New mining lease uncertainty may be resolved by Brown v WA appeal

The High Court has recently granted Western Australia special leave to appeal the Federal Court’s decision of Brown v Western Australia. The results of this appeal will hopefully resolve some uncertainty in the case law about the extinguishment of native title by past grants of mining leases.

One of the purposes of the Native Title Act 1993 (Cth) is to provide a regime that validates certain past acts of governments that would otherwise be invalid because of native title. For the states, this invalidity would predominantly arise due to the acts having a racially discriminatory effect on native title holders under the Racial Discrimination Act 1975 (Cth).

The Racial Discrimination Act commenced on 31 October 1975, so mining leases granted on or after 31 October 1975, which would have been invalid under this Act, will be validated under the Native Title Act. The Native Title Act provides that these leases will not extinguish native title.

Amendments to the Native Title Act in 1998 also confirmed the extinguishment of native title caused by certain classes of acts done prior to the High Court’s judgment in Wik Peoples v Queensland on 23 December 1996. However, mining leases are expressly excluded from these provisions.

The extinguishing effect on native title of mining leases granted prior to 31 October 1975 is therefore not affected by the Native Title Act and falls to be determined by common law principles developed through case law. As this development is an ongoing process that relies on appropriate cases coming before the courts, there is still some uncertainty about the extinguishing effect of mining leases granted prior to 31 October 1975.

The large number of leases granted prior to 1975, in some cases over vast areas, and the need for future dealings to address native title where it has not been extinguished by the prior grant means this is a significant issue for the State.

The basic test at common law for extinguishment of native title by an executive act such as the granting of a mining lease was established by the High Court in Ward v Western Australia and is referred to as the ‘inconsistency of incidents’ test.

This requires a comparison between the statutory rights granted under the mining lease and the native title rights being asserted in the area. If the two sets of rights are inconsistent, native title will be extinguished by the grant to the extent of the inconsistency.

Ward also established that granting a mining lease would be inconsistent with any native title right to control access to the land and would therefore extinguish these ‘exclusive’ native title rights if the lease was granted prior to 1975.

The High Court in Ward did not consider whether the granting of a mining lease would be inconsistent with other non-exclusive native title rights such as the right to hunt or the right to care for the land.

This was the issue that came before the Federal Court in Brown. The leases in question were mining leases in relation to iron ore deposits in the Pilbara region of Western Australia. Pursuant to its rights under the leases, the lessee established an open-pit mine at Mt Goldsworthy, east of Port Hedland. Mining operations took place between 1966 and 1982 and resulted in Mt Goldsworthy, which previously stood at 132m above sea level, being transformed into a flooded pit 135m below sea level.

A township of more than 200 houses was also constructed. After mining ceased, the township was abandoned, buildings demolished and non-native vegetation burnt back.

The primary judge, Bennett J, had held that the construction of the mine, the township and associated infrastructure had extinguished native title in those areas. In doing so, Her Honour applied the 2005 Federal Court judgment in De Rose v South Australia.

In De Rose, the Full Federal Court had held that although the granting of a pastoral lease would not extinguish non-native title rights (in line with the High Court decision in Wik Peoples v Queensland), improvements in the form of a homestead, airstrip, sheds and outbuildings constructed on the pastoral lease had extinguished native title.

The Court in De Rose held that the right to construct and use improvements was clearly inconsistent with native title rights, but the location of those improvements would not be known until the pastoralist chose to exercise the right by constructing improvements in a certain area of the lease.

Applying the ‘inconsistency of incidents’ test from Ward, the Court in De Rose held that the right to construct improvements was inconsistent with native title and would extinguish native title. Even though the pastoralist had the right to construct improvements anywhere on the lease, the Court in De Rose held that granting the right to construct improvements only became operative and only extinguished native title once the right was exercised by actually constructing improvements in a particular area.

The primary judge in Brown applied the same approach in relation to mining leases.

On appeal to the Full Federal Court, the primary judge’s decision in Brown was overturned by a majority of two to one. While Mansfield J agreed with the primary judge and was not persuaded that De Rose was wrong, the other two judges reached a different conclusion.

Greenwood J held that the approach in De Rose was inconsistent with the High Court’s decision in Ward. Although Greenwood J considered that the rights granted to the lessee under the mining lease were inconsistent with native title rights over the whole of the lease area, he held that the granting of rights under the lease had a ‘temporal element’.

