Commonwealth of Australia v Mr A. Griffiths (deceased) & Anor; Nor of Australia v Mr A. Griffiths (deceased) & Anor; Mr A. Griffiths (deceased) v NT of Australia & Anor
[2018] HCATrans 174
[2018] HCATrans 174
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Darwin No D2 of 2018
B e t w e e n -
COMMONWEALTH OF AUSTRALIA
Appellant
and
MR A. GRIFFITHS (DECEASED) AND LORRAINE JONES ON BEHALF OF THE NGALIWURRU AND NUNGALI PEOPLES
First Respondent
NORTHERN TERRITORY OF AUSTRALIA
Second Respondent
Office of the Registry
Darwin No D1 of 2018
B e t w e e n -
NORTHERN TERRITORY OF AUSTRALIA
Appellant
and
MR A. GRIFFITHS (DECEASED) AND LORRAINE JONES ON BEHALF OF THE NGALIWURRU AND NUNGALI PEOPLES
First Respondent
COMMONWEALTH OF AUSTRALIA
Second Respondent
Office of the Registry
Darwin No D3 of 2018
B e t w e e n -
MR A. GRIFFITHS (DECEASED) AND LORRAINE JONES ON BEHALF OF THE NGALIWURRU AND NUNGALI PEOPLES
Appellant
and
NORTHERN TERRITORY OF AUSTRALIA
First Respondent
COMMONWEALTH OF AUSTRALIA
Second Respondent
KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J
TRANSCRIPT OF PROCEEDINGS
AT DARWIN ON TUESDAY, 4 SEPTEMBER 2018, AT 10.16 AM
Copyright in the High Court of Australia
____________________
MS S.L. BROWNHILL, SC, Solicitor‑General for the Northern Territory: May it please the Court, I appear with my learned friend, MR T.J. MOSES, on behalf of the Northern Territory in all three of the appeals. (instructed by the Solicitor for the Northern Territory)
MR S.A. GLACKEN, QC: If the Court pleases, I appear with MR G.A. HILL and MS L.E. HILLY in each appeal for the Ngaliwurru and Nungali Peoples. (instructed by the Northern Land Council)
MR S.B. LLOYD, SC: May it please the Court, I appear with MS N. KIDSON for the Commonwealth in each of the three appeals. (instructed by the Australian Government Solicitor)
MR P.J. DUNNING, QC, Solicitor‑General of the State of Queensland: May it please the Court, I appear with my learned friend, MR A.D. KEYES, for the Attorney‑General of the State of Queensland, intervening in each appeal. (instructed by Crown Solicitor (Qld))
MR C.D. BLEBY, SC, Solicitor‑General for the State of South Australia: May it please the Court, I appear for the first intervener, the Attorney‑General for the State of South Australia, in all three appeals. (instructed by the Crown Solicitor’s Office (SA))
MR G.T.W. TANNIN, SC: May it please the Court, with my learned friend, MS C.I. TAGGART, I appear for the Attorney for the State of Western Australia in each appeal as the third intervener. (instructed by the State Solicitor’s Office (WA))
MR S.J. WRIGHT, SC: May it please the Court, Mr Wright, I appear with my learned junior, MS M. GEORGIOU, for the Central Desert Native Title Services Limited and the Yamatji Marlpa Aboriginal Corporation. (instructed by the Central Desert Native Title Services)
KIEFEL CJ: We understand that the three State interveners are seeking leave to intervene, there being some doubt about whether or not their intervention extends to subject matters beyond the constitutional question raised in the notice. Each of the interveners have that leave. Before you start, Ms Solicitor, we have the agreed order and timing of addresses. Could I just inform the parties that we will not be taking a morning break today but on Wednesday and Thursday we will start at 10 and will be taking a 15 minute morning break at 11.15. Thank you, Ms Solicitor.
MS BROWNHILL: Thank you, your Honour. Your Honour, if I can start with some procedural background in relation to the compensable Acts, in particular, and a useful place, in my submission, to begin is the map of the town of Timber Creek which appears in the Full Court’s reasons. It is in the core appeal book on page 269. That map just provides some assistance in terms of an appreciation of the location of various of the landmarks of the town. So, if your Honours have that, your Honours will see that the town boundary of Timber Creek is represented by the dashed and dotted line. The northern boundary is the Victoria River which runs east/west along the top of the map. The town boundary is the dash/dotted line that travels diagonally and then up the eastern side.
The Victoria Highway travels through the middle of the town ‑ your Honours will see that represented there – and Timber Creek, the creek for which the town is named, travels in a north‑south direction from Victoria River in that north‑south direction.
The various allotments in the town are numbered and there is a key in the top right‑hand corner which gives an indication of what the colours of each of those lots mean. The compensable acts, the subject of the proceeding, there are 53 of them altogether affecting 39 lots and four roads. Those are what are depicted by the colours of those various allotments.
The pink lots represent what are referred to as development leases, so the leases granted by the Crown. The yellow lots represent public works - I will come to, in a moment, your Honours, in more detail to what the compensable acts are; I just wanted to show the location of them on the map – so the yellow lots are public works which were constructed without an underlying tenure and there are four yellow stars which also represent public works.
The blue lots represent grants to the Crown which have been followed by a public work and the green lots represent compensable acts which are subject to the non‑extinguishment principle in perpetuity – there are three of those. One of the green lots, which I will refer to in my submissions, Lot 16, is the large green lot that appears in the north‑western corner of the town, up near the river. That is relevant to the Lonergan methodology, which I will be addressing your Honours on in due course.
Then there are roads which are identified in red. Your Honours will see the horseshoe‑shaped road in the centre of the town is Wilson Street. There is some reference in all of the submissions to the Wilson Street development or the Wilson Street subdivision, which comprises the lots that appear in the inset which is in the bottom left‑hand corner of the map there, the residential lots that are marked in pink.
The only other thing I wish to note in relation to the map, your Honours, is that aside from those coloured lots and the stars and so on, almost all of the remainder of the town within the town boundary is the subject of the determination of exclusive native title rights and interests in favour of the native title party, some 86 per cent, I am told, of the total area of the town.
If I can move then, your Honours, to the claim for compensation. That is contained in the Claim Group’s book of further materials, in volume 1, commencing at page 12. It is a claim:
for a determination of compensation under s 61(1) of the Native Title Act1993.
The claim is set out by reference to various schedules. Schedule A describes the persons on whose behalf the claim is brought. Schedule B, over the page, describes the area the subject of the claim. On page 16, your Honours will see in Schedule E, paragraph 11:
The native title rights and interests in relation to the area –
and they comprise two sets of rights, the first being:
Rights in accordance with traditional laws and customs to the possession, occupation, use and enjoyment of the application area to the exclusion of all others.
