Laine v Thiess Pty Ltd
[2016] VSC 689
•15 NOVEMBER 2016
| IN THE SUPREME COURT OF VICTORIA |
AT MELBOURNE
COMMON LAW DIVISION
MAJOR TORTS LIST
S CI 2015 02583
| KIRSTI MARGARET LAINE | Plaintiff |
| v | |
| THIESS PTY LTD (ACN 010 221 486) | Defendant |
S CI 2015 02556
| ANTHONY BEETSON | Plaintiff |
| v | |
| SUNWATER LIMITED (ACN 131 034 985) | Defendant |
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JUDGE: | JOHN DIXON J |
WHERE HELD: | MELBOURNE |
DATE OF HEARING: | 21 OCTOBER 2016 |
DATE OF JUDGMENT: | 15 NOVEMBER 2016 |
CASE MAY BE CITED AS: | LAINE v THIESS PTY LTD; BEETSON v SUNWATER LIMITED |
MEDIUM NEUTRAL CITATION: | [2016] VSC 689 |
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PRACTICE AND PROCEDURE – Group proceedings – Application to discontinue proceedings – Proceedings not yet served – Whether Court approval required – Whether notice to group members and defendants should be dispensed with – Supreme Court Act 1986, Part 4A, ss 33V and 33X.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr M Guo | Maddens Lawyers |
| No appearance for the Defendants |
HIS HONOUR:
Two group proceedings were issued in this court arising from floods in Queensland.
Following heavy rains on 1 May 2015, there was flooding in the Moreton Bay area in Brisbane associated with construction works in connection with the Moreton Bay Rail Link. Ms Laine, the plaintiff in S CI 2015 02583, by writ issued on 21 May 2015, alleged that the defendant was responsible for her losses and the losses of group members for negligently carrying out those works, which caused rains to flood properties surrounding the works.
In the Callide Valley in Queensland, between 18 to 20 February 2015, following heavy rains associated with Tropical Cyclone Marcia, the Callide Dam rose rapidly. On 20 February 2015, the automatic gates operated to release water into the Callide Valley causing damage to surrounding properties. Mr Beetson, by writ issued on 20 May 2015, alleged that the defendant, the operator of the Callide Dam, was negligent and caused flood damage to his property and the properties of other group members. The plaintiff alleged that residents had requested on 19 February 2015 that water be released from the Callide Dam prior to further forecast rain, but the defendant failed to do so.
Each proceeding was advertised through the media, by a media release about the commencement of the proceedings, and a small number of media interviews thereafter. Community meetings were held. Material about the proceedings was placed on the plaintiffs’ solicitor’s website.
Both writs remain unserved and on 13 April 2016, each plaintiff filed a notice of discontinuance.
Application to discontinue proceedings
Common law group proceedings in this court are managed in the Major Torts list and when the filed notices came to my attention, the plaintiffs were directed to consider s 33V of the Supreme Court Act1986 (‘the Act’). That section provides that a group proceeding may not be discontinued without the approval of the Court. The plaintiffs then applied for leave nunc pro tunc to file a notice of discontinuance of each proceeding.
On 21 October 2016, I made the following orders in each proceeding, announcing that I would later publish my reasons for doing so
(a) Pursuant to section 33V of the Supreme Court Act 1986, the plaintiff has leave nunc pro tunc to discontinue the proceeding.
(b) Pursuant to rule 2.04(2) of the Supreme Court (General Civil Procedure) Rules 2015, the requirement to serve on the defendant the Notice of Discontinuance dated 12 April 2016 is dispensed with.
(c) The confidential affidavit of Mr Brendan Francis Pendergast, sworn on 18 October 2016, is not to be disclosed without further order and is to be placed in a sealed envelope on the court file marked ‘Not to be opened except by leave of the Court or a Judge’.
(d) The requirement of section 33X of the Supreme Court Act 1986 that notice be given to group members of the application for approval under section 33V of the Act of the discontinuance of the proceeding is dispensed with.
(e) There is no order as to costs.