In other words, the native title holders would only be prevented from exercising their native title rights for so long as the lessee carried on certain activities under the lease such as mining or construction and use of improvements.

Greenwood J held that in these circumstances, native title would not be extinguished, even in the areas where mining operations had taken place or improvements were constructed. Native title holders would merely be prevented from exercising native title rights in those areas while mining took place or the improvements remained in place. After mining ceased and the township was abandoned, the native title rights could again be exercised.

The remaining judge, Barker J, also held that De Rose should not be followed. Barker J agreed that native title rights would not be extinguished, but for different reasons. Greenwood J. Barker J’s approach did not rely on the notion of a temporary inconsistency but merely held that the nature of the tenure obtained under the mining lease did not reveal a clear and plain intention by the Western Australian Government to extinguish native title rights.

The decision in Brown therefore leaves the position in some uncertainty. If the previous approach of the Full Federal Court in De Rose and of Mansfield J in Brown is followed, the granting of a mining lease prior to 1975 will have resulted in extinguishment of native title (including non-exclusive rights), but only over areas on which mining or other activities inconsistent with native title were actually undertaken.

If the approach of Greenwood J is followed, native title would not be extinguished even in those areas.

The broadest application of the inconsistency of incidents test, which was the position Western Australia took in Brown, and presumably will maintain in the appeal, is that the granting of the mining lease was inconsistent with all native title in the area, resulting in total extinguishment.

It is difficult to predict how the High Court will resolve the conflicting Federal Court judgments.

The approach in De Rose is problematic as the inconsistency of incidents test the High Court set down in Ward focuses on a comparison of rights granted under the lease with native title rights. It is not concerned with the actual use that is made of the land under the lease. This appears to be the basis of Greenwood J and Barker J declining to follow De Rose in Brown.

However, the approach of the majority in Brown also appears to be problematic. With respect, Greenwood J’s finding that inconsistency can have a ‘temporal element’ that does not result in extinguishment of native title is also difficult to fully reconcile with Ward.

The High Court did refer at one point in its judgment to the holder of a mining lease having the right to exclude native title holders and exercising that right in a way that would prevent the exercise of native title rights ‘for so long as’ the holder of the mining lease carried on certain activities.

Greenwood J appeared to rely on this passage of Ward in finding that inconsistency did not give rise to extinguishment. However, this approach appears to conflict with an earlier passage in the Ward judgment in which the High Court starkly noted that there could not be degrees of inconsistency of rights.

The High Court held that 'Two rights are inconsistent or they are not. If they are inconsistent, there will be extinguishment to the extent of the inconsistency; if they are not, there will not be extinguishment'.  The High Court therefore considered that 'questions of suspension of one set of rights in favour of another do not arise'.

On a practical level, differing considerations also arise. Extinguishment of native title rights over the whole of an area covered by a mining lease may result in extinguishment over large areas including areas that were untouched by any mining or construction activity.

That said, it is also difficult to see how some native title rights could continue to be meaningfully exercised over an area where mining operations on the scale of the Mt Goldsworthy operations had been carried out. Even after the mined area was rehabilitated, the open-pit mining had a profound effect on the nature of the landscape by transforming Mt Goldsworthy into a pit over 100 metres below sea level.

It is questionable whether native title rights were held over 100 metres below sea level. Assuming that they were, any native title rights that could be exercised after this transformation would be vastly different from before. For example, it is difficult to see how the right to hunt could be exercised and even other rights such as the right to fish or take water would be severely curtailed given the drastic transformation in the landscape. It seems counter-intuitive to argue that the rights under the mining lease were consistent with native title rights in these areas.

The High Court will hopefully resolve this issue in the appeal against the Federal Court in Brown. It is hoped that this will lead to some more certainty about whether, and if so the extent to which, the grant of a mining lease prior to 1975 extinguished native title rights.

However, the leases in Brown were issued under specific legislation giving effect to an agreement between the State and the mining company rather than general mining legislation. Depending on the High Court’s reasoning, this may limit the application of the decision in Brown to other mining leases.

The High Court’s decision may also have implications for pastoral leases, given the parallels with the approach taken in Brown and in De Rose.

The information in this publication is provided for general purposes only. It is not to be relied on as a substitute for legal advice. Crown Law and the Department of Justice and Attorney-General accept no liability for losses caused by reliance on the material in this publication. Formal legal advice should be obtained for particular matters.

Published: 17 December 2013

Author: James Potter