A methodology for the calculation of native title compensation

 On 13 March 2019, the High Court handed down its first decision on native title compensation in ‘Timber Creek’ [2019] HCA 7 (Timber Creek).

The High Court’s decision is a measured reflection of the need for Australian law to evolve in a manner that acknowledges, recognises and accommodates the diversity and individuality of native title in Australia. The majority judgment sensibly navigates the difficult task of applying common law legal concepts, such as compensation, freehold value, economic loss and solatium, in the context of traditional rights and interests, and connection to country.

Resisting the temptation to apply a blanket approach, a 5:2 majority of the High Court instead affirmed a methodology to determine the appropriate, just and fair compensation to be awarded to native title holders for the impact of compensable acts on their distinct native title rights and interests.

Applying the methodology, the High Court determined that compensation should be paid for the extinguishment of the claim group’s non-exclusive native title rights and interests as follows:




Climate change impacts used to reject new NSW coal mine

Proponents seeking consent for new projects, or modifications of existing projects, with ‘material’ greenhouse gas emissions across all industries in NSW should carefully assess climate change impacts, particularly if the proposal is not ‘carbon neutral’.

What has happened?

On 8 February 2019, the NSW Land and Environment Court (Court) refused development consent for a new open cut mine near Gloucester, New South Wales.

The Rocky Hill Coal Project (Project) was expected to produce 21 million tonnes of coal over a period of 19 years (including rehabilitation) and support up to 110 jobs during operation and 60 jobs during construction.


PIL Notes Re-Post – Bear Creek Mining Corp. v. Peru: the potential impact on damages of an investor’s contributory action and failure to obtain a social license

In an award dated 30 November 2017, an ICSID Tribunal ordered Peru to pay around US$30.4million to Canadian company Bear Creek Mining following its finding that a 2011 decree constituted an unlawful indirect expropriation of the Claimant’s right to operate the Santa Ana mine.


Forrest & Forrest v Wilson – consequences for mining lease applicants

As we previously reported1, a consequence of the High Court of Australia’s decision in Forrest & Forrest Pty Ltd  v Wilson2 is unexpected and unhelpful uncertainty regarding the validity of the grant of certain mining leases in Western Australia.

The State Government and the Department of Mines and Petroleum (DMP) are continuing to assess an appropriate legislative fix for the issues arising out of the High Court’s decision. Although this assessment is ongoing, the DMP has publicly indicated that the legislative fix will not cover mining lease applications which (in DMP’s opinion) are affected by the High Court’s decision. Affected applicants will be required to re-submit new mining lease applications that comply with the relevant requirements of the Mining Act. The DMP has not indicated (at this stage) whether the same approach will be taken for other applications for mining tenure which have similar document lodgement requirements.

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Federal Government Announces Junior Mineral Exploration Tax Credit

On 2 September 2017, the Government announced a welcome new four-year $100 million Junior Mineral Exploration Tax Credit (JMETC) following the expiry of the existing Exploration Development Incentive (EDI) exploration credit regime.

The JMETC will commence this 2017-18 financial year. Companies still have until 30 September to report their estimated expenditure to access credits under the existing EDI for the 2016-17 income year.

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High Court applies strict compliance test under the Mining Act 1978 (WA) and raises doubts regarding tenement validity –remedial legislative response required

In its recent decision in Forrest & Forrest v Wilson [2017] HCA 30, the High Court held that a failure to strictly comply with the technical lodgements requirements of the Mining Act 1978 (WA) (Mining Act) invalidated a decision of the Mining Warden to recommend that a number of mining leases be granted. This overturned two decisions of the Western Australia Supreme Court (at hearing and on appeal) which reached an opposite conclusion.

It also departed from the generally understood position that a mining lease, once granted, conferred on the holder an ‘indefeasible’ mining title that cannot be the subject of subsequent legal challenge on the basis that the tenement was invalidly granted.

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Queensland’s mining sector set to experience significant changes to financial assurance and rehabilitation requirements with proposed reforms

Mining projects in Queensland typically require financial assurance (FA), a form of financial security/bonding provided to the Government to cover costs associated with environmental harm and rehabilitation, should the project not comply with environmental obligations.

In 2016, an independent review of Queensland’s FA framework was undertaken, which revealed that an increasingly small amount of land disturbed by mining is rehabilitated, causing over-reliance on the FA to remediate the environmental impacts of mining. Consequently, the Government committed to a number of reforms and on 4 May 2017, released the first 2 of 6 proposed discussion papers outlining proposed changes to Queensland’s FA and rehabilitation frameworks for the resources sector.