These are my reasons.
Is Court approval required?
It is well settled that on applications pursuant to s 33V of the Act for approval of settlement, the critical questions raised are whether the proposed settlement is fair and reasonable as between the parties having regard to the claims of the group members, and whether it be in the interests of group members as a whole and not just in the interests of the parties.[1] There are a handful of proceedings involving unilateral discontinuance, as opposed to settlement.
[1]Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663, [34] (Osborn JA).
In Wotton v State of Queensland[2] (‘Wotton’), where leave to discontinue an entire proceeding was sought, Rares J observed:[3]
Under s 33V(1), a representative proceeding cannot be settled or discontinued without the approval of the Court. The decided cases on s 33V(1) all appear to have been concerned with settlements, rather than discontinuances. The considerations affecting a settlement are not always the same as a discontinuance. It is important that any order that is made has regard to the interests not only of the present parties but of group members who may be affected by the terms of any grant of leave to discontinue.
[2][2009] FCA 758.
[3]Ibid, [37]. See also Mercedes Holdings Pty Ltd v Waters (No 6) [2012] FCA 1412, [16] (Jacobson J).
In Mercedes Holdings Pty Ltd v Waters (No 6),[4] Jacobson J determined that considerations of fairness and reasonableness were pertinent to any application to discontinue a representative proceeding. That proceeding concerned discontinuance of claims against particular defendants, not discontinuance of the entire proceeding.
[4][2012] FCA 1412.
In Pendrigh v Ex ADA Ltd[5] Derham AsJ adopted a slightly different approach, considering whether discontinuance of the entire proceeding was fair and reasonable and if it would be in the interests of group members.[6]
[5][2015] VSC 719.
[6]Ibid, [15], [17].
I considered a like issue in Matthewsv SPI Electricity Pty Ltd (Ruling No 16).[7] In the Kilmore-East Kinglake bushfire group proceeding, the plaintiff effectively abandoned a cause of action in an extremely complex civil proceeding with multiple claims against multiple defendants. I determined that court approval was required and approved the settlement in that case.
[7][2013] VSC 74.
In the present case, it is clear that the plaintiff requires court approval for discontinuance of the proceeding by force of s 33V of the Act, notwithstanding that the proceedings have not been served and the basis for the discontinuance is that the proceedings have no real prospect of success. In Wotton, Rares J approached the question of approval from the perspective of how the discontinuance would affect the interests of group members. That approach is plainly what is required in the present case, since discontinuance is, as I will shortly demonstrate, unarguably in the interests of the parties.
Prospects of success
The plaintiffs commenced claims in respect of which they certified, as did their solicitor, that there was then a proper basis, on the factual and legal material available, for each allegation of fact in the statement of claim.[8] Each plaintiff now contends that in each proceeding she or he, respectively, has no real prospect of success. A question arises whether the interests of group members may be affected in these circumstances.
[8]See s 18 and 43 Civil Procedure Act 2010 (Vic).
The Laine proceeding was issued within three weeks of the flood. The Beetson proceeding was issued about three months after the event and at the same time as the Laine proceeding.
Ms Laine suggested that there was, on initiation, a proper basis for the proceeding against Theiss Pty Ltd. Mr Pendergast and another solicitor employed by Maddens undertook investigations and interviewed witnesses between 10 to 13 May 2015. Residents of the Moreton Bay area instructed the plaintiff’s solicitor, Mr Pendergast, that flooding of the magnitude associated with the flood had never been observed. Mr Pendergast deposed that he believed, on the basis of these materials, there was a proper basis on the initiation of the proceeding for each allegation of fact made by Ms Laine.
The Statement of Claim made the following allegations:[9]
[9]The lead plaintiff brought the proceeding on her own behalf and on behalf of the group members, those of whom suffered loss of or damage to property, economic loss, whose enterprise suffered loss or damage, whose use or enjoyment of land was interfered with, who suffered personal injury and the legal representatives of the estates of any deceased persons who suffered from any of the above.
