Landmark High Court decision exposes Commonwealth to new native title compensation liability

What you need to know

• On 12 March 2025, the High Court of Australia handed down its landmark decision of Commonwealth of Australia v Yunupingu on behalf of the Gumatj Clan or Estate Group [2025] HCA 6.
• The High Court agreed with the Full Federal Court that pre-1975 acts of the Commonwealth could be compensable under the Native Title Act 1993 (Cth) as invalid acquisitions of property contravening the just terms guarantee imposed by section 51(xxxi) of the Australian Constitution.
• Prior to Gumatj, the Courts had only considered whether post-1975 acts by the States and Commonwealth that offended the Racial Discrimination Act 1975 (Cth) were compensable. However, the possibility that contravention of section 51(xxxi) might lead to invalidity was contemplated at the time of the enactment of the Native Title Act. Gumatj is simply the first compensation claim to test this principle.
• It is important to note that the Court has not yet ordered that the Commonwealth pay compensation to the Gumatj Clan. This decision is the legal step necessary to allow the Gumatj Clan to progress their claims that the 1939 vesting of minerals in the Crown and the grant of certain leases between the 1930s-1960s are "compensable acts" under the Native Title Act. It will be some years before the claim is fully resolved.

What you need to do

• Note that this decision predominantly affects the Commonwealth. It has exposed the Commonwealth to significant liability for many of its land dealings in the Northern Territory and other Commonwealth Territories from the early 1900s. There is also the issue of Commonwealth land dealings, including the compulsory acquisition of land in the States.
• The decision is likely to trigger new compensation claims in relation to Commonwealth land. The Commonwealth may attempt to resolve its liability by way of Indigenous Land Use Agreements with relevant native title holding groups or consider attempting a multi-claim area negotiated settlement similar to that reached by the WA Government with the Noongar People.
• Note that the decision has no direct impact on State Governments or third parties. For non-Commonwealth land users operating on land or using minerals in respect of which native title was extinguished by Commonwealth legislation, the question is whether liability for native title compensation has been passed on by legislation or in contracts.

Commonwealth of Australia v Yunupingu on behalf of the Gumatj Clan or Estate Group [2025] HCA 6

Context of the Gumatj compensation claim – a test case for pre-1975 acts

The Gumatj Clan filed a claim in late 2019 seeking compensation from the Commonwealth and the Northern Territory in respect of the acquisition of land and minerals in the Gove Peninsula in the Northern Territory between the 1930s and 1960s. This claim revisits the same Commonwealth actions that gave rise to the Yirrkala people's bark petitions to parliament and the Gove land rights case – Milirrpum v Nabalco.

The claim stood as a test case for whether certain pre-1975 acts of the Commonwealth are compensable under the Native Title Act 1993 (Cth) as an acquisition of property other than on "just terms" in accordance with section 51(xxxi) of the Australian Constitution.

Prior to Gumatj, the Courts had only considered whether post-1975 acts that offended the Racial Discrimination Act 1975 (Cth) were compensable.

From a legal perspective, the decision is not a surprise. The possibility that contravention of section 51(xxxi) of the Constitution might lead to invalidity requiring validation by the Native Title Act was in fact contemplated at the time of the enactment of the Native Title Act in the early 1990s. Gumatj is simply the first compensation claim to test this principle.

In May 2023, the Full Court recognised a new category of invalid acts: Commonwealth acquisitions of native title rights and interests that did not provide just terms in accordance with section 51(xxxi) of the Constitution (including those that occurred prior to 1975). The Commonwealth appealed to the High Court.

The High Court was asked to consider whether the just terms requirement in the Constitution:

• applies to laws made by the Commonwealth under the territories power; and
• applies to acquisitions of native title rights and interests.

The resolution of the constitutional issues relates to the question of whether certain acts and dealings may be "compensable acts" under the Native Title Act.

High Court agreed with the Full Court

On 12 March 2025, the High Court dismissed the appeal.

The High Court answered the Constitutional questions as follows:

The just terms requirement applies to laws made under the territories power

The first constitutional question was whether the just terms requirement applies to a law made under the territories power for the compulsory acquisition of property.

The High Court said that the territories power was subject to section 51(xxxi) of the Constitution. It said:

"The time has come for it to be finally and authoritatively declared that the power conferred on the Commonwealth Parliament by s 122 of the Constitution to make laws for the government of a territory does not extent to making a law with respect to an acquisition of property otherwise than on just terms within the meaning of section 51(xxxi) of the Constitution".

Native title rights and interests are property and subject to the just terms requirement

The second constitutional question was whether the extinguishment or impairment of native title rights was capable of being characterised as an "acquisition of property" for the purposes of section 51(xxxi) of the Constitution? The property in question was the non-exclusive native title rights that potentially remained after exclusive native title rights were extinguished by the grant of pastoral leases in the 1880s.

