Matthews v AusNet Electricity Services Pty Ltd (Ruling No.40)
[2015] VSC 131
•4 May 2015 (First revision – 11 May 2015)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
S CI 2009 04788
| 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 |
JUDGES: | J FORREST J and DALY AsJ |
WHERE HELD: | Melbourne |
DATE OF CASE MANAGEMENT CONFERENCE: | 15 April 2015 |
DATE OF RULING: | 4 May 2015 (First revision – 11 May 2015) |
CASE MAY BE CITED AS: | Matthews v AusNet Electricity Services Pty Ltd (Ruling No. 40) |
MEDIUM NEUTRAL CITATION: | [2015] VSC 131 |
PRACTICE AND PROCEDURE – Case management conference – Orders made for the distribution of the settlement sum after settlement approval by the Court – Scheme setting out the process of distribution of the settlement funds – Orders made for the payment of the Scheme Administrator – Supreme Court (General Civil Procedure) Rules 2005 O 15 – Supreme Court Act 1986 (Vic) Part 4A.
---
APPEARANCES: | Counsel | Solicitors |
| For Carol Ann Matthews | Mr A J Keogh SC | Maurice Blackburn |
| No appearance by the other parties |
THE COURT:
Introduction
The class action arising out of the Kilmore-East Kinglake bushfire was settled for $494,666,667, subject to the Court’s approval. The settlement deed (deed) and the scheme setting out the process of distribution of the settlement funds (SDS) were approved by Osborn JA on 23 December 2014.[1] A copy of the approved deed and SDS will become available on the Court’s website following the determination of the settlement application in the Murrindindi bushfire class action, at:
[1]Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663.
On 15 April 2015, we held a case management conference to enquire as to the progress of the administration of the SDS. The purpose of this ruling is to explain that progress – in particular, the way in which group members’ claims will be supervised by the Court – and to set out the reasons for the orders made at the conference.
Content of the SDS in précis
The settlement sum has been split into two discrete funds for the duration of the assessment process. Each fund has been invested and the interest earned will be used to offset the cost of administration, including the claims assessment process. It is hoped that the interest earned on the sizeable fund will cover all of these costs.
37.5% of the settlement sum has been allocated to personal injury and dependency (I-D) claims, and the remainder has been allocated to the economic loss and property damage (ELPD) claims. The SDS establishes an assessment procedure by which the claim of each group member will be individually assessed. The Scheme Administrator, appointed by the Court, is Andrew Watson, Principal Solicitor at Maurice Blackburn, who has extensive experience in class actions. Costs he incurs administrating the SDS will be paid out of the overall compensation fund and will not be charged to group members individually.
Mr Watson is not the solicitor for any individual class member. If claimants wish, they are entitled to retain their own solicitor, at their own expense, to represent their interests in the administration of the scheme.
The assessment procedures for the two types of claims are administered separately. In summary, the procedure for the I-D claims is as follows:
(a) Claim information, obtained from claimants via an electronic survey and a questionnaire, is delivered to a barrister who specialises in personal injury. That barrister will confer with the claimant and, if necessary, refer the claimant to a medical practitioner for a medico-legal assessment. The barrister will then deliver an initial assessment of the value of their claim.
(b) The claimant can seek a review if dissatisfied with the assessment, either by a medical practitioner or by Senior Counsel specialising in personal injury claims. The assessment, which may be modified by the review, will then determine the value of the claim.
(c) The rate of compensation for the I-D claims is capped at 80% of the value of each claim (although Maurice Blackburn estimates that I-D claimants will recover approximately 70% of their assessed losses). Any balance then remaining in the I-D fund will be transferred into the ELPD fund so as to reduce the difference in compensation rates which exists between the two.
The assessment procedure for the ELPD claims is as follows:
(a) Each claimant’s information is collated by either the Scheme Administrator’s staff or by the loss valuers appointed by the Scheme Administrator. A written report as to the value of the claim will be prepared. The SDS provides a set of ‘Assessment Principles’ to be followed in conducting the ELPD assessments.
