Class action launched by Australian bushfire survivors against SP AusNet

February 18, 2009 The largest class action in Victorian history was commenced at the Supreme Court of Victoria on Friday the 13th by Slidders Lawyers against electricity distribution company SP AusNet and the Brumby Government in relation to the Kilmore East fire that became part of the Kinglake complex.

Because of the lawsuit, SP AusNet SPN.AX's shares on Monday have dropped more than 13.36 per cent or 14.5 cents, to an intra-day low of 94 cents, was at 98.5 cents at 10:38 a.m. local time, before recovering slightly to be 7.5 cents lower at A$1.01 by 1144 AEDT (0003 GMT) or 6.9 percent in Sydney trading. Shares in SP AusNet closed 3.7 percent lower at A$1.045 on Monday.

Power supplier SP AusNet said it has asked the Victoria Court regarding the status of the class action proceedings saying the firm had insurance policies in place consistent with industry standards. "SP AusNet will continue to update the market as further information becomes available," the company said.

The claim has focused on alleged negligence by SP AusNet in its management of electricity infrastructure. It maintains most of the power lines in eastern Victoria. Its fallen power line is believed to have sparked the blaze that tore through Kinglake, Steels Creek, Strathewen, Humevale, and St Andrews. The plaintiffs include thousands of angry Kinglake farmers, small business owners, tourist operators and residents who lost homes.

Leo Keane, the lead plaintiff in the class action has alleged "SP AusNet owed a duty of care to landowners to operate and manage power lines in a way that limited the risk of damage from bushfires."

On Thursday Phoenix Taskforce had taken away a section of power line as well as a power pole from near Kilmore East, part of a two-kilometre section of line in Kilmore East that fell during strong winds and record heat about 11am last Saturday. It was believed to have started the fire there, since within minutes a nearby pine forest was ablaze, and within six hours the bushfire had almost obliterated nearly every building in the towns in its path.

"It is believed that the claim will be made on the basis of negligent management of power lines and infrastructure," Slidders Lawyers partner Daniel Oldham said. The law firm has announced it was helping landowners and leaseholders get compensation for the 2003, 2006, 2007 and 2009 bushfires. "If you have been burnt by the recent bushfires, please register your interest using the form below as soon as possible," the law firm's website stated.

The Insurance Council of Australia has placed the cost of the bushfires at about $500 million. "That means keeping electricity lines clear of trees and in a condition that won't cause fires. They must also have systems in place to identify and prevent risks occurring," Melbourne barrister Tim Tobin, QC, said. According to the 2006 census, Kinglake had a population of almost 1,500 people.

But SP AusNet's legal liability has been limited at $100 million under an agreement inked by the former Kennett government with private utility operators, when the former State Electricity Commission was privatized in 1995. Accordingly, the Brumby Government could be legally obliged to pay damages of the differences amounting to hundreds of millions of dollars.

SP AusNet Ltd said some of its electricity assets have been damaged by the Victoria bushfire. "As a preliminary estimate, it is thought that damage has been sustained to approximately one per cent of SP AusNet’s electricity distribution network, mainly distribution poles, associated conductors and pole top transformers," SP AusNet said in a statement to the Australian Securities Exchange (ASX). It explained that up to 6,000 homes and businesses on its network were without power due to bushfires, including the Kinglake complex fire, Beechworth fire, and fires across Gippsland including Churchill and Bunyip.

SP AusNet said the firm will cooperate fully and will assist in any fire probe. "We stand ready to assist the relevant authorities with their inquiries if it is necessary for us to do so now and in the coming months," SP Ausnet spokeswoman Louisa Graham said in a statement.

"Our priority is to restore power to fire-affected areas as quickly as possible. We believe the claim is premature and inappropriate ... SP AusNet will vigorously defend the claim. If the claim is pursued, SP AusNet advises that it has liability insurance which provides cover for bushfire liability. The company's bushfire mitigation and vegetation management programmes comply with state regulations and were audited annually by state agencies," Grahams explained.

Victorian Auditor-General Rob Hulls said "there was an 'unseemly rush' by some lawyers to sue before the cause of the fires had been fully investigated."

"The government body had audited the network's bushfire risk to make sure required distances between power lines and vegetation were maintained. Power companies had been given a clean bill of health, and electricity firms were judged to be 'well prepared for the 2008-09 bushfire season.' There were no regulations applying to the distances between poles supporting electricity lines and spans of one kilometre were not unusual," a spokesman for Energy Safe Victoria explained.

