I have previously reported on the settlement of the 2009 Victorian Bushfires class action (see ‘Black Saturday bushfire survivors secure $500 million in Australia’s largest class action payout’ (July 15, 2014)). A class action is brought by a representative plaintiff on behalf of people who suffered losses in the same event, as such it can affect the legal rights of people who are not actively engaged in the litigation. To ensure that those people’s rights are properly considered, settlement of a class action must be approved by the Court. In Matthews v AusNet Electricity Services Pty Ltd & Ors  VSC 663 Justice Osborn of the Supreme Court of Victoria approved the settlement.
The terms of the settlement are that SPI Ausnet will pay $378.6 million, UAM (which was the defendant responsible for powerline inspections) will pay $12.5 million and the State of Victoria, on behalf of the CFA, police and land management agencies will pay $103.6 million. The damages are to be distributed among 5847 claimants (which includes claims by insurers to recover amounts that they paid out under insurance policies). The money will be used to pay the legal fees ($60 million) and then to meet claims for damages; 3/8, will be used to meet claims for personal injury or death and 5/8, will be used to meet claims for property damage and economic losses. The state’s contribution will go to the personal injuries and death claims only. It was estimated that personal injury claimants would receive about 70% of their total claims, and those claiming for property and economic losses would obtain about 33% of their total claims. When taking into account insurance the average claimant would actually obtain about 2/3 (66%) of their total losses. Whilst these figures were necessarily ‘broad brush’ and unlikely to reflect final outcomes, in particular as no-one is really the ‘average’ it was accepted that there had been conscientious modelling by the parties to determine the likely outcomes for claimants.
Osborn J was not determining the legal issues between the parties but he gave a detailed consideration of the issues raised. You can read my summary of the judgment here: Matthews v AusNet. For those that don’t want to read the detailed summary, my conclusions and thoughts are set out below.
This post cannot do justice to the judgement that runs for some 442 paragraphs plus appendices, but it does I think raise some interesting issues. The ABC reports (‘Black Saturday class action: Judge approves $494m Kilmore East bushfire settlement’, ABC Online, 23 December 2014) that the plaintiff:
Ms Matthews said the settlement brings “an element of relief and a sense of comfort” and will help ease the financial struggles of the victims of the fire.
But she said power companies like SP Ausnet must heed the finding.
“I’m really hopeful that the evidence that was presented at the trial will encourage all the parties involved to renew and review their standards of operation,” she said.
“And [I] would like to say that the electricity companies, whether it be SP Ausnet or the newly-branded Ausnet Industries, need to take into account the rationale behind this record breaking class action settlement and they need to do everything they can to stop another avoidable disaster from destroying so many lives.”
I’m afraid to say I suspect Ms Matthews is unduly hopeful. This is a settlement it is not a judgement. It is being made as a commercial assessment, by both sides, as to their risks in litigation. There is no ‘finding’ (and to the extent I’ve reported findings, above, it was that the plaintiff’s case had real problems). No-one can really believe that companies like Ausnet ‘need to do everything they can to stop another avoidable disaster from destroying so many lives’ because the obvious ‘everything’ is to not have an electricity grid, but no community will tolerate that (see ‘Bushfires; the price we pay for electricity’ (May 20, 2014)).
What this shows, in my view, is that there has to be a better way. As Osborn J says, apart from 208 sitting days (), there were ():
(a) … 26 pre-trial directions hearings; and
(b) 34 pre-trial applications;
(c) 60 major evidentiary and procedural rulings were made by the judge;
(d) evidence was ultimately heard from 40 expert and 60 lay witnesses;
(e) some 22,466 documents were loaded onto the electronic court book;
(f) some 10,364 documents were tendered in evidence; and
(g) in excess of 20,300 pages of transcript were generated in the course of the trial.
