Matthews v AusNet Electricity Services Pty Ltd (Ruling No.41)

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

S CI 2009 04788

CAROL ANN MATTHEWS	Plaintiff
v
AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118) and others according to the Schedule	Defendant

AND

AUSNET ELECTRICITY SERVICES PTY LTD (formerly SPI ELECTRICITY PTY LTD) (ACN 064 651 118)	Plaintiff by Counterclaim
v
ACN 060 674 580 PTY LTD and others according to the Schedule	Defendants by Counterclaim

AND

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 annexed to other rulings of the Court	Defendants by UAM Counterclaim

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JUDGE:	J FORREST J
WHERE HELD:	Melbourne
DATE OF HEARING:	31 March 2016
DATE OF RULING:	19 April 2016
CASE MAY BE CITED AS:	Matthews v Ausnet (Ruling No.41)
MEDIUM NEUTRAL CITATION:	[2016] VSC 171

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PRACTICE AND PROCEDURE – Case management conference – Supervisory power of the Court – Orders made for the payment of the Scheme Administrator – Appointment of counsel to monitor progress of the Settlement Distribution Scheme - Appointment of additional assessors.

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APPEARANCES:	Counsel	Solicitors
For the Scheme Administrator	Mr A Watson, the Scheme Administrator, appeared in person	Maurice Blackburn
No appearance by the other parties

HIS HONOUR:

Introduction

The Kilmore-East Kinglake bushfire class action was settled for $494,666,667. The Settlement Deed (the ‘Deed’) and the accompanying Settlement Distribution Scheme (‘SDS’) was approved by Osborn JA on 23 December 2014.[1]
[1]Matthews v AusNet Electricity Services Pty Ltd [2014] VSC 663. A copy of the Deed and SDS is available on the Court’s website at:

The SDS provided for a detailed scheme by which the claims of group members, whether for personal injury and dependency (‘I-D’) or for economic loss and property damage (‘ELPD’), were to be assessed. I will set out in a moment the important elements of that scheme.

On 15 April 2015, 19 June 2015, 20 October 2015 and 31 March 2016, case management conferences were held by the Court for the purpose of fulfilling its ongoing responsibility to supervise the progress of the assessment and distribution of the group members’ claims.[2]
[2]See Supreme Court Act 1986 (Vic) s 33V.

This ruling concerns three discrete matters that arose out of the March 2016 case management conference:

(a) The progress of the assessment of claims under the SDS.

(b) The appointment of counsel to supervise the SDS assessment process.

(c) Whether employees of Maurice Blackburn (the SDS lawyers) be retained as claims assessors for the SDS.

Precis of the SDS

The key elements of the SDS are as follows:

(a) The settlement sum of $494,666,667 was paid into two separate funds. One for I-D claims and the other for ELPD claims.

(b) The scheme administrator is Mr Andrew Watson, a principal solicitor at Maurice Blackburn, the solicitors who acted for Mrs Matthews in the trial.

(c) The I-D and ELPD claims process under the SDS is administered by Maurice Blackburn.

(d) There are more than 10,000 claims (I-D and ELPD) registered on behalf of over 5,000 individuals.

(e) Subject to a qualification I will mention in a moment, the claim of each individual must be assessed in order to allow compensation to be paid to all group members.

(f) Once there are 30% (by number) of I-D Claims or 40% (by number) of ELPD claims completed (i.e. the assessment process completed) the Scheme Administrator may, if he wishes, commence to make interim distributions from the respective funds to claimants whose claims have been completed.

(g) The I-D and ELPD claims are dealt with by separate assessment processes within the SDS because of the distinct nature of the losses. The claims are assessed by different assessment teams, at different times.

(h) For the majority of group members who bring both an I-D and ELPD claim, these two assessments occur independently of each other. However, for a very small number of group members there will be a limited interaction between the two assessment processes.

(i) The settlement funds are invested for the duration of the assessment process, with interest earned prior to the date of distribution used to offset the costs and disbursements associated with the administration of the SDS.

(j) The Court (Osborn JA) approved the amount of costs and disbursements ($60 million dollars) prior to it being deducted from the settlement sum.

(k) As best can be estimated, I-D claimants will recover 70% of their assessed losses (with recovery capped at 80%) and ELPD claimants will recover 30% of the assessed value of each claim.[3]

[3]See Maurice Blackburn Lawyers, ‘Property Damage Compensation in the Kilmore East – Kinglake Bushfire Class Action’ (Booklet, Maurice Blackburn Lawyers, 2015).

