if they had proved their claim, irrespective of the merit of their claim, the number of people represented by each claimant group or whether they are separately claiming the same communal title. While it is recognised that the complexities of traditional Aboriginal association with land will inevitably produce overlapping or interrelated interests, the current link between claims and the right to negotiate can produce arbitrary and unfair consequences for proponents attempting to negotiate future act agreements. Overlapping claims have the potential to discredit the right to negotiate procedure. As such, the present procedure should be a matter of concern to native title holders as well as proponents.

  50. The right to negotiate procedure needs to be reformed in relation to claims. The proposed amendment to the Native Title Act provide for a stronger threshold test for acceptance of claims including certification by representative bodies. Whether this is sufficient to overcome the problem in the future will depend to a large extent upon how the proposed acceptance procedures are administered. However the amendments will not affect future act proposals which have already been notified under the Act.

  51. Claims and Future Acts - The Statistics

  52. At present there are 271 native title claims affecting approximately 82% of Western Australia. As mentioned, many claims overlap each other. The total area of land included within all of the claims affecting Western Australia represents 185% of the area of the State.

  53. On an annual basis, Western Australia generates approximately 40%-50% of Australia's mining and exploration activity and approximately two thirds of Australia's mining tenement applications. Between March 1995 and August 1997, the State issued notices under section 29 of the Native Title Act in relation to 9102 proposed mining tenements (see table below).

  54. The great majority of exploration and prospecting licences were granted without objection under the expedited procedure. All mining leases have been or are currently the subject of the right to negotiate process. As the table shows, only 19% of mining lease applications since March 1995 have been granted.

  55. WESTERN AUSTRALIA - MINING TITLE APPLICATIONS NOTIFIED UNDER NATIVE TITLE ACT
    MARCH 1995 - 1 AUGUST 1997

    Tenement Type Notification Made Granted Percent Granted Objections to Expedited Procedure Percent Objected to Subject to Negotiations Percent subject to negotiation
    Exploration Licences 4041 3081 82.6 % 484 13 % 167 4.5 %
    General Purpose Leases 69 3 4.7 % 0 0.0 % 61 95.3 %
    Miscellaneous Licences 157 110 82.1 % 6 4.5 % 18 13.4 %
    Mining Leases 1853 320 19.0 % 0 0.0 % 1366 81.0 %
    Prospecting Licences 2976 2605 94.1 % 129 4.7 % 34 1.2 %
    Retention Licences 6 6 100 % 0 0.0 % 0 0.0 %
    TOTAL 9102 6125 619 1646

  56. As at 6 August 1997 the State had also issued 254 notices concerning the compulsory acquisition of

  57. land. These have included 142 third party compulsory acquisition proposals which have become subject to the right to negotiate procedure. Many of these proposals relate to land sub-division and the number of proposed land titles far exceeds the 142 notifications.

  58. The volume of future act proposals has generated extensive activity in Western Australia under the right to negotiate procedure. Although different proposals will produce different negotiating issues, some patterns are emerging.

  59. The "Economic Dimension" of a Native Title Claim

  60. In North Ganalanja Aboriginal Corporation v Queensland,[12] the majority of the High Court observed that the Native Title Act prevents governments from granting mining tenements in relation to land the subject of an accepted native title claim without first complying with the right to negotiate procedure. The court said that the acceptance of a native title claim maintains the status quo of the land pending negotiation and either agreement or a Tribunal determination.

  61. The court commented that valuable rights attach to an accepted claim, that those rights are given to claimants before the validity of the claim is determined and exist irrespective of the outcome of the claim.

    1. "Those rights of negotiation are valuable rights. They enable an applicant to protect his or her claim against permissible future acts. They may also result in the applicant obtaining a commercially beneficial settlement of a doubtful or even non-existent claim" (McHugh J at page 253). "[the] Act has attached valuable rights to an accepted claim, rights that are exercisable by a claimant before the validity of the claim is judicially determined. The Act has given claims of native title an economic as well as a spiritual and physical dimension". (McHugh J at page 259).