(a) The watercourse of Ms Laine’s property was obstructed by the defendant’s works in the course of construction of the Moreton Bay Rail Link and, as a result, her property was inundated by floodwater following the Moreton Bay flood, destroying her property;
(b) The defendant failed to properly undertake, supervise or manage the design and construction of the Moreton Bay Rail Link with reasonable care, to ensure that the design and construction adequately provided for the potential of an extreme weather event or substantial rainfall;
(c) The defendant failed to undertake the construction with due care and skill to minimise the risk of flooding;
(d) The defendant failed to consider the likely impact that any flooding would have on surrounding properties;
(e) The defendant failed to undertake extensive assessment, research, analysis and modelling of the Moreton Bay area;
(f) The defendant failed to ensure that any third party engaged by the defendant undertook any construction with due care and skill;
(g) The defendant failed to take reasonable care, causing physical damage to properties, disrupting commercial activities, causing loss or damage to persons in respect of land or businesses, causing personal injury to individuals, and causing unreasonable interference with the use or enjoyment of land. The risk that this harm would eventuate, by failing to take reasonable care, was not insignificant; and
(h) The lead plaintiff and group members could not take any actions to prevent or minimise the loss or damage sustained by them.
Mr Beetson contended that there was, on initiation, a proper basis for the proceeding against Sunwater Ltd. Residents of the Callide Valley area instructed Mr Pendergast that flooding in early 2013 had caused damage to properties in the area following the gates of the Callide Dam being opened after a period of very heavy rainfall. The residents believed that there was a causal relationship between the operation of the Callide Dam and flooding in respect of both the 2013 and 2015 flood events. Mr Pendergast and another solicitor employed by Maddens undertook various investigations and spoke to witnesses between 23 to 26 March 2015. Mr Pendergast deposed that he believed there was a proper basis on the initiation of the proceeding on the basis of these investigations for each allegation of fact in the proceeding.
The Statement of Claim made the following allegations:[10]
[10]The lead plaintiff brought the proceeding on his own behalf and on behalf of the group members, those of whom suffered loss of or damage to property, economic loss, whose enterprise suffered loss or damage, whose use or enjoyment of land was interfered with, who suffered personal injury and the legal representatives of the estates of any deceased persons who suffered from any of the above.
(a) Mr Beetson’s property was inundated by floodwater following the opening of the Callide Dam gates, destroying his property;
(b) The defendant failed to properly operate the Callide Dam with reasonable care, to ensure that the volume of water released would not cause flooding downstream;
(c) The defendant failed to ensure that any person engaged by the defendant to operate the Callide Dam exercised reasonable care;
(d) The defendant failed to monitor and consider the range of weather conditions, including actual and forecasted rain, to minimise the risk of flooding downstream;
(e) The defendant failed to consider the current water levels of the Callide Dam and the risk that this posed;
(f) The defendant failed to consider the weather forecast information and likely impact such rainfall would have on water levels should it eventuate, and whether such water levels should be reduced, given past rainfall, ongoing inflows and the likelihood of rainfall in the near future;
(g) The defendant failed to consider the risk that future rainfall may exceed what was predicted by the Bureau of Meteorology (‘BOM’);
(h) The defendant failed to ensure there was sufficient precautionary releases of water from the Callide Dam to ensure there was sufficient available capacity to avoid or minimise the risk that large scale releases would be required should further rainfall occur in accordance with, or in excess of, that forecast by the BOM;
(i) The defendant failed to ensure there was scheduled controlled water release from the Callide Dam to ensure there was capacity to receive heightened inflow;
(j) The defendant failed to ensure that any third party engaged by the defendant undertook any operations with reasonable care; and
(k) The defendant failed to take reasonable care, causing physical damage to properties, disrupting commercial activities, causing loss or damage to persons in respect of land or businesses, causing personal injury to individuals, and causing unreasonable interference with the use or enjoyment of land. The risk that this harm would eventuate, by failing to take reasonable care, was not insignificant; and
(l) The lead plaintiff and group members could not take any actions to prevent or minimise the loss or damage sustained by them.
