12 Mar 2014

Pre 1975 mining leases unlikely to extinguish native title in the absence of exclusive possession

A mining or other specific purpose lease granted pre-1975 will only have extinguished native title rights and interests where the lease itself, as at the date it was granted, clearly conferred on the lessee rights that were inconsistent with the continued existence of native title. So said the High Court in its decision this morning in Western Australia v Brown [2014] HCA 8.

The mineral leases and the native title claim

The State of Western Australia made an agreement with a joint venture in 1964 with respect to the mining of Mt Goldsworthy in the Pilbara region. Under the agreement:

  • the State had to grant the joint venturers mineral leases for iron ore;
  • the joint venturers agreed to construct mining and other infrastructure; and
  • the joint venturers agreed to permit the State and third parties access to the land that did not unduly prejudice or interfere with its operations.

The mineral leases were granted, the mining infrastructure constructed over about one-third of the land, and operations commenced.

The Ngarla People successfully claimed native title rights and interests over particular land and waters in the Pilbara region. While their claim included the areas subject to the mineral leases, a determination in relation to these areas was suspended pending resolution of the issue of whether the grant of the mineral leases had extinguished their native title rights and interests.

The (common law) test for extinguishment of native title

The mineral leases were granted before the Racial Discrimination Act 1975 (Cth) became law. As a result, the leases could not have been "past acts" or "intermediate period acts" for the purposes of the Native Title Act 1993 (Cth). As the grant of a mining lease can also not be a "previous exclusive possession act", the question of extinguishment had to be resolved at common law.

The Court therefore turned to its previous decision in Western Australia v Ward (2002) 213 CLR 1; [2002] HCA 28 to identify the proper test for extinguishment at common law, and held that the question that needed to be answered was whether the rights granted to the joint venturers under the mineral leases were inconsistent with the native title rights and interests claimed by the Ngarla People.

This was said to be an objective inquiry requiring identification of, and comparison between, the two sets of rights.

The High Court stressed that:

  • in order for there to be inconsistency, the existence of one set of rights would necessarily have to imply the non-existence of the other;
  • the question of inconsistency was to be determined as at the time of the grant of the relevant mineral leases; and
  • there are no "degrees of inconsistency of rights".

In short, there would be inconsistency only if the rights under the mineral leases as granted were inconsistent with the native title rights and interests. The fact that the later carrying out by the joint venturers of mining and other activities "in exercise of" the rights granted under the mineral leases may have been incompatible with the exercise of native title rights and interests would not itself determine the questions of inconsistency and extinguishment.

Argument before the High Court put forward two potential bases for inconsistency, being:

  • that the mineral leases conferred on the joint venturers exclusive possession of the subject land; or
  • alternatively, that the two sets of rights necessarily clashed with each other as both "could not be exercised simultaneously in the one place".

The mineral leases did not grant exclusive possession

The High Court, adopting the formula it had earlier set out in Fejo v Northern Territory [1998] HCA 58; (1998) 195 CLR 96, decided that the leases could only be said to have granted exclusive possession if they had conferred on the joint venturers the unqualified right to exclude any and everyone from the land – both for any reason and for no reason at all.

The rights granted under the mineral leases did not give the joint venturers exclusive possession. On the contrary, the State agreement actually expressly required the joint venturers to allow the State and third parties to have access over the leased land as long as such access did not "unduly prejudice or interfere with" the joint venturers' operations. The existence of this express provision precluded any notion of an implied conferral of a right of exclusive possession.

The first argument for inconsistency (and extinguishment) therefore had to be rejected.

The mining rights and native title rights are not inconsistent

The native title rights and interests asserted by the Ngarla People were the non-exclusive rights to access and camp on the land, to take flora, fauna, fish, water and other traditional resources (excluding minerals) from the land, to engage in ritual and ceremony on the land and to care for, maintain and protect from physical harm particular sites and areas of significance.

The State argued that these rights had been extinguished by the joint venturers' actual or potential conflicting use of the land pursuant to the mineral leases. The leases gave the joint venturers the rights to mine and to construct improvements anywhere on the leased land. The State's argument was that, because native title holders could not exercise native title rights and interests where such activities are being carried out, the rights granted by the leases had to be seen as being wholly inconsistent with the claimed native title rights and interests – whether as at the time of the grant of the mineral leases (potential inconsistency), or in any event when the joint venturers carried out their mining and other activities in exercise of their rights (actual inconsistency).

The High Court rejected this argument decisively, finding that:

"The decisions in both [Wik Peoples v Queensland (1996) 187 CLR 1] and Ward established that the grant of rights to use land for particular purposes (whether pastoral, mining or other purposes), if not accompanied by the grant of a right to exclude any and everyone from the land for any reason or no reason, is not necessarily inconsistent with, and does not necessarily extinguish, native title rights such as rights to camp, hunt and gather, conduct ceremonies on land and care for land."

Here, the limited rights granted to the joint venturers were not inconsistent with the native rights asserted by the Ngarla People, although the matter may have been different had the leases required the joint venturers to mine and build improvements over the whole of the land. To illustrate its finding, the High Court noted that, on the day after the leases were each granted, and before any mining and other activities had been carried out, native title holders would have been able to exercise all of the rights that now are claimed anywhere on the land without breaching any of the joint venturers' rights. This meant there could be no finding of consistency.

Nor does the subsequent development extinguish the native title rights. The Full Federal Court had held in De Rose v South Australia (No 2) (2005) 145 FCR 290 that, because a pastoral lease granted rights to construct houses, sheds and other improvements that (when exercised) were inconsistent with native title rights and interests, the grant of those rights should be taken to have extinguished the native title rights and interests.

The High Court unequivocally held that this decision is wrong and should not be followed. It is not the manner in which a right is exercised, but the right itself, that is the crucial issue.

So where does this leave pre-1975 mining leases?

If a pre-1975 mining (or pastoral) lease expressly grants exclusive possession rights on the lessee, then this decision changes nothing. The grant of the lease will extinguish native title.

If it provides that the whole of the land must be used in a way that would not permit any use of the land by native title holders, there could also be extinguishment on the basis of inconsistency between the rights granted by the lease and the native title rights and interests over the leased area.

Otherwise, holders of pre-1975 mining leases who may have been relying on the decision in De Rose and their carrying out of mining and other development as the answer to any claim of native title will need to review those leases now in the light of this decision to see whether in fact native title is an issue for their leases.

It should be noted that, however, that even if native title rights and interests have not been extinguished over land which is held subject to a pre-1975 mining or pastoral lease, "any competition between the exercise of the two sets of rights must be resolved in favour of the rights granted by statute". In other words, the lease-holder's rights will prevail over the native title rights and interests. However, they will not extinguish them and, once the rights end, or are no longer exercised, the native title rights and interests remain.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.