And then, in paragraph (b):
Where the rights . . . were extinguished by an earlier act –
which these native title rights were – I will come to that – then is set out the following:
non‑exclusive rights in accordance with traditional laws and customs –
and there are a number of them there. The point I make here is that the claim itself draws a distinction between exclusive native title rights and interests and the non‑exclusive native title rights and interests affected by the compensable acts. So the rights are set out there:
(1)the right to travel over, move about and to have access to the application area;
(2)the right to hunt, fish and forage on the application area;
(3)the right to gather and to use the natural resources of the application area such as food . . .
(4)the right to have access to and use the natural water of the determination area;
(5)the right to live on the land, to camp, to erect shelters and other structures –
I will come back to what that means - and then:
(6)the right to:
(i)engage in cultural activities;
(ii)conduct ceremonies;
(iii)hold meetings –
and so on:
(7)the right to have access to, maintain and protect sites of significance –
I will come back, again, to what that means, and then:
(8)the right to share or exchange subsistence and other traditional resources . . . (but not for any commercial purposes).
Paragraphs 12 and 13 make clear that these are the same rights as were determined in the native title determination application proceeding. The rights in paragraph 11(a), that is, the exclusive rights, were those which were held to subsist in the town by operation of the effect of section 47B of the Native Title Act which required the prior extinguishment of the exclusivity of those rights by pastoral leases to be disregarded. That is how the native title party ended up with a determination of exclusive native title rights in relation to the town.
Then, in 13, the rights referred to in 11(b) are those determined in relation to which section 47B did not apply. Those native title rights are the same rights and interests that the parties agreed would operate in relation to these proceedings and were affected by the compensable acts.
If you can just turn to Schedule I, paragraph 19, that schedule identifies the acts for which compensation is claimed, comprising past acts, intermediate period acts and previous exclusive possession acts – and I will come back to each of those shortly.
Then, on page 24, just to make reference to the just terms compensation aspect of the claim - so this was a claim on the basis that if the Native Title Act does not oblige the Northern Territory to pay compensation, as claimed in the points of claim on quantum, then section 53 of the Native Title Act would operate to oblige the Commonwealth to pay the shortfall on just terms.
If I can just then take your Honours to the Amended Points of Claim on Quantum – it is at page 38 of this bundle. This document was amended after the trial judge prepared draft orders on quantum, so after the liability – sorry, draft orders on liability – after the liability hearing in which it was determined that there was a liability to pay compensation in relation to the 53 compensable acts. This document was amended to take account of that conclusion.
On page 40, your Honours will see the claim for economic loss and it is a claim for compensation:
to be assessed at the date a compensable act happened –
as it turned out, firstly, for:
The loss of the native title on and from the dates [of] the compensable acts –
Or, secondly, for:
The impairment of the native title –
if there was an application of the non‑extinguishment principle. And, in paragraph 10 the loss is quantified by reference, firstly:
to the value of the land in the state in which it was at the time of the compensable act . . . with adaptation of the criteria in Schedule 2 of the [Lands Acquisition Act] on the basis that –
it was a compulsory acquisition of a freehold estate at the time the act happened.
And, then, in the second paragraph, 10(2), in relation to the impairment of native title, there was a claim for “mesne profits”. Ultimately, that claim was not pressed because of the way the parties dealt with the impairment of native title, which was either generally followed by a wholly extinguishing compensable act or impairment that proceeded in perpetuity so that the parties approached it by reference as if that act actually wholly extinguished native title.
And, then, paragraph 11, the heading “Non‑economic loss”, so that is a claim:
to compensation for non‑economic loss in relation to:
(1)loss or diminution of connection or traditional attachment to the land, including disruption of spiritual ties, and interference with the exercise of the native title;
(2)intangible disadvantages by loss of rights to live on and gain spiritual and material sustenance from the land;
to be assessed . . . on an in globo basis in reference to all of the Lots (and road areas) as a whole, and having regard to –
the matters there set out in paragraphs (3) through to (5). And, again, over the page, that is:
with adaptation of the criteria in Schedule 2 rules 2(b) and 9 of the –
Lands Acquisition Act (NT). And, then, thirdly, the claim included a claim for “pre‑judgment interest to reflect” the – this is in paragraph 12 :
delay in payment of compensation assessed from the time of loss or impairment of the native title by way of:
(1)damages in loss of use of money, or compensation for being deprived of the earlier payment, compensable by compound interest; or –
alternatively:
(2) simple interest by reference to:
(a)the terms of . . . the [Lands Acquisition Act] . . . for intangible disadvantages) –
or, alternatively:
(b)the power to award prejudgment interest and the rates payable for prejudgment interest under s 51A of the Federal Court of Australia Act 1976 (Cth) –
given that there was actually no rate fixed, pursuant to section 55 of the Lands Acquisition Act. I will come to that in a moment.
So in terms of the 53 compensable acts, your Honours, the acts affected 39 lots and four roads, as I said. If your Honours can turn to the Full Court’s reasons, which is in the core appeal book, paragraph 10, the court has there set out a table of the compensable acts, at page 270 and following of the bundle. The symbols that the court has used in that table are explained in paragraph 10 and I note that there actually a couple of errors in that table, so act 27, which is on page 271, about halfway down, the court has placed there a double asterisk. There should actually be only a single asterisk. And act 28, which is over the page, again about halfway down, that act should have a cross mark, like the other acts ‑ ‑ ‑
GORDON J: You mean an asterisk.
MS BROWNHILL: ‑ ‑ ‑ which are subsequent previous exclusive possession acts. And then act 41, which is the next act, should have a double asterisk because that is a non‑extinguishing ‑ sorry, that is a category D past act, extinguishing in perpetuity, impairing in perpetuity.
What the table shows is that the compensable acts were acts done between 1980 and 17 December 1996. They comprised either public works or the grants of freehold or leasehold interests and a single cemetery reserve. In relation to those acts which were done before 1 January 1994, they comprised past acts within the meaning of section 228(2) of the Native Title Act. Essentially, they were invalid because of the existence of native title and that is what makes them a past act.
And then there were in addition, five acts which were done between 1 January 1994 and 23 December 1996. They were intermediate period acts within the meaning of section 232A(2); again, invalid because of the existence of native title. The effect of the Native Title Act and the Territory legislation was that the past acts were validated by the Validation (Native Title) Act (NT). That is legislation that was passed pursuant to section 19 of the Native Title Act. Section 4 of that Act validated those Acts. If your Honours wish to turn to it, it is in the joint book of authorities, volume 1 at tab 11, and the provision ‑ ‑ ‑
BELL J: What page is tab 11?
MS BROWNHILL: I am sorry, your Honour, it is page 349.
BELL J: Thank you.
MS BROWNHILL: So, section 4 provides that:
Every past act attributable to the Territory is valid and is taken always to have been valid.
And there is similar provision in relation to the intermediate period acts. They were validated by section 4A of that Act:
Every intermediate period act attributable to the Territory is valid and is taken always to have been valid.
So, in terms of the basis of the compensation or how we get to compensation, the provisions of the Native Title Act operate in relation to, firstly, previous exclusive possession acts within section 23B of the Native Title Act, so there is 41 of those amongst the 53 compensable acts.
