HJA NealN Simpson (Second Defendant)
GA Thompson QCE Morzone (Third Defendant)
Judgment (3 paragraphs)
[1]
Solicitors:
Gillis Delaney Lawyers (Plaintiffs)
King & Wood Mallesons (First Defendant)
Norton Rose Fulbright (Second Defendant)
Crown Solicitor for State of Queensland (Third Defendant)
File Number(s): 2017/7321
[2]
EX TEMPORE Judgment
Between 12 and 14 July 2017, each of the defendants filed notices of motion which in effect sought the dismissal of these proceedings and, failing that, various alternative forms of relief. The notices of motion were first made returnable on 28 July 2017. On 25 July 2017, the plaintiffs filed their own notice of motion which sought an adjournment of each of the defendants' motions, a variation of consent orders requiring them to provide security for costs, and a lifting of a stay of these proceedings. In circumstances I will describe, all of those motions were adjourned until today, 11 August 2017. This judgment deals with some aspects of those motions.
These are representative proceedings. They seek damages on behalf of an open class in respect of various forms of damage, other than personal injury, said to have been suffered during flooding of the greater Brisbane area in January 2011 as a result of the allegedly negligent operation of the Somerset and Wivenhoe dams. The plaintiffs allege that the first defendant, Queensland Bulk Water Supply Authority trading as Seqwater, owned and controlled the operation of the two dams, the second defendant, Sunwater Limited, was responsible for the conduct of flood operations for the two dams and was also responsible for establishing and maintaining a dedicated operation centre from which the flood operations could be conducted, and that the third defendant, the State of Queensland, is liable as the employer of one of the individual engineers engaged in the conduct of the flood operations centre.
The nature and scope of these proceedings and their relationship with another representative proceedings brought on behalf of a closed class (the "Rodriguez proceeding") is outlined in Hassid v Queensland Bulk Water Supply Authority trading as Seqwater [2017] NSWSC 599 ("Hassid (No 1)"). I will not repeat that discussion. However, it is necessary to set out the procedural history of these proceedings.
The proceedings were commenced on 9 January 2017. It seems likely that the six-year limitation period provided for by subsection 10(1) of the Limitation of Actions Act (Qld) in respect of claims arising out of the flooding, expired the next day or shortly afterwards. At the time these proceedings were commenced, the Rodriguez proceedings had been on foot for a number of years, and were due to be heard in October 2017. The pleadings filed in these proceedings are almost identical to the Statement of Claim in the Rodriguez proceedings. The relevant differences are explained in Hassid (No 1).
The Statement of Claim filed in these proceedings was given an initial return date of 18 April 2017. Upon becoming aware of the proceedings having been filed, the Court directed that they be made returnable before the Court on 24 March 2017, the same date as the Rodriguez proceedings was listed. Copies of the statement of claim in these proceedings were provided to the defendants by the Court.
On 24 March 2017, I fixed these proceedings for hearing at the same time as the Rodriguez proceedings. I also ordered that these proceedings be mediated at the same time as the Rodriguez proceedings, namely commencing 14 August 2017. I extended the time for the plaintiffs to opt out of the Rodriguez proceedings, an opportunity they exercised. I made orders enabling them to access the plaintiff's evidence‑in‑chief in the Rodriguez proceedings and for the filing of any further evidence by 21 April 2017. The orders for the filing of evidence were ultimately not complied with. I also ordered that draft opt out notices be served by 3 May 2017. The proceedings were then stood over 3 to 5 May 2017.
When the matter returned on 3 and 4 May 2017 the parties agreed on orders which resolved various applications made by the defendants and clarified the nature of the plaintiffs' intended participation in the final hearing of the Rodriguez proceeding. The effect of those orders was as follows.
First, leaving aside any evidence concerning the loss said to have been suffered by the plaintiffs and certain group members, the plaintiffs confirmed that they would be relying on the evidence adduced in the Rodriguez proceedings, to prove their case on breach of duty and causation.
Second, the plaintiffs agreed to provide an amount of security for costs in favour of each defendant by 22 June 2017, failing which the proceedings would be stayed.
Third, orders were made which had the effect of providing for a limited form of class closure in relation to these proceedings, but only in relation to the mediation due to take place on 14 August 2017 (see Lam v Rolls Royce PLC (No 3) [2015] NSWSC 83 at [17]). The orders provided that, as part of the process of issuing of opt out notices, group members were to be advised that if they wished to participate in any settlement that arises out of the mediation they must register their claims and provide some details of their losses.
Fourth, orders were made for the service during May 2017 of draft opt out notices and for the parties to confer in relation to those notices.
On 5 May 2017, I heard argument on a notice of motion filed by the plaintiff in the Rodriguez proceedings seeking to strike out that part of the Statement of Claim in these proceedings that created an overlap between the group members in the two proceedings. I upheld the motion and published reasons for doing so on 9 May 2017, being Hassid (No 1).