Scheme Administrator’s role

Mr Andrew Watson is the Principal Solicitor of National Class Action Practice at Maurice Blackburn, and, as I mentioned, was appointed Scheme Administrator by the Court. As Scheme Administrator, his role is to oversee and manage the procedure for assessing the individual claims of group members by Maurice Blackburn and to the group members.

Mr Watson has a duty to the Court to distribute the settlement sum according to the approved terms of the SDS.

Progress of the administration of the SDS
I-D claims

In general terms, the SDS for I-D claims operates as follows: Maurice Blackburn prepares a brief containing documents, instructions, statements or other material submitted to or obtained by the Scheme Administrator from, for instance, the group member, the Health Insurance Commission, private health insurers and medical practitioners.

Approximately 25 members of the independent Victorian Bar have been engaged as assessors. In March of this year I approved the engagement of solicitors to endeavour to improve the efficiency of the assessment process.

A barrister or solicitor appointed as an assessor under the SDS is provided with the brief for the assessment process; in almost all cases the assessor will confer with the group member for the purposes of evaluating the I-D claim or may refer the group member for medico-legal assessment.

Following completion of the conference or the medico-legal assessment and his or her assessment of the material, the assessor provides to Maurice Blackburn a Notice of Injury/Dependency Claim Assessment (‘Notice’) and a brief statement of reasons disclosing his or her advice, reflecting the assessments in the Notice. The group member is then issued with the Notice with an explanation as to his or her right to seek a review.

If a review is sought by the group member, the request is referred for either a medico-legal assessment (if not previously conducted) or to a senior assessor (an experienced barrister). Following the re-assessment, the Notice will either be confirmed or re-issued (as a Notice of I-D Review Assessment).

The Notice (or in the case of review the Notice of I-D Review Assessment) will be the final assessed value of the I-D claim of the group member.

As at 18 March 2016, of the 1,854 I-D claims registered, 1,830 group members have completed electronic surveys. 1,644 have completed detailed personal injury questionnaires, 1,271 have attended a conference with assessing counsel, 60 have conferences scheduled with counsel and 132 are in the process of being assessed by counsel.

343 Notices of Assessment and Statements of Reasons are outstanding from assessing counsel, 928 Notices of Assessment and Statements of Reasons have been received from assessing counsel: 140 are being reviewed by Maurice Blackburn, 788 Notices of Assessment and Statements of Reasons have been reviewed and sent to group members and there have been 8 requests for review received from group members arising from this.

Mr Watson deposes that a distribution to I-D group members by the end of this year or early next year should be possible. This situation is, however, dependent upon an increase in the rate of assessment completion and reducing the backlog of outstanding assessments, two issues considered later in these reasons.

ELPD claims

In general terms, the SDS for ELPD claims operates as follows: Maurice Blackburn prepares a brief containing authorities, documents, instructions, statements or other material held by Maurice Blackburn and the entire property insurer’s file. The brief is then assessed by qualified loss assessors or independent solicitors at present, Hall & Wilcox Lawyers, Crawford and Company and RM Consulting Group.

The group member is contacted to obtain further information that is required to assess the total losses suffered at a particular address. Following this, a Provisional Notice of Assessment is issued and reasons disclosing the bases for the assessments reflected in the Provisional Notice. If the group member considers that there is an error or omission in the Provisional Notice, 14 days is allowed in which to raise this with the loss assessor. If no objection is received within 14 days, that assessment is then reissued as the group member’s Notice of Assessment.

A group member may also seek review of the assessment. A review is conducted by one of a panel of barristers. The Notice of Assessment that is issued after a review is not the subject of further review.

As at 16 March 2016, of the estimated 3523 unique property addresses compromising the ELPD claims, 1562 with an above-insurance claim and 1021 with subrogated-only claims have been allocated for assessment to assessors. Approximately 700 (equating to 20%) Provisional Notices of Assessment have been completed by the assessors.

Mr Watson advises that it may be possible to have the remainder of the Provisional Notices of Assessment completed by the third quarter of this year.

As I have been told at two hearings, the process has had a number of teething problems – particularly in relation to differentiating insured and uninsured claims in relation to the one property. Mr Watson indicated, however, that a distribution to group members by the end of this year or early next year should be possible.

Costs of Maurice Blackburn in the administration of the SDS

Over the past 15 months, I have made a number of orders for payments of Maurice Blackburn’s costs and disbursements in relation to administration of the SDS.

On each occasion, Maurice Blackburn has provided a detailed affidavit as to the break-up of its costs and disbursements.

At the April case conference I made orders approving payment of the sum of $4,856,511.87 to Maurice Blackburn for administration costs and disbursements for the period 1 September 2015 to 31 January 2016.