Christine Nixon, the 19th and current Chief Commissioner of Victoria Police said investigations into the cause of the bushfires were ongoing. "I know people are angry, and so are all of us in this community. But we need to kind of have a sense that the proper processes are in place and we need to go through the investigation and through the court case," Nixon said. "At this stage we are not able to confirm how it started. I understand there is some legal action that people are taking, but at this stage we're still investigating its cause. But the whole circumstances of that fire are part of our Taskforce Phoenix, and as we move through that we'll be able to tell the community more once we're able to confirm or deny what we think is the cause of these fires," Nixon added.

On Thursday, two people were arrested in connection with the fires, having been observed by members of the public acting suspiciously in areas between Yea and Seymour; although they were both released without charges laid.

Brendan Sokaluk, age 39, from Churchill in the Gippsland region, was arrested by police at 4pm on Thursday, in relation to the Churchill fires, and was questioned at the Morwell police station. He was charged on Friday with one count each of arson, intentionally lighting a bushfire and possession of child pornography. The arson case relates to 11 of the 21 deaths in the dire Gippsland fire, which devastated 39,000 hectares in the Latrobe Valley, Calignee, Hazelwood Koornalla and Jeeralang. Two teams of Churchill firefighters were almost lost in the inferno that remains out of control.

Mr Sokaluk joined the CFA Churchill brigade in the late 1980s as a volunteer fire fighter, left in the 1990s and attempted to rejoin twice, but was rejected. He failed to appear in Melbourne Magistrate's Court Monday for a scheduled hearing, since the court reset the committal hearing on May 25. He is represented by lawyer Julian McMahon.

Magistrate John Klestadt has lifted the suppression order which kept the suspect's identity a secret but identifying photographs were barred from being released. Mr Sokaluk was remanded in protective custody from Morwell to a cell in Melbourne for his own safety amid fears angry prisoners will target him and real risk of vigilante attacks. He faces a maximum sentence of 25 years imprisonment if convicted on the arson charge.

"This is an extraordinary case. The level of emotion and anger and disgust that the alleged offenses have aroused in the community is unprecedented." Mr Sokaluk's defense lawyer Helen Spowart argued. The prosecution has moved the Court for more time to prepare its case, saying there would be up to 200 witnesses to interview.

Slater & Gordon has indicated that they were awaiting the report of the to-be-established Royal Commission, expected in late 2010, before initiating any claims.

Armed with a $40 million budget, the Royal Commission's Chair Justice Bernard Teague will be assisted by former Commonwealth ombudsman Ron McLeod, who led the inquiry into the 2003 Canberra bushfires, and State Services Authority Commissioner Susan Pascoe. The Commission has said its interim report is due on August 17 while the final report will be submitted by July 31, 2010.

Judge Bernard Teague has announced Tuesday he will meet with fire victims and fire authorities within the next two weeks. "We want to do that as soon as possible - probably not next week but starting to have these discussions the week after," he said.

Julia Eileen Gillard, the Deputy Prime Minister of Australia and deputy leader of the federal Australian Labor Party (ALP) said the federal and Victorian governments would respond quickly to the royal commission's report. "Everybody who has lived through this experience in Victoria and around the nation has asked the question: 'Why? What can we do better?'. No one wanted to see the report "as a book on a shelf gathering dust," she said.

Victoria bushfire experts, led by Forest Fire Victoria - a group of scientists and forestry experts - have condemned the government's "Living with Fire" policy and the state's failure to initiate serious fuel-reduction programs. The Victoria government had failed to seriously act on bushfire safety recommendations submitted last June by the Victorian Parliamentary Environment and Natural Resources Committee.

As death toll rises, evidence mounts of lack of planning prior to Australia’s worst bushfire. "Living with Fire" policy means Kinglake fire trucks were dispatched to an earlier fire in Kilmore, leaving Kinglake undefended. "Kinglake was left with no fire brigade and no police. The trucks had been sent to Kilmore. I've been in the fire brigade for 10 years. There was always a law—the trucks had to be on the hill. Because of the government we got gutted at Kinglake. They should have been getting generators ahead of the fire—so people would have had a chance of fighting it. As soon as the power went, I couldn't keep fighting the fire at my place," Rick and Lauren Watts, and their friend Neil Rao, spoke to the WSWS.

