Traditional Owner Settlement (Negotiation Costs) Regulations 2025

The regulations define several key terms that structure the cost calculation. “Negotiation” is limited to negotiations under Division 3 of Part 4 of the Traditional Owner Settlement Act 2010, which deals with land use activities. This scope means the regulations do not apply to other negotiations that might occur under the settlement framework, such as the making of overarching recognition or settlement agreements. “Authorised person” is narrowly drawn: it means a person authorised by a traditional owner group entity to prepare for or conduct negotiations who is also either a member of the traditional owner group or an employee of the entity. This definition excludes independent contractors who are not employees, which may affect whether certain consultants can be counted under preparation costs as opposed to professional services costs. “Preparation costs” are defined by reference to regulation 8 and include the time an authorised person spends preparing for and conducting negotiations, their wages, salary or fees, and overheads and on costs. The examples given (site analysis, writing reports, considering recommendations) suggest a broad scope, but the definition does not impose a cap on hourly rates or total hours, relying instead on an implicit reasonableness standard. “Professional services costs” are defined by regulation 9 as costs for a service provided by a qualified professional, with examples including legal, economic, geological and engineering services. Again, no maximum is set. “Travel costs” are defined by regulation 7 and subdivide into car expenses (calculated using a prescribed cents per kilometre table), public transport expenses (actual costs), and travel expenses (accommodation, meals and incidentals capped at a daily maximum amount that escalates annually). “Service provider” is defined by reference to the Native Title Act 1993 (Cth) and means a body that performs the functions of a representative Aboriginal/Torres Strait Islander body under section 203B of that Act. Critically, the costs of a service provider can only be included if the traditional owner group entity is liable to pay for those services and if the service provider is not funded by the Commonwealth under section 203FE of the Native Title Act. This prevents double recovery through two streams of public funding. “GST” has the same meaning as in the Commonwealth A New Tax System (Goods and Services Tax) Act 1999. All cost figures in Form 1 must include GST, which means entities that are not registered for GST may effectively recover the tax component even though they cannot claim input tax credits, creating a small windfall. The central calculation method in regulation 6 requires the entity to add travel, preparation and professional services costs for each three month period and for the final period, using Form 1. The instrument also provides tables of rates that are fixed in advance for the life of the regulations, with car expenses rising from 88 cents per kilometre in late 2025 to 118 cents by mid 2035, and daily travel expenses rising from $333.90 to $431.60 over the same period.

The regulations directly affect traditional owner group entities, which are the bodies recognised under the Traditional Owner Settlement Act 2010 as representing traditional owner groups for the purposes of land use negotiations. These entities must now use the prescribed method and Form 1 to calculate and claim their negotiation costs. The responsible person (likely a Victorian Government department or statutory officer) is also directly affected, as that person is liable to pay the calculated costs under section 52(2) of the Act and may be required to assess whether the claimed costs are reasonable despite the prescribed method. The regulations create an obligation on the entity to produce evidence of costs if requested, which imposes a record keeping and document production burden. The authorised persons within the entity - members or employees - are affected because their time and wages form part of preparation costs, and the entity must track that time. Qualified professionals such as lawyers, economists, geologists and engineers are affected because their fees become claimable as professional services costs, but only to the extent the entity incurs them. This may make engagement of such professionals more attractive to entities because the costs are recoverable, potentially increasing demand for their services. Service providers (representative bodies under the Native Title Act) are affected by the condition that their costs are only recoverable if the entity is liable to pay and the provider is not Commonwealth funded for the relevant services. This may create a perverse incentive for entities to avoid using Commonwealth funded service providers, or for providers to restructure their funding to avoid losing the cost recovery stream. Taxpayers and the Victorian budget are indirectly affected because the costs are ultimately paid from public funds, and the uncapped nature of preparation and professional services costs introduces a risk of cost escalation. Land use activity proponents (such as developers, miners or public works authorities) are affected because the negotiation process and its cost recovery mechanism can influence the pace and cost of obtaining land use approvals. If the entity inflates costs, the responsible person may resist payment, leading to disputes that delay the underlying activity. The regulations do not apply to parties outside Victoria or to negotiations under other settlement frameworks such as the Commonwealth Native Title Act 1993.

