In November 2015, the Queensland floods class action was listed for an interlocutory hearing to settle the common questions and the proposed opt out notice. Justice Beech-Jones directed the plaintiff to identify sample group members representing the various categories of loss identified in the definition of the class. His Honour also accepted that separate opt out notices were required for insured and uninsured group members.
The decision continues the trend in natural disaster class action litigation towards determining claims of multiple group members at the first substantive hearing of the proceedings, and indicates the complexities that can be involved in considering questions of duty, breach and causation in large scale negligence class actions. As a result of these decisions, representative plaintiffs in analogous proceedings may need to undertake a more detailed interrogation of the group members’ claims at an early stage, and will need to carefully consider whether there is a need for sub-groups prior to initiating proceedings.
Categories of loss sought to be recovered in the proceedings
The definition of the group includes claimants that suffered four types of loss:
- damage to real property, (including economic loss consequential upon damage to property);
- interference with the use or enjoyment of an interest in land as a result of flooding;
- damage to personal property; and
- pure economic loss.
Rodriguez & Sons Pty Ltd (Rodriguez), the representative plaintiff, claims to have suffered “damage to fixtures and fittings, loss of sales and profits, repair and restoration costs as well as hiring and storage costs”. That is, it alleges that it has suffered property damage and economic loss consequential on such damage. Therefore, the resolution of Rodriguez’s claim will not resolve group members’ claims for pure economic loss.
The necessity of evidence addressing all the forms of harm allegedly suffered
The defendants argued that in addressing the forms of harm, other than those in fact suffered or claimed to be suffered by Rodriguez, then the court will be addressing questions that are purely hypothetical.
Seqwater submitted that it was appropriate to identify sub-group members to represent the different categories of loss and different geographical locations. This issue was also addressed in Matthews v SPI Electricity Pty Ltd & Ors (Ruling No 5)  VSC 66 where Forrest J held:
‘… a trial focusing solely on the representative plaintiff’s claim may not cover the claims of all group members…. a practice has developed to permit other group members to give evidence at trial as to relevant facts concerning his or her claim. This evidence then enables the court to make findings and give judgment in relation to those other claims, which enables binding determinations to be made in respect of most, if not all, group members.
Matthews recognised that different considerations in relation to questions of duty, breach and causation can arise depending on the group member’s location and type of loss allegedly suffered. Justice Beech-Jones accepted that the same considerations may apply in this case and ordered that the plaintiff nominate sample group members who had only suffered:
- damage to personal property; and
- pure economic loss.
Justice Beech-Jones accepted that the area downstream of Wivenhoe Dam could be divided into four geographic areas whose characteristics were likely to be relevant in any determination of the existence of a duty of care. As a result, group members were required to be nominated from the following areas:
- the Brisbane River:
- downstream of Moggill, which is the first point at which the Brisbane River and all of its main tributaries converge (to be represented by Rodriguez); and
- north of Moggill.
- the Lockyer Creek and Bremer River upstream of where they each meet the Brisbane River. These locations were considered to be separate as whereas water releases from Wivenhoe Dam could physically contribute to the flooding which occurred in the locations specified in (a) above, the Wivenhoe Dam releases could only contribute to the Lockyer Creek or Bremer River backing up. Justice Beech-Jones accepted that the foreseeability of harm may be different in relation to group members likely to be flooded by the Brisbane River, versus the two main tributaries that flow into the Brisbane River.
Justice Beech-Jones indicated that he would determine whether there should be sub-groups or sample group members (the process adopted in Matthews) after the group members had been identified and the nature of their claims was known. Sample group members, unlike sub-group members appointed under section 168 of the Civil Procedure Act 2005 (NSW), are not liable for costs. It will be interesting to see how the plaintiff approaches the issue of incorporating other group members’ claims into the proceedings (for example, by way of an amendment to the pleading or separate points of claim).
Remedying Rodriguez No 3: all group members must have a claim against a defendant
As discussed in our previous article, in July 2015 Justice Beech-Jones rejected Seqwater’s objection to leave to amend the statement of claim being granted on the basis that the group included a large number of persons who were potentially not affected by the defendants’ alleged negligence. This decision was premised on his Honour’s finding that such an approach would require potential group members to ‘conduct their own causal inquiry into the flooding on their land before making a decision to opt in or out.’
Seqwater submitted that there are a number of decisions which confirm that it “must be apparent from the pleading that every member of the group has, or at least properly asserts, a “claim”” against a defendant.
The plaintiff was granted leave to amend the pleading to clarify that it is alleged that the defendants’ conduct caused loss or damage to the plaintiff, and Group Members, from the flooding, or greater flooding alleged to have resulted from the operation of Somerset Dam and Wivenhoe Dam. This amendment cures the discrepancy between the definition of the group members and the causation case.
Opt out notices
As a result of the decision in Johnston v Endeavour Energy, Justice Beech-Jones held that there should be different opt out notices issued to insured group members and uninsured group members. As indicated in our previous article, Endeavour Energy highlights the potential for conflicts or issues to arise between insurers who sign up to participate in class actions and their insureds, who may have no knowledge of their involvement in the proceedings or their ability (if any) to pursue their uninsured losses outside of the proceedings. The recognition of the potentially different positions of individuals who directly sign up to participate in the proceedings, and individuals who are only group members due to the acts of their insurer, is welcomed.
The matter is next listed for directions on 12 February 2016. The hearing of the plaintiff’s claim is likely to be some time in 2017.
Note: Kione Johnson and Justin McDonnell are acting for Seqwater in relation to the class action.