In November of last year, I appointed Mr John White, an experienced solicitor with great expertise as a cost assessor, to the position of special referee. The order was as follows:

1.Pursuant to r.50.01 of the Supreme Court (General Civil Procedure) Rules 2005 (‘Rules’), Mr John White is appointed as a special referee.
2.The special referee shall report in writing to the Court on the question set out in Annexure A to these orders and state his opinion in that report with reasons.
3.The special referee shall provide a report under paragraph 2 on each occasion that approval is sought from the Court for payment of the costs of administering the Settlement Distribution Scheme, commencing with those sought at the case management conference of 20 October 2015.
4.In relation to the costs of administering the Settlement Distribution Scheme sought prior to those under paragraph 3 of these orders and not otherwise dealt with by the orders of Justice Osborn made on 23 December 2014, the special referee shall provide a retrospective report as provided by paragraph 2.
5.Pursuant to r.50.06 of the Rules, the special referee shall be remunerated by the Plaintiff from the Settlement Distribution Fund as part of the costs of the settlement distribution process.
6.Pursuant to r.2.04 of the Rules, the need to comply with r.50.03(2) is dispensed with for the purposes of this special reference.

7. Liberty to apply.

The purpose of appointing Mr White was to ensure that there was an independent audit of the administration costs claimed by Maurice Blackburn (for professional costs and disbursements such as counsels’ fees or loss assessors’ fees) and that the claims were reasonable.

Unfortunately, Mr White has experienced some health issues but it is expected that his audit of Maurice Blackburn’s administration costs and disbursements for the period up to 31 January 2016 will be received within the next couple of weeks. As soon as it is received I will make, if necessary, any consequential orders.

Appointment of counsel to monitor the progress of the SDS?

Mr Andrew Keogh SC (now Keogh J) has, since the approval of the SDS, undertaken the task of supervising the administration of the SDS – and in particular that of I-D claims. Mr Keogh acted for Mrs Matthews and the group members at the trial of the proceeding. In March 2016, Mr Keogh was appointed a judge of this Court. At the April settlement conference, the question arose as to whether Mr Keogh should be replaced and, if so, by whom.

In my opinion, it is necessary for there to be some general oversight as to the conduct of the SDS from at least one member of the independent Victorian Bar. Counsel experienced in handling negligence claims are well placed to consider the manner in which the SDS is operating.

As I see the position, counsel would fulfil the following role in relation to the administration of the SDS in respect of both I-D and ELPD claims:

(a) supervise the assessment process and liaise with the Court and the Scheme Administrator in relation to any issues; and

(b) coordinate the tasks of the assessors and endeavour to ensure that there is a consistency of approach.

I have determined that Mr Michael Wilson QC, a highly experienced tort trial lawyer, be engaged immediately.[4] He has a familiarity with the operation of the SDS, being a reviewing assessor of I-D claims. I see no conflict in him carrying out both tasks. If there is such a conflict, I have no doubt he will advise the Court.
[4]There is no provision within the SDS for the appointment of counsel to such a role. The appointment is made pursuant to the powers of the Court under s 33ZF of the Supreme Court Act1986 (Vic).

Engagement of an employee of Maurice Blackburn as an assessor of I-D claims?

One of the issues that has arisen is that of the return of assessments in a timely fashion by some members of the Victorian Bar. I intend no criticism of these members of counsel as each, I suspect, has their own busy practice – but it has made it difficult, I am told by Mr Watson, to progress the assessments in a timely fashion. With this difficulty in mind, Mr Watson approached the Court with a proposal for the engagement of an employee or employees of Maurice Blackburn to act as an assessor of I-D claims.

I readily accept that efficiency of assessments can be improved by engaging experienced solicitors (rather than counsel) to work full-time on the assessment of the claims. To this end, on 3 March 2016, I made orders that the SDS be amended to enable solicitors, in addition to members of the Victorian Bar, to take on the role of an assessor:

(a) In Overview paragraph C(iv)(a) insert the words “or solicitors” after the word “barrister”.
(b) In clause A1.1(m) the definition of I-D Assessor be amended by inclusion of the underlined words below:
I-D Assessor means a member of the Victorian Bar or an experienced personal injury solicitor appointed by the Scheme Administrator to undertake I-D Assessments and I-D Review Assessments.

Whilst I think that it is a practical suggestion to engage a Maurice Blackburn employee, I will not accede to this request. I think it vital that any assessment of I-D claims be carried out by lawyers independent of Maurice Blackburn. Until convinced otherwise I am confident that there are sufficient members of the Victorian Bar and experienced personal injury solicitors who should be able to take up the challenge.