The traditional owner group entity has the duty to calculate its negotiation costs using the prescribed method, adding together travel, preparation and professional services costs in accordance with regulations 7, 8 and 9, and to present that calculation in Form 1. The calculation must be made at the end of each three month period beginning from the day a section 49(1) notice is given, and again at the end of the negotiation. The entity has the right to be paid those costs by the responsible person under section 52(2) of the Act, subject to the responsible person’s assessment of reasonableness. The entity also has the duty to produce evidence of costs if the responsible person requests it. This is a potentially onerous obligation because the regulation does not limit the scope of evidence that can be requested, nor does it set a time frame for production. The entity has the right to include service provider costs only if two conditions are satisfied: the entity is liable to pay the service provider, and the service provider is not funded by the Commonwealth under section 203FE of the Native Title Act. This places a due diligence obligation on the entity to ascertain the funding status of any service provider it engages. The responsible person has the right to request evidence of costs and presumably to dispute the reasonableness of claimed amounts, although the regulations do not create a formal dispute resolution mechanism. The regulations confer no rights on third parties such as land use activity proponents; they are not parties to the negotiation cost calculation. The duty to calculate costs arises at fixed intervals, which forces entities to maintain ongoing records rather than waiting until the end of the negotiation. This quarterly cycle imposes a recurring administrative burden. If the entity fails to produce evidence when requested, the responsible person may withhold payment or refuse to accept the calculation as meeting the reasonable standard. The regulations do not specify any right to interest on late payments or any mechanism for adjusting costs if the responsible person unreasonably delays payment. The entity’s right to recover costs is contingent on following the prescribed method; if it uses a different method or fails to use Form 1, the calculation may be deemed non compliant and the responsible person might not be obliged to pay.

The regulations themselves contain no penalty provisions. They are subordinate legislation made under section 91 of the Traditional Owner Settlement Act 2010, and enforcement depends on the Act’s provisions and general law. The Act does include penalties for certain offences, but the regulations do not create any new offences. If a traditional owner group entity submits a calculation that is knowingly false or inflated, it could potentially face liability for fraud, misrepresentation or obtaining a financial advantage by deception under the Crimes Act 1958 (Vic). The responsible person may also have a right to recover overpayments as money had and received, or to set off disputed amounts against future payments. The regulations impose an obligation to produce evidence of costs if requested, but there is no stipulated penalty for failing to do so. The consequence is likely practical: the responsible person may treat the costs as not proven and refuse payment. There is no enforcement body specifically designated in the regulations. Disputes about the reasonableness of costs may ultimately be resolved through civil proceedings or through mechanisms in the underlying Act, which provides for the Victorian Civil and Administrative Tribunal (VCAT) or the Supreme Court to hear matters arising under the settlement framework. The lack of an express penalty may reflect the policy assumption that entities will act in good faith, but it also means there is no deterrent against opportunistic over claiming beyond the threat of litigation. The regulations do not provide for audit by the responsible person or any independent agency, although the evidence production right gives the responsible person some investigative capacity. The sunset provision (expiry on 23 September 2035) acts as a form of enforcement pressure on the executive to review the regulations and make any necessary amendments. If the regulations expire without re making, the method ceases to be prescribed and the Act’s requirement to pay reasonable costs would revert to an undefined standard, creating legal uncertainty. The instrument does not contain any provision for recovery of costs from an entity that has been overpaid if a later audit reveals over claiming. Such recovery would need to rely on common law principles of restitution or contractual terms.

These regulations are made under section 91 of the Traditional Owner Settlement Act 2010 and operate wholly within that statutory framework. They prescribe the method for calculating “reasonable costs of negotiating” referred to in section 52(2) of the Act, but they do not alter the substantive rights and duties in the Act itself. The regulations interact with the Commonwealth Native Title Act 1993 through the definition of “service provider”, which incorporates sections 203B and 203FE of that Act. This creates a dependency on Commonwealth law for determining which entities qualify and whether their costs are recoverable. Changes to the Commonwealth Act could affect the operation of these regulations without any amendment to the Victorian instrument. The definition of “GST” is tied to the Commonwealth A New Tax System (Goods and Services Tax) Act 1999, so any change to the GST regime would flow through. The regulations revoke and replace the Traditional Owner Settlement (Negotiation Costs) Regulations 2015, but they do not preserve any transitional provisions for negotiations that were already underway when the 2025 regulations commenced. This could create a gap: if a negotiation began before 28 September 2025, it is unclear whether costs incurred prior to that date should be calculated under the 2015 method and costs after that date under the 2025 method. The instrument does not address this. The underlying Act (section 52) imposes a duty on the responsible person to pay reasonable costs, and the regulations inform the meaning of “reasonable”. If a court or tribunal finds that the prescribed method produces an unreasonable result in a particular case, the Act’s general standard may override the regulation’s specific method. The regulations are also subject to the Subordinate Legislation Act 1994, which imposes the ten year sunset and has procedural requirements for making and amending statutory rules. The Interpretation of Legislation Act 1984 governs how the regulations are to be read, including that headings, examples, notes and punctuation form part of the instrument. The regulations do not interact directly with the Competition and Consumer Act 2010 (Cth) or Victorian fair trading laws, but the engagement of professional service providers may be subject to those laws. The regulations may also interact with native title agreements under the Commonwealth Act, because land use activities negotiated under the Victorian framework may also require native title consents, creating overlapping cost recovery mechanisms that are not harmonised.

