Hawker v Powercor Australia Ltd
[2019] VSC 521
•2 August 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2018 01833
| WILLIAM ROBERT HAWKER | Plaintiff |
| v | |
| POWERCOR AUSTRALIA LTD (ACN 064 651 109) | Defendant |
---
JUDGE: | FORBES J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 July 2019 |
DATE OF JUDGMENT: | 2 August 2019 |
CASE MAY BE CITED AS: | Hawker v Powercor Australia Ltd |
MEDIUM NEUTRAL CITATION: | [2019] VSC 521 |
---
PRACTICE AND PROCEDURE – Group proceedings – Approval of Settlement Application under Supreme Court Act 1986 (Vic), s 33V – In the interests of group members as a whole - Whether terms of settlement “fair and reasonable” – Settlement Approved.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C Nicholson | Maddens Lawyers |
| For the Defendant | No appearance |
HER HONOUR:
On St Patrick’s Day 2018, a bushfire started in grass along Cross Forest Road Naroghid, just east of Terang in Western Victoria. It was known as the Gnotuk fire. The Gnotuk fire was one of four that started, in the country around Warrnambool on 17 March 2018, a day of severe fire conditions. The fire burnt 343 hectares and destroyed one home, a number of outbuildings, fencing and pasture.
Mr Hawker suffered damage and loss to his property in the Gnotuk fire. On 17 May 2018, he commenced a proceeding against Powercor as provided for in Part 4A of the Supreme Court Act 1986 on behalf of himself and other persons who had suffered loss and damage as a result of the Gnotuk bushfire. The group represented the class of 17 persons who have suffered personal injury or property damage or pure economic loss as a result of the fire. Orders were made setting a timetable by which group members may opt out of the proceeding and four group members did opt out, leaving a group containing 13 members. The group members’ claims were substantially in relation to property damage.
The parties have reached an agreement in relation to the proceeding. They have agreed to discontinue the proceeding on the basis that each bear their own responsibility for legal costs incurred. In lay terms, both parties agree to simply walk away from the litigation. Settlement of the proceeding reached by the plaintiff and defendant requires approval of the Court pursuant to s 33V of the Supreme Court Act 1986. Terms of settlement to this effect have been executed by the parties and on 29 July 2019 I heard the application seeking the required approval. I indicated I would make orders approving the settlement and provide my reasons. These are my reasons.
The sequence of events that led to the fire starting is not disputed between the parties. Powercor owned and operated a single phase high voltage power line between Naroghid and Cobden known as the Kokoda Line. Pole eight (‘Pole’) along the Kokoda Line was located opposite the property at 114 Cross Forest Road, Naroghid (‘the property’’). At this Pole a low voltage service line to the property , crossed the road and delivered supply to that property. A transformer located on the Pole transformed the high voltage current to 240 volt which was delivered on the low voltage line (LV line) to the customer.
At around 9.00pm a eucalyptus branch or branches from a tree located within the property fell onto the low voltage line breaking or pulling it from its connection with the Pole and causing loss of power to the property. Mrs Wright who lived there, called the Powercor emergency line to notify them of the loss of power and the fact that the power line was down. This call was logged by Powercor at 9.05pm. The defendant treated the information on the basis that the downed line was still live. Powercor was informed that the loss of power was confined to the property and they advised Mrs Wright that they would get someone there as soon as possible. At the time of this call, there was no evidence of fire.
The plaintiff pleads that at about 9.25pm sparks fell into long dry grass near the base of the Pole igniting a fire which became the Gnotuk bushfire. The basis for this timing is found in the observation of a witness from the property who reported seeing sparks “like an arc welder at the pole”.[1]
[1]Affidavit of Brendan Francis Pendergast dated 16 May 2019 [9].
The circumstances of the fire commencing were investigated by the CFA and by Energy Safe Victoria. From those investigations it appears that both police and the CFA were notified of the live wire down hazard prior to the ignition of the fire and CFA responded very soon after ignition. The Energy Safe Victoria investigation found that the falling tree branch caused damage at the connection between the LV line and the casing of the transformer box. The Defence says, consistent with this finding, that the fire was caused by an arc event occurring between the transformer LV line and the earthed transformer tank resulting from forces imparted when the Tree fell onto the LV line. As a result of the arc molten material dropped to the ground starting the fire in the dry grass’[2]. The plaintiff accepts this as the cause of the fire.