The reforms, if adopted, will have significant impacts for mining operational costs, decisions to place mines on care and maintenance and the structuring and timing of divestment of mines.

The proposed reforms

The Financial Assurance Framework Reform Discussion Paper (FA Paper)1 is based around a ‘tailored approach’ to FA. The reforms contemplate the majority of operators contributing to a pooled fund with annual contribution rates of between 0.5 and 2.75%, rather than providing bank guarantees. For a number of companies, this will result in a significant increase in surety costs.

The reforms also involve:

  • assigning FA arrangements to resource companies based on their size and level of credit/insolvency risk;
  • undertaking more realistic calculations of rehabilitation costs and phasing out discounts on FA and use of company approved calculators;
  • pooling FA into an interest-earning Rehabilitation Fund for certain resource companies;
  • introducing new options for the delivery of FA, such as insurance bonds;
  • clarifying the obligations of operators for sites in care and maintenance; and
  • strengthening the assessment of financial capability of incoming mine owners/investors, including the potential introduction of a change of control trigger.

The State intends to remove the ability of a resource company to be sold, distinct from the assets, without the State having the power to reassess the conditions of the tenure and approvals. This will involve guidelines for what are acceptable counterparties.

The Better Mine Rehabilitation for Queensland Discussion Paper (Rehabilitation Paper)2 currently applies only to site-specific mining operations and proposes a number of measures which complement those outlined in the FA Paper, to proactively mitigate rehabilitation risk. These measures include:

  • using life-of-mine plans to outline operational and rehabilitation matters at all stages of mine life;
  • improving assessment and reporting of rehabilitation performance with self-assessments, independent audits and checks by the regulator;
  • enforcing progressive rehabilitation requirements in life-of-mine plans;
  • setting clearer completion criteria for rehabilitation outcomes;
  • introducing performance-based incentives for the management of rehabilitation; and
  • enhancing data collection practices to improve analysis and reporting on rehabilitation performance.

Once legislative provisions are introduced to facilitate the Rehabilitation Paper, the framework is to be implemented in a staged approach. For existing site-specific mines, provision of a life of mine plan will be required on the first anniversary day following:

  • one year after commencement of the legislative provisions for ‘higher risk’ existing mines; and
  • two years after commencement of the legislative provisions for the remaining existing mines.

Next steps

The FA Paper and the Rehabilitation Paper were open for public consultation until 15 June 2017, with responses now being considered.

Additional discussion papers are expected to be released by late 2017, including papers on the:

  • expanded range of surety providers;
  • expansion of the Abandoned Mines Land Program; and
  • improved management of sites in care and maintenance.

The various reforms are expected to begin taking effect by mid-2018.


  1. Financial assurance framework reform.
  2. Better Mine Rehabilitation for Queensland.

This article was written by Madeline Simpson, Special Counsel, Brisbane.

Madeline Simpson
Madeline Simpson
Special Counsel, Brisbane
+61 7 3258 6662

High Court reconfirms object commercial purpose test for construction of contracts

This is a summary of a High Court decision made in the case of Ecosse Property Holdings Pty Ltd v Dee Gee Nominees Pty Ltd [2017] HCA 12 in dispute of a contract that restricted the sale and purchase due to planning restrictions.


The parties had entered into a long-term lease (99 years) for land, in circumstances where they were unable to effect a sale and purchase due to planning restrictions. The following amendments were made to a clause governing the payment of rates, taxes and other outgoings in the relevant lease agreement (clause 4):

“AND [the Lessee] will pay all rates taxes assessments and outgoings whatsoever which during the said term shall be payable by the tenant in respect of the said premises.”

The appellant argued that the above clause required the lessee to pay all rates, taxes and outgoings in respect of the land, whilst the respondent argued that the modifications to the clause only obliged the lessee to pay for imposts that were levied on it in its capacity as a tenant.

Neither party disputed during proceedings before the Court of Appeal (Vic) that the amendments left clause 4 ambiguous, and neither party objected to reference being made to the deleted words for the sake of interpreting clause 4.


