Supreme Court action dismissed, fire victims must pay all costs

Sisters and Terang bushfire class actions participants are likely to shoulder legal costs that may be as high as $80,000 after Maddens Lawyers launched an unsuccessful application in the Supreme Court relating to the right of victims to opt out of class actions.

In the wake of unprecedented no-costs offers from insurance companies to victims of the devastating bushfires, it’s understood some Maddens’ class action participants have opted out of in favour of a potentially more timely and better financial outcome.

Maddens’ application was dismissed in the Victorian Supreme Court by Justice Cameron Macaulay on Monday with costs awarded against the class actions.

Legal experts believe those costs will be eventually be paid out of any settlement sum recovered from Powercor for bushfire victims. Powercor infrastructure failings sparked the two St Patrick’s Day fires in March this year which devastated large tracts of the Moyne and Corangamite regions.

Experts say the legal costs for the insurance companies and Maddens for Monday's application alone will be about $80,000.

Attempts to obtain a running total of legal costs incurred by Maddens in the class actions have proved unsuccessful, with Maddens saying there are “currently no costs payable”.

Aerial photo of the Gazette fire ground. Supplied: CFA

Aerial photo of the Gazette fire ground. Supplied: CFA

Monday's unsuccessful application follows Justice John Dixon previously finding that Maddens had been misleading in prior statements made to The Standard on September 25.

In that judgement, Justice Dixon found that Maddens Lawyers' Brendan Pendergast, one of Australia’s leading bushfire lawyers, had clearly sought to persuade insured group members to deal with his firm and not deal with their insurers.

Late last month, leading south-west civil lawyer Creon Coolahan, of Stringer Clark, told The Standard that the no costs insurance companies' offer was "almost certainly more likely" the best option for many of the bushfire victims. That article triggered Maddens' application to the Supreme Court.

Justice Macauley said in his finding that the circumstances in which insurers may or may not opt out group members was at present speculative.

He said the relative advantage of staying in the group proceeding or otherwise was  complex and involved a myriad of factors including priority of distribution, proportion of insured versus uninsured losses, speed at which proceeding comes to hearing, competing costs efficiencies and other factors.

Justice Macauley said there was no evidence that any individual has been misled by the opinion expressed by Mr Coolahan.

He said Maddens could give legal advice to its client base if it apprehends anyone has been misled.

Mr Pendergast said the Supreme Court ruled on Monday that there was no need for the publication of a notice to correct statements that have been made in the media and elsewhere relating to the right of fire victims to opt out, the cut-off date and the opt out date, and about the distribution of recovered compensation funds to fire victims and insurers.

"We believed it was an appropriate step to take as the solicitors on the record in each class action," he said.

Mr Pendergast referred to his firm’s concern that, as solicitors for the plaintiffs in the actions, it was not only necessary to prosecute the plaintiffs’ claims but to also ensure that the interests of group members were considered and protected.  

He said it was observed in court that there were matters of complexity which had arisen. 

“We have the benefit of a judicial determination. The court has ruled that in the circumstances of these class actions the publication of a further notice is not required," he said.. 

We now have the ruling and that will assist in how we deal with fire victims’ inquiries.

Mr Pendergast said fire victims impacted by these fires have until December 21 to opt-out of the proceeding should they wish. 

"Persons who do not intend to opt-out need to do nothing. The decision to opt-out might have important consequences for fire victims," he said.

"People concerned about this issue should obtain legal advice without delay from an experienced legal practitioner preferably with relevant class action experience."

Mr Pendergast said that to date there had been very few fire victims who have filed opt-out notices with Maddens Lawyers. 

He said that on the other hand there were a significant numbers of property owners who had instructed Maddens Lawyers that they intend to pursue their loss claims through the class actions.

Mr Pendergast emphasised that his firm has provided legal services to the people of south-west for more than 60 years. 

“Our focus is on recovering the full measure of loss available at law for fire impacted families and individuals," he said. 

"These matters will be the subject of court ordered mediations to be conducted early next year and in the event that the matters are not resolved they will be determined by trial before the Supreme Court of Victoria. 

"The trials are presently fixed for hearing in October 2019 in Warrnambool."

The principal lawyer said there would be no resolution of the matters without the approval of the court. 

He said that approval relates to the level of compensation recovered and costs including the costs of the insurer parties relating to Monday’s application. 

Mr Pendergast said the suggestion that $80,000 in legal costs was payable was without basis and the quantum of costs was ultimately for determination by the court.