This class action is being heard in the NSW Supreme Court because, as I understand it, the Queensland Supreme Court does not have provision for class actions.  Why the NSW Court has jurisdiction to hear a claim for damages that occurred in Brisbane, alleging negligence by Queensland dam operators of a dam located in Queensland that lead to flooding in a Queensland river is discussed below.

In any event in Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater [2014] NSWSC 1565 the defendants sought to have the claim ‘struck out’ for various defects in the pleadings. Garling J in the NSW Supreme Court agreed (as did the plaintiffs’ lawyers) that the pleadings (that is the documents that set out the case against the defendant) would need to be ‘redone.  The judgment is very technical and deals with the law and rules of procedure rather than the law relating to the alleged negligence in the management of the Wivenhoe and Somerset dams.

The short answer is that the originating documents were struck out.  First the plaintiff had not addressed the relevant factors set out in the Civil Liability Act 2003 (Qld).  That section says:

(1) A person does not breach a duty to take precautions against a risk of harm unless—

(a) the risk was foreseeable (that is, it is a risk of which the person knew or ought reasonably to have known); and

(b) the risk was not insignificant; and

(c) in the circumstances, a reasonable person in the position of the person would have taken the precautions.
(2) In deciding whether a reasonable person would have taken precautions against a risk of harm, the court is to consider the following (among other relevant things)—

(a) the probability that the harm would occur if care were not taken;

(b) the likely seriousness of the harm;

(c) the burden of taking precautions to avoid the risk of harm;

(d) the social utility of the activity that creates the risk of harm.

The plaintiffs’ lawyers agreed that they need to ‘replead’ the case to address the concept of ‘risk of harm’ in this section.  Because that was agreed there is no discussion as to what the defect was but one can infer that they did not sufficiently identify the ‘risk of harm’ that the defendants SEQWATER, SUNWATER and the State of Queensland should have had in mind and without that ‘risk of harm’ being identified, they could not argue how s 9 applied to them   that is whether the claimed ‘risk of harm’ was one they should have taken precautions against and if so what a reasonable response would have required.

There were other objections that the judge did rule on.  The successful ones were that the plaintiff had identified nine relevant time periods during which decisions, which it alleged were negligent, but did not identify how those decisions caused or contributed to the ultimate damage.   The judge said the plaintiff had to identify for each period ‘the level of the dam which the plaintiff contends ought to have been the appropriate one’ at that time, so the defendant could identify how the various acts or omissions contributed to the ultimate damage.

Finally the plaintiff alleged the engineers were negligent in how they approached their task or judgments they made.  The judge said that ‘it is not correct to regard mental processes … as being capable of constituting a breach of duty’.  In other words the plaintiff could allege negligence in what the engineers did or did not do, but not for the thought processes that lead to those actions or omissions.    Accordingly the plaintiff would need to delete ‘those allegations which deal with states of mind, and limiting its claim for breach of duty to allegations of acting inappropriately or failing to act appropriately’.

One might think that was a victory for the defendants as the pleadings were struck out, but there were orders to allow them to re-plead the case in accordance with the judge’s directions by 13 February 2015.   Orders were also made to ensure the cases were prepared and the matter is listed for hearing, beginning on 18 July 2016.  There is no doubt a very long way to go and equally no doubt that there will be further ‘interlocutory judgments’ (ie judgments by the court on issues of practice and procedure to keep the case ‘on track’) between now and July 2016.

Why is this matter in the NSW Supreme Court?

When I first wrote this post I said ‘I fail to understand why the NSW Court has jurisdiction to hear a claim for damages that occurred in Brisbane…’   A fellow lawyer and RFS volunteer has got back to me with the answer which is found in the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Qld).   This Act is part of a national scheme to, in effect, create a national legal system so there are identical Acts in each state and territory (see for example the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) and the Jurisdiction of Courts (Cross-Vesting) Act 1987 (VIC)).