The proceedings were then listed before me again on 24 May 2017. On that day, draft opt out notices were reviewed by the Court. However, they could not be approved under s 176 of the Civil Procedure Act 2005 at that stage because the plaintiffs were still seeking to obtain funding for the proceedings. It was agreed that the identity of the funder was a matter that had to be stated in any opt out notice. The proceedings were then adjourned until 23 June 2017 with liberty to apply. At that time, I anticipated approving the opt out notices in chambers once the identity of the funder became known. The timing of the dispatch of the opt out notices was critical to the preservation of the mediation and hearing dates.
In the meantime, efforts to obtain a funder were unsuccessful, the plaintiffs did not file their evidence, and the agreed security was not provided. On 23 June 2017, the plaintiffs' solicitor advised the Court that the order for security had not been complied with, but that attempts to obtain funding or some form of insurance policy to meet the obligation to provide security, were continuing. As the failure to provide security meant the proceedings were stayed, and the details of any funding were not available, no application was then made for the approval of opt out notices. This delay in seeking approval of the opt out notices removed any realistic possibility that these proceedings could be mediated at the same time as the Rodriguez proceedings.
The proceedings were then listed for further directions on 28 July 2017. The defendants were given leave to file the motions now being considered. They each filed detailed submissions principally in support of a contention that the proceedings should be dismissed in their entirety. The State of Queensland also contended that, in the alternative, the Court should order under subs 166(1) of the Civil Procedure Act that the proceedings no longer continue as a representative action because the relevant representative party was "not able to adequately represent the interests of group members" (Civil Procedure Act; s 166(1)(e)).
On 27 July 2017, the solicitors for the plaintiffs wrote to the defendants accepting that they were now no longer able to adequately represent the interests of group members and effectively consenting to an order under subs 166(1). When the matter was called on on 28 July 2017, Mr Pritchard SC, Senior Counsel for the plaintiffs, maintained that concession but submitted that any order for the dismissal for the proceedings, or that they no longer continue as a representative proceedings, not be made until group members had been notified of the defendants' motions. In respect of the former order he referred to ss 175(1)(c) of the Civil Procedure Act. Mr Pritchard SC contended that it was possible that another group member may wish to take over the conduct of the proceedings. He also submitted that the plaintiffs should be able to pursue their individual claims, and to that end stated that they would apply to set aside or vary the consent order for the provision of security for costs and to lift the stay.
I accepted Mr Pritchard SC's application to adjourn the motions until today. I made orders directing the plaintiffs' solicitors to notify the persons for whom they acted, any person who registered a claim and any person who opted out of the Rodriguez proceedings after 9 January 2017 of the adjourned date and that the motions sought orders dismissing the proceedings, or that they no longer continue as a representative proceedings, and the potential for that to significantly affect their ability to bring their claim. I also ordered the plaintiffs' solicitors to place a prominent advertisement in a metropolitan newspaper circulating in Brisbane and south‑east Queensland to similar effect. Otherwise, it was accepted by all parties that the plaintiffs could attend the mediation due to commence on 14 August 2017 in respect of their own claims.
When the matter was called on today, Mr Pritchard SC read an affidavit from the solicitor for the plaintiffs, David Eric Collinge. The affidavit set out the efforts that were made to comply with the orders made on 28 July 2017 for the notification of the Court's orders of that date. In his affidavit Mr Collinge stated that he was able to identify 72 persons who fell within the category of people for whom he acted, people who had registered with his firm or people who had opted out of the Rodriguez proceedings since the Hassid proceedings were commenced. With a couple of exceptions which related to difficulties in obtaining email addresses, those persons were notified in accordance with the Court's orders. Mr Collinge also testified to the fact that on 3 August 2017 a notice was circulated in the Queensland Times advising group members of the state of the proceedings and the relief that would be sought today, as well as their options, including the ability to attend Court and apply to become the representative party.
When the matter was called on today no person sought to appear. Since 28 July 2017, one person who may be a member of the Rodriguez class, or may be a member of the Hassid class, wrote to the Court expressing some disquiet at the conduct of the Rodriguez proceedings and requesting the Court make an order requiring the solicitors for the plaintiff in the Rodriguez proceedings disclose to the Hassids' solicitors the identity of the group members in the Rodriguez proceedings. This need not be taken further as the solicitors for the Hassids no longer seek to maintain a representative action on their behalf. That person will need to take up their issues with the solicitors for the plaintiff in the Rodriguez proceedings.
As noted, the principal relief sought by the defendants' motions was that these proceedings, including all of the claims of group members, be dismissed or permanently stayed. Various bases were put forward but they all arise out of the failure of the representative party, namely, the Hassids, to properly prosecute the proceedings, specifically, their failure to provide their affidavit evidence in accordance with the directions, comply with other procedural directions and most importantly to provide the agreed security.
The difficulty with the conduct of these proceedings is not so much that they were commenced so late, but the failure to prosecute them quickly after they were commenced. An affidavit from the plaintiffs' solicitor read on the last occasion explained how the proceedings had their origins in the amendments to the group definition in the Rodriguez proceedings in February 2016 which deleted claims for pure economic loss. He stated that Senior Counsel's advice was sought later in 2016 on the viability of such a claim and set out the steps taken to effect the commencement of these proceedings in January 2017. That said, it must be remembered that many of the group members in these proceedings make claims for the same form of loss as are sought in the Rodriguez proceedings although they have not signed a funding agreement with the financier of the Rodriguez proceedings.