The Commonwealth and the Northern Territory argued that the acquisition of native title rights and interests does not have to be made on just terms. They said that native title rights and interests are inherently susceptible to extinguishment or impairment by an inconsistent exercise of the Crown's radical title and that the High Court has consistently described native title rights and interests as "inherently fragile" or "inherently weaker".

The High Court agreed with the Full Court's rejection of this argument. The High Court agreed with the Full Court that native title rights and interests are proprietary in nature and constitute “property” for the purposes of section 51(xxxi). To say otherwise would be "untenable". A grant or act that extinguishes native title rights and interests is capable of amounting to an acquisition of property within the meaning of section 51(xxxi). Accordingly, an extinguishment of native title rights and interests that did not provide just terms is an invalid act which gives rise to a compensation entitlement under the Native Title Act.

What does this mean for the Gumatj claim?

The Gumatj Clan has pleaded the following acts as compensable acts:

• vesting of minerals in the Crown under section 107 Mining Ordinance 1939 (NT);
• grant of a 1938 lease to the Methodist Missionary Society of Australia Trust pursuant to the Aboriginals Ordinance 1918-1937 (NT); and
• grant of special mineral leases pursuant to the 1939 Ordinance in 1958 and 1963, and pursuant to the 1939 Ordinance and the Mining (Gove Peninsula Nabalco Agreement) Ordinance 1968 (NT) in 1969.

The High Court said "the theory of the claim is sound" and the decision allows the Gumatj Clan to progress their claims that the acts are "compensable acts" under the Native Title Act. This is on the basis that they were acquisitions of property other than on just terms (invalid under section 51(xxxi) of the Constitution), validated as "past acts" by the Native Title Act and triggering a right to claim compensation from the Commonwealth.

However, there are still a number of unresolved questions in the Gumatj Clan's parallel native title claim. They still have significant hurdles to overcome. For the Gumatj Clan's compensation claim to succeed, they must prove that they hold native title in the area (a claim contested by other clans) and that there is a native title right to take and use minerals. Finally, the extent to which any native title holders have already been compensated for the Government's acts is also a live issue.

We expect that this claim will not be resolved for a number of years.

Implications of the High Court's decision

The High Court's decision increases the Commonwealth's exposure to native title compensation liability well beyond the area claimed by the Gumatj Clan.

The decision is likely to trigger new compensation claims in relation to Commonwealth land dealings in the Northern Territory and other Commonwealth territories. There is also the issue of Commonwealth land dealings in the States such as the compulsory acquisition of land where just terms compensation was not payable.

The Commonwealth argued during the hearing that if the Full Court's decision was allowed to stand, it would expose the Commonwealth to "100 years or more" of compensation claims for land grants awarded in the Northern Territory. The Commonwealth submitted that "Everything that happened after the Commonwealth accepted the Territory is at risk of invalidity". The High Court noted that in an earlier High Court case about the operation of section 51(xxxi) in the Territory, the Commonwealth argued that "the application of s 51(xxxi) to the Northern Territory would have the effect of invalidating significant provisions of Commonwealth legislation and would potentially invalidate every grant of freehold or leasehold title granted by the Commonwealth in the Territory since 1911 to the extent to which any such grant may be inconsistent with the continued existence of native title as recognised at common law".

In addition to invalid land dealings, the potential Commonwealth liability for compensation for the vesting of minerals in the Northern Territory in the Crown is likely to run into the many millions of dollars.

The Commonwealth may attempt to resolve its liability by way of Indigenous Land Use Agreements with relevant native title holding groups or consider attempting a multi-claim area negotiated settlement similar to that reached by the WA Government with the Noongar People.

It is important to note that the decision has no direct impact on State Governments or third parties. For non-Commonwealth land users operating on land or using minerals in respect of which native title was extinguished by Commonwealth legislation, the question is whether liability for native title compensation has been passed on by legislation or in contracts.

Want to know more? 

• Native title compensation: a big year ahead? (23 May 2024)
  Summarises the status of compensation claims from mid 2023-2024
• Landmark Gumatj Clan compensation decision opens up a new class of compensation claims against the Commonwealth (2 August 2023)
  Summarises the Full Federal Court decision in the Gumatj compensation claim
• Native title compensation: we're off to the High Court again (2 August 2023)
  Summarises the status of compensation claims from mid 2022-2023
• Native title compensation Not much to see but plenty happening below the surface (11 July 2022)
  Summarises the status of compensation claims from mid 2021-2022

Other authors: Leonie Flynn, Expertise Counsel.