End
of Article
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
-
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).
-
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:
-
if native title rights and interests to an
area are compulsorily acquired under a Compulsory Acquisition Act (defined
in section
253), just terms compensation must still be paid but may be
determined in accordance with the criteria contained in that Act (section
51(2));
-
where native title is affected but not extinguished
(such as by the grant of a mining tenement over the land), native title
holders
are entitled to compensation in accordance with the State law under
which freehold title holders would be compensated; this is called
the "similar
compensable interest test" (sections 51(3), 240).
-
Compensation is only payable once under the
Native Title Act for acts that are essentially the same (section
49).
-
Compensation for past acts is payable by the
Commonwealth or the State or Territory which carried out the act. Compensation
for
future acts is similarly payable by the government which carries out
the act (sections 17, 19, 20, 23(3), 23(4)). However, if a
future act is
carried out at the request of another person, liability for compensation
may be transferred to that person (section
23(5)).
-
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].
Compulsory
Acquisition Act
-
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)).
-
Compensation for compulsory acquisition of
land under the LAPW Act is based upon:
-
the value of the land including any improvements,
or the estate or interest of the claimant in the land, without regard to
any increased
value arising from the proposed use;
-
any loss or damage sustained in relation to
removal expenses, the disruption and re-instatement of a business, disruption
to any
building works and any other facts which are:
"just having regard to the
circumstances of each case";
-
compensation may include an additional amount
equivalent to up to 10% of the assessed compensation (solatium), although
if the court
considers that the operation of the compensation provisions
would not provide:
"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
-
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.
-
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.
-
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.
-
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.
-
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.
Compensation
and Land Valuation Principles
-
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].
-
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.
-
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.
-
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]
-
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.
-
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.
Special
Attachment To Land
-
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.
-
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.
-
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.
-
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.
-
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.
The
Compensation Claims Process
-
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.
-
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).
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).
-
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]
-
Where the application is opposed the applicants
will be required to prove in the Federal Court :
-
that native title exists or existed and the
applicants (or their predecessors) are or were the native title holders;
-
the nature and content of the native title
rights;
-
that their native title rights will be or
were impaired or extinguished by the act; and
-
the nature of their loss.
-
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.
The
Reality
Compensation
Claims
-
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.
-
Compensation claims may increase over time.
In the meantime the clarification of compensation principles by the courts
is likely
to be a slow process.
Native
Title Act and Future Acts
-
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.
-
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.
-
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.
Right
to Negotiate Procedure
-
Under the right to negotiate procedure:
-
the State must give notice of a proposal to
grant a mining tenement or to effect a third party compulsory acquisition
to registered
native title holders and claimants, representative Aboriginal
bodies, the proposed grantee and to the public (section 29);
-
if a native title claim exists or is registered
within 2 months of the notice being given (section 30), the proposal becomes
subject
to negotiation for a period of no less than 4 or 6 months (depending
on the nature of the proposal) from when the notification was
given;
-
if the parties are not able to negotiate an
agreement concerning the proposal, any party may apply to the National
Native Title
Tribunal for a determination whether the proposal may proceed
(section 35);
-
the Tribunal may approve the proposal, with
or without conditions or refuse the proposal, within a target period of
4 or 6 months
(sections 31-38); and
-
the Commonwealth Minister may override a Tribunal
decision (section 42).
-
The flow chart contained in Annexure 1 shows
the right to negotiate procedure.
-
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]
-
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).
-
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.
-
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]
-
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]
Overlapping
Claims
-
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:
"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."
-
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.
-
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.
-
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.
Claims
and Future Acts - The Statistics
-
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.
-
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).
-
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.
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 |
|
-
As at 6 August 1997 the State had also issued
254 notices concerning the compulsory acquisition of
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.
-
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.
The
"Economic Dimension" of a Native Title Claim
-
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.
-
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.
"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).
-
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.
-
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.
-
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.
-
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.
-
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.
-
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.
-
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.
Negotiation
Factors
-
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.
-
Other factors include overlapping claims,
timing, procedural and extinguishment issues.
-
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.
Aboriginal
Heritage
-
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.
-
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.
-
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.
Exploration
Activities
-
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.
-
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.
-
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.
Project
Development
-
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:
-
payments will be agreed for exploration activities,
along the lines mentioned above;
-
the parties may agree that the grantee will
not commence mining operations without first negotiating a detailed a mining
agreement;
this may include provision for reference to an arbitrator if
agreement is not possible;
-
a payment in the form of production royalty
may be agreed in the event that a mine is brought into production; section
123 of the
Mining Act raises an issue concerning the legality of
royalties, although in practice this is not necessarily an obstacle;
-
a fixed annual payment may be agreed for each
commercial mining operation discovered and brought into production.
-
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.
-
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.
-
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.
-
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.
Multiple
Claimants
-
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.
-
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.
-
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.
Timing
-
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.
-
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.
Procedural
Issues
-
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.
Land
Tenure and Extinguishment Issues
-
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.
-
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.
Conclusions
-
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.
-
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.
-
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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