So, in the Full Court’s table, they are acts which either have no symbol or have a cross or plus sign – I am not sure what the technical term is for that symbol. They comprise leases to non‑Crown entities within section 23B(2) of the Native Title Act or public works within section 23B(7) of the Native Title Act. Those acts wholly extinguished native title ‑ that is found in sections 9H and 9J of the Validation Act ‑ and the entitlement to compensation in respect of them is found in section 23J. Subsection (1) provides that:
The native title holders are entitled to compensation in accordance with Division 5 for any extinguishment under this Division –
that is the previous exclusive possession act provision:
of their native title rights and interests by an act, but only to the extent (if any) that the native title rights and interests were not extinguished otherwise than under this Act.
So, it is compensation for any extinguishment by an act and it excludes any effects on native title which were affected by earlier ‑ that is, pre‑1997 ‑ and the Racial Discrimination Acts. The obligation to pay this compensation is found in subsection (3) of 23J:
compensation is payable by the State or Territory –
to whom the Act is attributable.
In relation to the category D past acts, there are 12 category D past acts. Those are indicated in the Full Court’s table by an asterisk or a double asterisk. They constituted leases to Crown entities within the meaning of section 23B(9C). The non‑extinguishment principle applies to those acts. Of those 12, nine of them were followed by a previous exclusive possession act. So the parties approached the issue of compensation as if the previous exclusive possession act wholly extinguished native title with effect from the doing of the first act, the category D past act, which means essentially that the approach to compensation for those acts is the same as if it were under section 23J.
There remain three category D past acts which were not followed by a previous exclusive possession act. The parties approached compensation in relation to those three acts as if they wholly extinguished native title because there was essentially no foreseeable prospect of the acts being acts in perpetuity, so no foreseeable prospect that the extinguishing effect would end.
In relation to those acts, the entitlement to compensation is contained in section 20 of the Native Title Act. So the Territory law has validated the past acts, which means subsection (1):
the native title holders are entitled to compensation if they would be so entitled under subsection 17(1) or (2) –
If one goes to section 17(2):
the native title holders are entitled to compensation for the act if –
and then the criteria in (a) is met. The point that I am making is that the entitlement is to compensation for the act. Again, the obligation to pay compensation is in section 20(3).
If I can then take your Honours to the compensation provisions in particular, they are found in Division 5 of Part 2, which starts at section 48 of the Act. That section provides:
Compensation payable under Division 2, 2A, 2B, 3 or 4 –
which is where we just were:
in relation to an act is only payable in accordance with this Division.
That is, Division 5. Section 50 makes it clear that it is the Federal Court that determines compensation. Then section 51 is headed:
Criteria for determining compensation
Section 51(1):
Subject to subsection (3) –
which does not apply in this case:
the entitlement to compensation under Division 2, 2A, 2B, 3 or 4 is an entitlement on just terms to compensate the native title holders for any loss, diminution, impairment or other effect of the act on their native title rights and interests.
We say that the effect of those words ‑ ‑ ‑
EDELMAN J: The second reference to entitlement needs to be read as “obligation”, does it not?
MS BROWNHILL: As an obligation to pay the entitlement?
EDELMAN J: Yes.
MS BROWNHILL: Yes, we read it that way, your Honour. An entitlement to receive what the Northern Territory is, by the other provisions, obliged to pay.
We say that what those words mean is that it is compensation for the rights and interests which were actually held at the time of the compensable act and what they together comprise, not some enlarged or different title or what they might be deemed to be practically equivalent to – and I will come back to that – but in relation to what they are as their legal entitlements and capacity to provide as they have been translated into the common law for determination and the list of the native title rights.
GAGELER J: So we are concerned here with loss in respect of some of the native title rights.
MS BROWNHILL: Loss is the primary effect of the compensable acts, your Honour, in the sense that it has extinguished - those acts extinguished the native title and therefore the extinguishment equates to the loss, yes.
GAGELER J: So loss and, in respect of some, total impairment amounting to loss in respect of others. Are we concerned here also with other effect?
MS BROWNHILL: We would say that the word “loss” contemplates and captures the extinguishment and everything that flowed from that in terms of the effects upon the native title rights and interests.
KIEFEL CJ: Will you read “loss, diminution, impairment or other effect” as a gradation from the whole to a lesser effect?
MS BROWNHILL: One could read it that way, yes, your Honour.
GORDON J: There are two questions. First of all, what are the native title rights and interests and the second is the effect of the Act on those native title rights and interests by reference to the gradation the Chief Justice has put to you.
MS BROWNHILL: Yes, your Honour.
GORDON J: So are we concerned with other effect here? We are, are we not? You do not seek to put it into one box, do you?
MS BROWNHILL: Well, we do not need to and to the extent that there is some difference of meaning between loss and other effect, we would accept that whatever the effect is we are to address that effect by the compensation.
BELL J: Just to be quite clear, the three category D Acts, it is accepted for all practical purposes involved extinguishment. So no difference in approach is adopted in relation to any of the compensable acts.
MS BROWNHILL: That is so, your Honour. In terms of the term used, so it is an entitlement to compensation, we place some emphasis on the use of that word “compensation” and would refer your Honours to the decision of this Court in Nelungaloo v The Commonwealth (1948) 75 CLR 495. It is in the joint book volume 10, tab 80, at page 4054.
The case concerned the compulsory acquisition by the Commonwealth of wheat under regulations which converted rights and interests of persons in wheat into claims for compensation. At page 571 of the report, which is 4130 of the bundle, his Honour Justice Dixon, as he then was, explains the term “compensation” as it appeared in those regulations, about halfway down the page, your Honours.
BELL J: I am sorry, can I get the page number again of the report?
MS BROWNHILL: The page number of the report, your Honour, is 571.
BELL J: Thank you.
MS BROWNHILL: I asked your Honours to read from halfway down the page over to the top of the following page.
GAGELER J: We are not concerned with what is commonly known as the “Pointe Gourde principle”
MS BROWNHILL: I am sorry.
GAGELER J: The second part of that passage reflects what is commonly referred to as the “Pointe Gourde principle”. We are not concerned with that in this case, are we?
MS BROWNHILL: Not specifically, no, but the remainder of that passage does include the ideas of value to the owner which we say is a part of this case and the idea, contrary to the native title party’s case, that they are to be compensated as if their native title rights and interests were a compulsory acquisition of a freehold estate, we say that that is inconsistent with this understanding of the term “compensation”.
GORDON J: Can I just ask a question? How does that sit with what is on page 569 of what Justice Dixon says when he is comparing compensation in just terms in the context of this case:
Unlike “compensation,” which connotes full money equivalence, “just terms” are concerned with fairness.
MS BROWNHILL: Yes.
GORDON J: Do we not have both concepts here at play?
