SLM recently acted as a financial expert for the Aboriginal parties in the matter of Griffiths v Northern Territory of Australia (“Timber Creek Compensation Matter”). The case involved the economic valuation of Native Title rights and interests principally under the Native Title Act 1993 (Cth) and involved important issues of principle, including the application of well-established rules as to the valuation of compulsorily acquired land and the loss and impairment of traditional rights and interests of Aboriginals in Australia.
On 24 August 2016 the Federal Court ordered the Northern Territory Government to pay $3.3m ($512,000 for the extinguished native title rights, $1,488,261 interest and allowance for solatium of $1,300,000) to Traditional Owners as compensation for the impact of land grants and public works on their native title. This is a landmark decision for Native Title compensation in Australia.
Key Valuation Outcomes
With regard to the valuation of non-exclusive native title rights the presiding justice, Mansfield J, affirmed that:
“the freehold value is an appropriate starting point because s 51A [of the NTA] puts it as the upper limit…[and] [t]o accommodate the fact that they were non-exclusive, clearly some reduction from the freehold value is necessary…in my view, the deduction should not be great in the present circumstances…the appropriate valuation should be 80% of the freehold value.
On the treatment of interest in calculations for compensation, Mansfield J stated that:
“the appropriate interest calculation is simple interest at the rate specified in the Practice Note CM 16.
Mansfield J also asserted that there is insufficient precedent to support the entitlement of compound interest (although the Justice does not preclude the possibility) because there was insufficient commercial activity at the time of act to justify a compounding of returns from investment alternatives and additionally, the Claimants would likely have disbursed the funds for immediate community benefit.
Media reports suggest that Commonwealth and State Governments could be liable for billions of dollars in native title compensation, since the Timber Creek case covers 23 km2 which is only 0.001% of the 2.3m km2 declared native title land.
SLM Corporate is a Melbourne based independent corporate advisory firm. Our clients are shareholders and boards of companies that are publicly listed or privately held, Government and indigenous organisations. We routinely act as a financial expert, and value listed and private businesses, executive and director share options and performance rights, and we have undertaken independent expert reports in a variety of transactions.
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