According to the Table of Amendments in the instrument as published, there are no amendments made to the Traditional Owner Settlement (Negotiation Costs) Regulations 2025 by statutory rules, subordinate instruments or Acts at the time of publication (version 001, effective 28 September 2025). This is expected given that the regulations are new and came into force on that date. The regulations revoke the 2015 version (S.R. No. 109/2015) but do not provide a detailed history of the 2015 regulations’ amendments. The 2015 regulations have been wholly replaced, not merely amended. The instrument includes a two page endnotes section that lists general information, including that the regulations were made on 23 September 2025 by the Governor in Council. The sunset is set for 23 September 2035, ten years from the date of making, as required by the Subordinate Legislation Act 1994. The regulations have not yet been the subject of any amending regulations, and there is no indication of pending amendments. The escalating rates in Tables 1 and 2 are built into the principal instrument, meaning that no future amendment is needed to change the rates; they are fixed for the life of the regulations. This removes the need for periodic updates but also locks in rates that may diverge from actual cost increases over a decade. Any amendment to correct an error or to adjust the method would require a new statutory rule. The explanatory details note only that the 2015 regulations are revoked. The instrument does not include a transitional or savings provision for pending claims under the 2015 regulations, which could be a source of legal uncertainty. It is possible that the responsible person and entities will treat any ongoing negotiation as subject to the new method from the date of commencement, but that interpretation is not explicitly supported in the text. The lack of amendment history is notable because it means the instrument has no precedents for how amendments are to be structured, and any future amendment will need to be carefully drafted to avoid disrupting the fixed rate tables.

The instrument itself contains no reference to any litigation. As a newly made statutory rule effective from 28 September 2025, there are no reported cases interpreting or applying these regulations. The 2015 predecessor regulations may have generated disputes, but the instrument does not list any, and the endnotes contain no relevant case references. It is possible that litigation under the underlying Traditional Owner Settlement Act 2010 has touched on the reasonableness of negotiation costs, but the regulations are recent and any court or tribunal decisions will post date this instrument. The lack of litigation history means that key interpretative issues remain unresolved. For example, what constitutes a “reasonable” preparation cost in the absence of a cap is untested. The definition of “authorised person” as excluding contractors might be challenged if entities commonly use external facilitators. The evidentiary burden on the entity to produce costs has not been judicially considered. The interaction between the regulations and the Act’s general reasonableness standard is also untested. Practitioners should monitor VCAT and Supreme Court decisions for guidance. The regulations are likely to be interpreted in accordance with the purpose of the Act, which is to facilitate settlement of native title claims and land use agreements. Courts may give some deference to the prescribed method as a safe harbour, but they may also allow the responsible person to challenge costs that, while calculated under the method, are still unreasonable in quantum. The absence of litigation history also means there is no established body of precedent on the 2015 regulations, so the 2025 regulations start with a clean slate. The fixed rate tables in particular have not been tested against actual cost patterns. If entities find the rates too low, they may argue that the method itself is unreasonable under the Act, leading to a challenge that could invalidate parts of the regulations. The sunset date means that even if litigation is slow, the regulations will expire before any lengthy appeal process is exhausted.