  62. It is accordingly important to recognise that, as a matter of law, and equally as a matter of practice, the right to negotiate process in relation to pending native title claims is not about attempting to agree the "value" of the land or the likely compensation that the Federal Court may award native title holders in relation to a proposed future act. The native title holders are not agreeing to accept compensation for their native title interests. The existence of native title will not have been determined and any decision in that regard may be years away. In any event there may be little likelihood of a compensation claim being pursued.

  63. Rather, the procedure is about negotiating the terms upon which the native title claimants are prepared to give their statutory right of consent to the proposed future act taking place in country where they claim native title. It is their right to give consent which is the subject of the negotiations. As Justice McHugh said, this is a valuable right which has an "economic dimension". It is a right which may be negotiated as often as there are proposals affecting the land.

  64. The negotiation process involves attempting to find the amount which the native title parties will accept for their consent to the proposal and which the grantee party is prepared to pay. This will depend on a number of variables and is not limited to monetary considerations. The agreement will almost always include a procedure for the management of Aboriginal heritage issues. Depending on the nature of the proposal, the terms may also include commitments to Aboriginal training and employment, environmental management and, on some occasions, the provision of community infrastructure.

  65. Both the native title and the grantee parties have incentives to reach agreement. The grantee wishes to obtain certainty, establish a working relationship with the traditional owners and avoid the delay, expense and uncertainty of a Tribunal application. Similarly, the native title parties will usually wish to avoid the Tribunal process.

  66. In addition, there is a financial reason for native title parties to enter into a future act agreement rather than proceed to a Tribunal determination. The agreement will almost always involve financial and other benefits being provided to the native title parties, either immediately or progressively. This will usually be binding irrespective of whether the underlying native title claim is ultimately successful.

  67. On the other hand, if the matter proceeds to the Tribunal there will be no immediate financial benefit to the native title parties. Although the Tribunal may impose a condition that compensation is to be paid in relation to a future act, that compensation must be held in trust pending the determination of native title. This could take years and the particular native title claimants may, in any event, not be successful in their native title claim.

  68. These factors tend to operate in most circumstances to create the classic situation of a willing buyer and a willing seller. Depending upon the circumstances, the value of obtaining the native title parties' consent and the relative bargaining position of the parties may vary significantly.

  69. Negotiation Factors

  70. Most of the negotiation activity to date has related to exploration and mining titles and resource development proposals. In practice, the key factors in a future act negotiation are Aboriginal heritage issues and the nature and value of the future act proposal.

  71. Other factors include overlapping claims, timing, procedural and extinguishment issues.

  72. Under section 31(1) of the Native Title Act, the State has an obligation to negotiate in good faith with the native title parties and the grantee parties with a view to obtaining the agreement of the native title parties to the future act proposal. The State, through the Department of Minerals and Energy and the Department of Land Administration has established negotiation protocols. However, in practice any negotiations concerning compensation for a future act will be conducted with the grantee party, as the State generally is not prepared to provide compensation in relation to native title claims which have not been determined.

  73. Aboriginal Heritage

  74. Aboriginal heritage issues are central to the negotiation process. This is for both cultural and legal reasons. The native title parties have a cultural obligation, and the right, to ensure that sites are protected. Future act agreements invariably provide for a consultative heritage clearance procedure. Moreover, it is illegal under the Aboriginal Heritage Act 1972 to disturb a site (without Ministerial consent) irrespective of whether native title exists to the land. Accordingly, even if the requirements of the Native Title Act can be satisfied without the agreement of the native title parties (for instance, through an application to the Tribunal), the grantee party must still resolve heritage issues, either by agreement or through an application under section 18 of the Aboriginal Heritage Act. An application under that Act may not be successful without the support of the traditional owners.