(b) The assessed value of the claim is subject to certain ‘ELPD multipliers’, the purpose of which is to prioritise certain losses over others, and to reflect uncertainties in aspects of the law which relate to loss valuation. The adjusted assessment values will form the basis on which the ELPD claimants will share, pro rata, in the ELPD fund, subject to the review process described below.
(c) Any claimant dissatisfied with the assessment may seek a review by a barrister acting together with a senior loss valuer. The assessment, which may be modified by the review, will then determine the value of the claim.
The timeframes for steps in the assessment processes for I-D claims are comprehensively detailed in a booklet produced by Maurice Blackburn, which is discussed further below. A similar booklet in relation to the ELPD claims is at a late stage of drafting, and will be distributed to the group members in the next month or so. As noted above, the SDS itself will become ultimately become available on the Court’s website.[2]
[2] type="1">
It should be understood by group members that the SDS does not provide for payment immediately or shortly after assessment. Rather, save for exceptional cases, payments out of either fund will not be made until the assessment processes are completed.
The SDS makes special provisions for claimants who are under a disability within the meaning of O 15 of the Supreme Court (General Civil Procedure) Rules 2005 (Rules), and therefore subject to Court supervision. Order 15 applies to minors and to those who, by reason of injury, disease, senility, illness, or mental or physical infirmity, are incapable of managing their own affairs in relation to the proceeding.
The SDS also provides for ongoing supervision of the assessment and distribution process by the Court, requiring Maurice Blackburn to provide the Court with periodic updates as to the progress of the distribution process. This ruling is made as part of that exercise.
The role of the Court
Part 4A of the Supreme Court Act 1986 (Vic) (Act) deals with group proceedings. Section 33ZF provides as follows:
General power of court to make orders
In any proceeding (including an appeal) conducted under this Part the Court may, of its own motion or on application by a party, make any order the Court thinks appropriate or necessary to ensure that justice is done in the proceeding.
Section 33V makes provision for the Court’s supervision of a settlement:
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.
Given the unprecedented size of the settlement sum, and the vast number of claimants, it is important that the Court exercise the supervisory power granted by the Act, and required under the terms of the SDS, to ensure that the settlement distribution process is undertaken in a timely, efficient and cost-effective fashion. Timeliness of distribution is particularly significant in ensuring that claimants can get on with their lives with some financial assistance and, inasmuch as it is possible to do so, to put the events of Black Saturday behind them.
It is equally important that group members understand the Court’s role and its involvement in the supervision of the distribution of the funds. Hopefully this and subsequent rulings assist in that regard.
Steps taken so far by the scheme administrator
Much has been done by Maurice Blackburn to progress the implementation of the SDS. Particularly impressive is a comprehensive booklet outlining the process by which the I-D assessments are to be undertaken. Our only concern is that the effect of Part VA of the Wrongs Act 1958 (Vic) on claims is not spelled out adequately. This requires a claimant to have suffered a ‘significant injury’ (defined as above 5 per cent impairment for physical injuries, or above 10 per cent for psychiatric injuries) as a precondition to entitlement for damages for pain and suffering. Unfortunately, this does not appear anywhere in the booklet until one reaches the final few pages. It should have been given greater prominence as it will impact upon group members’ entitlements in I-D claims.. The booklet is otherwise a very impressive document, and will no doubt be of great assistance to the I-D claimants in understanding their position under the scheme. The booklet has been circulated to group members, and a similar booklet relating to the ELPD assessments, which is at an advanced stage of drafting, is expected to be published shortly.
Other work undertaken by Maurice Blackburn includes the recruitment and specialised training of an ‘SDS team’, the creation of a standalone IT system for the management of information related to the settlement distribution, the engagement of a team of psychiatrists and psychologists to undertake medico-legal assessments as required, the development of a series of precedent assessment documents, the obtaining of bulk records from relevant government bodies and medical clinics, and the development of a process in respect of the group members to whom O 15 applies.
