Native Title Year in Review 2022-2023

What you need to know

• On 22 May 2023, the Full Court of the Federal Court handed down its landmark decision of Yunupingu on behalf of the Gumatj Clan or Estate Group v Commonwealth of Australia [2023] FCAFC 75.  
• The Full Court held 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 obligation imposed by section 51(xxxi) of the Australian Constitution. 
• The Commonwealth has filed an application for special leave to appeal to the High Court.  It is not yet known when the leave application (or the appeal) will be heard.
• This decision is the most important development in the native title compensation landscape since the Timber Creek decision.  Subject to the appeal, it has significantly expanded the range of potentially compensable acts.

What you need to do

• The High Court's decision will be an important one, affecting the Commonwealth's exposure to native title compensation liability well beyond the area claimed by the Gumatj Clan.  
• The Commonwealth and the other parties will be actively engaged in the appeal process, while the rest of us will wait for the decision with interest.
• 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 to you by legislation or in contracts.  

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.  

We have written about this claim in all of our native title compensation updates since it was filed: see our Native Title Year in Review 2021-2022 article, "Native title compensation: Not much to see but plenty happening below the surface", our Native Title Year in Review 2020 article, "Native title compensation update: no claims tsunami but the tide has turned" and our Native Title Year in Review 2019 article, "Compensation update: What next for native title compensation?".

The claim is an important test case.  It asserts that certain acts that affected native title were invalid because they amounted to an acquisition of property without providing just terms, as required by section 51(xxxi) of the Constitution.  The Commonwealth will only be liable for compensation if the Gumatj Clan can prove invalidity because invalidity is necessary to trigger the validation (and associated compensation) provisions of the Native Title Act.  The Commonwealth will not be liable for compensation if the acts were valid.  

The parties agreed to have several threshold questions determined by the Full Court of the Federal Court before the claim progressed any further.  This decision addresses those questions.  The hearing took place over six days in October 2022.  The Full 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.

Full Court finds that the Commonwealth acquisition of native title rights and interests other than on just terms is a compensable act

On 22 May 2023, the Full Court handed down its unanimous decision in Yunupingu on behalf of the Gumatj Clan or Estate Group v Commonwealth of Australia [2023] FCAFC 73.  The Full 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 Full Court said that the territories power was subject to section 51(xxxi) of the Constitution.  This issue came down to precedent and competing arguments about whether one High Court case overturned another 

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

The second constitutional question is more generally interesting - Is extinguishment or impairment of native title rights 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.  That is, there is no acquisition of property when rights are extinguished or diminished in a manner to which they were always susceptible. In particular, they observed, native title rights and interests are inherently susceptible to extinguishment or impairment by an inconsistent exercise of the Crown's radical title.  They pointed out that the High Court has consistently described native title rights and interests as "inherently fragile" or "inherently weaker".  

The Full Court rejected the governments' argument.  It said that the language of fragility conveyed no more than an acknowledgment that the Crown's assertion and exercise of powers to control ownership of land will prevail over the rights of the native title holders.  The Full Court did not accept that native title rights and interests were "inherently defeasible."

The Full Court said that native title rights and interests are proprietary in nature and constitute “property” for the purposes of section 51(xxxi).  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.

High Court – application for special leave to appeal filed by the Commonwealth

The Commonwealth has filed an application for special leave to appeal to the High Court.  It is not yet known when the leave application (or the appeal) will be heard.

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.

Subject to the outcome of the appeal, the Full Court's 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.  Even if the High Court resolves the constitutional issue in their favour, 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.   

Key insights

Subject to the outcome of the appeal, the Full Court's decision will likely lead to new compensation claims being filed.  Prior to the decision, the courts had only considered whether post-1975 acts that offended the Racial Discrimination Act 1975 (Cth) were compensable. The decision recognises 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 High Court's decision will be an important one, affecting the Commonwealth's exposure to native title compensation liability well beyond the area claimed by the Gumatj Clan.  The Commonwealth and the other parties will be actively engaged in the appeal process, while the rest of us will wait for the decision with interest.

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 to you by legislation or in contracts.

Authors: Leonie Flynn, Expertise Counsel; Clare Lawrence, Partner.