In Mercieca & Anor v SPI Electricity Pty Ltd & Ors; SPI Electricity & Ors v Eagle Travel Tower Services Pty Ltd & Ors  VSC 204 (16 May 2012) Emerton J approved a settlement of $32 million for damages arising from the Churchill fire on Black Saturday. Apart from causing extensive property damage, this fire claimed two lives.
The case was a ‘class action’ where two representative plaintiff’s brought the legal action on behalf of all people, other than those who ‘opted out’, who suffered damage in the fire. The original claim was against SPI Electricity for alleged negligence in failing to clear around their power lines so that when a tree was brought down during high winds, it impacted the power line and started the fire. SPI joined the Department of Sustainability and Environment (DSE) and Eagle Travel Tower Services Pty Ltd which was the contractor they employed to keep the vegetation clear of the powerline. All of the defendants denied liability but have agreed to settle for $32million being about 45% of the total losses claimed ($73 million). There are advantages in settling, rather than running a case such as this. There is no guarantee of winning as the legal and factual issues were contested so settling for 45% can be quite prudent.
Because this was a class action, it needed a Supreme Court judge to approve the settlement which he did.
There are two issues of interest here. The first is that His Honour approved a deed of settlement that is not reproduced in this online version of the judgement. (The judgement is currently on AustLII but not yet on the Victorian Supreme Court website. When the court adds it they may include the deed.) The judgement does not explain how the damages are ‘split’ between the defendants, that is whether they are being paid 100% by SPI’s insurers or whether the insurers for DSE are also contributing to the settlement.
The second issue lies in nature of class actions. These actions are designed to reduce litigation by resolving all the issues once and for all. Victoria has an ‘opt out’ system so anyone who was affected by the Churchill fire but who has not opted out, is bound by this settlement, even if they did not know the case was happening. It is because other people’s rights are affected that a judge must approve the settlement and now the lawyers invovlved must take action to publicise the settlement so that people affected by the fire can notify the lawyers and have their claim included in the settlement. If the total claims exceed $73 million, the defendants must add more money to cover 45% of the total claim, but only to a maximum of a further $2 million.
One group of potential plaintiffs excluded from the class is local, state and federal governments and their agencies. As they are not part of the class they are still able to bring their own legal actions to recover any damages they have suffered which could include any amount that DSE has paid as part of this settlement.
In a paper that is to be published in the International Journal of Wildland Fire I have traced the extent of post bushfire litigation. We can see that since 1977 and significant grass fires in Victoria, the electricity authorities are being sued more and more often over fires including the Ash Wednesday fires of 1983 and now the Black Saturday fires of 2009. These cases have all settled rather than been fought in court, and the electricity authorities, and their insurers, are continuing to make a profit so we might infer that starting fires and having to pay out for the damage is seen simply as a cost of doing business! Actions against the state agencies like DSE and the Country Fire Authority are more recent and so far, only one, Gardner v the Northern Territory  NTCA 14 (10 December 2004) has been finalised by the court. All the others, including those from fires in NSW in 2001 and Canberra in 2003 remain ongoing. As there has been no judicial determination in these matters the law on duty and responsibilty remains unclear. The electrical authorities are willing to settle and the state agencies are generally fighting hard against being held responsible for the outcome of catastrophic fires. As this case has again settled, it sets no legal precedent, but it does make it interesting to ask whether or not the state agency, in this case DSE, took part in the settlement or whether it was agreed that the damages bill was to be paid solely by SPI.
17 May 2012.