Appendix 7: Terms of Reference for an expert to advise on compensation matters

1. This document should be read in conjunction with the Compensation Model, which sets out a process for the calculation of compensation and identifies areas for potential expert advice.
2. This document sets out the agreed Terms of Reference to be provided to the relevant expert(s).
3. Terms defined in the Compensation Model have the same meaning in this document.

4. The expert is asked to advise how the principles contained in the Timber Creek decision should apply to inform the Formulas. This will include addressing the following:
   1. (Economic loss): Consider whether ‘unimproved market value’ is the appropriate measurement to define land value in this context? What are the principles that should be applied or used in carrying out valuations of land for a compensatory purpose? For instance, should reserves, covenants, restrictions on sale, leasing or mortgaging, and the impact of roads or other structures be disregarded?
   2. (Interest): Presuming that interest will be paid on each Historical Land Use Activity from the date of the act, to the date of payment, and taking into account all relevant case law, what type of interest is appropriate in circumstances where the Traditional Owner group:
      1. Has received compensation or other funds in the past or has not received compensation or other funds in the past;
      2. Where the group has a history of receiving compensation or other funds, whether it has distributed the principal, or the interest, to group members, OR whether the group has a history of investing the principal and the interest, OR has applied the principal or the interest to a commercial enterprise that is profitable to the same degree as reinvestment of earnings over time
      3. Has any other relevant circumstances that ought to be taken into account to consider the appropriate type of interest to apply in Victoria
   3. (Cultural loss) Taking into account all relevant discussion on the subject of cultural loss in the Timber Creek decision, what basis or methods are appropriate to use for arriving at cultural loss amounts for each compensable acts or the cumulative impact of compensable acts? Please investigate the appropriateness of the following methods, and consider any other method that the expert arrives at independently:
      1. a pre-determined flat rate for all compensable acts, based on the UMV of the impacted land;
      2. a negotiated sum or rate, on a case by case basis, based on examining the impact of each compensable act;
      3. a hybrid model of (a) a pre-determined flat rate in general areas; and (b) a negotiated sum or rate in areas of high cultural significance.
   4. Please investigate whether the method of arriving at a cultural loss amount should be different, based on any significant factual circumstances relating to the act including:
      1. Whether the act impaired rather than extinguished native title, and the degree of impairment
      2. Whether the act caused consequential contamination or environmental degradation
      3. Whether the act proceeded, following consultation with Traditional Owners where genuine opportunities existed for Traditional Owners to minimise cultural loss or otherwise mitigate cultural loss through non-financial means
      4. Whether the act was consented to by Traditional Owners
      5. Whether the application of the non-extinguishment principle to acts that would otherwise extinguish native title has any effect
      6. Any other factual circumstances the expert arrives at independently

Having reference to the Compensation Model, please provide views on how the analysis in paragraphs 4a to 4d above should inform the design of the permanent Formulas and inform the Calculation Method of the Settlement Sum.

5. The application of the Retrospective LUAA Method relies on a review of the State’s records to identify Historical Land Use Activities.
6. An exhaustive review of the State’s records may not be preferable because:
   1. it will be time and cost prohibitive;
   2. records are likely to be incomplete or inaccurate.
7. Accordingly, the expert is asked to provide advice on the status of State records, including:
   1. What records does the State currently hold that would be useful for this process?
   2. Are there any difficulties in locating, collating or releasing this information?
   3. Is the information incomplete or inaccurate in any respects?
8. What time and cost-effective methods are there for reviewing this material, for example:
   1. by electronic means;
   2. by using sampling techniques, and adopting methods of statistical analysis to create estimates; or
   3. by some other means or method.
9. Once a Historic Land Use Activity is identified, what method or processes should be adopted to provide the historical value of the land that was subject to the act?
10. Examining each method explored at paragraph 8, and also the valuation task explored through paragraph 9, what is the likely average:
    1. time for completion;
    2. cost; and
    3. expected level of accuracy;

for a Traditional Owner group. Compare this against the same metrics for a full and exhaustive analysis of the relevant material.