4. Protecting Indigenous community benefits

This chapter considers the operation of the Native Title Act in relation to the management of native title payments and identifies reform options to improve governance arrangements, including clarification that the native title group is the beneficial owner of funds generated by native title agreements.

4.1 Issues of concern

The Working Group is concerned about the adequacy of current governance arrangements for managing native title payments. Improved governance is crucial if maximum benefit is to be derived from any new entity for use by Indigenous communities or groups for managing native title payments.

The Working Group is aware of instances where individuals have diverted for their own benefit the proceeds (or significant portions of them) from native title-related 'future act' agreements that were intended by the Native Title Act or the terms of an agreement to be enjoyed by an entire community.

The National Native Title Council's view, which is shared by a number of Working Group members, is that the opportunity for such situations to develop has been allowed by a lack of clarity in the Native Title Act regarding two matters. The first is whether, or the extent to which, a named native title applicant has fiduciary obligations to the broader native title group. The second is that, while the Act contemplates that native title groups will usually be represented by Native Title Representative Bodies (or Native Title Service Providers), section 84B of the Act allows for private agents to provide these representational services but does not establish any regulatory mechanism in respect of these private agents.

There are two key issues. First, is the uncertain status of funds generated by native title agreements. Second, is the uncertainty regarding a named applicant's duties to the native title group (comprising both the native title claim group and the determined native title holders) and the representation of some, but not all, members of a native title group, by private agents who have dubious authorisation to act on behalf of all members of the native title group. It might be thought that, under the Act, the proceeds of native title agreements would belong to the native title group and that the named applicant is in a fiduciary relationship with the group. As noted above in Section 3.1, this issue has been raised in the Mandandanji case and is the subject of ongoing litigation.

4.2 Options for reform

The National Native Title Council has suggested a number of different models to address these issues. These include:

• the regulation of private agents (persons or firms other than Native Title Representative Bodies or Native Title Service Providers) involved in negotiating native title future act agreements;
• the establishment under statute of a trust that would be the holder of native title agreement funds where there was no Prescribed Body Corporate, ICDC or other appropriate funds management entity to receive them; and
• a process for the registration of native title future act agreements.

The Working Group agrees that these matters require urgent attention which must involve significant and detailed consideration, and considers that each of the models proposed by the National Native Title Council has merit. However, the Working Group did not have an opportunity to discuss the proposals in detail. They necessarily involve a level of policy development that the Working Group was not equipped to undertake and there may be potential practical implications and complexities with the proposals and their implementation.

The Working Group considers the regulation of private agents (persons or firms other than Native Title Representative Bodies or Native Title Service Providers and/or their legal representatives) involved in negotiating native title future act agreements needs to be progressed by the Government as a matter of priority.

The Working Group is aware that Minister Macklin announced a review of the role and statutory functions of native title representative bodies and native title service providers in June 2012, to be conducted by Deloitte Access Economics (the FaHCSIA review).¹² The Working Group considers the establishment of a statutory trust and the registration of native title future act agreements are matters that ideally would be considered by the FaHCSIA review.

4.3 Fiduciary duty

The Working Group considers that urgent steps should be taken to clarify that the native title group is the beneficial owner of funds generated by native title agreements, irrespective of the identity of the legal owner or possessor of those proceeds, and that the named applicant is in a fiduciary relationship with the group. The Working Group considers amendments to the Native Title Act or the relevant regulations are required to achieve this outcome.

The Working Group is aware that there is ongoing litigation relating to the existence of a fiduciary duty under the current operation of the Native Title Act. This litigation raises complex legal and practical issues, including how such a fiduciary duty would interact with the future acts regime (particularly given the future acts regime is designed to enable registered native title claimants and proponents to negotiate about their interests prior to any determination of native title which recognises the ultimate native title holders). In addition, public consultation has commenced on draft terms of reference for an Australian Law Reform Commission (ALRC) inquiry which cover the authorisation and joinder provisions of the Native Title Act and related issues such as fiduciary duty.

¹² More information about the review, including its terms of reference and discussion paper, is available on the Deloitte Access Economics website: http://www.deloitteaccesseconomics.com.au/our+services/economic+analysis+and+policy/native+title/about+the+review.