Federal Court creates more precedent for native title compensation
This judgment concerns a claim for compensation brought by the Yindjibarndi Ngurra Aboriginal Corporation RNTBC (YNAC), a registered native title body corporate for the Yindjibarndi People, under the Native Title Act 1993 (Cth) for the effects of 36 mining tenements the State of Western Australia granted to Fortescue companies in the Pilbara region. Those tenements facilitated the development of the Solomon Hub Project in 2012.
The Solomon Hub Project occupies approximately 135 km² of land within the Yindjibarndi People's native title determination area and includes four major open-pit mines. The infrastructure within the project includes conveyor belts, a railway connecting to Port Hedland, waste dumps, a tailings dam, a stockpile area, power infrastructure, and water pipelines. The mine has an expected operational life until 2045, but the company does not expect to complete rehabilitation and relinquish the land until 2100. Beyond the Solomon Hub itself, the total compensation claim area extends across approximately 563 km² of the native title determination area, including an additional 427 km² covered by exploration and prospecting licences not subject to active mining.
This claim was a test case for a number of issues relating to the assessment of native title compensation and who is responsible for paying it.
The Federal Court ordered that the Yindjibarndi People were entitled to compensation from Fortescue pursuant to section 51 of the Native Title Act and section 125A of the Mining Act 1978 (WA) (WA Mining Act). The compensation amounts were as follows:
The Court rejected the State and Fortescue's submission that the Yindjibarndi People were not entitled to compensation under section 51 of the Native Title Act and that any claim should instead be brought in the WA Mining Warden's Court under section 123 of the WA Mining Act.
The Court held that it must determine economic loss by reference to the freehold value of the land within the compensation claim area, with various allowances addressing how much the mining tenements diminished the native title rights and interests and for how long (having regard to the non-extinguishment principle and the exclusive or non-exclusive nature of the native title rights).
Justice Burley rejected the Claim Group's approach to economic loss and held that the "exchange value" case was not available, having regard to the reasoning in Timber Creek and the structure and terms of the Native Title Act.
The Yindjibarndi People's principal claim was that the economic value of the native title rights and interests lost or suppressed by the compensable acts should be calculated by reference to the negotiation or exchange value of those interests. They said that this should be calculated by reference to what miners in the Pilbara commonly agree to pay native title parties for their agreement to mining on their country pursuant to negotiations conducted under the right to negotiate provisions of the Native Title Act.
The Claim Group submitted that this should be assessed at 1% of the FOB revenue1 from the Solomon Hub Project, relying on evidence that Pilbara iron ore agreements typically include royalty payments in the range of 0.5% to 0.6%. They doubled the proposed rate to 1% to reflect the Yindjibarndi People's exclusive native title rights over a substantial portion of the Solomon Hub Project.
The Court comprehensively rejected the "exchange value" approach because it was not supported by the correct application of section 51(1) of the Native Title Act or Timber Creek. The reasons included:
The Court also held that, even if it wrongly rejected the exchange value case, the evidence did not establish it. Justice Burley said that "much is concealed in the seductive simplicity" of the Claim Group's submission that a standard Pilbara royalty rate exists.
The Court adopted a lot-by-lot approach to economic loss, assessing the freehold value of the land affected by each of the 36 tenements at its grant date, consistent with Timber Creek. His Honour made the following relevant findings:
The Court rejected three other heads of claim for economic loss:
The Court did not originally stipulate the final economic loss figure due to the complexity of the lot-by-lot calculations and directed the parties to confer and supply short minutes of order giving effect to the reasoning. The Court’s final orders made on 1 July 2026 fixed economic loss at $136,757.
For the first time, the Court found that compound (not simple) interest was payable on the economic loss component of the award from the date of the compensable acts, in the sum of $217,152.
The Court found that Timber Creek had not settled the law on this point, and that the evidence demonstrated the Claim Group would have used the funds to the most beneficial effect open to them and would not simply have applied them to an interest-bearing account. Justice Burley was accordingly satisfied that they were entitled to compound interest on the economic loss compensation amount, calculated from the date of each of the future acts.
Justice Burley assessed cultural loss at $150 million. This was vastly less than the $1 billion claimed by YNAC but substantially more than the $5–10 million proposed by the State or the $8 million proposed by Fortescue.
