A federal court has ordered the payment of more than $3m in compensation to traditional owners over damage to sacred sites in one of the most significant rulings about native title since the Mabo decision 24 years ago.

The compensation case, brought on behalf of the Ngaliwurru and Nungali people in the township of Timber Creek, sought damages for the extinguishment of native title in the area through acts attributable to the Northern Territory and commonwealth governments in the 1980s and 1990s.

Their victory in Darwin on Wednesday was expected to set a significant precedent in such compensation cases, leaving state, territory and federal governments exposed to future compensation and drawing comparisons with the historic Mabo ruling in 1992 which recognised native title for the first time.

The Ngaliwurru and Nungali groups won native title for the land, near the West Australian border of the Northern Territory, in 2006 after a seven-year battle, but not for every area of land they claimed.

The groups sought compensation for a number of acts, including the construction of public works, on their land which extinguished native title and impacted their ability to conduct spiritual and ceremonial activity.

Federal court judge John Mansfield ordered compensation of $3,300,261, including $512,000 for the economic value of the extinguished rights, more than $1.48m in interest, and another $1.3m for pain and suffering.

Wednesday’s judgment sets an extraordinary precedent and methodology for measuring the value of extinguished native title, and is predicted to leave state and territory governments liable for huge payouts in forthcoming and future compensation claims. More than 2.3m square kilometres of land is currently designated native title.

Mansfield preferenced the higher valuations made by the commonwealth’s expert valuer, Copland, rather than the expert relied on by the Timber Creek applicants.

In February the federal court convened at Timber Creek so Mansfield and lawyers could hear from the traditional owners about how they valued native title.



Among his findings, Mansfield said the loss to the Ngaliwurru and Nungali peoples was “evident” but it was clear they had not wholly lost their connection to country, and that some developments in Timber Creek had been acceptable under Indigenous law.

Each government encroachment had “to some degree diminished the geographical area” that the Ngaliwurru and Nungali could exercise native title rights over, he said, and “in an imprecise way” had adversely affected their spiritual connection with the particular areas and their country generally.

Mansfield noted the construction of water tanks on the path of the Indigenous people’s dingo Dreaming “has caused clearly identified distress and concern”, and had impacted their capacity to conduct ceremonial and spiritual activities.

Speaking outside the court, the chief executive of the Northern Land Council, Joe Morrison, said they were “buoyed” by the court’s decision. Allowing the case to proceed had been an “immense opportunity for traditional owners right around the country who wanted to seek compensation for extinguishment of native title”.

Morrison said the amount of compensation after “the conquest of the British” could always be argued but “for now the court has made a relevant and important decision to calculate the amount of comp, particularly in non-exclusive native title, and to award that cost”.

Distribution of the compensation payments will be made in accordance with the decision-making processes of the native title holders.

Also in the federal court on Wednesday, another long-running dispute, brought by a powerful northeast Arnhem Land clan against the Northern Land Council, was dismissed.

The case was centred the distribution of mining royalties by the NLC in north-east Arnhem Land, and the unsuccessful party said the decision left Indigenous landowners as “wards of the state” without equal rights of appeal.

The complicated case, brought by the Rirratjingu Aboriginal corporation (RAC) and others against the NLC, began in 2014 after attempts to settle a dispute between RAC and the rival Gumatj clan over royalties from the Gove bauxite mine and refinery failed.

The NLC had determined a split of 74% to 26% in favour of the Gumatj, while the RAC claimed they were entitled to 50%.

Mansfield dismissed the RAC’s case, and awarded some costs to the NLC. His decision essentially repeated an earlier judgment in the same proceeding.

Mansfield said the RAC was free to reformulate a new case, but it could not appeal with the same arguments.

The RAC has interpreted Mansfield’s decision as finding Indigenous groups to be “wards of the state” and said the decision enforced a two-tier system which allowed greater rights of dispute resolution to non-Indigenous people.

The RAC director, Witiyana Marika, told Guardian Australia his group would continue to fight for greater control and benefit from their land.

“In the territory the land council is always denying our position. It is the traditional owners that should make the decision,” Marika told Guardian Australia.



He said the Rirratjingu were rightful landholders and entitled to the royalties, and dismissed the NLC as bureaucracts.

“In this case, most Australians can appeal to the courts, where traditional owners must appeal to commonwealth bureaucracies – and our view is that this is not right,” said RAC chairman, Bakamumu Marika.

He said it allowed the NLC to do what it liked, including blocking development.

“The judgment will say if you don’t agree with land council decisions, you’re pretty well stuck with them, which is problematic if you’re in legal conflict with the land council, as we are.”

Djawa Yunupingu, senior elder of the Gumatj clan, said they had always been certain of their position as landowners on the Gove peninsula, and confident of the case’s outcome.



“This court case has been very expensive and has distracted us from our work at the community level where we are building businesses, creating jobs, and educating children,” he said.

“We hope that from here common sense will prevail.”

Morrison said the case reaffirmed the NLC’s role in “determining who traditional owners are and in determining how much money should be flowing from those agreements and activities on Aboriginal land”.

“I think that’s a win for the land council, but also for traditional owners, all Rirratjingu and the clan members in north east Arnhem, and we’re looking forward to working with all of those to ensure a prosperous future for Yolngu people”.