Matthews v AusNet Electricity Services Pty Ltd
[2014] VSC 663
•23 December 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 04788
BETWEEN
| CAROL ANN MATTHEWS | Plaintiff |
| and | |
| AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) and others according to the Schedule | Defendants |
AND BETWEEN
| AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) | Plaintiff by Counterclaim |
| and | |
| ACN 060 674 580 PTY LTD and others according to the Schedule | Defendants by Counterclaim |
AND BETWEEN
| ACN 060 674 580 PTY LTD | Plaintiff by UAM Counterclaim |
| and | |
| AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) and others according to the Schedule | Defendants by UAM Counterclaim |
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JUDGE: | OSBORN JA |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 24 and 25 November 2014 |
DATE OF JUDGMENT: | 23 December 2014 |
CASE MAY BE CITED AS: | Matthews v AusNet Electricity Services Pty Ltd & Ors |
MEDIUM NEUTRAL CITATION: | [2014] VSC 663 |
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PRACTICE AND PROCEDURE – Application for approval of settlement of group proceeding – Supreme Court Act 1986, s 33V, pt 4A – Settlement of proceeding after trial but prior to delivery of judgment – Whether terms of settlement fair and reasonable – Whether settlement distribution scheme fair and reasonable – Whether claim for legal fees and disbursements reasonable – ‘Black Saturday’ bushfire near Kilmore East Kinglake – Settlement approved.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Richter QC with Mr L W L Armstrong and Ms M Szydzik | Maurice Blackburn |
| For the Third to Fifth Defendants | Mr M D Rush with Ms A Robertson | Norton Rose Fulbright |
| For the Objector (Mr Charles Exton) | Mr G Conlan | Law 554 Solicitors |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
Procedural context.............................................................................................................................. 7
The Court’s approach...................................................................................................................... 11
The settlement as between the parties......................................................................................... 15
Quantum...................................................................................................................................... 15
Primary risk................................................................................................................................. 18
The case against SPI.................................................................................................................... 21
The fire.......................................................................................................................................... 23
Targeted dampers (retro-fitting)............................................................................................... 53
Targeted replacement................................................................................................................. 58
The inspection case..................................................................................................................... 62
The OCR (oil-operated circuit recloser) case........................................................................... 66
Nuisance....................................................................................................................................... 70
The claim against UAM — negligent inspection.................................................................... 72
Claims against the State parties — planned burning by DSE.............................................. 76
Claims against the State parties — warnings.......................................................................... 81
Conclusion as to primary risk................................................................................................... 87
Consequential risks..................................................................................................................... 87
Conclusions as to risk................................................................................................................. 89
Other advantages offered by the settlement........................................................................... 90
Finalisation......................................................................................................................... 90
Personal stress, anxiety and suffering............................................................................ 92
Advancement of payment................................................................................................ 93
Containment of costs......................................................................................................... 93
Counsel’s opinion....................................................................................................................... 94
The settlement as between group members............................................................................... 95
The deed of settlement............................................................................................................... 95
The SDS......................................................................................................................................... 96
Costs of the proceeding.................................................................................................... 99
Costs agreements................................................................................................ 104
Methodology of Ms Dealehr............................................................................. 105
Professional fees................................................................................................. 106
Disbursements.................................................................................................... 107
Methodology of Mr Mazzeo............................................................................. 108
Disbursements.................................................................................................... 110
Are the costs sought by Maurice Blackburn fair and reasonable?.............. 111
The split between classes of claimants......................................................................... 113
Priority as between insured and insurer...................................................................... 114
Future administration costs..................................................................................................... 116
Procedural provisions.............................................................................................................. 118
ELPD assessment principles and multipliers....................................................................... 119
Trial participation..................................................................................................................... 122
The objections................................................................................................................................. 122
Confidentiality............................................................................................................................... 124
Orders............................................................................................................................................... 127
ANNEXURE A................................................................................................................................ 128
HIS HONOUR:
Introduction
At 11:45 am on 7 February 2009, a section of power line known as the Valley Span conductor located at Kilmore East broke and, upon striking the ground, ignited a bushfire which spread first south-east and then to the north-west.
At the time of ignition, weather conditions were extreme. The temperature was around 40°C, humidity was below 5 % and a north to north-west wind was gusting to around 80 kilometres per hour.
The fire ran south to south-east with the wind. It jumped the Hume Highway and spread towards Mount Disappointment with long distance spot fires occurring at Wallaby Creek, Humevale and Strathewen, St Andrews, Steels Creek, Dixons Creek, Yarra Glen and the Healesville area.
Later in the day, there was a south-westerly wind change causing the eastern flank of the fire to become the main fire front. The fire then engulfed Kinglake, Kinglake West, Clonbinane, Steels Creek, Chum Creek and Strathewen before progressing towards Flowerdale, Hazeldene, Castella and Glenburn.
The fire travelled as far south-east as Yarra Glen, as far east as the Acheron Way and as far north as Strath Creek.
The extent of the fire is depicted on the map below, which was produced by the 2009 Victorian Bushfires Royal Commission.[1]
[1]The 2009 Victorian Bushfires Royal Commission was established on 16 February 2009 to investigate the causes and responses to the bushfires which swept through parts of Victoria in late January and February 2009. The Commission delivered its Interim Report on 17 August 2009, and its Final Report on 31 July 2010. The Commission was chaired by the Hon Bernard Teague AO, supported by Commissioners Ron McLeod AM and Susan Pascoe AM.
In the course of the conflagration, 119 people died, more than 1,000 suffered serious injury, and approximately 1,772 homes and properties were destroyed or damaged.
The plaintiff has brought this proceeding on her own behalf and on behalf of that class of people who were either injured or suffered the death of persons upon whom they were dependent, or suffered property damage or economic loss in consequence of the fire.
The claim is brought against the owner and operator of the power line (AusNet Electricity Services Pty Ltd, formerly SPI Electricity Pty Ltd, and referred to as ‘SPI’ in this judgment), a maintenance contractor charged with carrying out a periodic inspection of the power line (referred to as ‘UAM’ in this judgment) and various entities of the State of Victoria variously charged with the management of forest lands, the fighting of fires, and the policing of emergencies (‘the State parties’).
After a trial lasting some 208 days before J Forrest J, at which the causes of the fire and questions of legal responsibility for the damage resulting from it were fiercely contested, the proceeding has provisionally settled for a sum, inclusive of costs, of just under $500 million.
Pending the outcome of this settlement approval application the matter has not proceeded to stage 1 judgment, namely a judgment on the fundamental question of whether, and if so how, each of the defendants breached any, and if so what, legal duty or duties owed to the plaintiff and group members.
Under the deed of settlement, the claims which would otherwise be the subject of determination by the Court are fully and finally settled in consideration of payments by the defendants.
SPI will pay approximately $378.6 million, UAM will contribute $12.5 million. The State parties will pay $103.6 million but only for compensation in respect of personal injury and dependency claims.
Under the legislation governing group proceedings, this settlement remains conditional upon the Court’s approval.
The Court must approve both the proposed settlement as between the parties and the proposed scheme for the distribution of settlement funds as between group members. That scheme (the ‘SDS’) is comprised in a separate document. In broad terms the SDS:
(a) extracts from the overall settlement funds the legal costs incurred on behalf of the claim group; then
(b) allocates the balance of the settlement funds as to three-eighths for the payment of the personal injury and dependency claims, and five-eighths for the property ownership and economic loss claims; then
(c) establishes streamlined procedures for valuing the individual claims of group members and provides for the distribution of the available funds pro-rata according to the value of each individual claim; and
(d) caps the percentage at which the personal injury and dependency claims will be compensated, with any surplus from the fund relating to those claims to be rolled over to the property damage and economic loss claims fund, and used to supplement the recovery rate for those claims.
In order to facilitate the approval process, the Court gave directions for notice to be given to members of the group affected by the proposed settlement including instructions as to how and when to file any objections. Ultimately, only three objections were pursued.
The application for approval of the settlement has in turn been referred to me for consideration in order to preserve the capacity of the trial judge to bring down judgment in the event that the settlement is not approved, and to do so unaffected by confidential material which may be put forward by the parties in respect of that settlement.
For the reasons which I elaborate below, I would approve the settlement. In summary:
(a) $500 million is a large and commercially significant sum in itself;
(b) it will result in a level of substantial compensation for group members;
(c) that compensation will be achieved in circumstances where they faced some real risk of a nil outcome;
(d) even if some substantial success were achieved, group members also faced a series of other significant subsidiary risks with respect to particular causes of action and heads of damage;
(e) the settlement offers group members a series of material advantages which will not be achievable if the matter proceeds further;
(f) having regard to these factors, the settlement figure is comfortably within the range of reasonable settlements; and
(g) the proposed SDS is appropriate and a fair compromise as between group members.
There are a series of contextual circumstances which support my confidence in these conclusions:
·the settlement sum is some 2½ times greater than any sum previously achieved by way of settlement or damages in group proceedings in this State;
·the settlement has not been objected to by the overwhelming majority of group members;
·only two relevant objections have been received and they do not demonstrate that the settlement should be rejected;
·the level of compensation proposed has not been objected to by any commercial claimant having expertise in litigation including, in particular, the group of property insurers having substantial interests in the outcome by way of rights of subrogation;
·the primary matters in issue with respect to liability fall to be assessed after a 208 day hearing extending over 16 months, in the light of very detailed evidence and careful and comprehensive final addresses identifying and addressing the issues in the case;
·consequential risks with respect to the ultimate burden of costs and prospects of recovery also fall to be assessed in the light of the course of the proceeding to date and the proportions they assume can be understood having regard to the scale of the litigation to date;
·the evidence from individual group members called at trial illuminates the issues that would potentially arise and complicate the resolution of the further issues in the trial;
·the settlement is the product in part of an extended and complex mediation process during which there has been an exchange of confidential material between the parties and exploration of potential bases of resolution of the proceeding;
·the settlement is supported by the opinions of trial counsel and the plaintiff’s solicitors which have been explained in confidential memoranda and relevantly elaborated in submission to the Court;
·the settlement is consistent with the independent opinion of eminent interstate counsel as to the prospects of success in the broad; and
·the settlement is the product of a protracted negotiation process and can reasonably be regarded as the best settlement the plaintiff and group members will get without going to stage 1 judgment.
In order to further explain the bases for the principal conclusions I have set out above, it is necessary for me to address in turn:
·aspects of the procedural history of the matter;
·the principles which I must apply when determining whether to approve the settlement;
·the probable quantum of the claim;
·the risks attending the further prosecution of the claim, if the settlement were not approved;
·the advantages provided to the plaintiff and group members by the proposed settlement;
·whether the costs proposed to be paid to the plaintiff’s solicitors are reasonable;
·the appropriateness of the proposed SDS;
·whether the SDS is fair and reasonable as between group members;
·whether the objections made to the settlement should be upheld; and
·some issues of confidentiality.