Rick has also criticized the lack of early warning communications systems, since emergency siren warnings in the town had been stopped some years earlier. Humevale resident Sina Imbriano who has six children was angry about the failure of state and federal governments to set up a recommended telephone warning system amid its "stay and defend or go" policy. Bald Spur Road residents Greg Jackson and his wife Fotini said the government's "stay and defend or go" policy was "fruitless" since the critical issue was early warnings, but "they [the government] just won't spend the money."

Also on Friday, five law firms from Victoria's Western Districts, including Warrnambool-based Maddens Lawyers and Brown & Proudfoot, held a meeting to discuss a potential class action in relation to the Horsham fire, which was also thought to have been started by fallen power pole that burnt vast swathes of land in Mudgegonga and Dederang, Victoria. The lawsuit will also focus on the fire that blackened about 1750 hectares at Coleraine.

Maddens senior attorney Brendan Pendergast said: "We don't know who the defendant is at this stage. We are unsure who the electrical supplier is for that area but we should know in a few days. There were people who had their homes burnt to the ground and they will need to reconstruct, replace their contents," he said. Maddens has initiated a register of affected landowners for the recent bushfires, saying the firm has included victims of the Pomborneit fire that burnt almost 1300 hectares in the proposed class action amid the CFA's statement the blaze could have been deliberately lit.

Frances Esther "Fran" Bailey, Liberal member of the Australian House of Representatives (1990-93 and 1996-present), representing the electorate of McEwen in Victoria said the Country Fire Authority (CFA) had told her one of the power lines had broken before the fire.

"The local CFA [Country Fire Authority] told me on that Saturday, with those very high winds, one of the lines had broken and was whipping against the ground and sparked," she said. "Whether or not that is the cause of that terrible fire that actually took out Kinglake and maybe Marysville, the investigations will prove that, but we've got to do better," she added.

Victorian Premier John Brumby said the power line claim would be examined as part of the Royal Commission into the bushfire. "No stone will be left unturned. So, I think it's important the Royal Commission does its work. And, the Royal Commission will, of course, look at all of the factors with the fires," Mr Brumby said. At least 550 houses were incinerated and 100 people have been killed, leaving more than 1,000 homeless in the Kinglake bushfire and surrounding areas.

SP AusNet - Singapore Power International Pte Ltd is a wholly-owned subsidiary of Singapore Power Limited (51% interest in SP AusNet). SP AusNet's electricity transmission and distribution networks, along with the gas distribution assets, enable it to deliver a full range of energy-related products and services to industrial and domestic customers in Victoria, Australia.

Singapore Power ( 新加坡能源有限公司) is a company which provides electricity and gas transmission, distribution services, and market support services to more than a million customers in Singapore. As the only electricity company in Singapore, and also one of its largest corporation, SP was incorporated as a commercial entity in October 1995 to take over the electricity and gas businesses of the state provider, the Public Utilities Board. Since 1995, Temasek Holdings controls the entire company with a 100% stake. SP is involved in a major investment in Australia's Alinta in partnership with Babcock & Brown, after putting up a bid of A$13.9 billion (S$17 billion), beating out a rival bid by Macquarie Bank.

The devastating 2009 Victorian Black Saturday bushfires, a series of more than 400 bushfires across Victoria on February 7 2009, is Australia's worst-ever bushfire disaster, claiming at least 200 deaths, including many young children, and is expected to pass 300. 100 victims have been admitted to hospitals across Victoria with burns, at least 20 in a critical condition, and 9 on life support or in intensive care. The fires have destroyed at least 1,834 homes and damaged many thousands more. Many towns north-east of Melbourne have been badly damaged or almost completely destroyed, including Kinglake, Marysville, Narbethong, Strathewen and Flowerdale. Over 500 people suffered fire-related injuries and more than 7,000 are homeless. It has scorched more than 1,500 square miles (3,900 square kilometers) of farms, forests and towns.

The Supreme Court of Victoria is the superior court for the State of Victoria, Australia. Founded in 1852, it is a superior court of common law and equity, with unlimited jurisdiction within the state. Those courts lying below it include the County Court of Victoria, the Magistrates' Court of Victoria and the Victorian Civil and Administrative Tribunal (which is technically not a court, but serves a judicial function). Above it lies the High Court of Australia. This places it around the middle of the Australian court hierarchy.