Section 4 says ‘The Supreme Court of another State or of a Territory has and may exercise original and appellate jurisdiction with respect to State matters’.   What that means is any state Supreme Court can hear any matter regardless of the state it occurred in.   This allows people to commence proceedings in their ‘local’ court rather than having to travel interstate.  It makes perfect sense when there are complex matters that cross state-boundaries such as the 2003 Canberra fires.  Those fires began in both the ACT and NSW and damaged property in both jurisdictions.  It would have been wasteful if both the NSW and ACT Supreme Courts had to hear separate cases and where would the action for a fire that started in NSW but did damage in the ACT be heard?  By vesting each court with the jurisdiction of each other, the whole thing could be, and was, dealt with by one court (in this case, the ACT Supreme Court).

On the other hand it does appear to allow forum shopping as in the Queensland case as the parties started the action in NSW as they could bring a class action there, but they could not do so in Queensland, but s 4 doesn’t require that there be any particular connection with the state where the action is started so indeed the NSW court has jurisdiction.  The Act does provide that where a matter is started in a court other than the Queensland Supreme Court but it appears to the court that for reasons set out in s 5(3) the matter can be transferred to Queensland.  The criteria in s 5(3) include a generic consideration regarding ‘the interests of justice’.    From what I can infer Queensland has made no application to seek to have the matter transferred to the Queensland Supreme Court so one has to further infer that they don’t see that the interests of justice require that the matter be heard in Queensland.  As my colleague suggested it may be that Queensland is quite happy for the matter to proceed in NSW for the very reason the plaintiffs may want to be there, namely they can bring a class action.

A class action involves an action by a representative plaintiff.  The named plaintiff represents the class of people who have claims arising from the same or similar event and where the claims raise similar questions of law and facts (Civil Procedure Act 2005 (NSW) s 157).   With multiple plaintiffs it is easier to hear one case and determine issues of liability that then bind everyone rather than have multiple cases with perhaps each plaintiff represented by separate lawyers, going over the same issues multiple times.    In NSW the system is ‘opt out’ that a person does not need to consent to be a member of the group or class (s 160) rather they must opt out if they don’t want to be part of the proceedings (s 162).  That has always struck me as odd as it means a person who is not aware of the proceedings may go to a lawyer for advice on their rights, only to find their rights have been determined in representative proceedings that they did not know about and they can no longer take action as they see as appropriate, though in this case the class is described as:

…a “closed class” because, in order to be a member of the class, each person had to have entered into a litigation funding agreement as at the date of the commencement of the proceedings, or else have been indemnified by an insurer which had entered into a litigation funding agreement. (Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater [2014] NSWSC 1565, [23]).

This is related to the way the action is being funded.   Rather than the plaintiffs meeting the costs the action is being funded by Bentham IMF Ltd.   The class is not those who suffered a loss as a result of the floods but those who suffered a loss and ‘who have entered into a litigation funding agreement with Bentham IMF (Australia)’.

The solicitors running the case are Maurice Blackburn.  On their website it says:

If the case is won, Bentham IMF will be paid from the net settlement or judgment proceeds (that is after payment of costs). Bentham IMF will receive up to 30 per cent of the net settlement or judgment proceeds.

An Australian lawyer can enter into a ‘no win no fee’ costs agreement but if the case is won, fees have to be calculated in accordance with the normal scale of fees with an allowed ‘mark up’ to reflect that the lawyer shared the risk of losing (Legal Profession Uniform Law (NSW) s 182).  What is not allowed is a costs agreement where the lawyers’ fees are calculated as a percentage of the verdict (Legal Profession Uniform Law (NSW) s 183).   Although the legal practitioner cannot charge this sort of contingency fees, the litigation funders clearly can, and are.

Putting all those issues aside, as my colleague says, Queensland may be happy to just have to respond to one case rather than many hundreds if not thousands of claims that would be brought if everyone had to bring, and fund, their own claim.