The Court assessed cultural loss by reference to the principles in Timber Creek, which required a "social judgment" of "what, in the Australian community, at this time, is an appropriate award for what has been done". The assessment involved "a complex balance of different factors" going to the Yindjibarndi People's spiritual relationship with their country and the harm the compensable acts caused.
In calculating the dollar figure, the Court began by discussing the relevance of Timber Creek and McArthur River because it would be unwise to ignore what courts have decided in relation to similar cases when forming a view as to an appropriate amount. However, Justice Burley agreed with Justice Banks-Smith in McArthur River that, while applying a rate per hectare provides a form of check on parameters, one must approach it with considerable caution. At best, prior cases provide a point of comparison that may provide some normative standard when quantifying cultural loss, but they cannot go further.
The following factors were considered in assessing cultural loss:
The Court held that no compensation was payable for the social disruption between members of the Yindjibarndi community allegedly arising from the development of the Solomon Hub Project. This was because the Native Title Act does not allow the negotiation process to form part of the "future acts" in respect of which compensation may be claimed. Even if this was compensable, Justice Burley was not satisfied that Fortescue's conduct and the social division were sufficiently causally connected.
The Court also swiftly rejected the Yindjibarndi People's claim for a separate head of cultural loss founded on psychological harm caused by the social disruption from constructing and establishing mining infrastructure and conducting mining activities. The general consideration of cultural loss was sufficient to address this.
After three major decisions there are common principles starting to emerge. Yindjibarndi is the first material precedent for major mining projects in Western Australia, and for iron ore projects in particular. It will start to significantly impact agreement-making in Western Australia and beyond. Despite the Court's caution about doing so, stakeholders will inevitably extrapolate from the amounts awarded in the two recent decisions to other projects, using the assessment criteria emerging from the 2026 cases.
The Court in Yindjibarndi made very few references to the McArthur River decision but reasoned very similarly on both economic and cultural loss. Both judgments confirm that the Timber Creek freehold value methodology remains the applicable approach for assessing economic loss. Neither Court accepted royalty-based calculations. We now have a rough formula, of sorts, for calculating economic loss and determining the various discounts that apply in particular circumstances.
Although the award for cultural loss was far greater in Yindjibarndi than McArthur River, there was an important distinguishing feature. In Yindjibarndi, approximately 70% of the land within the Solomon Hub Project was subject to exclusive native title rights, whereas McArthur River involved only non-exclusive rights. Although the Solomon Hub Project footprint was comparable to the McArthur River principal mine and port area, the total Yindjibarndi compensation claim area was substantially larger.
Whether the Court in Yindjibarndi placed greater weight on the impact on archaeological and cultural sites than the Court in McArthur River gave to the disturbance of Dreaming sites and routes is unclear. What is clear from both decisions, however, is that the courts will consider how cultural heritage protection and management practices are conducted when assessing cultural loss, notwithstanding that parties have complied with relevant State and Territory legislation.
How the Solomon Hub Project affected groundwater both within and outside the mine site was a significant aspect of the case and the first time a court has considered this issue in the context of a native title compensation claim. Whether the findings can be extrapolated to allow a separate group of Native Title Holders to claim compensation for impacts outside a determination area, or indeed whether a "future act" can also have an impact in this manner, remains to be seen.
The Court awarded compound interest on economic loss for the first time. Timber Creek had left this possibility open where the evidence supported it. That the Yindjibarndi People were able to demonstrate their corporate structure, investment strategy, and successful business activities satisfied this threshold was no surprise. Although the compound interest amount of $217,152 was not large in this case (because the compensable acts were relatively recent and the economic loss award was relatively low), compound interest could be significantly larger in other cases where there is a long time between the compensable acts and the compensation award and/or where the freehold values are much higher.
The Court's decision on the constitutional validity of the pass-through provision in section 125A of the WA Mining Act may not be the last word on this issue. In the meantime, WA and NSW remain the only States to legislatively pass on future act compensation to proponents.
Each of Yindjibarndi, the State and Fortescue has appealed aspects of the judgment to the Full Federal Court.
Authors: Andrew Gay, Partner; Leonie Flynn, Expertise Counsel and Cheyne Jansen, Counsel.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
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