Procedural context
The proceeding was commenced on 16 February 2009 in the name of Leo Keane, as an ‘open’ class group proceeding under pt 4A of the Supreme Court Act 1986. On 23 July 2010, the Court ordered that Mrs Matthews be substituted for Mr Keane as plaintiff.
The plaintiff claims on her own behalf and on behalf of the group members for loss and damage caused by the Kilmore East Kinglake bushfire. She brings the proceeding on behalf of persons:
(a) referred to on a list of persons filed with the Court who make claims:
(i) in respect of any personal injury; or
(ii) pursuant to pt 3 of the Wrongs Act 1958 in consequence of the death of another person as a result of the fire;
(I shall refer to these claimants as the ‘I-D claimants’.)
(b) Those who make claims:
(i) in respect of property loss or damage; or
(ii) in respect of economic losses not consequent upon injury to that person or loss or damage to their property.
(I shall refer to these persons as the ‘ELPD claimants’.)
Prior to settlement, the proceeding had progressed through complex pre-trial steps and been the subject of an initial trial which ran 16 months. Judgment in respect of this stage of the proceeding was reserved.
Some idea of the scale of the proceeding can be gleaned from the following incidental details:
(a) there were 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.
For present purposes, a significant aspect of the management of the proceeding was the making of orders on 24 January 2013 closing the class. The effect of these orders was to limit the I-D group members to a list of persons filed with the Court. The orders provided for ELPD group members by requiring registration by 22 March 2013 for claims:
(a) for property loss which was uninsured or not fully insured (‘above insurance loss claimants’); and
(b) by any insurer who claimed pursuant to rights of subrogation with respect to property loss or economic damage.
ELPD claimants who were not registered pursuant to the class closure orders remained part of the proceeding but lost their right to participate in any settlement of the proceeding without leave of the Court. The class closure orders facilitated an estimate by the parties of the total losses suffered by the defined group.
As a result of the class closure orders, the number of participating claims in each category is:
(a) 1,731 I-D claimants;
(b) 3,753 above insurance loss claimants; and
(c) 5,006 subrogated claimants.
There is some crossover between categories. Nevertheless the total number of individuals falling within the relevant classes is 5,847.
A further relevant aspect of the procedure adopted was the definition of liability issues for a stage 1 trial. Prior to the trial, the Court identified 42 common questions (Annexure A to this judgment). The trial was then conducted as a full hearing of all issues raised by the plaintiff’s individual claim on the basis that her claim raised most of the ‘common questions’ relevant to the group members. The hearing included consideration of the plaintiff’s individual damages claims for personal injuries and property losses, and also extended to consideration of certain limited issues raised by the claims of four ‘sample’ group members (Mrs Clarke, Mr Gibson, Mrs Lackas and Mr Bennett). This allowed the template effect of the initial judgment to cover questions which were not directly raised by the plaintiff’s case but were nonetheless likely to affect large sub-groups of the claim group.
In the course of the trial, the judge indicated that his initial stage 1 reasons would address the fundamental questions of whether, and if so how, each of the defendants breached any, and if so what, legal duty or duties owed to the plaintiff and group members. If the stage 1 ruling found liability on the part of any of the defendants then the parties would return to make further submissions as to various issues of vicarious liability, apportionment, and contribution as between themselves. His Honour would then issue a stage 2 ruling on those further issues.
The third aspect of the procedural management of the trial which is relevant for present purposes is the nature of the comprehensive notice procedure undertaken after settlement was provisionally reached.
The notice and accompanying information sheet included the following:
(a) a statement that the group members have legal rights that may be affected by the proposed settlement;
(b) a description of the group on whose behalf the proceedings were commenced including a map of the relevant affected area;
(c) a summary of the effect of the class closure orders on persons who did not register a claim by the relevant date and an outline of possible options, if any, which may be available to such persons;
(d) information on how a copy of the statement of claim and defences may be obtained;
(e) a summary of the key terms of the proposed settlement including the settlement sum, a breakdown of the amounts contributed by the various defendants, and the fact the settlement is on the basis of no admission of liability;
(f) a brief explanation of the process and estimated timeline for claims assessment under the SDS including the approximate number of claims and the estimated percentage of losses claimants could expect to receive based on the sampling conducted by the plaintiff’s solicitors;
(g) information on how to obtain a copy of the SDS;
(h) information about the plaintiff’s solicitor’s fees, whether group members will have to pay back monies received from their property insurers or the Victorian Bushfire Relief Fund, and other deductions from the distribution sum;
(i) a statement that the settlement will not take effect unless approved by the Court;
(j) logistical details regarding the Court hearing of the settlement application;
(k) an outline of the timing and process for registering objections including the form required to communicate such objections in writing and the further expectation to attend the hearing to make submissions in person if practicable;
(l) a statement that group members who do not wish to oppose the settlement are not required to do anything and will be contacted by the plaintiff’s solicitors if the settlement is approved;
(m) information on how to obtain legal advice and assistance from the plaintiff’s solicitors.
The Court’s approach
Group proceedings are governed by pt 4A of the Supreme Court Act 1986 (Vic) (‘Act’). Section 33V of the Act requires that any settlement of a group proceeding be approved by a judge of the Court. It states:
33V Settlement and discontinuance
(1)A group proceeding may not be settled or discontinued without the approval of the Court.
(2)If the Court gives such approval, it may make such orders as it thinks fit with respect to the distribution of any money, including interest, paid under a settlement or paid into court.
The critical questions raised by the application for approval of the settlement are:
(a) whether the proposed settlement is fair and reasonable as between the parties having regard to the claims of the group members; and
(b) whether the proposed settlement is in the interests of group members as a whole and not just in the interests of the plaintiff and the defendants.[2]
[2]Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (receivers and managers appointed) (in liquidation) [2014] VSC 516, [31]-[56]; Matthews v SPI Electricity; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74, [35]-[36]; Wheelahan v City of Casey [2011] VSC 215, [59]-[61]; Perry v Powercor [2012] VSC 113, [9]-[16]; In re Timbercorp Securities Limited (Applications for the Approval of Compromises) [2012] VSC 590, [64]-[68]; Pathway Investments Pty Ltd v National Australia Bank Limited (No 3) [2012] VSC 625, [2].
In Tasfast Air Freight v Mobil Oil Australia Ltd, Bongiorno J observed:
The principles upon which s 33V is based might be said to be those of the protective jurisdiction of the Court, not unlike the principles which lead the Court to require compromises on behalf of infants or persons under a disability to be approved. In a group proceeding, ex hypothesi, there may be persons, in the community who can be affected by such settlement but know nothing of it...[3]
[3][2002] VSC 457, [4].
In the present case, the group affected by the settlement is very large and contains persons with very diverse claims. It will necessarily include persons who have not been able to follow the course of the proceeding in other than a limited way. It will also include persons who may reasonably have been expected to have had difficulty in following the evidence and legal arguments which have been advanced in the course of the trial because of its length and complexity. It will also of course include persons under a disability.
These factors mean that the Court must reach independent satisfaction as to the fairness of the proposed settlement. It will not be sufficient to simply assess whether the opinions expressed on behalf of the plaintiff’s legal advisors appear on their face to be reasonable.
Likewise, the almost complete absence of substantive objections to the settlement cannot relieve the Court of its obligations.[4]
[4]Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) (2006) 236 ALR 322, 333, 335; Wheelahan v City of Casey [2011] VSC 215, [63]-[64]. Cited with approval in Matthews v SPI Electricity; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74, [36]; Thomas v Powercor Australia Limited [2012] VSC 113, [14]-[15].
Nevertheless, the assessment which the Court is able to make can ultimately be no more than one which confirms whether or not the proposed settlement is one within the range of fairness.[5]
[5]See fn [2].
In particular, the relative prospects of success can only be broadly gauged. In A v Schulberg, Beach JA described the role of the Court in determining whether or not to approve the settlement of group proceedings as follows:
The job of this Court is to determine whether or not the settlement is fair between the parties and between the plaintiff and group members. While, in making that assessment, it is necessary to form a view as to the correlation between the amount individual group members will recover under the settlement distribution scheme and the amount they might recover after a trial, necessarily any such comparison can only be performed in a broad manner.[6]
[6][2014] VSC 258, [12].
Decisions of the courts exercising the approval function have identified a series of factors which may be relevant to aspects of the issue of fairness. The decision of Goldberg J in Williams v FAI Home Security Pty Ltd[7] is much cited in this regard.
[7](2000) 180 ALR 459, 465 [19]. A number of the factors which were identified in Williams have been incorporated in s 11 of Practice Note 9 of 2010 — Conduct of Group Proceedings, as matters which the Court will take into account when considering an application under s 33V of the Act. The matters listed in the Practice Note are used as a guide only and are not applied mechanically as necessarily definitive considerations.
Nevertheless, it is also well accepted that there is no checklist which necessarily identifies the indicia of fairness or its absence in a particular case.[8]
[8]Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) (2006) 236 ALR 322, 335; Wheelahan v City of Casey [2011] VSC 215, [62]. Cited with approval in Matthews v SPI Electricity; SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No 16) [2013] VSC 74, [36]; Thomas v Powercor Australia Limited [2012] VSC 113, [12]; Clarke (as trustee of the Clarke Family Trust) & Ors v Great Southern Finance Pty Ltd (Receivers and Managers appointed) (in liquidation) & Ors [2014] VSC 516, [41]-[42].
Potentially relevant factors include the following:
(a) the complexity and duration of the litigation;
(b) the reaction of the group to the settlement;
(c) the stage of the proceedings at which settlement is proposed;
(d) the relative risks of establishing liability;
(e) the relative risks of establishing loss and damage;
(f) the risks of continuing a group proceeding;
(g) the ability of the defendants to withstand a greater judgment and the range of reasonable outcomes governing the settlement in light of the best feasible recovery;
(h) the range of reasonableness governing the settlement in light of all the attendant risks of litigation on the one hand and all the advantages of settlement on the other; and
(i) the terms of any advice received from counsel and/or from any independent expert in relation to the issues which arise in the proceeding.
Lastly, it is necessary to keep in mind the observation of Jessup J in Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2) that it is not the Court’s function to attempt to second guess the plaintiff’s advisors as to whether the plaintiff ought to have accepted the offer of the defendants.
[T]he court’s function is, relevantly, confined to the question whether the settlement was fair and reasonable. There will rarely, if ever, be a case in which 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 such position and, under s 33V, the court should, up to a point at least, take the [plaintiffs] and their advisers as it finds them. Neither should the court consider that it always knows more about the group members’ businesses than the [plaintiffs], or more about the actual risks of the litigation than their advisers. 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 s 33V.[9]
[9](2006) 236 ALR 322, 339 [50].