A majority (4-1) of the High Court conceded that, prima facie, the clause was ambiguous and either the appellant’s or the respondent’s interpretations were plausible.1 As such, their Honours favoured interpreting the clause by reference to what a reasonable person in the position of the parties would have interpreted clause 4 (including its deleted words) to mean in light of the circumstances known at the time that the agreement was executed (objective test).2

The majority ultimately accepted the appellant’s construction of clause 4, and overturned the decision of the Court of Appeal. As part of their interpretation of clause 4 through the objective test, their Honours placed great emphasis on understanding the apparent commercial purpose of the lease. Reference was made to clause 13, which set out the intention of the parties to the lease:

‘in circumstances in which the parties were unable to convey a freehold estate in the land, they had chosen instead to convey a leasehold estate for almost a century for a fixed sum.’3

As such, the commercial purpose of the lease was to ‘recreate’ conditions (including a fixed value consideration of $70000 for the 99-year lease with no future adjustment) that would have otherwise existed if the land had been sold. Their Honours concluded that, as the lease purported to place the lessor as close in position to that of a vendor of land, the liabilities in clause 4 would have otherwise been transferred to a (quasi-) purchaser upon transfer of title. Therefore, the lessee was required to pay all rates, charges and obligations for the period of the lease.4

Nettle J dissented, preferring a construction of clause 4 that only considered the language used by the parties in light of the circumstances in which the contract was made.5 With reference to the strikeout of “excepting land tax”, “Landlord or” and “but a proportionate part…”, his Honour agreed that the proper interpretation of clause 4 was to oblige the lessee to only pay for imposts that were levied on it in its capacity as a tenant. His Honour did not view the ‘commercial approach to construction’ as ‘a licence to alter the meaning of a term that is ‘clear and fairly susceptible of one meaning only.’6


A possible implication of this case is establishing a High Court precedent in interpreting ambiguous clauses; greater weight will be placed on the presumed commercial purpose of an agreement than the language used and adopted by parties to the agreement. Nettle J was particularly critical of the majority’s approach, citing that the court ‘is not authorised under the guise of construction to make a new contract for the parties at odds with contract to which they have agreed.’7

This post was written by Julien Rosendahl, Graduate, Brisbane.


  1. Ecosse Property Holdings Pty Ltd v Dee Gee Nominees Pty Ltd [2017] HCA 12, at [15].
  2. Ibid, at [16].
  3. per Kiefel, Bell, Gordon JJ at [18].
  4. Ibid, at [25-26].
  5. per Nettle J, at [98].
  6. Id.
  7. Ibid, at [98].

Queensland explores mining rehabilitation and financial assurance reforms

At a glance

The Queensland Government has proposed broad policy and legislative reform in relation to financial assurance and mine rehabilitation with a view to improving rehabilitation performance, reducing reliance on the financial assurance system and clarifying mine rehabilitation requirements.

The first two of a series of discussion papers have recently been released, and are open for public comment until 15 June 2017.

What’s to come

Key aspects of the reform package include:

  • a new financial assurance framework that eschews a ‘one size fits all’ approach, and is tailored to the operator’s risk profile and potential rehabilitation liability;
  • a rehabilitation fund to pool contributions;
  • diversified methods for providing financial assurances;
  • a framework that requires, monitors and assesses progressive mine rehabilitation, rather than taking an ‘end of life’ approach;
  • mandatory reporting and clear signing off on progressive rehabilitation; and
  • more realistic estimates of rehabilitation costs.

If adopted, the reforms are likely to have significant impacts on operational costs, decisions to place mines on care and maintenance and the timing of divestment.

Key dates

Proponents in the resources sector should be aware of the following proposed timetable for stakeholder engagement:



Key dates


A redesigned financial assurance framework—the tailored solution

Discussion paper released

Open for comment until 15 June 2017


Better mine rehabilitation for Queensland

Discussion paper released

Open for comment until 15 June 2017


Expanding the range of surety providers

Mid to late 2017


Expanding the Abandoned Mine Lands Program

Late 2017


Improving management of sites in care
and maintenance

Late 2017



Mid 2018


Watch this space – asset transfers and share sales

As part of the ‘other reforms’ aimed at improving rehabilitation outcomes in Queensland, the Government has identified the need to investigate how the financial capacity (i.e. ability to meet rehabilitation costs) of incoming owners of resources assets is assessed.

It is possible that the risk of unfunded rehabilitation costs could be addressed by introducing a power to regulate resources transactions effected by way of share sale.  In addition, the Government may also look at developing guidelines to assist both industry and decision-makers when considering ‘acceptable counterparties’ for both share and asset sale transactions involving resources interests.

For further information, please contact William Oxby, Partner, or Madeline Simpson, Special Counsel.