Natural or environmental disasters often generate claims of sufficient volume and scale to attract litigation funders and plaintiff law firms. The NSW Supreme Court’s recent decision to strike out the statement of claim in the Queensland floods class action illustrates the particular difficulties which may arise in natural disaster class actions where the claim is based in negligence. In particular, the need to specifically identify the risk of harm which the plaintiff alleges the defendants needed to have taken precautions against may hinder the plaintiff’s ability to prove that the defendants owe the same duty of care to all members of the class.
Background to the proceedings
In January 2011, parts of south-east Queensland located downstream of Wivenhoe Dam were flooded. The floodwaters caused significant damage to real and personal property and interruption to businesses. In July 2014, Rodriguez & Sons Pty Ltd commenced representative proceedings on behalf of a closed class of approximately 4,500 group members1 against:
- the Queensland Bulk Water Supply Authority (“Seqwater”) as the owner and operator of the Wivenhoe and Somerset Dams;
- SunWater Limited (“SunWater”), who is alleged to have been responsible for the conduct of flood operations at Wivenhoe and Somerset Dams; and
- the State of Queensland (the “State”), who employed one of the flood engineers responsible for overseeing the conduct of flood operations at Wivenhoe and Somerset Dams.
Media reports suggest that this is largest class action in Australia’s history. The plaintiff alleged that significant amounts of water should have been released prior to 9 and 10 January 2011 to ensure that there was “sufficient available capacity” in Somerset and Wivenhoe Dams to avoid the substantial releases which occurred on 10 and 11 January 2011 “and which caused the flooding that the plaintiff alleges gave rise to the relevant damage”.2
Statement of claim struck out
Seqwater and SunWater each applied to strike out the statement of claim. The State sought orders requiring the plaintiff to provide further particulars in relation to the claim. Justice Garling struck out the statement of claim out on the basis that:3
- it did not properly identify the risk of harm which the plaintiff alleges the defendants were obliged to take precautions against; and
- allegations regarding thinking processes and the processes contributing to the making of a judgment, or the failure to make a judgment, were not “capable of constituting a breach of duty” in the context of this particular case;
- the plaintiff failed to plead the appropriate level of available capacity by reference to the appropriate water level of the dam in respect of each of the nine time periods referred to in the statement of claim. These matters needed to be pleaded to ensure that the defendants could understand the causation allegations.
The finding in relation to the pleadings regarding the risk of harm is of particular importance in these proceedings, and may impact upon the allegations which may be made in other “natural disaster” class actions where the claim is based in negligence.
Identifying the risk of harm
A pleading to which the Civil Liability Act 2003 (Qld) applies must “identify, and articulate clearly, the “risk of harm” in respect of which, it is alleged, the defendant was obliged to take precautions”.4 In this case, the plaintiff pleaded that Seqwater had a duty to take reasonable care in the conduct of flood operations at Somerset and Wivenhoe Dams, and to ensure that reasonable care was taken by any third party involved in conducting flood operations, to:
avoid the risk that a failure properly to conduct Flood Operations at Somerset Dam and Wivenhoe Dam would cause Greater Flooding downstream of Wivenhoe Dam.
The term “Greater Flooding” was defined as flooding downstream of Wivenhoe Dam which would not have occurred if flood operations were conducted properly.5 Similar duties were pleaded against the other defendants.
Justice Garling accepted that there would have been some inundation downstream of Wivenhoe Dam even if the defendants had acted without negligence.6 The statement of claim was deficient as:
it did not in any rational way define by reference to either maps or other geographical description, where in truth the floodwater which had been caused by negligence had occurred, and had affected properties.7
The need to provide “some specificity” regarding where the “greater flooding” allegedly occurred raises significant issues in these proceedings. Justice Garling declined to strike out the claim on the basis that it ought to have disclosed the street addresses of the group members.8 However, his Honour acknowledged that “there may well be group members who do not ultimately prove that they suffered damage”, because their properties would have flooded regardless of the defendants’ conduct and will not be able to prove that the defendants caused their loss.9
A requirement to define areas in which the “Greater Flooding” allegedly occurred may prevent the plaintiff from establishing that a duty of the kind originally pleaded is owed to all members of the class.10 Although each group member’s ability to establish that the defendants’ conduct caused their loss is likely to be an issue in any representative proceeding, the decision will likely have a significant impact on issues such as the definition of group members (and whether there are, in fact, different sub-groups of claimants), the scope of the duty pleaded in any new statement of claim and the determination of the common questions.
A relaxation in the pleading requirements for class action plaintiffs?
Seqwater and SunWater had also argued that the statement of claim should be struck out on the basis that it included hundreds, if not thousands, of alternative and cumulative combinations of allegations such that the defendants could not properly understand the case which they needed to meet. The High Court recently held that although pleading in the alternative was permissible, “it does not extend to planting a forest of forensic contingencies and waiting until final address, or perhaps even an appeal hearing, to map a path through it.”11 Of particular concern was the plaintiff’s use of the phrase “one or more” throughout the statement of claim, which the defendants submitted amounted to “literally thousands upon thousands of combinations of alleged breaches”.12
This issue was of considerable importance in this case. There were four flood engineers on duty at different times during the relevant period. On the face of the pleading, it was impossible for each defendant to know whether the breaches which were alleged were ones for which they were responsible, or whether any liability ought to properly be attributed to one or both of the other defendants.13
Justice Garling declared to strike out the claim on this basis, noting that the question of the sufficiency of a pleading in a representative action “has to be considered in light of a representative action and its purpose”.14His Honour applied the Full Federal Court’s decision in Phillip Morris (Australia) Ltd v Nixon,15 where the court found that “it may be sufficient for the applicant to plead the case of each member of the represented class at a reasonably high level of generality”.16 Requiring the plaintiff to specify which breaches were made on each shift, and by each flood engineer, “would result in a much more complex, much lengthier and much more prolix pleading. Such a pleading would not conform with the overriding purpose of s56 of the Civil Procedure Act…”17
The plaintiff must file any new statement of claim and its dam operations expert report by 13 February 2015. The plaintiff must provide precise rates of release or the volume of water which it will allege ought to have been released by way of precautionary releases in its expert evidence or particulars.18 Further case management orders have been made by the court, with the matter listed for hearing commencing on 18 July 2016.
The full decision is Rodriguez & Sons Pty Ltd v Queensland Bulk Water Supply Authority t/as Seqwater  NSWSC 1565.