In considering whether the settlement is within the range of reasonable outcomes as between the parties two significant threshold issues arise. The first is the need to make some overall estimate of the probable quantum of damages. The second is the need to make some overall estimate of the prospects on the one hand of total success and on the other hand of total failure.
There are a series of subsidiary issues which must also be considered but the two questions which I have identified provide a logical starting point to the inquiry whether the settlement is a reasonable one as between the parties.
The settlement as between the parties
Quantum
It is anticipated that the settlement will yield compensation in the order of 70 per cent of the damages likely to be recoverable by group members with I-D claims.
ELPD claimants will receive approximately one-third of their claimed losses but on average individual ELPD claimants appear to have been insured for approximately half their losses. As a result, after receipt of the settlement monies, the plaintiff’s solicitor estimates that on average individual ELPD claimants will receive approximately 66 per cent of their total claimed losses once insurance payments are taken into account. This figure does not take into account Victorian Bushfire Appeal Fund payments to claimants in relation to property related losses. In some cases, these were substantial.
The estimates of quantum forming the basis of these percentage estimates have been informed by evidence aspects of which are the subject of claims of confidentiality and privilege either because they involve mediation processes or are the product of confidential negotiations.
Nevertheless, I am satisfied that the estimates of quantum adopted by the plaintiff’s legal advisors are reasonable. They are the product of the following processes:
In respect of I-D claimants, they are the product of a two stage modelling process carried out by the plaintiff’s representatives prior to settlement. The first stage commenced in 2012 and involved a ‘full work-up’ of claimed losses for a random sample of 52 persons which included obtaining appropriate treating and medico-legal reports, as well as detailed information regarding medical expenses and loss of earnings. Claimants conferred directly with junior counsel and the resulting memorandum of assessment was reviewed by Mr Keogh SC and Mr Walsh of Maurice Blackburn, both of whom are very experienced in personal injuries litigation.
Following class closure, Mr Keogh SC and Mr Walsh undertook a further ‘desktop’ assessment of a sample of 173 persons out of the cohort of persons who had registered only during the class closure process and had not previously indicated that they wished to pursue an I-D claim. As the plaintiff’s advisors expected, this sample resulted in a lesser value average claim.
An average of the estimates from both the first and second samples was calculated to produce a figure which was used by the plaintiff’s advisors in assessing the reasonableness of the settlement in question.
While there remain some uncertainties attendant on the overall estimate given the small initial sample size, the ‘desktop’ nature of the second sample and the dangers of extrapolating averages generally, these do not dissuade me from the view that the plaintiff’s representatives made a serious and conscientious effort to accurately estimate the amount of I-D losses and accordingly, it is not unreasonable to proceed to settlement on the basis of that estimate.
In respect of ELPD losses, the range of losses suffered, the number of individuals affected (approximately 5,500) and the number of claims involved (approximately 9,000) rendered the scale of the task of estimating such losses unprecedented in Australia. In turn, the sampling undertaken, between full work-ups and desktop assessments, was larger than the entire class of around 200 claims in the recent Beechworth bushfires action.
In assessing the ELPD losses amongst other things it was necessary to take the following steps:
(a) ascertain the quantum of the insured losses paid out to claimants;
(b) deduct any amounts paid by insurers which were unrecoverable, such as moneys paid for the reinstatement of property when the proper measure of damages would be the diminution of the value of that property; and
(c) make allowances for underinsurance and uninsured losses.
Each of these matters was contentious.
The confidential materials make clear that whilst there was some agreement between the parties’ legal advisers on a methodology for calculating such losses (to take account of unrecoverable amounts and underinsured and uninsured losses), this did not lead to any agreement as to the quantum of such losses. As counsel for the plaintiff emphasised in oral submission, at no time was there ‘even remotely something approaching agreement between the parties’ as to the total value of ELPD losses. The conduct of further random sampling by an independent team of assessors engaged by the mediator did not resolve the dispute.
Ultimately, the plaintiff’s estimate of ELPD losses was adjusted in light of a number of factors which were outlined in the confidential material and included a reflection of aspects of the mediator’s estimates to take into account the prospect that the Court may prefer the mediator’s approach on certain issues. I have reviewed this material and am satisfied that each of these matters was a legitimate consideration bearing upon the question of what could be considered a reasonable settlement in the circumstances.
On the other hand, I accept that there are aspects of the mediator’s approach which it was proper for the plaintiff’s legal advisors to reject in formulating an estimated quantum for the purposes of assessing the settlement.
It may be that the assessment of claims process which is proposed under the SDS will ultimately result in total figures which are either higher or lower than the estimated figures. This is unavoidable in the present situation of a very large number of diverse claims.
All that can be done if the very substantial potential benefits of settlement are to be achieved is that careful and reasonable estimates of the likely order of damages are made. I am satisfied this has been done.
Moreover, the obvious commercial advantages to the defendants of settling on a lump sum basis are so overwhelming that it would not be realistic to suggest that the case should only settle on the basis of an agreed percentage of damages to be ascertained on an open-ended basis hereafter.
A lump sum also offers the plaintiff and group members the advantage of minimising the cost of the assessment of individual claims and, in effect, maximising the benefit each receives from a sum which has been offered on an all-in basis. The heterogeneous natures of the claims overall and the domestic character of many of them makes this advantage doubly attractive.
Uncertainty of quantum in a case of the kind here in issue is also of course a factor which favours settlement from the defendants’ point of view. In this sense, it advances the plaintiff’s case for settlement and should not be regarded as an entirely negative factor from the plaintiff’s point of view.
Primary risk
It is necessary next for me to form a view as to the nature and range of risks materially affecting the plaintiff’s prospects of success on liability.
I should say at the outset however that for a number of reasons it is not open to me to finally or fully assess the evidentiary and legal issues as if I were in effect the trial judge:
(a) I have not had the benefit of participation in the trial. Because of the duration, complexity and technical nature of much of the evidence, this is a significant disadvantage;
(b) the evidence is so extensive and complex that to attempt detailed assessment of it would require a period of protracted consideration which is not in the interests of justice; and
(c) ultimately, the critical question is simply whether the settlement is within the range of reasonable settlements.
It is necessary to say something further about each of these considerations.
The relative disadvantage of my position as against that of the trial judge is exemplified by one aspect of the proceeding. In the course of the hearing, the trial judge appointed two expert assessors. By the time of ruling 32, ten experts engaged by the parties to address technical issues relating to the causation of the fire were scheduled to give evidence concurrently in a four week evidence session. Ruling 32 provided further guidance as to the scope of the role of the two assessors as follows:
·The assessors would provide assistance to his Honour. However, the ultimate decision would be that of his Honour alone.
·The assessors would sit with his Honour during the concurrent evidence session.
·The assessors would be permitted to ask questions (of limited scope) of the experts or counsel during the concurrent evidence session.
·His Honour would be permitted to consult with the assessors during the concurrent evidence session and in chambers.
·The assessors would provide to his Honour, when sought, guidance and technical assistance, including basic ‘lessons’ on technical matters.
·The assessors would provide advice to his Honour on matters in dispute between the experts.
·The assessors would be available for consultations with his Honour after the conclusion of the concurrent evidence session, including while drafting the judgment.
·In the event the assessors raised a theory or opinion with his Honour that had not been previously identified by the parties, his Honour would discuss this with counsel.
It can be seen that the trial judge enjoyed considerable advantages in assimilating and addressing the evidence, and that it was ultimately contemplated that the assessors might assist in preparation of the Court’s judgment. I have not had these advantages.
Insofar as the second consideration of timeliness is concerned, the Court is now bound by s 8 of the Civil Procedure Act 2010 to give effect to the overarching purpose of that Act in exercising its powers. That purpose in relation to civil proceedings is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute. In the present case, it would be possible to take many months seeking to explore, consider and write in detail about the factual matrix which has been the subject of extended evidence in this case.[10] It would not be in the interests of justice to do so. The plaintiff and the group members have already experienced substantial delay in resolution of their underlying grievances by way of the processes of the law. The Court must provide a timely and cost-effective resolution of the real issues in dispute if this is possible without a further delay.
[10]At the completion of the stage 1 trial in July 2014 the trial judge indicated that he hoped to be in a position to deliver judgment in February or March of 2015.
The third and ultimate consideration referred to above comes back to the role of the Court upon an application of this kind. Satisfaction as to the question of whether the settlement is within the range of reasonable settlements will be achieved if risks as to liability are identified which bring the plaintiff and group members’ potential claims within that range.
Accordingly, in dealing with the case as to liability I will identify only those primary matters which taken together are sufficient to satisfy me that the settlement is reasonable.
I will not seek to address all the issues formulated by the trial judge at trial nor all the bases upon which the defendants contended in final address that the plaintiff should fail.
I will also, of course, not purport to express concluded views upon the issues in the case but will simply seek to identify considerations which demonstrate a range of risks. In so doing, I will necessarily concentrate on aspects of the ‘down side’ of the plaintiff’s case. Despite the matters I will identify and elaborate, I should not be taken to have concluded the plaintiff did not have material prospects of success.
The case against SPI
The case against SPI was brought on five bases. The central thrust of these claims as ultimately put was as follows:
(a) The targeted damper case — the plaintiff alleged that SPI breached duties of care to her by failing to fit dampers to the Valley Span conductor which would have reduced Aeolian vibration (‘Aeolian VIV’) within it and consequent fatigue. The plaintiff further alleged that Aeolian VIV was a material cause of the failure of the conductor and the fire caused by its fall.
(b) The asset management case — the plaintiff alleged that SPI breached duties of care to her by failing to implement reasonably appropriate asset management protocols with respect to its overhead conductors of the type utilised on the Valley Span. The Valley Span conductor was the 17th longest thin steel conductor on SPI’s entire distribution network and within that group of super-long spans it was one of the older conductors. It had evidence of past damage, the causes of which were unknown. The plaintiff alleged that it would have featured highly in any review of high risk spans and that, if an appropriate review had been undertaken, it would have been the subject of any reasonable planned replacement program before 2009. In consequence, it would not have failed and the fire would not have occurred.
(c) The scheduled inspection case — it was alleged that SPI breached duties of care to the plaintiff by increasing the recurrent intervals between the systematic inspections of the Valley Span conductor from three years to five years and that, as a result, defects present on poles 38 and 39 during 2008 were not identified. It was further alleged that routine maintenance action consequent upon a proper inspection program would have resulted in the Valley Span being made safe before February 2009. The span would not have fallen down in the conditions in which it did and the fire would not have started.