In any event, the critical point to note is that it must or should have been apparent to all that once these proceedings were commenced, they had to be conducted with expedition given their relationship to the Rodriguez proceedings. As at January 2017, it was well-known that the Rodriquez proceedings were well advanced and due to be heard sometime this year. There was, and is, no realistic prospect of this Court conducting two separate hearings into the same flood given the resources required of the Court and the parties and the risk of inconsistent judgments. This was effectively conceded by the plaintiffs at the first directions hearing when their Senior Counsel embraced the proposition that these proceedings should be heard with the Rodriguez proceedings.
Despite this, these proceedings were not conducted expeditiously. The statement of claim was not served quickly, opt out notices were not finalised, procedural directions were not complied with and, ultimately, the proceedings were stayed when an agreed amount of security could not be provided. In these circumstances I have no doubt that, at the very least, s 183 of the Civil Procedure Act empowers the Court to dismiss the proceedings, including the claims of group members (see Lam v Rolls Royce PLC (No 5) [2016] NSWSC 1332).
However, I will not take that course. Given the width of the description of the represented group in these proceedings and the fact that opt out notices have not been sent, it is very likely that many if not most group members are not aware that these proceedings have been brought on their behalf. In those circumstances, it would be unjust for them to have any rights that they may have to bring a claim extinguished because the person that just happened to bring the proceedings proved unable to prosecute them properly.
On the other hand, the potential injustice that the defendants might have to face effectively the same action brought by a different representative party, is largely ameliorated by the fact that any fresh action is most likely to be statute barred. In those circumstances, I consider the preferable course is to make an order under ss 166(1) of the Civil Procedure Act which provides:
(1) The Court may, on application by the defendant or of its own motion, order that proceedings no longer continue under this Part if it is satisfied that it is in the interests of justice to do so because:
(a) the costs that would be incurred if the proceedings were to continue as representative proceedings are likely to exceed the costs that would be incurred if each group member conducted a separate proceeding, or
(b) all the relief sought can be obtained by means of proceedings other than representative proceedings under this Part, or
(c) the representative proceedings will not provide an efficient and effective means of dealing with the claims of group members, or
(d) a representative party is not able to adequately represent the interests of the group members, or
(e) it is otherwise inappropriate that the claims be pursued by means of representative proceedings.
There is no doubt that ss 166(1)(e) has been demonstrated by the various defaults which I have described.
I am aware that making this order is likely to lead to many group members' claims becoming statute barred as any suspension of the running of the limitation period effected by s 182 of the Civil Procedure Act will be lifted. However, the alternative is to leave group members' claims suspended in a stayed class action or dismiss their claims outright. To take either course would be unfair to any group member who for any reason whatsoever may be able to bring a claim outside the six year limitation period and any person who opted out of the Rodriguez proceedings to participate in these proceedings who wishes to apply to undo that step, assuming that is possible.
Accordingly, the orders of the Court are as follows:
Order that pursuant to section 166(1) of the Civil Procedure Act these proceedings no longer continue under Part 10 of the Civil Procedure Act 2005.
Direct the plaintiffs' solicitor to notify, by 16 August 2017, all persons:
(i) Who have instructed them to act;
(ii) Who have registered a claim with the plaintiffs' solicitors; or
(iii) Who have opted out of the Rodriguez Proceedings since 9 January 2017;
That:
(iv) Order 1 has been made;
(v) These proceedings are no longer a representative action;
(vi) They are no longer a group member of any representative proceeding;
(vii) If they wish to bring a claim in respect of the flooding in the greater Brisbane area during January 2011, they should seek legal advice.
Direct the plaintiffs' solicitors, by 16 August 2017, to place a prominent advertisement in a metropolitan newspaper circulating in Brisbane, South East Queensland stating the matters set out in Order 2.
Without limiting the newspaper referred to in Order 3, the advertisement be placed in the Courier Mail.
That still leaves the plaintiffs' own claims. I have been advised by Senior Counsel that there are some discussions about that matter and he has asked that it stand down while there can be further discussions. I will take the same position in relation to the costs of the defendants' motions.
[The matter was then stood down and the following consent orders were made]
The proceedings continued as proceedings by the plaintiffs on the plaintiffs' own behalf against the defendants, be dismissed.
The dismissal is to operate as a final determination of the rights of the plaintiffs to claim damages against the defendants arising out of the January 2011 Queensland Flood (as described in paragraph 5 of the Statement of Claim filed 9 January 2017).
There be no order as to costs, including costs against the plaintiffs of the representative proceedings and the proceedings on the plaintiffs' own behalf.
Any existing costs orders be vacated.
[3]
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Decision last updated: 16 August 2017
Parties
Applicant/Plaintiff:
Hassid
Respondent/Defendant:
Queensland Bulk Water Supply Authority t/as Seqwater