The progress of the assessment of the I-D claims
After trialling the proposed assessment process with 12 group members in August and September 2014, Maurice Blackburn commenced the I-D assessments. Given the number of registered I-D claimants (currently standing at 1,731), the Scheme Administrator estimates that the assessment process will take approximately eighteen months from the date of approval.
As at 10 April 2015, the progress of the I-D assessments was as follows:
(a) The distribution of the booklet mentioned above to all the claimants, ensuring that they are aware of all their rights and responsibilities under the SDS.
(b) 1,464 of the claimants have completed the electronic surveys, and 588 have completed the questionnaires, which will allow the assessing barristers to estimate the value of each claim. 191 claimants have attended a conference with an assessing barrister, with a further 13 conferences currently scheduled.
(c) The majority of the ATO and general practitioners’ records requested by the SDS team for the purposes of assessment have been received.
(d) Certain deductions and repayments may apply to some group members’ compensation sums, as follows. Claimants who have received benefits from Centrelink, private health insurers and Medicare may be required to forgo a corresponding amount of their entitlement, or to pay back a proportion of it to the bodies in question. The Scheme Administrator has reached an agreement with Centrelink as to the interaction between the SDS and individual group members’ Centrelink obligations, and allowing the efficient exchange of information. He has reached a similar agreement with Medicare. Negotiations are currently on foot to arrive at a ‘Bulk Payment Agreement’, which will avoid the need to individually assess the payback figure for each relevant group member.
(e) Some claimants also have existing entitlements under statutory compensation schemes such as the Victorian WorkCover Authority (VWA), the Transport Accident Commission (TAC), Comcare, the Department of Veterans’ Affairs or the Country Fire Authority (CFA). The Scheme Administrator has reached an agreement with the TAC as to the interaction between the SDS and the TAC’s statutory compensation scheme, and allowing the efficient exchange of information.
(f) He has reached a similar agreement with the VWA. He is engaged in ongoing negotiations with the CFA. If necessary, the Court would be able to resolved any justiciable dispute – hopefully, that will not be needed.
The progress of the ELPD claims
The individual ELPD claims number approximately 9,000 – comprising approximately 4,000 claims for uninsured or underinsured property losses (above insurance claims), and about 5,000 claims for insured property losses (insurance-only claims). For ease of management, and given the significant overlap between many of the claims, Maurice Blackburn is processing claims according to the address to which they are attached. It is estimated that there are approximately 2,400 of these ‘unique address’ claims.
As at 10 April 2015, the progress of the ELPD assessment process was as follows:
(a) Four firms have been appointed as assessors – RM Consulting Group, Hall & Wilcox Lawyers, Crawford & Company (Australia), and Ligeti Partners Lawyers.
(b) Before the class action settled, Ligeti Partners and Hall & Wilcox had already undertaken a large amount of work assessing claims from their insurer clients. It is proposed by the Scheme Administrator that this work continue, and that it be audited upon completion before being used as a basis for the assessments of the insurance-only claims.
(c) After extensive discussion, rates have been fixed for various kinds of assessment by the assessor firms. Assurances have been given regarding the volume of assessments which can be completed so that Maurice Blackburn can ensure that the entire ELPD assessment process will be completed within the projected timeframe.
(d) To date, 83 claims have undergone preliminary assessments by RM Consulting Group, though they have not yet been provided to group members. Crawford is in the process of assessing 120 claims with which it was recently provided, whilst a number of detailed assessments undertaken by Hall & Wilcox and Ligeti Partners prior to settlement are currently being reassessed for consistency with the SDS.
Late registrants
Maurice Blackburn has received late registration forms from 184 claimants. These are being assessed on a claim-by-claim basis, in accordance with the SDS. The Scheme Administrator is required to consider whether the evidence discloses compassionate grounds that justify the inclusion of each claimant. To date, 126 of the late registrants have been considered, with 47 approved. Further enquiries are being made in respect of the other 79.
The Case Management Conference
As part of the exercise of its supervisory role, the Court required that Maurice Blackburn file an affidavit detailing the progress of the SDS thus far, prior to the case management conference. The affidavit and its exhibits, which included an itemised bill of costs, were extremely thorough and detailed, and of great assistance.