(d) The oil-operated circuit recloser (‘OCR’) case — the plaintiff alleged that SPI breached duties of care by failing to suppress the ‘reclose’ function on circuit breaker devices on the Valley Span conductor in conditions of high bushfire risk. The plaintiff alleged that appropriate protection engineering practice required SPI to prevent the circuit breaker devices from reclosing the circuit in such conditions. If the OCR had not reclosed then it was alleged the probability was that the arcing between the conductor and the ground which ignited the fire would not have occurred.
(e) The nuisance case – the plaintiff alleged that SPI caused a nuisance in the legal sense.
It is necessary to next say something further about the factual basis of some of the principal risks the plaintiff faced in respect of the causation aspects of each of these cases.
The fire
The power line which failed was a single wire earth return (‘SWER’) conductor[11] comprising three strands of 12 gauge galvanised steel wire spun together. It was known as the Pentadeen Spur line and, as I have said, the portion which failed was known as the Valley Span.
[11]The conductor is not earthed otherwise than through the ground beneath it.
The Valley Span was 43 years old and some 1,043 metres long. As the name implies, it traversed a valley constituted by undulating rural land.
As the conductor passed over both poles 38 and 39 at each end of the Valley Span it changed its angle slightly and the poles were stabilised with stays.
The Valley Span fractured close to the end of the helical termination forming part of the pole 39 pole top assembly.
[12]
[12]Report of Dr Simon Barter, 22 August 2012, 15, figure 1.
The conductor then recoiled sufficiently for the portion adjacent to pole 38 to become entangled with the pole 38 stay wire. It came into contact with the ground below the pole 38 stay wire and, while alive, caused arcing which resulted in the ignition of vegetation. Expert investigation determined this to be the starting point of the Kilmore East fire.
Two strands of the conductor (strands 2 and 3) failed due to fatigue.[13] Fatigue is a process of gradual failure resulting from repeated exposure to stress.
[13]Conclave 3 first report dated 6 November 2012, section 1.1(b).
The remaining strand of the conductor (strand 1) failed as a result of sudden tensile overload[14] — that is, a sudden failure because the full load of the conductor was too much for the single remaining strand and it broke at about 11:45 am on Black Saturday.
[14]Ibid section 1.1(b).
Strand 3 failed first at the helical termination some time prior to 7 February 2009. It unwound and then failed by reverse bending 2.8 metres distal from the helical termination and fell to the ground prior to the failure of strand 2.[15]
[15]Ibid section 1.3.5(a).
There were multiple stages in the failure of both strands 2 and 3. The process that led to failure began with initial cracking in both strands. Those cracks then propagated due to cyclic stress of some nature. Ultimately, both strands succumbed to ductile fracture — strand 3 after wearing two thirds of the way through, and later strand 2 after wearing one third of the way through.
The question of what caused the initial cracking was contentious at the outset of the trial. Initially, the plaintiff claimed (at least primarily) that the cracks in strands 2 and 3 initiated from fretting fatigue caused by rubbing between the helical termination and the conductor. However, by the end of the trial, there was instead substantial agreement that the fatigue in strands 2 and 3 was initiated at quench cracks in martensite ‘white layers’, which were caused by electrical arcing resulting most probably from lightning strike.[16] Martensite is a phase of steel that forms when steel is heated to a high temperature then cooled rapidly. It is hard and brittle. It appears in white layers when examined microscopically.
[16]Ibid section 1.1(d)(iii).
The arc marks and quench cracks were located at the end of the helical termination at pole 39.
The time of formation of the arc marks and quench cracks was unknown but it was likely to be a considerable time prior to February 2009.[17]
[17]Ibid section 1.1(c)(iii).
Following formation of the quench cracks, fatigue propagated in strands 2 and 3 due to dynamic loading from wind.[18] The period over which this occurred is unknown, as discussed below in relation to the inspection case.
[18]Ibid section 1.1(c)(iv).
The plaintiff’s principal case as to causation of the conductor failure was that, subsequent to the damage from lightning, Aeolian VIV was a material cause of the failure of the conductor. There was a fundamental and extensive controversy over this issue at trial.
The evidence led by the parties concerning the probable causes of the failure of strands 2 and 3 was technical, complex and very extensive.
The plaintiff called Dr Gates (fracture mechanics/metallurgy), Mr Better (engineer), Associate Professor Meehan (modelling), Professor Baitch (engineer) and Mr Hawes (line design). SPI called Dr Barter (fracture mechanics/metallurgy), Mr Vazey (mechanical engineer) and Dr Potts (modelling). UAM called Dr Havard (vibration) and Mr Gartner (fracture mechanics/metallurgy).
As I have said, two assessors were also appointed to assist the Court in understanding the evidence, being Professor Randall of the University of New South Wales and Professor Nowell of the University of Oxford.
In total, on the question of causation alone, 35 individual expert reports were filed. Six separate conclaves took place and six joint reports were produced. A concurrent evidence session occupied four weeks. A voir dire preceded the concurrent evidence session and formed part of the evidence at trial. The transcript with respect to the causation issue totalled some 2,500 pages. The final submissions filed by the parties totalled approximately 640 pages, again on this question alone.
Extensive modelling and testing were performed, and formed the basis of much of the expert opinion. A key test was performed on the Valley Span itself by Mr Vazey. Dummy conductors were set up on the Valley Span intended to replicate the environmental and other conditions that affected the conductor prior to 7 February 2009. Various outputs on the dummy conductors were then measured over an extended period of time.
There was, however, continuing uncertainty as to the cause of the fractures; in particular, as to what type or types of wind-related stressed caused the initial cracks to propagate. The nature of the underlying conceptual framework and some indication of the degree of complexity of the evidence producing this uncertainty can be traced through three of the conclave reports to which I shall shortly refer.
It is convenient to say something in narrative form about the conceptual framework bearing on the plaintiff’s case before turning to the conclave reports.
Strands 2 and 3 fractured at about 45° to the axis of the conductor. The question therefore arose as to how such a fracture plane could be produced. A 45° crack plane suggests shear stress or torsional stress, whereas vertical or bending stress would be expected to produce a 90° fracture plane. Aeolian VIV produces vertical vibration, and accordingly it was agreed that Aeolian VIV would generally be expected to produce a 90° fracture plane and not a 45° crack plane. If Aeolian VIV would not directly cause a 45° crack plane, the question arose whether the vertical vibration involved in Aeolian VIV could somehow be translated into shear or torsional stress, by coupling, or in combination with other stresses, to form a complex stress field, such that it would produce a 45° crack plane.
Additionally, cyclic stress would not cause the cracks to propagate unless the magnitude of the stress exceeded a certain stress threshold. It was not certain what the exact stress threshold would be, but it was agreed that such a threshold would apply, and would be higher initially before dropping to a lower threshold at the late stages of fracture propagation. Aeolian VIV therefore needed to generate stress of this magnitude or higher if it were to propagate the fractures. On the data available, it appeared that neither Aeolian VIV nor other types of wind-related stress would have surmounted the stress threshold. There were questions as to whether the magnitude of stress caused by Aeolian VIV and other stressors was under-measured, or whether the stress threshold was over-estimated.
Further, given that the cracks were propagated by cyclic stress, a question arose as to what kind of stress could have generated a sufficient number of stress cycles. Aeolian VIV is a low amplitude, high frequency type of vibration. On the other hand, other types of wind-related motion such as buffeting involve high amplitude, low frequency motion.
In the first Conclave 3 report dated 6 November 2012, the experts agreed generally as follows:
1.1. General agreements about the primary failures
Experts who agree a) The conductor failure was studied using computational modelling, physical simulation, metallurgical examination, the application of experience, and reviews of the relevant technical literature. The studies included careful examination of the photographic evidence from the failure site and of the samples of the failed conductor and fittings in the offices of the Victoria Police. Some studies benefited from access to original fittings and conductor samples, and others from high quality replicas of key components. SB, AEP, PM, BG, DGH, JV, HB, JG b) It was assumed that the failure of the conductor between poles 38 and 39 (involving fractures located at or about the distal end of the helical termination at pole 39) occurred in three distinct stages: initiation of cracks in the surface of strands 2 and 3, propagation of these cracks by fatigue, and separation of these strands. This was then followed by the overload failure of strand 1. SB, AEP, PM, BG, DGH, JV, HB, JG c) In reference to the above, the following opinions about the primary fractures[19] of the strands of the conductor were agreed in general by all the Experts at the conclave: SB, AEP, HB, JG, JV, DGH, BG i. Brittle martensitic layers were observed to be present in two of the steel strands, at positions corresponding to the tips of the long arm of the helical termination. SB, AEP, HB, JG, JV, DGH, BG ii. The evidence indicates that the martensite formed as a result of arcing (electrical discharges) between the helical termination and the conductor. The arcing is believed to have occurred as a result of lightning strikes on or in the vicinity of pole 39. JG, JV, AEP, BG, SB, HB, DGH iii. The time at which these arc burns occurred during the life of the conductor is unknown. Therefore it is unknown what number of loading cycles was applied to the conductor after the production of these burns. SB, AEP, BG, DGH, HB, JG, JV iv. The brittle martensitic layers were at the bottom of depressions (craters) in the two strands. In strand 3 the depth of the depression was about 0.12mm and in strand 2 the depth was about 0.09mm. SB, AEP, BG, HB, JG v. The brittle layers in both of these depressions included small surface cracks, most likely due to the thermal stresses produced during the arcing events. These cracks are hereafter referred to as ‘quench cracks’ since they most probably occurred during the cooling part of the thermal cycle. In strand 3 the quench crack was between 0.06 and 0.08mm deep from the bottom of the depression and for strand 2 the quench crack was about 0.03mm deep. The diameter of each of the strands was between about 2.50 and 2.64mm. SB, AEP, BG, HB, JG vi. The small surface cracks in the brittle martensitic layers were transverse to the axis of the strands. Under cyclic loads produced by the service environment (primarily wind induced dynamic loading), these cracks had produced sufficient stress intensities at their tips to lead to fatigue crack growth at some time after their formation. SB, AEP, BG, HB, JG, JV vii. The fatigue crack planes were at about 45° to the axis of the two strands so affected. The cracks appear to have been growing in the tensile mode. This indicates that the maximum Principal stress produced by the cyclic loading was at 45° to the axis of these strands. This angle of crack growth can be produced by local torsional cyclic loading in the strands in each of these cases or by cyclic loading which results in a complex stress field.
While this is agreed, further examination of this point is required. Such an examination may take the form of testing, field measurements and/or modelling.
