A judgment delivered last week, on 27 May 2015, and an earlier judgment delivered on 23 December 2014 concerning the approval of settlement of the 'Black Saturday' bushfire class actions show that State government entities are increasingly being targeted in Australian representative proceedings, commonly known as "class actions." The judgments also demonstrate the arguments being made against State government entities and the factors relevant to Court approval of class action settlements.
Class actions have been able to be brought in the Federal Court of Australia since 1992, Victoria since 2000 and in New South Wales since 2011. Other state and territory jurisdictions in Australia do not have similar mechanisms. Court approval of settlements and discontinuances is required in all relevant jurisdictions.
The substantive claims by group members in both proceedings were brought against the owner and operator of the power line and a maintenance contractor charged with carrying out a periodic inspection of the power line. In essence it was alleged that the defendants owed group members a duty of care at common law and statute to take reasonable care in the operation and maintenance of the power lines and that the defendants breached that duty causing loss to group members.
Claims were also brought against State government entities, relevantly the Country Fire Authority, the Victoria Police and the Department of Sustainability and Environment (State Parties). The claims were principally based upon the existence of an alleged common law duty to provide warnings and information relating to the fire together with alleged statutory duties to take reasonable care in the performance of their duties.
The court in the Kilmore proceedings considered that the statutory claim against the State Parties was fundamentally problematic in light of the Victorian equivalent to section 42 of the Civil Liability Act 2002 (NSW), which requires that in determining whether a public authority owes or has breached a duty of care, resource limitations must be recognised and the functions required to be exercised by the authority are to be determined by reference to the broad range of its activities. Ultimately the Court did not have to consider this provision in any detail nor conclude whether the alleged common law or statutory duties of care existed. However, his Honour in particular described the common law duty postulated against the State Parties as a novel one and opined that it was at least arguable that such a duty was owed. The provision was not referenced in the reasons for approval given in the Murrindindi Proceedings but an assessment of that provision may have formed part of the confidential and frank assessment by the plaintiff of its own case tendered on the application for approval of the settlement.
Ultimately, the State Parties contributed sums of $103.6 million and $29.1 million for compensation in respect of personal injury and dependency claims out of total settlement funds of $378.6 million and $260.9 million in the Kilmore and Murrindindi proceedings respectively.
The relevant principles concerning court approval do not differ between jurisdictions. The Court is required to consider whether the proposed settlement:
(a) is fair and reasonable as between the parties having regard to the claims of group members; and
(b) is in the interests of group members as a whole and not just in the interests of the plaintiff and the defendants.
These principles are usefully set out and considered in the Kilmore Proceedings judgment and Emerton J followed that analysis in the Murrindindi Proceedings judgment (see in particular paragraphs 47 to 71).
For the Court to assess the settlement, the plaintiff itself is ordinarily required to provide an assessment of its own case which it may, in part, tender on a confidential basis.
These judgments are a timely reminder about the continued growth of class actions in Australia, the way plaintiffs are framing some actions against state government entities, and the factors likely to be considered by the Court in approving resolution of class actions. These recent decisions also demonstrate the entrepreneurial spirit of group members and their legal advisors and that plaintiffs are not deterred by the statutory limitations in the Civil Liability Act 2002 (NSW) (and equivalents elsewhere).
Henry Davis York has expertise in class actions and continues to monitor ongoing and future trends in Australia and internationally. There are more than 29 current class actions and a further 51 have been threatened across Australia.