  75. The right to negotiate procedure provides an opportunity for the grantee party to resolve heritage procedures as part of an overall agreement with the native title claimants. Whether or not heritage issues actually become significant in terms of the grantee party's activities obviously will vary from area to area. Sometimes the heritage survey process will be completed prior to finalising the future act agreement. In other situations the future act agreement will include a process for undertaking heritage surveys in the grantee party's area of interests.

  76. Although the grantee party needs to establish a heritage clearance procedure, it will wish to retain the right to make an application under section 18 of the Aboriginal Heritage Act, in the event that it becomes necessary to disturb a site. On the other hand, the native title parties will usually negotiate for a contractual obligation by the grantee party not to disturb any land without obtaining a heritage clearance.

  77. Exploration Activities

  78. Exploration is recognised as the life blood of the mining industry. Exploration titles cover large areas of land and are explored on a transitory and relatively low impact basis. Approximately 15% of Western Australia is held under mining tenements. Of this area approximately 95% is held under exploration and prospecting licences and only 5% under mining and related leases. The Department of Minerals and Energy suggests that only 1 in 1,000 exploration titles may result in a producing mine and only a 510 square kilometres or 0.02% of the State is actually used for mining operations and ancillary infrastructure. Exploration is, however, very expensive.

  79. Most native title claimants who have experience with the mining industry take a realistic view of exploration. They see it as an opportunity to establish a relationship with the exploration company and to ensure that an appropriate heritage clearance procedure is agreed. There may be a requirement for relatively low level of compensation. This is sometimes described as a land access fee and may be a fixed or annual payment, a percentage of exploration expenses or of tenement rent or an annual payment based upon the area of the exploration tenement, together with heritage survey costs.

  80. Some exploration agreements provide the basis for the grantee party to proceed to mining if a commercial ore body is discovered. These are known as conjunctive agreements. Resource companies generally want the security of knowing that if they incur the significant expense of exploring land, they will be able to proceed to mining if an ore body is discovered. On the other hand, it is difficult to negotiate mining conditions when the location and nature of any mining operation is not known. While resource companies would generally prefer conjunctive agreements, their importance may diminish in view of the grantee party's ability to obtain a Tribunal determination in relation to later applications for mining titles.

  81. Project Development

  82. In conjunctive agreements, or where a grantee party has applied for a mining lease but has not yet identified a commercial ore body, a variety of approaches to fixing compensation have been adopted:

  83. Royalty payments pose practical as well as legal difficulties. A royalty linked to profitability can lead to disputes about the level of profit. A royalty linked to production takes no account of whether the mine is profitable.

  84. If there is a proposal for the grant of mining tenements or the compulsory acquisition of land for the purpose of an existing or confirmed resource project, the negotiation equilibrium may change dramatically. Section 33 of the Native Title Act provides that a negotiation may include the possibility of including a condition that the native title parties are to be entitled to payments worked out by reference to profits, income or production. This has little to do with valuing the land in a conventional sense or in attempting to assess compensation based upon the effect of the proposal upon native title rights or interests. Rather, the scheme is premised upon giving native title parties a share in projects developed in their country.

  85. Irrespective of the area of the land in question or the impact of the proposal upon any native title interests, attention will focus on the value of the project and productivity. Negotiations will be at large in this regard. The native title parties' objective will be to obtain what they regard as reasonable value for giving their consent to the particular project. Their financial expectations will increase with the significance of the project. Although the negotiation process relates to the proposed future act, the native title parties may also wish to negotiate compensation for any past activities of the proponent. Conversely, obtaining native title consent and securing certainty will have a value to the proponent which will also be related to the significance of the project.

  86. Compensation may be a lump sum payment on signing or at commissioning or may involve staged payments. It may be ongoing in the form of fixed annual payments or production or profit related royalties. In the case of infrastructure projects payments may be related to the volume of the relevant commodity transported across the land.

  87. Multiple Claimants

  88. The number of overlapping native title claims will be a factor in negotiations. They will tend to prolong and increase the expense of negotiations. From the grantee party's perspective, its obligations under an agreement reached with one claimant should be conditional upon agreement being reached with the other claimants, or upon the completion of the future act proposal.