SB, AEP, BG, HB, JG, JV viii. The conductor throughout its operational life, through wind loading of various types, would be subject to tensile loads, bending and torsion that would have generated tensile, bending and shear stresses (due to torsion) in the strands. Consequently, the local stress state would have been complex. Moreover, these applied loads would include both static or quasi-static loads and rapidly fluctuating (cyclic) loads. SB, AEP, BG, DGH, JV, HB, PM, JG ix. The observed fatigue cracks were propagated by repeated cyclic stresses that are likely to have included tensile, bending and torsion components in the strands due to wind induced dynamic cyclic loading of the conductor. The local cyclic shear stresses due to torsion appear to have dominated the crack growth. SB, AEP, BG, JV, HB, JG x. Over time, the fatigue cracks grew to reduce the cross sectional areas of strands 3 and 2, such that, in the first instance strand 3 could no longer support the service tension load (dynamic and static) and it failed. Later, strand 2 failed when the supportable service tension load (dynamic and static) was exceeded, noting the absence of the load-carrying capacity of strand 3. The uncracked strand (strand 1) then failed by tensile overload as a result of dynamic and static loading. SB, AEP, BG, DGH, JV, HB, JG xi. The failure of the second strand (strand 2) and final (strand 1) most probably occurred at effectively the same time. SB, AEP, BG, DGH, JV, HB, JG xii. Simulations of the true condition of the failed conductor were hampered by lack of samples of the exact conductor and exact hardware, and lack of knowledge of the exact tension on the failed conductor when it was strung. Effects of the age of the failed conductor were also difficult to replicate in the tests and modelling. However, simulations were carried out with as close to original components as were available and some conclusions about the conductor failure can be drawn. SB, AEP, PM, BG, DGH, JV, HB, JG xiii. In general there are several age-related mechanisms that can have degrading effects on conductors. These may include: zinc loss, corrosion of the steel, strain aging, reduction in self damping and external damage such as lightning strikes. Additionally, the accumulation of stress cycles (over certain levels) will result in degradation through fatigue and local wear mechanisms. SB, AEP, BG, DGH, JV, JG, PM, HB
[19]Those strand fractures that caused the conductor to fail.
[20]
[20]Conclave 3 first report dated 6 November 2012, section 1.1 (emphasis added; footnote in original).
The first Conclave 3 report then examined the individual tests and models that had been carried out. It recorded agreement concerning the tests performed on the Valley Span itself by Mr Vazey. The agreements included the following:
1.3.1 Agreements about the Vazey tests
Experts who agree … … e) The field testing indicates that, in the test spans, the majority of the high magnitude cycles are related to low frequency oscillations that manifest as changes in the tensile stress in the conductor. These tension-tension cycles show ranges up to 50MPa under the weather conditions observed. SB, AEP, BG, JV, HB, PM, JG f) The field test indicates that, in the test spans, aeolian vibrations (high frequency bending vibrations) show a range of induced stresses that were generally less than 10MPa to 12MPa. However there is not complete agreement about the interpretation of this observation — see points of disagreement below. SB, AEP, BG, JV, JG, HB [21]
[21]Ibid section 1.3.1 (emphasis added).
The report next dealt with the laboratory trials carried out by Dr Havard. These related to quantification of the effect of a misaligned helical loop end over the thimble that is held in the clevis of the termination. As will appear below, this was ultimately agreed not to be a significant circumstance.
Next, the report addressed laboratory testing carried out by Dr Barter. The following points were agreed:
1.3.5. Agreements about the Barter tests and analyses
Experts who agree a) The failure sequence was established as: The first fracture occurred to strand 3 at the end of the helical termination, followed by a second failure of strand 3 at about 2.78m from the first fracture. Strand 2 then failed by fatigue. Finally, strand 1 failed by tensile overload probably at or shortly after the time that the failure of strand 2 occurred. SB, AEP, BG, DGH, HB, JV, JG b) The arc burns produced by the induced lightning strikes and those produced by the controlled energy level contact arcs all had features that were very close to the appearance of the arc burns in the failed conductor. SB, AEP, BG, HB, JG c) All three of the situations (burns in the failed conductor, the lightning strikes and the contact arc burns) produced burns that on occasion caused quench cracks due to rapid cooling. SB, AEP, BG, HB, JG, JV d) Within the limits of a tensile fatigue test program the results indicate that a conductor without arc burns had a life of in excess of 107 cycles at 5kN cyclic magnitude, while with the same loads test specimens with cracks had lives between 104 and 105 cycles. SB, AEP, BG, DGH, JV, HB, JG e) The tests and analyses suggest that the quench cracks would be a precondition to the generation of the fatigue cracks, although this does depend on the magnitudes of cyclic stresses actually generated in service. SB, AEP, BG, DGH, JV, HB, JG f) Assuming that the two arc burns that resulted in the two fatigue cracks at the end of the helical termination occurred at the same time, the fatigue cracks in strand 3 and 2 would have grown concurrently. Therefore, if they experienced the same stress regime then the time between their failures would be likely to be only a small percentage of the total life of the cracking, at this location. SB, BG, DGH, HB, JG, AEP g) In the presence of the quench cracks observed in the failed strands, the tension-tension loads required to fail a single conductor strand (with the other strands still intact) are likely to be: a peak cyclic stress range of about 100MPa applied on top [of] the static stress, which was estimated to be about 300MPa (noting that the approximate tensile strength of the conductor is 1480MPa). SB, AEP, BG, JG, HB h) The fatigue cracks produced from the induced cracked arc burns by tensile loading in the laboratory tests grew perpendicular to the loading direction (perpendicular to the axis of the strands). By contrast, the fatigue cracks in the two strands that failed at the end of the helical termination grew at about 45° to the axis of the strands. The 45° angle suggests that the direction of the Maximum Principal stress was at 45° to the direction of the strand at the location of the fracture. SB, BG, JV, HB, JG, AEP i. The bending fatigue tests on sections of new and failed conductor produced fatigue cracks from the induced flaws that also grew perpendicular to the axis of the strands. SB, BG, JV, AEP, HB, JG ii. The respective growth rates of the fatigue cracks in strand 3 and 2 could have been influenced by the orientations of the two strands with respect to the planes of bending, neutral axis etc. SB, AEP, HB, BG, JV, JG [22]
[22]Ibid section 1.3.5.
The report next addressed modelling undertaken by Associate Professor Meehan to investigate the relative change in the cyclic bending stresses at the end of the helical termination due to the ill-seated jammed loop end of the helical clevis.
The report then addressed modelling undertaken by Dr Potts to assess the appropriateness of Associate Professor Meehan’s modelling assumptions and the method used.
Ultimately, the report recorded the following agreed conclusions about the testing modelling and simulation:
1.4.1. Agreed conclusions about the testing, modelling and simulation
Experts who agree a) The assumed mechanisms and order of failure (ignoring the second failure to strand 3), as described above are supported by the physical evidence. SB, AEP, BG, DGH, JV, HB, JG b) The results of the field testing with an ill-seated (misaligned) helical loop end over its thimble (albeit not replicating jamming of the thimble within the clevis) would appear to have had only a minor influence on the vibration behaviour of the conductor. SB, AEP, BG, DGH, JV, PM, JG, HB c) The dynamic stress changes due to the misalignment of the loop end of the helical termination are largely negligible in the physical laboratory tests (within their limitations) and if anything have been shown to be slightly beneficial. SB, AEP, BG, DGH, JV, PM, HB, JG d) Having noted that there are several age related mechanisms that can have degrading effects on conductors (listed in the assumption above), the failed conductor had damage in the form of arc burns that appear to have been very damaging to the fatigue life of the conductor and it is likely that without that damage the conductor would not have failed. SE, AEP, BG, DGH, JV, HB, JG e) The failed conductor did experience high frequency aeolian vibrations during its life. Typically such displacement amplitudes are small, less than one conductor diameter, and typically reduce in amplitude as the frequency increases to only a fraction of conductor diameter. This was supported by the Vazey field test results. SB, AEP, PM, BG, DGH, JV, HB, JG f) The failed conductor span is expected to have experienced low frequency (less than 1Hz) conductor swing. This was supported by the Vazey field test results. It is known that at low frequency, spiral impact[23] dampers have less influence on vibration suppression. SB, BG, JV, AEP, PM, DGH, JG, HB g) Spiral dampers do reduce the amplitude of high frequency vibrations particularly above about 20Hz (for the diameter of the failed conductor). SB, AEP, PM, BG, DGH, JV, HB, JG h) Adding dampers to the span may have delayed, but not necessarily prevented, the failure of the conductor. The martensite and quench cracks arising from lightning strikes constitute a significant stress-concentrator, reducing the minimum magnitude of cyclic stress required to grow fatigue cracks, hence permitting a fatigue crack to occur at lower stress ranges than would be the case for an undamaged conductor. If the application of dampers did not reduce the stress intensity range to below the minimum value required to propagate a crack (a value known as stress intensity threshold or fatigue threshold) then the conductor would still eventually have failed, albeit possibly after a longer period of time. As to when these martensite defects occurred and the rate and likely timing of the failures that ultimately occurred, this is unknown SB, BG, AEP, PM, DGH, JV, HB, JG i) There is disagreement between the experts on the interpretation of the results from the field tests and the models, which with further analyses may approach a greater degree of convergence. SB, AEP, PM, HB, BG, DGH, JG, JV j) At the time of this report, the stresses measured in the Vazey field tests indicated that wind induced vibrations appear to dominate the load spectra. There are two mechanisms identified: low frequency swinging (<=10 Hz), and higher frequency (>10Hz) vortex induced vibration referred to as aeolian vibration. The data also contains some infrequent unexplained ‘Impulsive’ events. SB, AEP, PM, BG, JV, HB, JG, DGH k) The fatigue fracture surfaces of the failed strands (at the end of the helical termination) were at 45° which is consistent with local shear stresses (due to torsion) within the individual strands. SB, AEP, BG, JV, JG, HB l) In a helically braided conductor or wire rope, shear stresses (due to torsion) can in principle be induced by tension-tension, local bending and conductor swing or combinations of these. However, none of the expert reports filed prior to the conclave have demonstrated the manner in which 45° crack growth can be generated in a simple 3-strand conductor of the relevant lay under loading dominated by tension-tension cycling. Moreover, none of the laboratory simulations has yet been successful in reproducing such 45° fatigue growth; only transverse cracks have grown. Further modelling or physical simulation is required to clarify this question. SB, AEP, PM, BG, DGH, JV, HB, JG [23]Commonly called ‘spiral damper’.
[24]
[24]Conclave 3 first report dated 6 November 2012, section 1.4.1 (emphasis added; footnote in original).
The report went on to re-state that the levels of wind induced loading necessary for crack propagation were still being debated[25] and to state with respect to the effect of martensite/pre-cracks on fractures as follows:
[25]Ibid section 2.