The conference was held on 15 April 2015. Present were:
(a) the Scheme Administrator, Andrew Watson;
(b) Rory Walsh, a Senior Associate at Maurice Blackburn who has been involved in this proceeding from its inception; and
(c) Andrew Keogh SC, who represented the lead plaintiff and the group members at the trial,
with Court staff and several other staff members from Maurice Blackburn.
The defendants did not seek to take part in the conference. It would have been inappropriate if they had. Once the settlement was approved and the settlement sum paid, their involvement in the process was concluded.
As alluded to above, the purpose of the conference was to allow Maurice Blackburn to inform the Court of the progress of the settlement distribution thus far. Some of the details of this progress have been set out above.
Much of the conference was spent considering and discussing the contents of the affidavit, as there were several matters which required further explanation – in particular:
(a) the details of the negotiations with Centrelink, Medicare and the CFA;
(b) the means by which counsel would assess whether a claimant reached the threshold for statutory damages contained in the Wrongs Act,[3] and the operation of the review process; and
(c) the number of claimants who are subject to O 15 (a figure which, we were told, it is too early to determine).
[3]See page 51 of Maurice Blackburn’s booklet, ‘Personal injury compensation in the Kilmore East – Kinglake Bushfire Class Action’ for more detail.
The costs of administering the SDS
In addition to ensuring the smooth progress of the SDS, the Court is concerned to ensure that the quantum of costs to be paid to Maurice Blackburn for administering the SDS is reasonable. This amount is deducted from the settlement sum (and accrued interest on that sum) and directly affects the amount available for distribution to group members.
During the conference, we discussed the question of an external audit of the costs incurred in the administration of the distribution of the settlement sum. Although no criticism of Maurice Blackburn’s handling of the matter is implied, we were of the view that in the interests of transparency, and for the peace of mind of the group members, an external, high-level costs assessment is appropriate. We propose to appoint an independent costs consultant to conduct a high-level review of the ongoing costs of administration.
In the meantime, it is appropriate to permit interim payments from the fund to reimburse Maurice Blackburn for costs and disbursements incurred in SDS administration. Maurice Blackburn has proposed, and we agree, that these costs should be deducted from the interest generated by the settlement sum during the course of the administration process, rather than at its end, in order to ensure a reduced tax liability on the fund’s earnings.
As we have set out, a considerable amount of work has been done to progress the processing of claims in accordance with the SDS. The substance of the orders made is set out at [35] and following.
Confidentiality and disclosure to group members
It is vital that the administration process is as transparent as practicable to group members.
At the conference, we raised the issue of access to the affidavit for group members, along with its exhibits. Following discussion, and with Maurice Blackburn’s agreement, the affidavit (with some small redactions) is available on Red Crest and will be posted on the Court’s website. The two redactions relate to group members’ privacy, and to matters protected by client legal privilege.
In addition, Maurice Blackburn, at the Court’s request, provided the Court with a list of counsel involved in the I-D assessment process, and will provide a comparable list relating to the ELPD assessments when the appointments are finalised.
Orders made at the case management conference
After consideration of the materials placed before us by Maurice Blackburn, orders were made approving payment to Maurice Blackburn of the following administration costs:
(a) $354,064.30 for general settlement administration;
(b) $2,006,722.21 for the administration of the I-D claims; and
(c) $382,284.51 for the administration of the ELPD claims.
These sums will be paid out of the interest accrued on the invested settlement sum.
Future orders and hearings
It is likely that further orders as to payment of the administration costs and disbursements will be authorised in June 2015. At that time, there orders will also be made as to the appointment of a costs consultant to scrutinise the administration costs.
A further case management conference has been fixed for 9 October 2015. Maurice Blackburn will provide the Court with another affidavit detailing the progress of the scheme not less than a week beforehand.
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 ENVIRONMENTThird 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 ENVIRONMENTSecond 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 ENVIRONMENTSecond 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
201
0
0