I am not persuaded that there could have been a proper basis for the initiation of these claims on the basis of the available factual material. It rather appears that the factual material was wholly inadequate for any proper assessment to have been made and that the proceedings were commenced to capture the potential dispute, should it have turned out later to have some prospects of success. However, in the circumstances it is not necessary that I make any finding as to whether there has been a breach of the obligation to only make claims with a proper basis on the available and relevant factual materials and I would be unable to do so on the material before me having regard to the issue left for my determination. On the basis of the independent inquiries to which I will shortly refer and the confidential legal opinions, which are based on review of those inquiry reports by counsel in the context of the allegations being made in the proceedings, it is now accepted, correctly it would seem, that the claims cannot be made out.
It seems that in each case, the plaintiff did not serve the writ because she or he chose to await the outcome of an independent investigation into the flood. The overarching obligation for a proper basis applies on filing, not on service.
It is from the information discovered in these reports that each plaintiff now contends that there was no merit in the claims and consequently group members could not be prejudiced by their discontinuance.
In relation to the Laine proceeding, the Snowy Mountains Engineering Corporation (‘SMEC’) conducted a review into any possible connection between the Moreton Bay Rail Link and the flood. Once the review was tabled in the Queensland Parliament in September 2015, Mr Pendergast was able to study it and he concluded that the proceeding had a poor prospect of success and that even if successful, the liability of the defendant Theiss Pty Ltd was likely to be marginal.
In relation to the Beetson proceeding, the Inspector-General Emergency Management (‘IGEM’) investigated the cause of the flood. The IGEM report became available in or around June 2015, and Mr Pendergast sought advice from senior counsel regarding the prospects of success in the proceeding. Senior counsel recommended that the claim not be perused. Thus, Mr Pendergast concluded that the proceeding had poor prospects of success.
In relation to both proceedings, Mr Pendergast considered that the costs associated with pursuing the proceedings, including the engagement of an expert witness hydrologist, other expert witnesses, the costs of filing of interlocutory processes, disbursements in respect of counsel, costs in relation to discovery, interlocutory disputes, preparation of evidence and instructing at trial, were likely to considerably exceed any possible sum that could be recovered for the plaintiff and group members in the event the proceedings were successfully resolved. In addition there was no prospect of litigation funding.
Upon consideration of this advice and these materials, the lead plaintiffs in each proceeding instructed Mr Pendergast to discontinue the proceeding. They now contend that discontinuance will not prejudice the interests of any group member who might be minded to pursue a claim for relief in respect of the relevant flood event.
First, it appears unlikely that group members would be advised to contemplate proceedings for the same causes of action against the same defendants arising out of these flood incidents having regard to the independent inquiry reports and counsel’s assessment of them.
Secondly, group members will face the same economic viability analysis of potential litigation as faced the plaintiffs.
Thirdly, the plaintiffs contended that, given that no res judicata or issue estoppel will arise from discontinuance as no matter has been the subject of judicial determination,[11] any group member is at liberty to initiate a separate proceeding, if so advised.
[11]See Macquarie Bank Ltd v National Mutual Life Association of Australia Ltd (1996) 450 NSWLR 543, 556-7; Thirteenth Corp Pty Ltd v State (2006) 232 ALR 491, 500 [33].
Fourthly, the causes of action accrued on 20 February 2015 (Beetson) and 1 May 2015 (Laine), and the limitation periods are, by force of statute, suspended by the initiation of the proceedings on 20 May 2015 and 21 May 2015, respectively. This suspension applies for the benefit of any group member in any subsequent proceedings initiated in the Supreme Court of Victoria by virtue of s 33ZE of the Act.
The limitation period applicable in respect of the claims made in each proceeding is 6 years.[12] Discontinuance will have the effect that time within the limitation periods will recommence to run, but the plaintiffs contended it is evident that no group member will be significantly disadvantaged as a considerable period remains to run before a claim might become statute barred within which a group member may investigate and, if advised to do so, commence a proceeding.