MS BROWNHILL: Your Honour, the reference in subsection (1) to just terms has been approached or accepted, I think on the part of all parties, to invoke the understandings of fair dealing that the term “just terms” in section 51(xxxi) of the Constitution invokes. Notwithstanding that – and I will take your Honours to section 53 in a moment – section 53 adopts a different phrase – section 53 being the historic shipwrecks clause, but it adopts the phrase “paragraph 51(xxxi) just terms”.
So there is a textual suggestion that there might be something different as between what appears in 51 and what appears in 53, but none of the parties have taken that issue, so that everyone is approaching this case on the basis that the words in section 51(1), as I say, invoke those understandings of fair dealing as between a person whose property is acquired and the State, meaning Territory, on behalf of the community.
EDELMAN J: You accept then that in the quote on 571 the focus is on the pecuniary value to the owner contained in the asset. So it is value to the owner, not value to the acquirer.
MS BROWNHILL: Yes, acquiring authority, yes, your Honour.
EDELMAN J: If that is the case then how is it that one can separate the two matters that are pleaded as non‑economic loss matters from the valuation of the right to the owner themselves?
MS BROWNHILL: The separation, as we understood it – my learned friend’s separation at the end of the day was their claim that they put it their way. But we have understood that separation on the basis of this being a particularisation, if you like, of the quantum of the claim, so that both of those elements fall within the term “compensation” for any loss of the acts.
EDELMAN J: But if those two aspects were considered as part of the economic value to the owner of the right itself, then the economic value of the right would be far more than the freehold value, at least to a purchaser.
MS BROWNHILL: Because there is a non‑economic component, we say that that is captured in value to the owner in the same way that, under the Lands Acquisition Act, in Schedule 2, which I will come to, there is to be an accounting both of the economic value in the sense identified by application of the Spencer test as well as compensation for intangible disadvantages caused by the acquisition to the holder of the right.
EDELMAN J: Yes, but what I am putting is that this is not part of the economic value itself in the same way, for example, as a house with sweeping ocean views would have a much greater economic value in that case to both the purchaser and the vendor but here property with very significant spiritual ties has a very large economic value to, in this case, the hypothetical party being dispossessed?
MS BROWNHILL: We would disagree with that, your Honour, because the economic value does not include those aspects related to the spiritual relationship between Aboriginal people and their country because, for example, the valuation evidence is to the effect that a hypothetical purchaser who was to buy the native title rights and interests buys those rights on the basis of the fact that they are exercisable and enjoyable in their nature and that acquisition does not contemplate those kinds of intangibles which are separately dealt with under the compulsory acquisition type legislation.
NETTLE J: Well, that sounds right but did you not just say before it was a value to the owner rather than value to the acquirer and, if so, how can the two live together?
MS BROWNHILL: Value to the owner is a concept involved in the Spencer test and the determination of what the hypothetical purchaser would pay.
NETTLE J: So, it is value to both?
MS BROWNHILL: No, your Honour, it is – value to the owner means only that you take the acquired property in all of its incidents and that is what the hypothetical purchaser would be buying as opposed to, for example, an interest which in the hands of the acquirer is not subject to limitations or restrictions on sale and that sort of thing.
EDELMAN J: But you can have special value which is value only to the owner but will not be of value to an acquirer. The example in Boland v Yates that Justice Callinan gives is a blacksmith who has a forge as a non‑conforming use on a property.
MS BROWNHILL: Yes, this claim does not involve that concept of special value because the native ‑ ‑ ‑
EDELMAN J: Why is not the particular spiritual intangible benefit of special value?
MS BROWNHILL: Because special value in that compulsory acquisition context is a translation of economic consequence. So, it is something that the hypothetical purchaser, an additional use, if you like, that would translate into economic earning whereas a spiritual association or attachment to country is not something that can translate into an economic consequence.
KIEFEL CJ: Ms Solicitor, as I understand you, you are saying – you are not denying that special value in attachment to land or spiritual connection, you are not denying that it is compensable, it is just that you put it in the category of non‑economic loss.
MS BROWNHILL: Absolutely. We do not resist and have never resisted the idea that some part of the compensation within section 51 would reflect that spiritual relationship to country that the native title party has.
KIEFEL CJ: Is the value to the owners simply what the owner would accept for the surrender of the rights?
MS BROWNHILL: No, your Honour. We would say ‑ ‑ ‑
KIEFEL CJ: I mean in the economic sense.
MS BROWNHILL: Yes, in the economic sense of the hypothetical transaction between a purchaser and a vendor taking into account the incidence of and the nature of the rights or title that is acquired.
KIEFEL CJ: There must be many occasions on which governments of the States and Territories enter into agreements by which land – native title land, in the sense that land over which native title rights exist is surrendered and I would imagine that there is a large body of data about such matters. Do the parties – the parties did not ever consider approaching the matter by reference to comparisons in this way?
MS BROWNHILL: There was some comparison drawn in this matter because there were – at least there was one transaction involving the native title party and the surrender of their native title rights.
KIEFEL CJ: There is a dispute about the extent to which that is relevant but I am speaking more broadly.
MS BROWNHILL: I am essentially giving evidence here from the Bar table, your Honour, but I am not aware of a large body or bank of data by which this kind of information could be obtained. Transactions and acquisitions have occurred from time to time but they are not, in the Territory at least, as prolific as one might expect for whatever reason and I think perhaps also since the advent of the ILUA provisions in 1998 where native title holders can permit certain things to occur in relation to native title land ‑ ‑ ‑
KIEFEL CJ: Are ILUAs recorded? Are they registered?
MS BROWNHILL: Yes, they are, your Honour.
KIEFEL CJ: So, there are ILUAs which would have the effect of completely extinguishing native title. I mean ILUAs might have only a minor effect and run concurrently with native title rights but some would – could have the effect of extinguishing it completely. They would be ascertainable by reference to the register.
MS BROWNHILL: I think the difficulty, your Honour, is that the terms on which the ILUA or the exchange of what can be done and the price are kept confidential so that even on the register, if one were to search it, one cannot find the price at which people agreed for things.
BELL J: Can I just take up with you - a few moments ago you spoke of how the claimants had put their claim which was in what I think the Full Court referred to as the bifurcated way. As I understood it the Full Court noted that the Northern Territory and the Commonwealth had accepted that compensation might be calculated on that bifurcated basis. The Full Court went on later in their analysis to suggest - and this is at the core appeal book on page 314 at paragraph 142 - the Full Court expressed its preference for another approach which I think they characterised as a “holistic” approach and which seems to take up some of the matters that Justice Edelman was raising with you.
Now, one appreciates that this case has been run in a certain way and that parties responding to the claim have responded to the claim as it was put but at some stage are you going to tell us what is wrong with the analysis that one finds of the approach in the Full Court’s reasoning when they express what they describe as their alternative, and I infer, preferred approach.
MS BROWNHILL: No, your Honour, is the short answer, in the sense that we took no issue with the way that the claim was formulated and in some ways we think that that kind of approach may be preferable at least in enabling respondent parties and courts to understand how it is that the native title party’s claim got to a particular value or a particular quantum in the same way that personal injuries claims have to be quantified.
