High Court rules mining leases and native title can co-exist

In brief

Yesterday, the High Court ruled that certain mining leases in Western Australia did not extinguish all native title rights, but rather the mining rights and native title rights co-exist. In doing so, the High Court took the opportunity to clarify the test for determining when native title rights will be extinguished by statutory grants at common law. Partners Ben Zillmann and Marshall McKenna look at the findings of the court and the implications of the case.

What you need to know

The High Court's decision in Western Australia v Brown [2014] HCA8 is important because:

• The High Court has clarified that the test for determining the extinguishment of native title rights at common law by inconsistent grants is a test that involves an examination of whether the statutory grant involves rights which are inconsistent with any native title rights as at the date of the grant (as opposed to at a later time when those rights are exercised).
• While every case needs to be considered in accordance with its facts (including the provisions of the lease itself and the legislation under which it is granted), the High Court's decision suggests that in most cases the grant of mining leases will not be considered to have extinguished all native title rights over the area the subject to the lease, and some native title rights may co-exist.
• The decision is relevant not only to the mining industry, but all parties who rely upon state grants for their operations. In particular, the High Court has effectively overruled an earlier decision of the Full Federal Court by stating that the exercise of rights under pastoral leases to construct improvements on the land (such as a homestead) does not extinguish native title rights that might otherwise exist in the area the subject of that improvement.
• Where rights do co-exist, but there is a conflict in the exercise of those rights, the rights of the holder of the relevant statutory grant (such as a mining lease) will prevail.
• The result of the decision is that there will likely be more cases where native title rights are determined to co-exist with statutory rights such as with mining leases and pastoral leases, and this will increase the focus on practical arrangements between parties as to how that "co-existence" is actually given effect to 'on the ground'.
• To the extent that native title rights are considered to co-exist with rights granted to others under statute, rather than be extinguished, this may result in a reduction in compensation that native title holders may be awarded for impacts on their native title rights.

Background

The facts of the case involved a question of whether the grant of certain mining leases in Western Australia, or the subsequent exercise of rights under those mining leases, had the effect of extinguishing native title rights that might otherwise exist over the mining lease area.

The mining leases were granted pursuant to a 'State Agreement' for the Mount Goldsworthy iron ore project. In accordance with the Agreement and the mining leases granted under it, the mining company had developed the project, which had involved the construction of a mine, towns and associated infrastructure.

The Ngarla People claimed certain non-exclusive native title rights over the area the subject of the leases, such as the right to access and camp on the land, to hunt and take traditional resources from the land, to carry out rituals and ceremonies on the land, and to protect sites of significance (notably, the claimed native title rights did not consist of any claim to a right of exclusive possession).

In the proceedings before the Federal Court at first instance, the WA Government and the mining company had contended that native title was extinguished over the entire area subject to the mining leases. The Ngarla People contended there had been no extinguishment. The Federal Court decided at first instance that native title was extinguished over those parts of the mining leases where the company had actually exercised its rights to construct things such as the mine, a town and other infrastructure, but was not otherwise extinguished over the mining lease areas.

Both parties appealed to the Full Federal Court, where in a 2:1 majority decision the Full Federal Court decided that native title was not extinguished over any part of the mining leases (the dissenting member of the Full Court agreed with the conclusion reached by the trial judge).

The matter was then appealed to the High Court.

The High Court's decision

In the unanimous decision, the High Court decided neither the grant of the mining leases themselves, nor the subsequent construction of towns, mines and other infrastructure on certain areas of the mining lease, extinguished the native title rights of the Ngarla People. Rather, the court decided that those non-exclusive rights could co-exist with the rights under the mining leases.

In coming to this decision, the High Court looked at the terms of the State Agreement under which the mining leases were granted and the terms of the mining leases themselves. The court considered that the mining leases did not grant a right of exclusive possession which would have extinguished all native title rights over the area. Rather, the High Court ruled the mining leases simply granted the mining company the exclusive right to use the lease areas for mining purposes, but that did not extend to the right to exclude other persons, such as the native title holders, from the area for undertaking activities which did not conflict with the exercise of the miner's rights.

The High Court said that to the extent that the mining company was exercising its statutory rights under the mining leases, those rights took priority over the exercise of any native title rights. That is, where it is not possible for both the miner and the native title holder to exercise their rights over the same area at the same time, the statutory rights of the miner prevail. However, this does not extinguish the native title rights, which will be able to be exercised over the area once the miner's activities cease.

Clarification of the 'extinguishment test'

Earlier decisions of the Federal Court (in both this matter and other matters) had given rise to an understanding that some aspects of 'non-exclusive' grants, such as pastoral leases or mining leases, extinguish native title where the exercise of the non-exclusive rights is incompatible with the continued exercise of native title rights.

For example, in the earlier Full Federal Court decision of De Rose v South Australia (No 2)¹, the Court ruled that while the grant of certain pastoral leases in South Australia themselves did not extinguish all native title rights, when the pastoralist exercised rights under the lease to construct improvements such as homesteads, native title would be extinguished over the area in which those rights were exercised.

In Brown, the question was, whether the building of a mine, mine infrastructure and a town under the terms of the mining leases extinguished native title. The High Court's answer was 'no'.

The High Court held that the answer to the question required it to determine 'whether the rights [granted] are inconsistent with the alleged native title rights and interests', which is an objective inquiry involving the comparison between the rights. The comparison of rights must be made at the time of the grant of the statutory rights to determine if the grant extinguished native title rights and to what extent. At that time, a determination must be made as to whether the rights granted are inconsistent with the native title rights that otherwise exist over the area. If they are wholly inconsistent, then the native title rights are extinguished. If they are not wholly inconsistent, then the native title rights continue and co-exist to the extent they are not inconsistent with the granted statutory rights.

The court ruled that the subsequent exercise of rights under a statutory grant cannot effect extinguishment, and to the extent that the De Rose (No.2) decision suggested this was the case, that decision is wrong. Whether statutory rights are actually exercised or not is irrelevant to the question of extinguishment. The way a right has been, or will be exercised, is only relevant so far as it aids in the correct identification of the nature and content of the right.

Conclusion

The case is significant as the High Court has now stated very clearly how the extinguishment of native title by statutory grants (such as mining leases and pastoral leases) is to be determined at common law. The result will be that there will be more cases where native title rights will be found to co-exist with statutory rights, rather than be extinguished by them. Practically, this is likely to require more focus on how the parties will give effect to the exercise of co-existing rights 'on the ground'.