[2]Defence dated 26 July 2018 [21(g)].
The Defence further pleaded two particular features that were unusual about the circumstances of the fire. First, it was unusual for a fire to start as a result of a transformer being damaged when a line falls and second, that it was highly unusual for a fire not to occur instantaneously if it is to occur upon an insulated ‘wire down’ occurring.
Principles to be applied
The purpose of requiring approval of any settlement is to ensure that the outcome negotiated by the plaintiff, as representative of the group, with the defendant is one that is in the interests of group members as a whole.[3]
[3]ACC v Chats House Investments Pty Ltd (1996) 71 FCR 250.
In applying the equivalent provision under the Federal Court of Australia Act 1976 (Cth), Goldberg J in Williams vFAI Home Security Pty Ltd (No 4)[4] identified the following considerations as typically relevant to an assessment of an application for approval (the ‘Williams factors’):
(a)the amount offered to each group member;
(b)the prospects of success of the claim;
(c)the likelihood of group members obtaining judgment for an amount significantly in excess of the settlement offer;
(d)the terms of any advice of counsel and any independent expert in relation to the issues arising in the proceeding;
(e)the duration and cost (complexity and duration) involving proceeding further to judgment;
(f)the attitude of group members to the settlement offer.
[4](2000) 180 ALR 459.
This Court has frequently observed that the Williams factors are a useful guide for consideration but that each application for approval must involve consideration for specific factors that might raise issues about the fairness or appropriateness of the proposed compromise.[5] In particular, it involves identifying any features that might be said to be obviously unreasonable or unfair.[6]
[5]Wheelahan v City of Casey [2011] VSC 215 (Emerton J); Matthews v AusNet Electricity Services Pty Ltd & Ors [2014] VSC 663 (Osborn JA).
[6]Darwalla Milling Co Pty Ltd & Ors v F Hoffman-La Roche Ltd & Ors (No 2) (2006) 236 ALR 322 [39].
The assessment by the Court involves considering whether the settlement is in the interests of the group members as a whole having regard to the issues between them and the defendant as well as what might be fair and reasonable as between group members if there are differences as to amounts or the basis upon which any damages might be distributed.
The outcome will be fair and reasonable if it is within a range of fair and reasonable outcomes.[7] In Darwalla v F Hoffman-La Roche Jessup J said:
It is not, I consider, the court’s function under s 33V of the Federal Court Act to second-guess the applicants’ advisors as to the answer to the question whether the applicants ought to have accepted the respondents’ offer; the court’s function is, relevantly, confined to the question o whether the settlement was fair and reasonable. There will rarely, if ever, be a case where there is a unique outcome which should be regarded as the only fair and reasonable one. In settlement negotiations, some parties, and some advisers, tend to be more risk-averse than others. There is nothing unreasonable involved in either position and, under s 33V, the court should, up to a point at least, take the applicants and their advisors as it finds them. Neither should the court consider that it knows more about the group members’ businesses than the applicants, or more about the actual risks of litigation than their advisors. So long as the agreed settlement falls within the range of fair and reasonable outcomes, taking everything into account, it should be regarded as qualifying for approval under section 33V.
[7]Ibid [50].
These comments are equally apposite in circumstances where what is agreed involves the group members walking away from the litigation without recovery of any damages.
Fundamentally, whether or not the settlement is in the best interests of the group members and should be approved requires consideration of the prospects of success or failure and the probable quantum of damages.
The plaintiff in this application for approval relies on an affidavit of Brendan Francis Prendergast, sworn 16 May 2019, which exhibits the executed settlement agreement and confidentially exhibits details of communications with the group members regarding the proposed settlement and the opinion of senior and junior counsel as to the available evidence and the risks associated with the proceeding.
The plaintiff’s claim pleads causes of action in negligence, breach of statutory duty imposed by the Electricity Safety Act 1998 (Vic) and nuisance. The proposed settlement has been agreed at a relatively early stage in the process after close of pleadings. The plaintiff’s allegations of negligence and breach of statutory duty can be characterised as:
(a) a failure to adequately respond to the report at 9.05pm that the LV line was down, and/or
(b) failing to prevent the continuing supply of electricity to the electrical assets at the pole knowing they were damaged and presenting an increased risk of causing an unintended discharge.