KIEFEL CJ: Are you saying that the same result would be reached even if you approached it in a holistic way because you would have to have regard to economic and non‑economic considerations even though you were looking at the native title rights as a whole.
MS BROWNHILL: Yes, we would accept that in the sense that especially – if the amount claimed, for whatever reason, is a relatively low figure then it may not require the same kind of penetration or analysis or consideration that would be necessary in relation to a claim to a much, much greater number or a determination of a much greater number where both economic and non‑economic considerations would have to feature as part of identifying how one got to a particular sum – or why one gets to a particular sum.
EDELMAN J: It would be very odd in a traditional valuation, just of an ordinary property, for a valuer to express a view that this is what the value of the property is without all the views and this is what the value of the property is if you add in all these intangible non‑economic benefits that vastly enhance the value of the property to the owner.
MS BROWNHILL: It is not necessarily the valuer who would give the information about those intangibles that may create a greater claim for compensation in the sense that the Schedule 2 rules, for example, refer to things which are personal to the holder of the property, for example, they use it as their private residence, they have lived there for a very long time and those sorts of things. So, that is where we see these intangibles would appear, not necessarily in the hard valuation that comes from the land valuer.
KIEFEL CJ: One of the difficulties of this as something of a test case or a case which is meant to offer guidance for the future is that the parties have conducted it in a particular way and yet we have the Full Court saying that really there is another approach which is preferable. I do not think the parties can really avoid addressing those comments. If this Court is going to be asked to give guidance we are going to have to consider what might be proper approaches even if, perhaps, it is not exactly the way the parties have conducted this.
I mean, to an extent, the way in which the parties have conducted this is going to limit, potentially limit what this Court can say, not the least because of the evidence which has been adduced, because of the way in which they have conducted it and assumptions which they have made about matters of construction which have not been fully developed.
MS BROWNHILL: Yes, your Honour, I agree.
KIEFEL CJ: I am sorry, that was something of a speech.
MS BROWNHILL: To the extent that the Full Court preferred a holistic, intuitive, evaluative approach, we say that is not preferable, at least, as I say in a case where the claim is of considerable magnitude.
GORDON J: Is that just because of transparency of reasoning?
MS BROWNHILL: Yes.
GORDON J: If it is just transparency of reasoning then even if one took a holistic approach one has to provide a basis for the sum. It is like sentencing in a criminal matter. One does not divide it up and have a mathematical sum. One looks at it holistically and provides, as most judges try and do, an explanation for arriving at the sum. So, if it is about transparency I do not know that that is an answer to a rejection out of hand of a holistic approach.
MS BROWNHILL: Your Honour, I do not reject out of hand the holistic approach because we do not have a holistic approach before us and it is not really possible then to see that the criticism made by the Full Court can be upheld in relation to such a holistic approach. The Full Court seemed to be concerned that there would be double counting‑type errors because you would have the economic loss component and then a non‑economic loss component. But that criticism, in my submission, can simply be addressed by keeping them separate in the way that I have described in answer to Justice Edelman’s question so that there is the strict compulsory acquisition‑type approach to economic loss and then there is something added on top of that to reflect the spiritual ‑ ‑ ‑
EDELMAN J: Except the difficulty at the moment that I am having is that non‑economic loss is being used in two different senses. There is non‑economic loss in one sense which is all of the intangible factors that go to increasing the value of this particular land – and that could be anything. It could be the views, it could be the spiritual nature of the land to the claimant – there could be many examples of those intangible factors. But then non‑economic loss can also be used to mean the particular pain and suffering that an individual has suffered. That is the traditional sense in which non‑economic loss is confined, whether in the law of torts or in relation to valuation generally.
MS BROWNHILL: That is the approach, in my submission, taken here. So, to non‑economic loss, what is being sought to be compensated there is the intangibles that are particular to the native title holders and, on the other side of the ledger, one adds the economic loss in the sense of examining the nature of the rights assuming, as Mr Lonergan did, that they are rights held by anyone, not native title holders necessarily, so they are usufructuary and ceremonial‑type rights that permit things to be done on the land and then considering what a hypothetical purchaser would pay to acquire those types of rights and the spiritual does not enter into that side of the equation.
KEANE J: But it does enter into the view taken by the other party to the bargain. If you are going to try to analyse all this in terms of Spencer principles and willing purchasers and willing vendors then the vendors may not be willing unless their spiritual concerns are addressed in the price.
Can I just ask you, Ms Solicitor, the passage you have given us at the bottom of 571 to 572 of Nelungaloo from Justice Dixon, you are giving it to us, as I understand it, to support the view that we are concerned about compensating the owner for the owner’s loss rather than looking at what the acquirer gets. But is that not glossing over a special complexity of compensation under the Native Title Act which is the passage from Justice Dixon that you have given us, that is about acquiring property that has a market value that if the acquisition did not occur you would be able to go onto the market and sell the grain.
That is not what we have here for a number of reasons, not the least of which is that the property is inalienable, the point being that if you have evidence of the value of the land to the acquirer, that may actually be useful to demonstrate - or from which one might infer a particular bargaining position on the part of the owner. The owner says “This land is particularly valuable to me. I am not prepared to let it go for less than X because it is particularly valuable to me and I, the owner, know that you can put it to value, you can gain value from it, in the marketplace”. Why is that not likely to be the best evidence of where this very hypothetical bargaining process might end up?
MS BROWNHILL: The Spencer principle which is part of the compulsory acquisition scheme in which interests in land are valued and are compensated for ‑ ‑ ‑
KEANE J: And in relation to which reference to which is permissive under the Native Title Act. It is not compulsory.
MS BROWNHILL: It is not compulsory in this particular provision. There are a number of answers to your Honour’s question. So the Land Acquisition Act compulsory acquisition principles are a relevant factor to be taken into account. The language is permissive in the sense that it says “may” in some of the subsections of 51 and “must” in another of them, but the intention, the statutory intention is that those principles would apply. No other principles are identified and to the extent that we are dealing with interests in land and their involuntary extinguishment, they are useful principles to apply.
The Territory Lands Acquisition Act is constructed on the same basis so it says that in relation to native title use these rules, with modification if necessary, but those principles, those approaches are what the statute – what the legislature has identified as the proper means to approach the issue.
KEANE J: Well, identified as a possible means, a possible guide.
MS BROWNHILL: But the only guide identified. So one would have to be extremely careful about putting that to one side in favour of something else – query, what – when that is what the statute identifies. Secondly, the Spencer principle invokes a hypothetical transaction and is used in involuntarily, as in compulsory acquisition situations. So there is always going to be resistance on the part of the property owner to a sale, but that is not what is postulated.
What is postulated is a sale or an exchange as between willing but not anxious purchaser and vendor. So one would be making a mistake, in my submission, to postulate a transaction in which it is the native title holder saying, “There’s no way we’re going to sell this land because it is special to us”.