  89. Many grantee parties commence by identifying the amount they are prepared to pay to obtain native title consent and then attempt to negotiate with separate claimant groups on the basis that the budgeted amount must be divided amongst the groups. Although claimants in overlapping claims usually recognise the difficulties associated with the grantee party having to compensate more than one group, the existence of multiple claims inevitably leads to an overall increase in the negotiation and compensation cost of a proposal.

  90. As all claimant groups are given the same standing under the Act, the grantee party must generally deal with each group equally. This is irrespective of the relative legitimacy of the various claims or the numbers of people represented by each group.

  91. Timing

  92. Time and potential delay are always factors in a negotiation. Their significance depends upon the level to which the proposal as been developed and the proponent's critical path considerations.

  93. Generally, the later in the development process a proponent waits before attempting to obtain native title and heritage approvals, the more valuable those approvals will become to both parties.

  94. Procedural Issues

  95. Related to the question of delay are procedural issues. Questions may arise as to whether the State has discharged its obligation under section 31(1) of the Native Title Act to negotiate in good faith. This may prevent a Tribunal application and delay the completion of the process. Again, depending upon critical path considerations, procedural issues can become significant with a consequential strengthening of the native title parties' bargaining position and an increase in the value of obtaining their consent.

  96. Land Tenure and Extinguishment Issues

  97. Any historical or current land tenure is relevant to the negotiations where there is a reasonable likelihood of extinguishment or significant impairment of native title. The native title parties will be aware that their ability to resist an application to the Tribunal by another party will be reduced. However, this issue should not be overstated. It is unlikely that the Tribunal would make a determination concerning either the existence of native title or extinguishment in a future act application. Rather, the evidence concerning these issues will be weighed in the Tribunal's determination. There is some analogy with the approach taken by courts in an interlocutory injunction application.

  98. On the other hand heritage issues will remain highly significant irrespective of the likelihood of extinguishment of native title. The Tribunal is unlikely to approve a proposal without adequate protection of demonstrated heritage areas.

  99. Conclusions

  100. The assessment of compensation by the Federal Court under the Native Title Act for acts which affect native title will include both material (monetary) and non material (non-monetary) factors. This will involve an approach which combines principles applied in relation to land valuation and to the assessment of general damages.

  101. The negotiation of agreed compensation for future acts under the right to negotiate procedure is a wholly different process. The parties will attempt to negotiate terms for obtaining the native title parties' consent to the proposal. This raises the reality of the willing buyer and the willing seller. Numerous variables will influence the outcome. The possibility of an arbitrated decision by the National Native Title Tribunal provides both parties with an incentive to reach agreement.

  102. Generally, the cost of obtaining consent will be related to the value of the proposal. Delays and timing issues may escalate that cost.
Notes


[1] J Gobbo, "Compensation for Extinguishment of Native Title" (1993) 67 Law Institute Journal 1163

[2] Section 63 LAPW Act

[3] RTM Whipple, "Assessing Compensation Under The Provisions Of The Native Title Act"; April 1997

[4] Spencer v Commonwealth (1907) 5 CLR 418

[5] Pastoral Finance Association v Minister [1914] UKPC 77; (1914) AC 1083

[6] B A Keon-Cohen [1995] MonashULawRw 4; (1995) 21 (1) Monash University Law Review 84

[7] No. QG104 of 1993 FED No. 39/96

[8] J Gobbo, "Compensation for Extinguishment of Native Title" (1993) 67 Law Institute Journal 1163

[9] (1995) [1995] HCA 10; 127 ALR 1

[10] Whalley v Western Australia (1996) 37 ALR 561

[11] Waljen Future Act Determination 17 July 1996 at 84-87; Evans (Koara) v Western Australia unreported, Federal Court no. WAG 6010/96 8 August 1997 at 16

[12] (1996) 135 ALR 225

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URL: http://www.austlii.edu.au/au/journals/MurdochUeJlLaw/1998/2.html