3.1 Areas of agreement
Experts who agree a) The pre-cracks found in the untempered martensite layers probably occurred immediately on cooling of the affected volume of steel following the production of the untempered martensite regions by arcing. After their formation, the conductor tension and fluctuations in this tension due to wind loads and temperature changes would have caused these cracks to begin to propagate by fatigue. SB, AEP, HB, DGH, JG, BG b) The fractured conductor strands (at the end of the helical termination) had damage in the form of arc burns that appear to have been very damaging to the fatigue life of the conductor. It is likely that without that damage the conductor would not have failed by fatigue without some other form of degradation reaching a critical size. SB, AEP, BG, JV, HB, DGH, JG c) The unknowns that arc burns introduce, such as residual stresses, make crack growth predictions based on fracture mechanics difficult, imprecise and indicative only. This does not discount fracture mechanics as a means of interpreting fatigue crack initiation and propagation, but rather emphasising it as being an interpretive rather than absolute tool. SB, AEP, BG, JV, DGH, JG, HB d) For crack growth by fatigue to occur, local cyclic tensile stresses must be present and these cyclic stresses must be above a threshold although this threshold may be variable depending on the particular situation. SB, AEP, BG, DGH, JV, HB, JG, PM
[26]
[26]Ibid section 3.
It further addressed the effect of misalignment of the helical termination loop end[27] and then recorded the following agreement with respect to the effect of vibration on the conductor:
[27]Ibid section 4.
5.1 Areas of agreement
Experts who agree a) Aeolian vibration of the conductor in many circumstances is recognised as being one of the primary driving mechanisms leading to propagation of fatigue cracks across the strands in thicker conductors. The conventional design approach seeks to configure the conductor span to ensure that aeolian vibration related stresses are below the nominal fatigue endurance limit of the conductor. SB, AEP, DGH, HB, JG, PM, BG b) The wind excites the conductor at one or more of its natural frequencies leading to low frequency sinusoidal swinging oscillations in a range of frequencies (i.e. the fundamental and low frequency harmonics), and concurrently excites cross-flow vibration associated with lock-on to wind vortex shedding frequencies which are a function of increasing wind speed. The stress in the conductor depends on the curvature of the conductor, that is in turn the result of vibration amplitude and wave length, that being inversely proportional to frequency. SB, AEP, PM, HB, BG, DGH, JG c) The large amplitude low frequency swinging modes produce low frequencies and long wave lengths, with low resultant curvatures, though the span-wise increases in tension are potentially a significant source of cyclic tensile and cyclic shear stresses due to torsion within the conductor strands, but with largely insignificant bending stresses. SB, AEP, PM, DGH, HB, BG, JG d) High frequency vibrations have short wave lengths. The curvature of the conductor, and hence the bending stress, can still be large even with small amplitudes. HB, PM, JG, JV, AEP, DGH e) Low velocity winds will tend to excite low frequency cross-flow vibrations, with relatively long modal wave lengths relative to the length of individual spiral impact dampers making them less effective at these frequencies. Moderate velocity winds produce high vibration frequencies and short wave lengths relative to the length of individual dampers, which are thus well capable of significantly suppressing the incident vibrational waves. SB, AEP, PM, DGH, HB, JG f) The report on the field data collection testing (Vazey) has not so far demonstrated aeolian type vibration that had stress ranges of sufficient magnitude and repetitive occurrence to suggest that aeolian vibration was driving the cracking in the case of the failed conductor. Further investigation of the current and future data sets is necessary. SB, AEP, PM, BG, JV, HB, JG, DGH
[28]
[28]Ibid section 5.1 (emphasis added).
The report then addressed the effect of vibration damping or other measures on the probability and timing of the primary fractures and noted in part:
6.1 Prefacing Background Informative Comments
Experts who agree … … b) Generally, conductors strung at high tension and with long span lengths, require additional damping to keep the amplitudes of vibration below the endurance limit. The current Australian and utility Standards clearly identify the need for dampers on long spans (at the time of the stringing of the failed conductor these were not required). However, the Standards do not clearly state what specific type and performance characteristics of dampers should be fitted, nor the associated number of dampers required under particular circumstances. More dampers are generally required on a long span than on ‘normal’ length spans. The type of damper conventionally employed for SWER conductors is a spiral impact damper and these would be attached, singly or in pairs, near the ends of the span, though the guidance on this is not codified. AEP, PM, DGH, HB, JG
[29]
[29]Ibid section 6.1.
It further recorded the following areas of agreement:
6.2 Areas of agreement
Experts who agree a) In the case of the failed span, which was long, its small diameter and three strand construction has not been the subject of significant prior investigation to achieve codified industry consensus and needs systematic study of the damping required. SB, AEP, DGH, PM, HB, JG b) The simulations by Havard indicated that the highest stresses in terms of bending stress per unit amplitude of conductor oscillation occurred when high frequencies were excited. However, typically the amplitude of oscillation decreases with increasing excited oscillation frequency, whereby the absolute values of bending stress do not necessarily increase with increasing frequency, as recorded in much of the Vazey field data. Thus if the absolute amplitudes of oscillation are sufficiently large then it is desirable that additional damping that is effective up to these high frequencies ought to be fitted. However, the occurrence of high frequency vibrations of a small amplitude does not of itself necessitate the fitting of dampers. SB, AEP, PM, DGH c) If the high frequency vibrations were of sufficient magnitude then it would be agreed that the fitting of spiral dampers would have lengthened the lives of the fatigue cracks at the end of the helical termination. SB, AEP, DGH, JV, PM, HB, JG d) If the high frequency vibrations were not of sufficient magnitude in this regard, then it would be agreed that the fitting of spiral dampers would not have had any influence on the lives of the fatigue cracks at the end of the helical termination. SB, AEP, DGH, JV, JG, HB, PM e) High frequency vibrations have short wave lengths. The curvature of the conductor, and hence the bending stress, can still be large even with small amplitudes. Spiral impact dampers are demonstrably effective under those conditions. DGH, HB, AEP, JV, PM, JG
[30]
[30]Ibid section 6.2.
The report also recorded further comments on ‘other measures’ which might have minimised the effects of vibration.[31]
[31]Ibid section 6.4.
The second report of the third Conclave dated 15 February 2013 recorded general agreements about the primary failures in the conductor:
1.1 Fatigue surface orientations: the following statements are expansions/refinements of the statement included in the first Conclave 3 report:
vii. The fatigue crack planes were at about 45° to the axis of the two strands so affected. The cracks appear to have been growing in the tensile mode. This indicates that the maximum Principal stress produced by the cyclic loading was at 45° to the axis of these strands. This angle of crack growth can be produced by local torsional cyclic loading in the strands in each of these cases or by cyclic loading which results in a complex stress field ie with contact.
Agree 1.2 In metallurgical and mechanical failure investigations, it is typical that the observed plane of fracture provides considerable diagnostic information about the nature and orientation of the stresses that drove any fracture of interest. Fatigue cracks, as were present in the incident conductor, usually propagate on a plane oriented perpendicular to the direction of maximum cyclic tensile stress. Thus the observed plane of the fatigue crack can provide information about the orientations of cyclic stresses in the local region where the cracking occurred. SAB, DGH, JDG, PM, BG, JAV, AEP, HB 1.3 The orientation of the local stresses depends on the types of external forces that combine to generate these stresses. In wires, the loading actions that generally contribute to a failure may be tension, bending and/or torsion. These loading actions can give rise to both axial and shear stresses. Axial loads tend to produce fatigue crack planes that are transverse to the axis of the wire. Bending loads will also produce transverse planes over the early part of a crack, followed by planes that may diverge, depending on how close the crack gets to the neutral axis. Torsional loads tend to produce a 45° plane of fatigue crack growth, which may develop into a spiral failure if the torsion is confined to a single wire. Mixed loading modes may produce crack planes intermediate between these characteristic orientations. SAB, DGH, JDG, PM, BG, JAV, AEP, HB 1.4 The fatigue crack planes observed at the end of the helical termination adjacent to Pole 39 were at about 45° to the axis of the two strands so affected. In a helically stranded conductor, a component of shear stress is generated in the strands even under purely axial tensile loading or pure bending loading of the conductor. However, tensile and bending loads should cause the crack plane to deviate only a small amount from the transverse plane. This was observed in the laboratory fatigue tests performed by Barter, where the observed fatigue crack planes were reported to be essentially transverse to the axial direction of the conductor. The 45° crack plane observed in the incident conductor indicated that the influence of cyclic shear stresses was significantly larger than can be explained simply by conventional interpretive expectations arising from cyclic tensile or bending loads in the helically stranded conductor. SAB, DGH, JDG, BG, AEP, HB 1.5 The field tests (Vazey) and the laboratory tests (Havard) were not configured to measure shear stresses at the failure location, since at the time that these tests were designed they were focused on measuring tension and bending stresses only. SAB, DGH, JDG, PM, BG, JAV, AEP, HB 1.6 The members of the Conclave cannot be categorical about the mode (or modes) of cyclic loading that produced the observed 45° fatigue crack growth planes. The further investigations that have been undertaken since the previous Conclave 3 report was issued have not been able to complete a full explanation of the source of the stresses that produced the 45° fatigue crack growth planes. Planned additional testing and analysis by Potts, to be completed shortly, may aid in this part of the investigation. SAB, DGH, JDG, PM, BG, JAV, AEP, HB
Once the implementation of the scheme has begun, a reassessment of the administration costs can be undertaken should it become necessary to determine whether they are fair and reasonable in practice.
I approve the SDS provisions for future administration costs.
Procedural provisions
No objection has been made to the proposed scheme’s procedures and I do not propose to address them in any detail.
Mr Watson has elaborated the preparatory work that has been undertaken and the practical arrangements that have been made to implement them.
I have concluded that they are appropriate and strike a balance between the need on the one hand for expedition and certainty and the control of costs, and on the other hand the need for fair assessments.
Fundamentally, the SDS is concerned with procedures for establishing a value for every claim of every claimant. Those values will then provide the basis on which each of the funds will be distributed among the claims against that fund in the proportion which each individual claim’s value bears to the total value of all of the claims against that fund. This will result in a pro-rata distribution despite the fact that the total value of the claims may come in substantially above the figure of $500 million.
The scheme also makes provision for interim distributions to group members whose claims are assessed relatively early. Because the funds in the I-D claim fund or the ELPD claim fund are interest-bearing, the subsequent interest entitlements of claimants who receive interim distributions will be adjusted.
The I-D claims are capped to provide for an 80 per cent recovery rate reflecting particular risks in respect of the claims against the State parties. If the total value of the I-D claims has been over-estimated, the excess of funds will become available to the ELPD claimants.
There are provisions for internal review of assessments of threshold disability and the quantum of damages in the case of I-D claimants and of the assessment of the quantum of damages in the case of ELPD claimants.
There are some specific provisions relating to minors and persons under a disability. The ultimate resolution of claims by person in these categories remains subject to approval by this Court.
ELPD assessment principles and multipliers.
It is necessary next to say something about the principles adopted for the assessment of ELPD damages because they are in effect a code and the relativities between the different types of provisions made raise the question whether the scheme for compensation is fair as between different types of claim and in turn different claimants.