KEANE J: No, no, not “There’s no way we’re going to sell it” because we are in a situation where that possibility has been rendered impossible by the act of extinguishment. It is like if someone converts property - in the action by the owner of the property the person who has done the converting is not allowed to say, “Well, you wouldn’t have sold it to me”. The position is there has been an acquisition; there has been a conversion. So we do not have to worry about the possibility that there would not have been a deal. That is almost a given because of the extinguishment that they did not ask to happen.
So there has been an extinguishment. The question then is what is the proper, what is the fair compensation for that and, insofar as your proposition is that the determination of that fair compensation must not look at, must not be informed by the value to the acquirer it seems to me that you are putting out of the picture what may be very useful evidence of a point at which the owners could be taken to say that is proper compensation to us.
MS BROWNHILL: In the methodology that we propose as the appropriate course, the Lonergan methodology, there is an aspect of what your Honour has identified. So your Honours will recall that the Lonergan methodology involves an ascertaining of the usage value – that is, the value, as I have described, of the rights and interests in their exercise – and then an uplift to reflect that very thing that your Honour is referring to, which is called the negotiation value, in Mr Lonergan’s language, which comprises 50 per cent of the difference between the usage value and the freehold market value.
So that is the means by which we would accommodate this necessary bargain or hypothetical transaction in which the native title holders would have an attachment to the country. That attachment at its upper level is reflected in the freehold value because the hypothetical purchaser who wants to put the land to a different use and is assumed to want a freehold title would pay no more than the freehold value. So that 50 per cent equation is where those kinds of things ‑ ‑ ‑
KEANE J: The 50 per cent is derived by – it is just a rule of thumb?
GORDON J: It could be 75 per cent; it is arbitrary.
MS BROWNHILL: It is identified as 50 per cent because there is recognised to be, in relation to small and highly developed residential or other developed lots, a wide gap between the freehold value and the value of the native title rights and interests. Fifty per cent is identified because the other conventional and economic means by which you might narrow that range or identify where something would sit in that range are not available in this native title context and so game theory suggests that you exclude the two extremes and that the most likely outcome is a meeting in the middle.
KEANE J: The problem is where you have had involuntary extinguishment as opposed to voluntary bargaining there is an assumption that the native title owners are to be treated as being willing to play the game.
MS BROWNHILL: Yes, in the same way as the holders of interests in non‑native title interests in land are also assumed or deemed to be willing to play the game in a compulsory acquisition context.
BELL J: But very different considerations arise. I do not wish to be obdurate, Ms Solicitor, but if we go back to the analysis of the Full Court at paragraph 142, you said a few moments ago in answer to Justice Keane that the only statutory intentions to be divined are the Spencer principles that we pick up through the Land Acquisition Act. The Full Court looked at 51(1) and came to a different view, observing that the use of the phrase “loss, diminution, impairment or other effect” suggests that the Parliament contemplates that there may be more than one effect and so forth.
What the Full Court was saying was that 51(1) is to be construed in a way that reflects the unique subject matter. Their Honours went on to note the bundle of rights having the unique and indissoluble character that it has been recognised to have, and to conclude, as I understand their reasoning, that but for the way the matter had been conducted the preferable approach is the holistic approach which would make an attempt to value the economic value along the lines that Mr Lonergan proposes exposed as somewhat artificial.
MS BROWNHILL: Your Honour, the options which are presented to this Court by the parties are all in some sense artificial. That is where we are.
BELL J: So you call in aid transparency as a reason for rejecting the approach taken below to substitute for it calculations which are dressed up in terms of market theory but which at the end of the day involve necessary judgment and estimation?
MS BROWNHILL: Certainly judgment is involved. Evaluative ideas are involved. There is no getting away from that. As a respondent, and not taking issue with the way that the claimant put their case, we are now stuck with that as the means by which to identify an appropriate compensation level. The evidence, as was observed, has all been directed to that particular course, so your Honours are now faced with the native title party’s case that their non‑exclusive native title rights and interests should start with the freehold value and then add on non‑economic loss or the Commonwealth’s start with 50 per cent and add something, or Mr Lonergan’s methodology, which is what we put forward.
GORDON J: In relation to Mr Lonergan’s methodology, not only is it artificial but the cost of undertaking that exercise, going forward for any other future case, is just prohibitive, is it?
MS BROWNHILL: Not in my submission ‑ ‑ ‑
GORDON J: I mean, to sit there and undertake this artificial exercise by reference to game theory is not boding well for the future, is it?
MS BROWNHILL: Your Honour, in any case in which any of the options are put forward and have to be addressed, the land would have to be valued. Its freehold value would have to be identified.
GORDON J: That is a given and that is relatively straightforward. As we have seen here, there does not seem to be much dispute between the parties about the freehold value of the land, is there? We have one certain starting point which seems to be relatively easily established at not much cost.
MS BROWNHILL: And Mr Lonergan’s methodology takes account of and uses as a tool that freehold value. The only additional step would be to identify a parcel of relevant remote land which is shorn of its value associated with its proximity to infrastructure so that it properly reflects the usage value – the use and enjoyment of the native title rights and interests – as opposed to the freehold value, which contains the components referable to developed land and infrastructure.
GAGELER J: As I understand Mr Lonergan’s methodology, a native title claimant could always expect to be compensated at least 50 per cent of the freehold value of the land, irrespective of the extent of the native title rights. Is that the correct understanding?
MS BROWNHILL: Mr Lonergan has selected that 50 per cent and there is no reason why in his ‑ ‑ ‑
GAGELER J: The mathematics, it just has to end up that way, does it not?
MS BROWNHILL: Yes.
GAGELER J: If the native title rights are worth zero, then the bargain price is 50 per cent of the freehold price.
MS BROWNHILL: Correct. Yes.
GAGELER J: So, it is 50 per cent, or up?
MS BROWNHILL: Yes.
GAGELER J: Yes.
GORDON J: So, if one accepts that – just assume for the moment that is an acceptance regardless of what the evidence is – one wonders why one does not start with the freehold value and then, in a sense, assess the bundle of rights which are in issue and affected by reference to the idea that has been set out – at least by the Full Court – that one might try and assimilate exclusive possession of a bundle of rights which is complete at close to freehold value. It seems a much simpler exercise and straightforward. It is all artificial so one has to understand what the advantages and disadvantages are by reference to outcome as well as to process.
MS BROWNHILL: The reason the Full Court was wrong to begin from the premise that one starts with what is the value of the exclusive native title rights and interests, they equal freehold, and then we wind back from there to reflect the non‑exclusive nature of these native title rights and interests is because there are significant differences – significant in the sense that they affect value ‑ between native title rights and interests and a freehold or fee simple estate.
GORDON J: I do not, for my part, find that a difficult submission to accept because this whole exercise is one of translation. And, so, it does not matter which point you enter the debate, whether it is the Lonergan analysis or the analysis you have just put to me. One has to adjust it. One has to, as they said in Ward, in effect, put to one side western views about land and property law and valuation in order to identify what you are dealing with. To say that they are different – we know they are different. The question is whether or not we can use it as a process of translation.