Several features of the regulations warrant close attention. First, the definition of “authorised person” is narrow: only a member of the traditional owner group or an employee of the entity qualifies. This means that if an entity engages a consultant who is not an employee (for example, a specialised facilitator), that person’s time cannot be counted as preparation costs under regulation 8. It may instead be claimable as professional services costs (if they are a qualified professional), but if the person is not a qualified professional, their costs may not be recoverable at all. This creates a trap for entities that rely on external advisors for negotiation preparation. Second, the service provider cost condition is subtle. Even if the entity is liable to pay the service provider, costs are excluded if the provider is funded by the Commonwealth under section 203FE of the Native Title Act. That funding can change over time, and an entity may not know the funding status of its provider. If the provider loses or gains Commonwealth funding mid negotiation, the recoverability of past or future costs may be affected. Third, the quarterly calculation requirement under regulation 6(4)(a) starts on the day the section 49(1) notice is given. If the entity does not make a calculation at the end of that first quarter, it cannot simply roll those costs into the final calculation; the regulation implies that costs not calculated in a quarter are still captured at the end (regulation 6(4)(b) covers “any costs not previously calculated”), but the language is ambiguous. A responsible person could argue that costs not claimed quarterly are waived. Fourth, the daily travel expense cap in Table 2 is described as a maximum per day, but it includes accommodation, meals and incidentals. If an authorised person stays in expensive accommodation, the entity may need to absorb the excess. The cap does not include car expenses or public transport, so those are separate. Fifth, the form requires two signatures from authorised representatives, which may cause delay if key officers are unavailable. Sixth, the regulations do not index the fixed rates to any external measure such as CPI. The car rate rises by exactly 3 cents per year and the travel expense cap by roughly 3% per year, but if actual costs rise faster, entities bear the shortfall. Conversely, if costs rise slower, entities receive a windfall. Seventh, the sunset on 23 September 2035 means that negotiations that extend beyond that date will lose the prescribed method, creating uncertainty for long running negotiations. Eighth, there is no provision for extending the three month period if a negotiation is paused. The clock runs from the section 49 notice regardless. Ninth, the evidence production obligation in regulation 6(3) does not specify a time limit, but it also does not require the responsible person to specify what evidence is needed. An entity could be asked for vast amounts of documentation with short notice. Tenth, the regulations apply to “land use activities” as defined in the Act, but if a negotiation covers multiple activities, the entity must clearly identify them on the form; mixing costs across activities could lead to disputes.

To comply with the Traditional Owner Settlement (Negotiation Costs) Regulations 2025, a traditional owner group entity should implement a structured cost tracking system from the moment a section 49(1) notice is received. The first step is to identify which authorised persons will be involved in the negotiation and ensure they are either members of the traditional owner group or employees of the entity. If external experts are needed, they should be engaged as qualified professionals (legal, economic, geological, engineering) to fall within professional services costs rather than preparation costs. The entity should maintain a log of all time spent by authorised persons on preparation and negotiation, along with the hourly wage or salary rates paid, and any overheads and on costs attributable to that time. This data feeds into preparation costs under regulation 8. For professional services, the entity should keep invoices and engagement letters that clearly link the services to the negotiation. For travel costs, the entity must record kilometres travelled for car use (using the prescribed cents per kilometre rates from Table 1), keep receipts for public transport, and for travel expenses such as accommodation and meals, ensure that the daily total per person does not exceed the maximum in Table 2. The entity should also verify the funding status of any service provider to ensure it is not Commonwealth funded under section 203FE of the Native Title Act. At the end of each three month period from the date of the notice, the entity must complete Form 1, adding together all three categories inclusive of GST. The form requires two authorised representatives to sign, so the entity should designate at least two senior officers (for example, Chief Executive Officer and company secretary) to avoid delays. The completed form must be issued to the responsible person. The entity should retain all underlying evidence (time sheets, invoices, receipts, mileage logs) in case the responsible person requests it under regulation 6(3). A reasonable practice would be to compile the evidence in a dossier before submission and be ready to produce it promptly. At the conclusion of the negotiation, the entity must do a final calculation for any costs not captured in the quarterly forms. If there is any change in the authorised persons or service provider funding during the negotiation, the entity should re verify compliance. Entities should also be aware that the regulations do not cap preparation or professional services costs, but that does not guarantee the responsible person will accept the claimed amounts; any claim that appears excessive could be challenged as unreasonable under section 52(2). To mitigate dispute risk, entities should benchmark their rates against market rates and document the basis for any unusual charges. Finally, the entity should monitor the sunset date of 23 September 2035 and plan for a transition if the negotiation extends beyond that point.