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Australia – The First Compensation Determination: De Rose v State of South Australia.

8 October, 2013

 

The Issue

 

There is presently limited case law on the value of compensation payable for extinguishment or impairment of native title.

 

What Has Happened?

 

On 1 October 2013, the Federal Court of Australia delivered Judgment in a compensation application associated with the De Rose Hill native title determination in South Australia. 

 

The case is significant because it is the first instance of a Court ordering payment of compensation for the extinguishment of native title rights and interests under the Native Title Act 1993 (Cth) (NTA).

 

The Judgment settled the State of South Australia’s native title compensation obligations for the extinguishment of native title in relation to:

 

  • grant of a freehold parcel;
  • creation (part) of the Stuart Highway corridor; and
  • establishment of a wayside stop.
 

The Judgment gives effect to a settlement deed between De Rose Hill Nguraritja, De Rose Hill – ILPALKA Aboriginal Corporation RNTBC, the De Rose Hill applicants and the State of South Australia. Importantly, the Judgment redacted the value of the compensation payable to the RNTBC (see below).

 

How Was The Compensation Amount Assessed?

 

The Judgment does not contain any clear statements as to how compensation should be assessed. The Judgment states that:

 
  • the State did not accept that the freehold value of the extinguished area was necessarily relevant to the value of the native title rights and interests lost;
  • the parties were in any case not able to agree the freehold value of the land concerned; and
  • the parties ultimately reached agreement on a figure within the range of valuation figures exchanged between the parties.
 

Why Was The Compensation Amount Redacted From The Orders?

 

Despite acknowledging the lack of decisions addressing the method for assessing compensation under the NTA, the Court declined to make the value of the compensation public on the basis that to do so may unacceptably influence other compensation claims and associated proceedings. 

 

The Court noted that the individual circumstances of compensation claims are different and expressed concern that disclosure may:

 

  • create expectations in separate native title compensation negotiations and proceedings which private agreements would not otherwise produce;
  • impede independent compensation negotiations by establishing a tariff or standard against which other compensation claims may be measured; and
  • invite criticism from other compensation claimants towards the Nguraritja people or the State of South Australia.
 

Key Points

 

Key points from the Judgment:

 

  • it is clear that references to the freehold value of land will be relevant to the process by which the value of compensation for the extinguishment of native title rights and interests is determined;
  • the Court appears keen to preserve the integrity of negotiated outcomes encouraged under the NTA by declining to publish compensation values and in turn, avoiding prejudice to negotiating parties;
  • the decision will have precedent value for the settlement of compensation claims in the future; and
  • we reasonably expect this decision to become a discussion point in current and future native title negotiations.

 

herbert smith Freehills

 

For further information, please contact:

 

William Oxby, Partner, Herbert Smith Freehills
[email protected]

 

Herbert Smith Frehills Dispute Resolution Practice Profile in Australia

 

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