Posted on August 28, 2026 by Dominic Smith, Frances Tse and Megan Hawley 10

Federal Court assesses Compensation for Cultural and Economic Loss of Native Title arising from two Major Mining Projects

The Federal Court has further considered the principles of economic and cultural loss of native title in two recent decisions, Davey on behalf of the Gudanji, Yanyuwa and Yanyuwa-Marra Peoples v Northern Territory of Australia (No 5) (McArthur River Project Compensation Claim) [2026] FCA 153 (Davey) and Yindjibarndi Ngurra Aboriginal Corporation RNTBC v State of Western Australia (No 2) [2026] FCA 585 (Yindjibarndi No 2). These cases are useful reminders of the key principles relating to economic and cultural loss and what matters are relevant to the assessment of each form of loss, following the landmark High Court decision in Northern Territory v Griffiths [2019] HCA 7 (Griffiths HCA).

Background

Both Davey and Yindjibarndi No 2 were native title compensation cases concerning largescale mining projects, the McArthur River Project and the Solomon Hub. Both compensation claims were made on the basis that multiple interests had been granted, which either diminished or extinguished native title rights and interests. The number of tenures and mining tenements granted was extensive and the native title groups claimed the period of time over which there would be a loss of rights was intergenerational.

Valuation Methodology for Economic Loss

In the High Court decision in Griffiths HCA, the majority adopted the conventional method of valuation for calculating economic loss arising from diminution of native title. The most appropriate form of valuation was on the basis of what price a willing but not anxious purchaser would pay to a willing but not anxious vendor in a hypothetical transaction (otherwise known as the Spencer test from Spencer v Commonwealth of Australia (1907) 5 CLR 418).

In both Davey and Yindjibarndi No 2, the Court adopted the conventional method of valuation from Griffiths HCA and assessed compensation from a two-sided hypothetical transaction for the extinguishment (wholly or in part) or diminution of native title rights and interests. The hypothetical vendor (adapting the Spencer test) was the native title holders. The hypothetical purchasers were the Northern Territory Government, the State Government or the mining company. The subject of the transaction, being the native title rights and interests, had an economic value to both the hypothetical vendor and the hypothetical purchaser.

Compensation for Economic Loss

In Davey, the Court considered the following factors were relevant to valuing economic loss:

1. the fact that loss of native title rights was temporary and not permanent;
2. the fact that the term of the interests granted would cease at some point, as the mining project had a prescribed mine life and would eventually be closed with the land then becoming subject to rehabilitation obligations; and
3. the effect of temporal or geographic limitations on the economic value of any native title rights.

The Court did however reject that the economic loss valuation should assess native title rights as an inalienable right, and any evidence of subsequent activities or events to retrospectively inform the economic loss, including the provision of employment and other forms of benefits to members of the native title group.

In Yindjibarndi No 2, the Court considered the following factors were relevant to valuing economic loss:

1. the nature and extent of the native title rights and interests at the time at which the compensation claim was filed;
2. the fact that native title rights and interests could not be exercised over that land while the exploration and mining activities were being carried out;
3. the degree of impairment of the native title rights and interests;
4. the fact that the term of the interests granted would cease at some point, as the mining project had a prescribed mine life and would eventually be closed with the land then becoming subject to rehabilitation obligations; and
5. the size of the mining tenement excluding any overlap with other tenements over the same area.

In each case, the Court assessed the economic value of native title based on a percentage of the freehold value, with any adjustments made to take into account the above valuation factors.

Compensation for Cultural loss

In both cases, the assessment of cultural loss was a significant component of the compensation claim and reflected the real impact of the interests granted on the native title group over a long period of time. The effects of extinguishment or the diminution of native title often is ongoing and may impact a native title group for a long period of time. In the case of Davey, the loss of cultural rights had been ongoing since 1993 and has continued to present.

While the evidence differed between the claims, the Court in both decisions assessed compensation based on answering the following three questions:

1. what were the compensable acts?
2. what are the native title holders’ connection with the land or waters by their laws and customs?
3. what are the particular and inter-related effects of the compensable acts on that connection?

Of particular interest is the differing approaches of the Court in assessing what factors were relevant to the determination of cultural loss in each case.

In Davey, the Court determined cultural loss compensation to be a sum of $54 million for the cultural loss associated with the mining operations, having regard to:

1. the exclusion of effects not derived from compensable acts – that is, any prior diminution of native title rights;
2. the environmental impact;
3. the temporal limits of the effect of the relevant interests granted on native title rights;
4. the relevance of any geographical limitations on the exercise of native title rights; and
5. the protection of sacred sites.

On other hand in Yindjibarndi (No 2), the Court assessed cultural loss compensation to be $150 million having regard to:

1. the disturbance to various cultural sites, songlines and other sites of significance;
2. the effects on the cultural use of surface water and groundwater on the sites; and
3. the loss of spiritual connection, cultural duties and use of country.

The Court did not however consider that the sum should take into account any disturbance to the social division in the native title group or psychological trauma, when assessing compensation for the loss of native title. Those matters were not related to the grant of the interest or tenement. Those matters were instead related to the mining company’s conduct and therefore were outside the scope of the assessment of cultural loss. Those matters may however be relevant to other claims that native title groups may make under different statutory regimes.

Implications

The decision is part of a growing area of case law on compensation for the economic and cultural loss of native title. The existing case law on economic and cultural loss compensation is particularly relevant for local councils to consider when undertaking projects that may involve the granting of interests or the undertaking of works on any land subject to native title rights and interests. Examples of interests that could impair or extinguish native title include the carrying out of infrastructure works, the compulsory acquisition of land or the grant of certain interests on Crown land by a Council as the Crown land manager.

Copies of the decisions are available at the following links Davey and Yindjibarndi (No 2).

If you would like to read more about the key legal principles on native title compensation and cultural loss, you can read more on this issue in our previous article: How much is native title worth? – Landmark High Court case.

If you have any questions regarding this article, please contact Megan Hawley on 02 8235 9703, Frances Tse on (02) 8235 9711 or Dominic Smith on (02) 8235 9172.