The Canberra Times is reporting that all litigation against the ACT, arising from the 2003 Canberra fires has been settled.  The litigation against NSW is being continued by Wayne West and QBE insurance (see Louis Andrews ‘ Fire litigation ends for ACT’ The Canberra Times (online), 20 September 2012).

Because the case has settled, the details of the settlement will be confidential; but some observations can be made about the case based on the newspaper’s reporting.

First the story says ‘the fight continues for Brindabella landowner Wayne West, 19 clients of insurance giant QBE and the state of NSW.’  That is slightly misleading.  An insurance company that pays out to its insured then enjoys the rights of those insured persons.    Although the litigation may be continuing in the name of the people who were insured, it will be QBE that is conducting the case and is doing so to recover the money that it paid out under its insurance policies.   Accordingly the fight is really being carried on by two plaintiffs, QBE and Wayne West.    QBE is acting on its own behalf; it is not representing its 19 policy holders.  As the story correctly says, ‘The claims against NSW are based on different legal arguments to those against the territory, so the withdrawal of Stacks won’t impact on the outcome for the remaining plaintiffs.’

We are then told ‘The settlement payouts are expected to remain confidential, but judgment was formally entered for the two governments.’   As we are told the settlement is confidential and I have no particular access to them; but I infer from this statement that the case probably settled without payment to the plaintiffs.    The usual terms, if there was a payment to the plaintiffs, would be that judgement would be entered for the plaintiffs with terms not to be disclosed.  This would give the plaintiffs a binding decision that they could enforce if there was any delay in paying the agreed sum.  To enter a judgement for the defendants would suggest that the plaintiffs have agreed to discontinue their action; and entering a judgment will mean that it cannot be resumed at a later date.

Why would the plaintiff’s do that?  The most obvious reason is that they looked at their case, and perhaps the recent decisions in Warragamba Winery Pty Ltd v State of New South Wales [2012] NSWSC 701 and to a lesser extent, Myer Stores Ltd v State Fire Commission [2012] TASSC 54, two cases where the fire services have been sued, and won, over decisions made on how to allocate resources and combat the fire.  In the Tasmania case, Blow J said (at [41]);

At least in relation to property damage, legislation in this State since 1920 had reflected a policy that the financial burden of unfortunate operational decisions should be borne by insurers, or by the uninsured. That seems possibly to have been a quid pro quo for the State providing fire-fighting services which, in times long past, were provided by insurance companies, and not at the expense of the public.

That view would provide little comfort to the plaintiffs in this case and with those precedents in mind, they may have thought that they would face a large costs order if they lost, and the chances of winning were looking slimmer.  If that’s correct, they may have agreed to settle on the basis that there was a verdict for the defendant but the defendant would not seek any costs.   Again, I stress, that the settlement is confidential; I do not know what the terms of settlement were, but my ‘best guess’ is that it was probably something like ‘A verdict for the defendant, each party to pay their own costs’.

Finally, we are told that ‘the case is due to go back before the court later this year, with legal teams for QBE and Mr West seeking to make further submissions in light of recent cases.’  This is consistent with my thoughts, above.    The decisions in Warragamba Winery Pty Ltd v State of New South Wales and Myer Stores Ltd v State Fire Commission are decisions of single judges, in different jurisdictions, so they are not binding on the ACT Supreme Court, but there is no doubt that the judge would want to consider what effect they should have on his decision and whether or not, in the eyes of the parties, they accurately reflect the law.  As these decisions were handed down after the hearing of the Canberra case had concluded, His Honour could not simply rely on them.  Rather, in the interest of justice, he would have to bring the cases to the attention of the parties and invite them to make submissions on what impact those decisions should have on the case before him.  I infer from the statement that ‘the case is due to go back before the court  … to make further submissions in light of recent cases’ that this is indeed what has happened.

So the 2003 litigation continues but on a much smaller scale than when it started with an alleged 3000+ plaintiffs.  As yet there is no ruling on either the facts or law and a case that settles establishes no precedent for anything.   We are told that now in effect 2 plaintiffs, QBE and Wayne West and they are continuing the action against NSW alone.  As noted this settlement should not affect that case and the case against NSW is based on different facts and legal issues than the case against the ACT, but I suspect that, from today, they may be feeling quite lonely.   It is now likely that, whoever wins, the costs orders will far exceed the amount of any claim.

Michael Eburn

20 September 2012.