The SDS provides:
(a) the ELPD assessors are to value the various ELPD loss items according to the narrative principles set out in Schedule A and otherwise according to the laws of Victoria; but
(b) once loss values have been determined in this way, those values are to be multiplied according to the ‘ELPD multipliers’ also listed for each item in Schedule A to produce a final ELPD distribution value for each claim.
Schedule A then lists more than 40 discrete loss categories from homes to non-home buildings, to chattels, labour costs and non-economic losses. For each loss, item or category a narrative rule is stated which is intended to define the basis on which the value of the loss will be assessed.
The narrative rules reflect the contentions made for the plaintiff at trial regarding the proper basis for valuing the various kinds of losses. In summary, the narrative rules address the valuation of the following:
(a) the valuation of homes as opposed to non-home buildings, and the question of whether ‘diminution of value’ or ‘reasonable reinstatement’ is the proper basis for valuation;
(b) the complications involved in treating claims in different circumstances where home and non-home buildings have been rebuilt, partially rebuilt before property sale or not rebuilt before a property sale;
(c) the valuation of fences;
(d) the valuation of ordinary home contents and domestic chattels as opposed to collectibles and normal livestock as opposed to breed stock or bloodstock;
(e) issues regarding the valuation of gardens and trees, which have emerged from the exchange of a series of expert opinions;
(f) income losses by employees or self-employed persons not because of personal injury but because of damage to business assets or time off work to attend to personal assets or other disruptions from the fire, or wages lost by employees stood down because of the damage to their employer’s assets or slowdown in trade;
(g) lost corporate income from damage to business assets or trade slowdown;
(h) pure economic loss not covered by the above items;
(i) the costs of alternative accommodation;
(j) the valuation of claimants’ own/volunteer labour and own/donated materials; and
(k) the question of ‘inconvenience damages’.
I accept that the scheme provided for in the Schedule provisions is a fair and reasonable one when looked at in the broad. Factors which support this conclusion are:
(a) it is fair to hold the claimant group generally to the position advanced at trial on their behalf as that constituting the proper basis for compensation. Indeed, it would be unfair to group members to depart from that basis without due notice and detailed justification;
(b) most claimants will have claims falling into more than one category and there will in effect be some averaging out of the relativities between different bases of assessment of damage;
(c) the potential claims are so heterogeneous that unless some simplified scheme of assessment is provided, the process of assessment of damages will be impractically costly, contentious and delayed;
(d) none of the insurers with rights of subrogation have objected to the scheme despite the fact that such claims must necessarily embrace categories of loss and damages falling within each part of the proposed Schedule;
(e) the Schedule responds sensibly to the experience of assessment of damages in other bushfire claims in recent times.
This leads to the discrete issue of ‘ELPD multipliers’. Once the narrative principles have been applied to the assessment of value of a particular claim, that value is further adjusted in a limited number of instances to, in effect, reflect inherent risks peculiar to that type of claim that such a loss would not be recovered if the relevant claim went to judgment.
I have carefully considered each of these adjustments and accept that they are also well-founded.
Trial participation
Section 12 of the SDS proposes to compensate the plaintiff and sample group members for their personal time and any incidental disbursements expended by them in assisting the plaintiff’s lawyers to prepare for trial the issues which those claims raised. Reimbursement payments of this kind were made by Jessup J in Darwalla Milling Co Pty Ltd v F Hoffman La Roche Limited (No 2)[97] and by Gordon J in Modtech Engineering Pty Ltd v GPT Management Holdings Limited (No 2),[98] although her Honour adjusted the quantum of the amount claimed.
[97](2006) 236 ALR 322, 346.
[98][2013] FCA 1163.
I have formed a view on the basis of the affidavit material that the amounts in issue are reasonable.
The template potential of each claim sampled was what gave it significance. Further, I accept that the Court process to which individuals were subjected was itself gruelling and extended.
Finally, specific notice was given to other group members of the reimbursement payments and no objection was made to them.
The objections
Only three objections were ultimately pursued before the Court. The objection by Mr Exton was withdrawn at the hearing before me.
Mr Apted has lodged a letter of objection which relevantly states:
My reasons are as follows, the proposed settlement of 33%. And After solicitors costs will not give me the funds to rebuild my home. I have lost one million in assets. My contents of the house. The house itself. If this settlement goes through I will have to sell the land also.
I am a pensioner but I have the skills to rebuild my home again. I have lived in Strathewen for forty years and I love this part of the world. This settlement would make me sell the land and would not give me the finances to buy in another area. This is not satisfactory to me.
Plainly enough Mr Apted’s concerns are genuine but they do not persuade me that the settlement figure as between the parties is unreasonable or that the SDS provisions are unreasonable.
The settlement necessarily involves a measure of compromise. For the reasons I have explained, I am of the view the overall settlement is reasonable.
In short, it will not provide group members with full compensation for their injuries, loss and damage (insofar as monetary damages can ever do this) but it will provide group members with some substantial compensation in circumstances where there was a real prospect that they would receive either no compensation or materially less than full compensation if the matter proceeded to judgment. In so doing, the settlement will also convey to group members the advantages of finalisation, avoidance of stress, advancement of payment and containment of costs to which I have already referred.
Mr Dunn has also lodged a written objection which states:
The amount proposed to be accepted is insufficient compensation for the losses suffered by the victims of the bushfire.
Once again, it must be accepted that the settlement will not provide full compensation to the claimants. Nevertheless, in my view, it is a reasonable settlement for the reasons I have explained.
Mr Partington of Benalla has lodged a written objection, which is substantially comprised of a submission entitled ‘The Corrupt Australian Octupus’. In large part it addresses issues relating to land use planning in response to bushfire risk and the propriety of various government actions. I would reject this objection. Mr Partington is not a group member. His objection traverses (at least in part) some serious issues of the public interest but these issues cannot be resolved in the present proceeding and cannot determine the view which I should take in respect of the settlement of the group claim.
Confidentiality
The Court relies on disclosure by the plaintiff’s legal advisers of their candid professional opinions concerning the settlement and the factual matters supporting those opinions. In Lopez v Star World Enterprises Pty Ltd, Finkelstein J addressed the difficulty which this may create for the lawyers acting for the parties:
With regard to the application under s 33V, my principal task is to assess whether the compromise is a fair and reasonable compromise of the claims made on behalf of the group members. I am not so much concerned with the position of Mr Lopez who, after all, has solicitors and counsel to advise him as to how his interests will best be served in the litigation. The group members are not protected in this way. It is true that any group member may opt out of the proceeding to avoid his or her rights being affected in any way (whether adversely or beneficially) by the outcome of this litigation. But, I have no doubt that many members of this group (and no doubt members of other large groups who are represented in proceedings in the court) will remain as represented parties (that is not opt out of the proceeding) without a real appreciation of what that entails. In particular, it is likely that many group members will not understand that any judgment given in a representative proceeding will be binding upon them: see s 33ZB. Even if the group members are provided with a summary of the law relating to matters such as issue estoppel and res judicata, it is unlikely to be instructive to most of them.
Accordingly, the task of the court in considering an application under s 33V is indeed an onerous one especially where the application is not opposed. It is a task in which the court inevitably must rely heavily on the solicitor retained by, and counsel who appears for, the applicant to put before it all matters relevant to the court's consideration of the matter. In this regard there would be few cases where the court can properly exercise its power under s 33V without evidence from the solicitor supported by counsel that the proposed compromise is in the interests of the group members. I appreciate that, on occasion, this will place the solicitor and counsel in a difficult position. The interests of their client will not always be coincident with the interests of the members of the group. But, in my view, that is no more than a necessary consequence of their client instituting a representative action.[99]
[99]Lopez v Star World Enterprises Pty Ltd (1999) ATPR 41-678, 42-670.
In Pathway Investments Pty Ltd & Anor v National Australia Bank Limited (No 3),[100] Pagone J explored the consequential competing policy imperatives which govern claims for confidentiality in cases such as this.
The need for confidentiality is often essential to the process of informing the Court about matters affecting its decision about whether or not to approve a settlement, but gives rise to potential difficulties and should be kept to a minimum. A candid evaluation of a client’s case may require revealing facts or opinions of potential forensic value to other parties to the proceeding as well as to strangers to the proceeding and to potential litigants to other proceedings. Receipt of evidence confidentially assists the Court in its statutory duty of considering whether or not to approve the settlement by encouraging the practitioners to disclose to the Court fully and candidly the facts and opinions which are relevant, useful and desirable to be before the Court for consideration. However, the receipt of confidential material is in contrast to the general principle of justice being done, and being manifestly seen to be done, openly and in public.[101] In Dye v Commonwealth Securities Ltd (No 2)[102] it was said:
The principle of open justice operates on the premise that all the material placed in evidence before a court and on which, in open court, it is asked to act is open to public scrutiny. That is because publicity itself has the purposes of both informing the public of how judicial power is exercised and ensuring that the courts are accountable for the use of that power entrusted to them. Administrative power can be, and frequently is, exercised in secret. Judicial power almost never is and, when it is, the departure from the ordinary mode of trial must be demonstrated to be necessary in the interests of justice.[103]
It is therefore important to ensure that any confidence extend only as far as is strictly necessary for the furtherance of the administration of justice. The need to balance the confidential expression of facts and views with the need for justice to be seen and to be done openly is of particular significance in the case of class actions where some members of the group, but not all, may have the ability to access the confidential information. The parties affected by a judicial decision, as well as the public on whose behalf a decision is made, are entitled to know the reasons for the decision. The Court is obliged to express reasons for its conclusions, and it is generally undesirable for those reasons not to be stated openly and clearly.[104] The general formulations of conclusions may not meaningfully convey reasons. There may be some cases where the Court may be able to express its reasons confidentially to the parties in such a way that all group members may have access to the confidential reasons but that will not always be the case and that may not always be a satisfactory or desirable process to adopt. What must be conveyed in the reasons must be something which sufficiently explains why or how the Court has reached its conclusion about whether or not to approve the settlement. In this case the joint opinion of counsel is appropriate to be kept confidential except to the extent that its content is expressly referred to in these reasons. Counsel has expressed candid opinions about the strengths and weaknesses of the Plaintiffs’ case which are confidential to the parties for whom they act…[105]
[100][2012] VSC 625.
[101]Scott v Scott [1913] AC 417; R v Chief Registrar of Friendly Societies; Ex parte New Cross Building Society [1984] 2 WLR 370, 377 (Sir John Donaldson MR).
[102][2010] FCAFC 118.
[103]Ibid [121] (Marshall, Rares and Flick JJ); see also David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294, 310 (Samuels JA).
[104]David Syme & Co Ltd v General Motors-Holden’s Ltd [1984] 2 NSWLR 294.