MS BROWNHILL: It is a proxy. By whatever method you use, it is a proxy.
GORDON J: Yes.
MS BROWNHILL: Yes, I accept that, your Honour. The appropriateness of one method over the other is – we say that Mr Lonergan’s approach is consistent with conventional economic analysis. He has taken, how do you assess an asset? You say, it has a present value according to its value put to its use while you hold it and the value you would obtain on exit. So, when you sell it. That is standard economic analysis for assessing the value of an asset. Something else like – let us take a 100 per cent of freehold – we say is erroneous because it does not properly reflect the nature of the native title rights and interests. Mr Lonergan’s approach seeks to come at it from a starting point which says what are the rights and interests in their exercise. Your Honour, I would not accept that Ward said put aside everything you know about ‑ ‑ ‑
GORDON J: It does not say put aside everything but it warns you and cautions you against being very dogmatic about which box you put things into.
MS BROWNHILL: Bearing in mind, of course, that the process undertaken in the determination application – so the native title holders have a determination of native title which expresses their rights and interests in their country – their native title – by reference to common law understandings of those rights.
EDELMAN J: But this still involves ultimately a hypothetical bargain that has been reconstructed, even on Dr Lonergan’s analysis.
MS BROWNHILL: Correct.
EDELMAN J: On your approach, that hypothetical bargain needs to proceed on the basis that the vendor of the rights is having those ‑ or is seeking a value for those rights divorced from all of the considerations that any reasonable person in that vendor’s position would be relying upon. In other words, divorced from all of the spiritual concerns that would lead the vendor to ask for a far higher price in that hypothetical negotiation.
MS BROWNHILL: Well, there is an aspect – so whatever methodology is adopted, we accept that there is something on the top of the economic assessment which is to reflect spiritual attachment but ‑ ‑ ‑
EDELMAN J: I understand that, but if you take the spiritual attachment out, you have got a hypothetical negotiation that is going on that has got nothing to do with what a person in the position of the owner would ever be seeking.
MS BROWNHILL: Your Honour, our submission is that that is the same thing that is done in compulsory acquisition cases and it should also be done in relation to native title cases. With respect, your Honour, I cannot defend the approach taken by the applicants to any greater extent. It is what we met and accepted as a course for this case.
KIEFEL CJ: I think we have taken you out of the way from the course of your argument and I would like to come back to it.
MS BROWNHILL: Thank you, your Honour.
KIEFEL CJ: Is your starting point that the equation with freehold in relation to exclusive rights is inapposite?
MS BROWNHILL: Yes.
KIEFEL CJ: That is your starting point. To an extent, that view in the courts below depended upon a view of section 51A, I think, as giving some kind of marker, a cap.
MS BROWNHILL: That position, in my submission, did not rest on the terms of section 51A. In our case, at least, the position is founded on, as the Full Court accepted, the distinctions between native title and freehold value which would affect the value under this hypothetical purchase. So, the terms of 51A were not really invoked by any party, at least at the Full Court level or beyond, because we, at least at that point in time, did not see it as a cap that limited what could be provided in terms of the non‑economic loss elements.
KIEFEL CJ: Because of the just terms.
MS BROWNHILL: Because of the just terms and because the transaction that ‑ or the compulsory acquisition which section 51A refers to, at that point in time we were envisaging as an acquisition of a freehold estate from the native title holders so that whatever non‑economic component there was would still be present in a freehold acquisition. When Western Australia came along to the Full Court and put a different submission which was that what is referred to in 51A is simply a garden variety freehold held by a hypothetical person who does not have a spiritual attachment to the land, you know, that is a way to construe the provision but at that point in time we were too far down the track, in a sense, to run the argument differently.
KIEFEL CJ: That argument was not allowed to proceed?
MS BROWNHILL: Exactly. So, as I appreciate the parties and the interveners’ positions, the actual construction and effect of section 51A need not be determined for the purposes of this case and will, at some point in the future, be determined in another case in which there has been, for example, evidence about what a compulsory acquisition compensation would be for each of the particular areas of land, and so on. So, yes, it is present and is a matter of context for the purposes of construction but its operation in terms of whether it is a cap or whether it is something different is really not in issue in these proceedings.
KIEFEL CJ: Putting aside that question of construction about how it operates, it seems to have been used as a justification for a starting point that freehold value equating to exclusive rights.
MS BROWNHILL: If your Honour has a passage from the Full Court’s reasons. It is not something that is sticking in my mind, I am sorry, your Honour, I cannot ‑ ‑ ‑
KIEFEL CJ: Well, perhaps you could refresh my memory then. Where does the notion of exclusive rights equalling the value of a freehold estate, where does it come from?
MS BROWNHILL: Well, the Full Court began with the idea that there had to be ‑ there were differences between a fee simple and native title rights and interests and acknowledged that inalienability was one of those things that bore on the value of the native title rights and interests but their Honours then proceeded to say that the starting point nevertheless was the equation between fee simple and ‑ yes, it is paragraph 134 of the Full Court’s reasons.
So, at 119 of the Full Court’s reasons their Honours held that inalienability “should have been taken into account” by the trial judge and had not been in determining its value, and they had earlier, paragraph 115, held that “it was necessary to discount the value” because native title rights and interests were inalienable. But then in 134, nevertheless began but with an analogy between freehold and exclusive native title and then sought to derive the value of the non‑exclusive native title by adjusting the freehold value.
KIEFEL CJ: I think the passage that I had in mind was actually ‑ I surprised myself at being able to find it ‑ is in the primary judge’s judgment at paragraph 213.
MS BROWNHILL: What was the paragraph, your Honour?
KIEFEL CJ: Paragraph 213. This is where notion of equivalence comes in and it is by reference initially to section 51A.
MS BROWNHILL: Yes, yes, I accept that. That, of course, was not the approach accepted by the Full Court who ‑ ‑ ‑
KIEFEL CJ: Who nevertheless use equivalence as their starting point.
MS BROWNHILL: Yes.
KIEFEL CJ: So, what is the rationale for it?
MS BROWNHILL: The rationale for equivalence as the starting point?
KIEFEL CJ: It is just an assumption.
MS BROWNHILL: It is somewhat inexplicable, in my submission, your Honour, because of that earlier recognition that there was ‑ you could not equate the two because of, amongst other things, native title not being alienable in the same way that a fee simple estate is alienable and, in addition to that characteristic, we also refer to some others. The first is the fact that the rights are non‑exclusive rights which means that in their legal incidents they both ‑ there is no right to exclude anyone from the land and as non‑exclusive rights they contemplate the existence of rights of a similar kind in others.
We say that that is how the Act worked. It is consistent with a well‑established meaning of “compensation”. This Court has never departed from the view in the Bank Nationalisation Case. In that case, some Justices held that Act invalid on the basis that the provision of compensation did not include interest. That was the 51(xxxi) flaw in that legislation for some of the Justices.
