Legal News & Analysis – Asia Pacific – Australia – Energy & Project Finance

 

What You Need To Know

 

• Mineral leases granted under State Agreement have been confirmed to have the same effect on native title as Mining Act mining leases. It appears unlikely that any form of mining tenement would wholly extinguish native title.
• The High Court has confirmed the test for inconsistency of rights and in practice appears to have narrowed, potentially significantly, the circumstances in which extinguishment occurs.
• The De Rose decision has been overturned. Native title is not extinguished by improvements on pastoral leases. 
• The test for whether exclusive possession exists has been narrowed. Almost any reservation of access rights or qualification of the right to exclude others from land will probably negate a finding of exclusive possession.

What You Need To Do

 

• While the decision is significant legally, it is unlikely to lead to many practical changes to the way in which native title affects day to day mining operations. 
• Consider if an agreement would assist the practical interaction and co-existence of your rights under mining tenements with the rights of native title holders. 

Overview 

On 12 March 2014, the High Court delivered its decision in Western Australia v Brown [2014] HCA 8. The decision considers whether mineral leases granted pursuant to the Mt Goldsworthy State Agreement (a contract ratified by Act of Parliament) extinguished the Ngarla People’s native title rights. 

The High Court upheld the Full Federal Court’s decision that the Ngarla People’s non-exclusive native title rights were not extinguished by the mineral leases. 

The decision is important because:

 

• detailed evidence was led about rights under the mineral leases and the Ngarla People’s native title rights were already determined meaning the Court could undertake a direct analysis in a way previous High Court decisions have not; 
• the test for inconsistency clarified by the Court will have broader implication to other tenure; 
• the Court overturned the decision in de Rose by finding that the exercise of BHP Billiton’s rights to construct the mine and townsite did not extinguish native title to those areas.

Issues Considered By The High Court 

The High Court decision addresses three questions.

 

• What is the test to determine whether native title rights and non-native title rights are inconsistent? 
• Did the mineral leases confer a right of exclusive possession and thereby extinguish native title? 
• Did the development of the lease extinguish native title rights (the de Rose issue)?

 

What Is The Test For Inconsistency?

Leaving aside exclusive possession, which results the complete extinguishment of native title, the test for extinguishment is inconsistency of rights. If a nonnative title right is inconsistent with a native title right then it extinguishes the native title right and it cannot be revived.
The High Court confirmed the following principle:

 

• Identifying the rights is an objective inquiry – this means the legal nature and content of the rights must be ascertained.
• Inconsistency is an inquiry about rights – exercise (or what the Joint Venturers did or didn’t do) only assists in the correct identification of the nature and content of the rights.
• Determining if two rights are inconsistent is also an objective inquiry – the question can always be decided at the time of the grant of the rights. In this case, at the grant of the mineral leases.
• There are no degrees of inconsistency; two rights are inconsistent or they are not.

Although the High Court was reiterating existing principles, it appears to have gone further in saying:

As counsel for the native title holders put the point in argument in this Court, inconsistency is that state of affairs where “the existence of one right necessarily implies the non-existence of the other”. And one right necessarily implies the non-existence of the other when there is logical antinomy between them: that is, when a statement asserting the existence of one right cannot, without logical contradiction, stand at the same time as a statement asserting the existence of the other right.” at [38]

Having considered the test for inconsistency in a matter where there was clear evidence of the nature and extent of both sets of rights, and where the nonnative title rights were very extensive, it is increasingly difficult to conceive of rights that involve the conduct of activities (as opposed to rights to control access) that could extinguish native title. There are some exceptions perhaps, such as the example given in Ward of the right to burn off being inconsistent with pastoral rights.

The Court rejected an analysis that considers the extensive nature of the rights conferred under the mineral leases (to build mines, towns and other infrastructure) and the right to do those things anywhere and everywhere on the leases (one-third of one lease had been comprehensively developed). The only circumstances they contemplated that this might be relevant is where the Joint Venturers must use the whole of the land for mining. It is difficult to conceive of such a lease. Moreover, this analysis still appeared to rely on the right to exclude others associated with such an obligation.

The High Court expressly rejected the analysis in de Rose which they referred to as extinguishment by development. The Court said that de Rose wrongly deferred consideration of extinguishment until the manner of the exercise of the rights was known (in that case, the construction of improvements like airstrips and homesteads on pastoral leases). The Court held that subsequent exercise of rights can only affect the manner of the exercise of the native title rights, not their existence.

Did The Mineral Leases Confer A Right Of Exclusive Possession?

The High Court stated that a right of exclusive possession means an “unqualified right to exclude any and everyone from access to the land, for any reason or no reason”.
The High Court found that the Joint Venturers’ rights did not amount to exclusive possession but were in the nature of the rights of an ordinary mining lease holder. That is, to use the land for the State Agreement purposes and to prevent anyone else from using the land for those purposes.

The Court cited the existence of qualifications in the State Agreement allowing third party access to lease areas for limited purposes as a key factor in deciding a right of exclusive possession was not granted.

Outcome

The High Court upheld the Full Federal Court’s determination that:

 

• native title rights are not extinguished by the Mt Goldsworthy mineral leases;
• rights under the mineral leases prevail over the native title rights to the extent there is any competition between the exercise of those rights.

 

Implications

 

• The test for inconsistency of rights has been confirmed and has arguably made it less likely that most rights other than rights involving the control of access would extinguish native title.
• State agreement mineral leases are in the same position as mining leases the Mining Act 1978 (WA) from a native title perspective – neither form of lease extinguishes nonexclusive native title rights.
• Rights under mineral leases and nonexclusive native title rights co-exist but, to the extent of any competition between those rights, the rights under mineral leases will prevail. An agreement about how the two sets of rights will co-exist in practice may be useful for mining tenement holders.
• The pastoral lease negotiations that generally precede consent determinations at least in Western Australia and South Australia are likely to be reconsidered given the findings about de Rose.

 

 

For further information, please contact:

 

Jean Bursle, Partner, Ashurst
 [email protected]

 

Gavin Scott, Partner, Ashurst
[email protected]

 

Tony Denholder, Partner, Ashurst
[email protected]

 

Clare Lawrence, Partner, Ashurst
[email protected]

 

Geoff Gishubl, Ashurst
[email protected]

 

Christopher Barry, Ashurst
[email protected]

 

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