The plaintiff’s legal costs were $60 million. Add to that the costs of providing the court, the costs of each defendant and no doubt costs that each member of the class met that will not be recovered just in putting together the details of what they lost. Apart from these legal proceedings, the 2009 Victorian Bushfires Royal Commission
■ held 26 community consultations
■ received almost 1,700 public submissions
■ conducted 155 days of hearings—including eight days of regional hearings and 23 days examining the 173 fire-related deaths, the hearings for which were attended by more than 450 family members and friends of the deceased
■ heard from 434 witnesses, including 100 lay witnesses and two panels of expert witnesses
■ received 31 submissions from counsel assisting and 107 submissions in response from interested parties
■ webstreamed the hearings live
■ produced 53 internal research papers
■ prepared and released one discussion paper
■ prepared one information paper
■ generated over 20,767 pages of transcript
■ received more than 1,000 exhibits into evidence—encompassing nearly 17,000 documents, photos, maps, and audiovisual and other material
■ issued five practice notes
■ produced two interim reports and this final report
■ filed over 98,000 documents in its electronic data management system 2009 Victorian Bushfires Royal Commission Final Report Volume 4, )
And cost $40 million (2009 Victorian Bushfires Royal Commission Final Report Volume 4, [4.3]) – $20 million LESS than the plaintiff’s costs in bringing this case to court! There has also been other litigation over these fires that has settled; see Further settlement of Black Saturday claims (May 17, 2012) and Thomas v Powercor – First Black Saturday case to settle (December 5, 2011).
Despite all the money spent on legal costs (putting aside the actual damages paid) there has been no definitive determination of legal rights and obligations (given all the cases settled) and as the evidence in Matthews v AusNet Electricity Services Pty Ltd & Ors shows, even if there is consensus as to the cause of the fire (failure of electrical assets) there is no consensus yet on what could or should have been done to prevent that fire or what can be done to prevent future fires.
Further, as noted here despite the $500 million payout, the claimants are not receiving the total cost of their losses. The solution is not to suggest that people need to take responsibility and insure against such losses as, in this case, some 5000 claims were by insurance companies. Much of these damages paid out here will be transferring money from those that insure the defendant to those that insure the claimants.
Worse than the money being wasted is the trauma experienced by those that have to keep reliving events and being subject to rigorous legal scrutiny and judgement (see ‘ACT Court of Appeal upholds verdict in favour of NSW over Canberra 2003 bushfires’ (November 3, 2014)). Whilst I’m sure the royal commissioners, judges and counsel will all believe in their contribution to community safety and allowing every one, and every view to be heard and tested, I am left with an uncomfortable feeling that little has been added. In Canberra there was the original McLeod Inquiry followed by the lengthy coroner’s inquiry and inquest, with several trips to the Supreme Court, and finally litigation in the ACT Supreme Court and then Court of Appeal. In terms of ‘learning lessons’ was anything really learned beyond the McLeod Inquiry – (see Ignatious Cha, Learning Lessons from Fires: A Study of Post-Disaster Inquiries in the 2003 Canberra Fires (2013, Unpublished Individual Research Project, Fenner School of Environment and Society, Australian National University)?
Anyone who thinks that, following the various inquiries into fires going back to 1939 and including inquiries into the 1983 Ash Wednesday fires, the 2003 fire season and now the 2009 fires we now have reached a stage where we understand fires and can, and will ‘do everything they can to stop another avoidable disaster from destroying so many lives” is bound to be disappointed. Given the Australian climate, landscape and choices we make about where and how to live, another fire event is inevitable.
Given that bushfire and other natural hazards are inevitable, a new way of reviewing these events to identify causes, potential action to mitigate risk and to spread the risk of losses must be found.
Love this post Michael – the recurring human cost of disasters is something that we all need to factor into our thinking.
Michael, I agree that bush fire disasters are inevitable. I also see that the inquiry processes you refer to tend to look at blame and accountability, rather than being a ‘lessons learned’ and ‘lessons implemented’.
Seems also an emphasis can be on fixing things. Maybe a focus on what works well and needs to be sustained is equally important and ‘what can be improved’.
I haven’t thought about the nexus between insurance, legal systems and inquiries. Maybe this is for the Christmas break!
Wise words Mr Eburn. As usual you have put your finger directly on the central issue and your comments should be taken on board and listened to. How I wish our Parliaments were full of people with your intellect and wisdom, rather than the mottley collection of dingbats we have. Merry Christmas Mr Eburn, and I hope to enjoy your blogg throughout 2015. Well done.