I will approve the appointment of any lawyer with appropriate expertise in the areas of personal injury and property damage assessment. I hope that with the assistance of senior counsel monitoring the process, it will be close to completion of the I-D claims by the end of this year.

Improving the progress of the SDS process

I am satisfied that Maurice Blackburn has acted reasonably in its handling of the assessment of claims under the SDS. But that is not to say that improvements cannot be made – as I have suggested in these reasons.

As in the past, I will continue to hold regular reviews of the assessment process. If, by November 2016, achieving the goal of completion of I-D reviews by the end of 2016 seems unlikely, then I propose to discuss with Mr Watson the provision for interim payments to those whose claims have been assessed. Similarly, if the ELPD claims are to be delayed for any length of time into 2017, I will raise this matter with Mr Watson.

As mentioned earlier, I note that the SDS provides that interim distributions for I-D and ELPD claims may be made. The relevant part of the SDS provides:

D.PERSONAL INJURY & DEPENDENCY CLAIMS - DISTRIBUTIONS

D1 Interim Distributions
D1.1Upon resolution of the Final Assessed Values of at least 30% (by number) of I-D Claims, the Scheme Administrator may at his absolute discretion commence to make interim distributions from the I-D Fund to resolved I-D claims.

D1.2 The Scheme Administrator:
(a)may make interim distributions progressively as claims are resolved, or in tranches; and
(b)may vary the proportions at which interim distributions are paid, for all claimants or for particular groups of claimants;

as the Scheme Administrator deems appropriate.
D1.3Notwithstanding anything in clause D1.2, the proportion at which interim distributions pursuant to Section D1 are paid:
(a)shall be determined by the Scheme Administrator having regard to the imperative to retain sufficient funds to pay pending I-D Claims, Administration Costs and indemnities; but
(b)save where clause D1.4 applies – shall not exceed 60% of the Final Assessed Values of resolved claims unless the Court permits, upon application by the Scheme Administrator.

D1.4The Scheme Administrator may, at his absolute discretion, make a payment to a particular I-D Claimant at any time and in excess of the rate stipulated in clause D1.3(b) where he is satisfied upon reasonable grounds that, even compared to the typical circumstances of I-D Claimants:
(a)the particular claimant is in a position of extraordinary need; and

(b) the payment is appropriate on special compassionate grounds.

…
F. ELPD CLAIMS – DISTRIBUTIONS
F1 Interim Distributions
F1.1Upon resolution of the Final Assessed Values of at least 40% (by number) of ELPD Claims, the Scheme Administrator may in his absolute discretion commence to make interim distributions from the ELPD Fund to resolved ELPD Claims.

F1.2 The Scheme Administrator:
(a)may make interim distributions progressively as claims are resolved, or in tranches;
(b)may vary the proportions at which interim distributions are paid, for all claimants or for particular groups of claimants;

as the Scheme Administrator deems appropriate.
F1.3Notwithstanding anything in clause F1.2, the proportion in which interim distributions pursuant to Section F1 are paid:

(a)shall be determined by the Scheme Administrator having regard to the Imperative to retain sufficient funds to pay pending ELPD Claims and Scheme Costs; but
(b)shall not exceed 60% of the Final Distribution Values of resolved claims unless the Court permits upon application by the Scheme Administrator.

F1.4The Scheme Administrator may, at his absolute discretion, at any time make a payment to a particular ELPD Claimant in excess of the rate stipulated in clause F1.3(b) where he is satisfied upon reasonable grounds that, even compared to the typical circumstances of ELPD Claimants:
(a)the particular claimant is in a position of extraordinary need; and

(b) the payment is appropriate on special compassionate grounds.

Whilst these provisions give Mr Watson an unfettered discretion as to the making of such interim payments, I see no reason why the Court should not, in its protective role, pursue the question of interim payments with the Scheme Administrator, once the discretion to make such a payment has been triggered.

It is important, as I am confident that the Scheme Administrator knows, that payments be made to claimants as soon as is practicable and, of course, consistent with the terms of the SDS.

Further steps

Further case management conferences have been fixed for 21 June 2016 and 18 August 2016.

Orders

I will make the following orders:

(a) Mr Michael Wilson QC be appointed as the SDS assessment co-ordinator; and

(b) the Court will give leave (if necessary) to the Scheme Administrator to appoint any lawyer (member of counsel or solicitor) with appropriate expertise in the areas of personal injury and/or property damage assessment to act as an assessor of claims under the SDS.

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

content and procedures for administering the SDS are contained in Matthews v AusNet Electricity Services Pty Ltd (Ruling No. 40) [2015] VSC 131 and therefore this discussion will not be recanvassed in this ruling.

[2016] VSC 171

19 April 2016