[12]Limitation of Actions Act 1974 (Qld) s 10(1).
Finally, the proceedings were subject to a conditional costs agreement. To date, no costs have been incurred by, or charged to, the plaintiffs or, a fortiori, group members and if the proceedings are discontinued, no costs will be forsaken.
I am satisfied that discontinuance of the proceedings will not adversely impact on the legal or financial position of any group members. Discontinuance of these proceedings will not be unfair or unreasonable or adverse to the interests of group members.
For these reasons, I ordered that the plaintiffs have leave nunc pro tunc to discontinue the proceedings.
Notice to group members
Section 33X(4) of the Act provides that unless the Court is satisfied that it is just to do so, an application for approval under s 33V must not be determined unless notice has been given to group members. The plaintiffs submitted that it is just not to give notice to group members and that I should dispense with that requirement. In Matthews v SPI Electricity Pty Ltd (Ruling No 16),[13] I granted such a disposition in the circumstances there prevailing.
[13][2013] VSC 74.
The plaintiffs advanced a number of considerations, which I consider are valid reasons to grant the dispensation:
(a) The writs remain unserved and to date no costs have been incurred by the defendant or by group members;
(b) The proceedings have no real prospect of success in terms of liability and quantum, as discussed above, and only carry adverse costs risks. Properly advised, it is inconceivable that a group member would oppose discontinuance of the proceedings on this basis.
(c) A community meeting was held in relation to the Laine proceeding on 4 November 2015, where attendees were advised that the lead plaintiff had provided instructions to discontinue the proceeding. All group members who had registered with the plaintiff’s solicitor at the time were invited to attend the meeting. Following the meeting, the plaintiff’s solicitor received nine telephone calls from group members, who were unable to attend the meeting. Of the nine telephone calls, only two group members expressed dissatisfaction with the outcome advised at the meeting. These group members were advised that they could engage another law firm;
(d) In relation to the Beetson proceeding, a letter was sent on 18 January 2016 to all persons in attendance at the community meeting held 24 March 2015 and those who had registered their interest thereafter, advising of the lead plaintiff’s intention to discontinue proceedings. Only one addressee contacted the plaintiff’s solicitor requesting the reasons why the proceeding was to be discontinued. The addressee was content with the explanation provided;
(e) References to the proceedings were removed from the plaintiffs’ solicitor’s website around 10 February 2016;
(f) The intention to discontinue was reported in the media, including in the Redcliffe & Bayside Herald of the Quest local community newspapers group on 1 August 2016 in relation to the Laine proceeding and by the ABC on 19 February 2015, in the Gladstone Observer on 29 February 2016 and the Queensland Times, Sunshine Coast Daily, Central Telegraph and Logan Reporter on 3 March 2016 in relation to the Beetson proceeding; and
(g) Any further publication and dissemination of notices to group members notifying them of the intention to discontinue would incur unnecessary and potentially substantial costs, be of little practical benefit and delay the disposition of the proceedings.
In making any order or giving any direction in a civil proceeding, the Court is required to further the overarching purpose to facilitate the just, efficient, timely, and cost effective resolution of the real issues in dispute in the proceeding, by virtue of s 8 of the Civil Procedure Act 2010 (Vic). In determining whether it is just to dispense with the notice to group members under s 33X(4) of the Supreme Court Act, I must seek to give effect to the overarching purpose by having regard to the matters set out in s 9 of the Civil Procedure Act.
A matter deserving of considerable weight in exercising this discretion is that, in my view, there is no real prospect that a group member, acting rationally, would oppose the orders that have been made. That is because, as explained, it is reasonable to conclude that the proceedings have no real prospects of success.
The other considerations I have set out favour dispensing with notice. There is a significant prospect that the expense and inconvenience of requiring the notice to be provided to group members would be disproportionate to any benefit that would arise, which appears in the circumstances to be negligible.
For these reasons, I dispensed with the requirement of notice to group members of this application.
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