Native Title Year in Review 2023-2024

What you need to know

• The Federal Court has considered the doctrine of frustration in the context of a native title agreement for the first time.
• In Lockyer for and on behalf of the Robe River Kuruma People v Citic Pacific Mining Management Pty Ltd (No 2) [2024] FCA 154 the Court held that a compensation deed between participants in a mining project and a native title party had not been frustrated, notwithstanding the reduction in the area of their claim and a determination of native title over less than one percent of the agreement area.
• The Court distinguished an earlier WA Supreme Court decision where a similar compensation deed was held to be frustrated after the dismissal of the native title claim of the native title counter party.

What you need to do

• The decision highlights the importance of drafting native title agreements in a way that clearly contemplates the array of possibilities that may occur with respect to the relevant native title claim landscape and clarifies how any ongoing benefits are to be treated in the event of particular native title outcomes.
• Remember that native title agreements are contracts, and the doctrine of frustration applies to them in the same way as other commercial instruments.

Federal Court considers doctrine of frustration in the context of a native title agreement 

Lockyer for and on behalf of the Robe River Kuruma People v Citic Pacific Mining Management Pty Ltd (No 2) [2024] FCA 154, is the first time the Federal Court has been required to consider whether a native title agreement has been frustrated.  

The only previous judicial consideration of this issue we are aware of has been by the WA Supreme Court and QLD Land Court.

Background to the dispute

In 2008, the Participants in the Sino Iron project entered into indigenous land use agreements (ILUAs) and accompanying compensation deeds with three different native title parties who each had registered native title claims over the agreement area. 

The agreement area covered a much larger area than the relevant mining tenements, and two of the native title claims overlapped at the time the agreements were entered into. One of those compensation deeds was with the Kuruma Marthudunera People (KM People).   

Over the next 10 years, the native title parties resolved their overlapping claims which resulted in the KM People reducing their native title claim area so that it no longer covered the overlapped area. This meant that their claim only covered a very small part of the agreement area. 

In 2019, the KM People were determined to hold native title over less than one percent of the agreement area, and their land sat a considerable distance away from the core mining project. In light of the determination, the Participants ceased making payments under the Compensation Deed and argued that future performance of the Compensation Deed had been frustrated by the determination. The KM People sought to enforce the Participant's obligations to pay compensation under the Compensation Deed.

Applying the doctrine of frustration in this case – there was no 'common assumption'

The Participants argued that the KM People's voluntary reduction in their claim boundary so that it did not cover any part of the tenement area was an event never contemplated by the parties, and resulted in a radically different situation to that which was contemplated when they entered the Compensation Deed.  

The Participants failed to establish that there was a common assumption that future performance would only be required if the KM People's native title claim was successful over some part of the land on which the Project was undertaken, as opposed to a successful application over some part of the broader Agreement Area.

The Court interpreted the Compensation Deed in the context of the terms of the ILUAs. It found that contrary to the Participants' submissions, the Compensation Deed evidenced an intention that its terms would continue to apply irrespective of the outcome of the KM People's native title claim. In particular, the Court found the Compensation Deed:

• was not confined to claims and interests of the KM People that were only native title interests and was instead comprehensive in relation to other matters such as obligations not to object to the project; 
• was not confined to the area of project activities and instead applied the same way to the entire Agreement Area;
• did address circumstances that may unfold in respect of the native title applications, but only provided mechanisms to ensure the Compensation Deed remained binding.

Justice Colvin found that self-evidently, there was the possibility that native title claims to some or all the relevant area may not succeed, yet the Compensation Deed made no provision for this "obvious possibility" indicating that it was the intention of the parties that its terms would apply irrespective of the eventual outcomes of the native title claims.

In rejecting the frustration claim, the Court also ordered the Participants pay the native title parties' costs associated with the proceedings.

Insights

It is important to remember that native title agreements are contracts, and the doctrine of frustration applies to them in the same way as other commercial instruments. 

A decision about frustration will turn on the facts of the case and whether there is a "common assumption" about a state of affairs that no longer exists. The common assumption is a matter that must be established from the terms of the contract considered in the context of any surrounding circumstances that bear upon its proper construction.

The decision highlights the importance of drafting native title agreements in a way that: 

• clearly contemplates the array of possibilities that may occur with respect to the relevant native title claim landscape; and
• clarifies how any ongoing benefits are to be treated in the event of particular native title outcomes. 

Authors: Libby McKillop, Counsel, Leonie Flynn, Expertise Counsel and Lydia O'Neill, Graduate.