These allegations of breach dealt both with the particular response on the day of the fire and with the system generally for responding to and, when appropriate, stopping the transmission of electricity after the occurrence of a fault or failure.
The Defence generally denied the existence of the duty and breach.
It pleaded that its response to the line down report was “in accordance with its normal protocols by treating the fault as a high priority ‘wire down’ fault and by proposing to despatch a fault crew; the logistics of despatch made it impossible to allocate a fault crew to reach 114 Cross Forest Road prior to the fire occurring. The closest fault crew had earlier been despatched to attend the Terang Fire (at 9.00pm) followed by a call to confirm (at 9.04pm), followed by a call from the County Fire Authority received at 8.58pm reporting an outbreak of fire at one of the defendant’s substations had caused a grass fire which was threatening houses in Terang. A fire in or affecting the zoned substation would have put over 6,000 customers, including life support customers, at risk of loss of supply for an extended period. It was not appropriate to pull that fault crew off that job.
In response to the failure to isolate supply to the Pole it pleaded that it is an unreasonable response to a report of a line down to an individual house where no fire has been reported to remotely isolate the entire feeder which supplied a total of 982 customers including six life support customers and, once isolated, the feeder would have been down for an extended period
Three things are important in the sequence of events: First, at the time that Powercor was notified of the loss of power and responded to the line down fault, no fire was reported; second if there was no fire at the time that the line down occurred, it would be unusual for a fire to start after a period of delay (in this case about 20 minutes later), and third the ability to dispatch a fault crew at 9.05pm was impacted upon by the competing need to respond to a fire already posing a threat at Terang.
As can be seen from the combination of these circumstances and the short window of time within which the plaintiff alleges a fault crew should have been despatched and arrived to prevent a fire starting, make for a very difficult case for the plaintiff on failure to respond adequately to say the least.
The defendant asserts that the step of isolating supply more widely is unreasonable in the circumstances. In seeking to prove that failure to undertake such a step amounted to a breach of duty of care, the plaintiff would need to show that such a step was a reasonable response in all the circumstances. That must involve some measuring of the relative risk associated with shutting down power against the risk posed by the downed line. The risks associated with such a sizable area that would be affected by any shutdown as identified was likely to be of significance.
In considering questions of liability and causation the plaintiff’s legal advisors have had available to them documentation from a number of sources as to the circumstances of this fire and conditions more broadly facing the defendant on that evening, including the ESV Gnotuk Fire Ignition, Technical Investigation Report and CFA documents produced under subpoena. Additionally, although discovery has not yet formally occurred the defendant has made available critical documents, including additional documents specifically requested by the plaintiff’s legal advisors. Additionally the plaintiff has had the benefit of conferring with a highly experienced independent electrical engineer and an experienced linesman and electricity worker and the confidential opinion of counsel is informed by matters of expertise of these persons.
What is tolerably clear is that once the factual and technical position became known in greater detail, the plaintiff faced a very real risk of not succeeding in the claims, in negligence at least on questions of breach, and also in nuisance.
I also have regard to the fact that the group members are a small group and all have had opportunity to consult with the plaintiff’s solicitors regarding the proposed settlement. None have lodged objection with the Court voicing opposition to the discontinuance of proceedings. In circumstances where the group is relatively small, it is simpler to provide detailed communication to all group members as to both the risk and opportunity of litigation and the reasons for the settlement proposed.
The outcome delivers no damages to the group members. It might be said that this outcome is one identifying an unfairness in the settlement. However, it comes about in circumstances where the plaintiff and group members have actively participated to bring about the outcome. I am satisfied that while group members will receive no compensation in this outcome, nor are any of them liable for any legal costs incurred.
The loss and damage that was claimed was almost entirely property damage. The confidential opinion sets out the work done to quantify the claims and to identify the insured component of loss which has been paid. The insured component is significant and there is no insurer objection to the settlement proposal.
Clearly there is a prospect of a better settlement, negotiating even a heavily discounted amount with the continuation of the litigation. However, my task is not to second guess the assessment that the plaintiff’s legal advisors have made of that prospect. I accept the assessment that they have confidentially outlined on that question.
In all of the particular circumstances of this proceeding I am satisfied that the ‘walk away’ settlement is within the range of fair and reasonable outcomes and approve the settlement as required by s 33V.
3