I think that is all I want to say about our interest ground. Can I move on to the native title party’s interest ground, which is where they seek compound interest. Whether or not they can get compound interest necessarily turns on what is the source of the power. One source of power that is available in this case for many of the acts at least is section 51A of the Federal Court Act.
Section 51A(2a) makes it clear that interest on interest is not available. So compound interest is not available there. Of course, the native title party never relied upon section 51A to get interest. But we say, nonetheless, it is not irrelevant because that is a judgment that provides pre‑judgment interest which is analogous of this case for all litigants in the Federal Court. No litigants in the Federal Court – no matter how long they are waiting for damages – get compound interest under that rule. Obviously, they might get it under some other principle but not under that rule. So the standard way of getting interest in Australia, the pre‑judgment interest, is not to get compound interest in relation to the Federal Court.
Another possible source of power might be a Hungerfords‑type claim. We do not necessarily concede that that would be available in a native title context anyway. But, even assuming it was, it has not been pressed here. The other source of power initially relied upon was the equitable rule. There are certainly circumstances where equity will provide for compound interest – principally, where there is a defaulting trustee who has profited from a breach of fiduciary duties.
There was a lot of argument in the courts below about whether or not the native title party could bring themselves within any ambit of that rule but they seem to accept that they cannot. At least, that is how we understand their submissions. So we say that they do not get it.
The principle guidance on that issue is in the Westdeutsche Landesbank Case and we set out the relevant passage of that in paragraph 67 of our submissions. I will not go to it but that gives an ambit of, at least, the extent to which Australian and English cases so far have given compound interest. As the learned Solicitor‑General for the Northern Territory said, there are no Australian or English cases that have given compound interest in relation to acquisition of property cases whenever the rule has been applied.
GAGELER J: Mr Lloyd, how is interest dealt with in a compulsory acquisition case arising under the Lands Acquisition Act of the Commonwealth, do you know?
MR LLOYD: Of the Commonwealth?
GAGELER J: Yes.
MR LLOYD: I think since – well, we are not sure exactly when but certainly around about the turn of the century, either just before or just after, the Commonwealth has allowed compound interest. I think it is the only jurisdiction that provides for compound interest in an acquisition case.
GAGELER J: It is an express provision of the Act, is it?
MR LLOYD: It is.
GAGELER J: Before that, do you know what the position was?
MR LLOYD: Before that it was simple interest.
GAGELER J: Again under the Act itself.
MR LLOYD: Under the Act. So we of course accept that the equitable rule and, in fact, we rely upon the equitable rule but say that in the circumstances of this case, at least under existing principles, it only justifies simple interest and that brings me to the final source of power advanced by the native title party, which is the Act. The native title party says that the interest can be given as part of compensation under section 51. It then says that there are reasons applicable to this case that justify compensation including compound interest.
The Commonwealth contends that section 51 is directed to compensation for the loss of or other effect of the compensable act on their native title rights and interests and awarded interest is not compensation for the effect on native title. It is some form of award for being kept out of money and that, we say, is outside of section 51.
It would follow on our case that section 51 is not a source of power. However, in case our submissions on this point are not accepted, we turn now to consider whether, on the assumption that compensation includes or can include interest, whether or not there is a justification for compound interest.
The claimants first rely upon the fact that the Territory took possession of the land and retained the capital value of their compensation as one of the justifications for it. But we say that idea, the idea that in a purchaser/vendor case, the purchaser both takes possession and has not paid for it, or on an acquisition case, that the acquiring body has taken not only possession, but taken the title and has not paid for it, that is the very thing which justifies the equitable rule giving simple interest. We say that that cannot alone justify compound interest.
So then they have three other factors that they rely upon. The first is that they say that the acts pre‑validation were unlawful. Secondly, they say there is an exceptional length of delay in this case and, thirdly, they seek to get some support from the words “just terms” in reaching that outcome. I will address these three matters in turn.
In relation to the pre‑validation unlawful acts, the native title party seeks to rely upon the notion that the acts done prior to the date of validation were done unlawfully and invalidly and that this is a factor that should inform the amount of compensation.
In paragraph 88(3) of their submissions it is said that prior to validation the use of the land was invalid – that is how they express it. The second proposition is that the divestiture of native title occurred upon validation and not the date of the validated acts. Third, it is advanced that, even though they submit that the divestiture happens on validation, they say the duty to pay compensation arose at the date of the compensable act. So they are the three, as we apprehend, their three key points.
I now propose to address each of those. In relation to the first one, the invalid use point, we say the effect of the validation provisions – and the Territory has already taken the Court to them – section 4 of the Territory Validation Act, and section 14, is that the acts are taken always to have been valid. The effect of the PEPA provisions, section 23C of the Commonwealth Act and section 9H of the Territory Act is that the extinguishment happened at the time of the act.
So in both of those scenarios the compensable acts are retrospectively made valid. We say once those acts have been validated, then all the subsequent conduct – that is, subsequent from the point of the retrospective validation – is then lawful.
I will not take the Court to it, but we have handed up a case which - because 18 volumes was not quite enough. There is a case called Doyle [2016] FCAFC 189 that we have handed up. It was a Full Court decision and at paragraphs 50 to 52, and 58, the Full Court describes, by reference to earlier authority of this Court in relation to other matters, what is the effect of that retrospective validation, because of course the concept of retrospective validation is not itself new. So they draw upon the learning of this Court and say that what that does is it changes the legal effect or gives a different legal effect to the conduct of the past.
Now, the trial judge found this at paragraph 259 of his Honour’s reasons, at page 165. His Honour did not accept that the conduct was unlawful and, indeed, later in his Honour’s reasons his Honour also declines to have regard – I will deal with that later – to a non‑economic loss factor advanced by the applicants, also based upon this idea that all of the conduct was unlawful. We say that the effect of this legislation was to make lawful the compensable acts.
Now, it needs to be borne in mind that in many instances the compensable act itself was not tortious or not actionable. So when the Territory invalidly granted a licence or a pastoral lease or something that itself was just an invalid act. No one could have sued the Territory for that, we would say. But when the person who got a lease or licence went onto the land and did something on the land that might be tortious.
So prior to the Native Title Act in many instances it would have been the conduct of people acting in belief that their titles were valid that would be at risk and what the Native Title Act does and the related Territory provisions is it validates the act which thereby means that when all those acts were done they were lawful acts. Then compensation is paid for the retrospective validation. So it is not paid on the basis that things unlawfully were done. It is paid on the basis that there was a lawful retrospective validation of the acts.
KIEFEL CJ: We might come to the balance of the points tomorrow, Mr Lloyd. The Court will adjourn until 10.00 am tomorrow.
AT 4.18 PM THE MATTER WAS ADJOURNED
UNTIL WEDNESDAY, 5 SEPTEMBER 2018
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