[105]Pathway Investments Pty Ltd & Anor v National Australia Bank Limited (No 3) [2012] VSC 625, [5] (citations in original).
I accept that in the present case a number of documents upon which the plaintiff relies should be kept confidential. Nevertheless, confidentiality should not extend beyond what is strictly necessary for the administration of justice. In the present case, the opinions of counsel are properly kept confidential but the submissions made in open court concerning aspects of their subject matter are not to be so regarded.
Likewise, whilst the specific content of sampling and modelling of quantum undertaken on behalf of the claimants should remain confidential the general nature of such sampling and modelling is (as counsel conceded) properly disclosed. Unless the process is described then the basis of its outcome and my assessment of it would simply not be apparent.
Similar considerations concern the methodology of the costs consultants because, as I have said, the methodology of the costs consultants is critical to the credibility of their opinion, I have described that methodology but not specific costings made by them or the figures at which they ultimately arrived.
In the circumstances of the case, I accept that the following documents should be the subject of orders protecting their confidentiality, save to the extent that their contents are expressly referred to in these reasons.
1. Affidavit of Andrew John Watson dated 10 November 2014
2. Exhibit AJW 4 — Schedules A and B of the Settlement Distribution Sche me
3. Exhibit AJW 8 — Advice of independent counsel
4. Exhibit AJW 9 — Confidential opinion of trial counsel as to reasonableness of the proposed settlement
5. Exhibit AJW 10 — Correspondence from Hall & Wilcox to Maurice Blackburn dated 3 July 2014
6. Exhibit AJW 11 — Correspondence from Maurice Blackburn to Hall&Wilcox dated 7 July 2014
7. Exhibit AJW 12 — Communications between mediator and the parties as to quantum
8. Exhibit AJW 13 — Proposed settlement sum distribution
9. Affidavit of Catherine Mary Dealehr dated 10 November 2014
10. Affidavit of Joseph Anthony Mazzeo dated 10 November 2014
11. Further affidavit of Joseph Anthony Mazzeo dated 11 November 2014
12. Further affidavit of Andrew John Watson dated 21 November 2014
These orders are made pursuant to s 33ZF of the Supreme Court Act 1986, alternatively the inherent jurisdiction of the Supreme Court[106] and r 28.05 of the Supreme Court (General Civil Procedure) Rules 2005.
[106]Open Courts Act 2013, s 5
Orders
I will make orders generally in accordance with the minutes submitted to me but varied in respect of certain matters referred to in the course of the hearing before me and by way of amplification in some other respects.
ANNEXURE A
List of Common Questions
[Amended 8 March 2013]
PRELIMINARY
What was the cause of the ignition of the Kilmore fire (“the fire”)?
What areas were damaged by the fire (“the fire areas”)?
THE CLAIMS AGAINST SPI
SPI STATUTORY DUTY
Did section 75 of the ES Act impose upon SPI any and if so what statutory duty which gave rise to or created any private right or cause of action for the benefit of any claimants and/or class of claimants?
Did SPI breach the statutory duty in relation to the SWER line and/or the pole and its infrastructure?
If SPI breached the statutory duty, was this a cause of any losses sustained by the claimants and/or class of claimants?
SPI COMMON LAW DUTY
Did SPI owe a common law duty to any claimants and/or class of claimants to exercise reasonable care in relation to the management, maintenance and control of the SWER line and/or the pole and its infrastructure to avoid:
(a) personal injury or death; and/or
(b) physical damage to property; and/or
(c) economic loss resulting from damage to property; and/or
(d) economic loss which did not result from damage to property?
Did the common law duty extend to SPI ensuring that reasonable care was taken by any contractors engaged by it in relation to the management, maintenance and control of the SWER line?
Did SPI breach the common law duty in relation to the SWER line and/or the pole and its infrastructure?
If SPI breached the common law duty, was such breach a cause of any losses sustained by the claimants and/or class of claimants?
SPI NUISANCE
Did SPI create a nuisance, in the form of the fire, which unreasonably interfered with the use or enjoyment of land (or interest in land) of any of the claimants and/or class of claimants?
Is SPI liable to any of the claimants and/or class of claimants for any loss or damage caused by the creation of a nuisance, in the form of the fire?
THE CLAIMS AGAINST UAM
UAM COMMON LAW DUTY
Did UAM owe a common law duty to any claimants and/or class of claimants to exercise reasonable care in carrying out its operations in relation to the SWER line and/or the pole and its infrastructure pursuant to the UAM Contract to avoid:
(a) personal injury or death; and/or
(b) physical damage to property; and/or
(c) economic loss resulting from damage to property; and/or
(d) economic loss which did not result from damage to property?
Did UAM breach the duty in relation to the SWER line and/or the pole and its infrastructure?
If the UAM breached the common law duty, was such breach a cause of any losses sustained by any of the claimants and/or class of claimants?
Is SPI liable for any losses caused by the breach by UAM of its common law duty?
THE CLAIMS AGAINST DSE
DSE STATUTORY DUTIES
Did section 62(2) of the Forests Act impose upon DSE any, and if so what, statutory duty which gave rise to or created any private right or cause of action for the benefit of any claimants and/or class of claimants?
Did section 17(2)(b) of the National Parks Act impose upon DSE any statutory duty, and if so what, which gave rise to or created any private right or cause of action for the benefit of any claimants and/or class of claimants?
Did DSE breach either of the above statutory duties?
If DSE breached either of the statutory duties, was such breach a cause of any losses sustained by any claimants and/or class of claimants?
DSE COMMON LAW DUTIES
Did DSE owe a common law duty to any claimants and/or class of claimants to take reasonable care to ensure that proper and sufficient planned burning for the prevention or suppression of fire was carried out in a timely and/or efficient manner for the Kilmore Fire Area Public Land?
Did DSE owe a common law duty to the personal injury claimants to exercise reasonable care in the provision of bushfire warnings to persons in the fire area?
Did DSE owe a common law duty to the personal injury claimants to take reasonable care in the provision of advice to members of the Victoria Police to enable them to issue bushfire warnings to persons in the fire area?
Did DSE breach any of the common law duties?
If DSE breached any of the common law duties, was such breach a cause of any losses sustained by any claimants and/or class of claimants?
THE CLAIMS AGAINST CFA
CFA STATUTORY DUTY
Did section 20 of the CFA Act impose upon the CFA any and if so what statutory duty which gave rise to or created any private right or cause of action for the benefit of any personal injury claimants and/or class of personal injury claimants?
Did CFA breach the statutory duty?
If CFA breached the statutory duty, was such breach a cause of any losses sustained by any personal injury claimants and/or class of personal injury claimants?
Did the CFA owe a common law duty to the personal injury claimants to exercise reasonable care in the provision of advice to members of Victoria Police to enable them to issue bushfire warnings to persons in the fire area?
Did CFA owe a common law duty to the personal injury claimants to exercise reasonable care in the provision of bushfire warnings to persons in the fire area?
Did CFA breach any of the common law duties?
If CFA breached any of the common law duties, was such breach a cause of any losses sustained by any personal injury claimants and/or class of personal injury claimants?
THE CLAIM AGAINST VICTORIA POLICE
VICTORIA POLICE COMMON LAW DUTY
Did the emergency response plan State Coordinator, Deputy Coordinator or the Kilmore Fire Emergency Response Coordinators owe a common law duty to the personal injury claimants to take reasonable care to issue effective and timely bushfire warnings to persons in the fire areas?
Did any of the identified members of the Victoria Police breach the common law duty?
If an identified member(s) of the Victoria Police breached the common law duty, was such breach a cause of any personal injury sustained by the claimants and/or class of claimants?
Are claims for economic loss or property damage against the First, Second, Third and Fourth Defendants ‘apportionable’ claims within the meaning of Part IVAA of the Wrongs Act?
For any apportionable claims, are any of the defendants concurrent wrongdoers and, if so, what is the proportionate responsibility of each concurrent wrongdoer in each case?
To what extent, if any, are SPI, UAM, DSE, CFA and the State of Victoria liable to make contribution to or indemnify each other pursuant to Part IV of the Wrongs Act in respect of their respective liabilities?
BINDING EFFECT
38A. For the purposes of formulating a judgment conforming to section 33ZB(1) of the Supreme Court Act 1986, which answers to each question above, alternatively which findings made for the purposes of answering each or any question above, are binding on:
(a) the plaintiff?
(b) any and if so which sample group members?
(c) any and if so which subgroup of group members?
(d) all the group members?
(e) all or any of the defendants?
CONTRACTUAL CLAIMS
Did UAM breach the UAM contract?
If UAM breached the UAM contract, did SPI suffer loss or damage as a result of that breach?
If UAM breached the UAM contract, and SPI suffered loss and damage, was any loss and damage caused by that breach?
If UAM breached the UAM contract and SPI did suffer loss or damage, is UAM obliged to indemnify SPI for that loss and damage?
If SPI suffered loss and damage and damages are recoverable by SPI against UAM:
(a) Was SPI contributory negligent; and
(b) If so, to what extent, having regard to SPI’s share in the responsibility for the SPI loss and damage, should the damages recoverable by SPI against UAM be reduced?
SCHEDULE OF PARTIES
| S CI 2009 4788 | |
| BETWEEN: | |
| CAROL ANN MATTHEWS | Plaintiff |
| - and - | |
| AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) | First Defendant |
| ACN 060 674 580 PTY LTD | Second Defendant |
| SECRETARY TO THE DEPARTMENT OF SUSTAINABILITY AND ENVIRONMENT | Third Defendant |
| COUNTRY FIRE AUTHORITY | Fourth Defendant |
| STATE OF VICTORIA | Fifth Defendant |
| AND BETWEEN | |
| AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) | Plaintiff by counterclaim |
| - and - | |
| ACN 060 674 580 PTY LTD | First Defendant by Counterclaim |
| SECRETARY TO THE DEPARTMENT OF SUSTAINABILITY AND ENVIRONMENT | Second Defendant by Counterclaim |
| COUNTRY FIRE AUTHORITY | Third Defendant by Counterclaim |
| STATE OF VICTORIA | Fourth Defendant by Counterclaim |
| CAROL ANN MATTHEWS | Fifth Defendant by Counterclaim |
| AND BETWEEN | |
| ACN 060 674 580 PTY LTD | Plaintiff by UAM Counterclaim |
| - and - | |
| AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) | First Defendant by UAM Counterclaim |
| SECRETARY TO THE DEPARTMENT OF SUSTAINABILITY AND ENVIRONMENT | Second Defendant by UAM Counterclaim |
| COUNTRY FIRE AUTHORITY | Third Defendant by UAM Counterclaim |
| STATE OF VICTORIA | Fourth Defendant by UAM Counterclaim |
| CAROL ANN MATTHEWS | Fifth Defendant by UAM Counterclaim |
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