Intensive panel delves into flood class action

by Resolve Editor Kate Tilley

In early 2011, devastating floods across south-east Queensland caused insured losses of $2.55 million.

Much of the flooding that impacted on Toowoomba, Ipswich, Brisbane and nearby areas was blamed on mismanagement of two major dams.

On 8 July 2014, a representative proceeding (class action) was filed in the NSW Supreme Court against the Qld Bulk Water Supply Authority, trading as Seqwater, SunWater Ltd, and the State of Qld by Rodriguez & Sons Pty Ltd, on behalf of about 6,800 class action members.

The action claimed the three defendants’ negligent operation of the Somerset and Wivenhoe dams during the floods caused greater damage to land downstream of the dams than would have otherwise occurred.

In December 2016, proceedings were filed on behalf of group members individually to protect their position because of a potential risk arising from limitations laws (these were referred to as the Lynch proceedings and eventually stayed).

In 2019, the court found all three defendants liable for negligent operation of the dams and apportioned liability as SunWater 30%; the State of Qld 20%; and Seqwater 50%.

A partial settlement amount of compensation of $440 million was agreed in 2021 for SunWater and the State of Qld. Seqwater is appealing against the judgement. The appeal was heard in May but no judgement handed down yet.

At the AILA Qld Insurance Law Intensive in June, delegates were treated to a rare behind-the-scenes insight into the class action. A panel session, moderated by Sophie Devitt, from DLA Piper, featured plaintiff lawyer Rebecca Gilsenan, from Maurice Blackburn, and Tricia Hobson, from Norton Rose Fulbright Australia (who has since moved to DLA Piper).

An unusual element of the action was that both sides represented insurers. Ms Hobson was acting for liability insurers and Ms Gilsenan for property insurers, plus individual claimants.

Both women outlined challenges that occurred during the long-running case.

Maurice Blackburn (MB) was contacted by victims within weeks of the floods, but Ms Gilsenan didn’t take conduct of the case until 2015, so initially “everyone knew more than me”.

MB signed 6,800 group members, of whom 500 were subrogated claims for insurers. About half the claims were insured.

Ms Gilsenan said maintaining focus during the action required constant reminders of clients’ stories. “We had visuals of the floods [to remind us] what being flooded is really like; what your house smells like.” 

MB’s challenges included:

• Complex jurisdictional issues about where to file because Qld had no class action legislation at the time.
• Needing expert investigations into how to operate dams and what difference it would have made had the dams been managed differently.
• Working with experts who were not used to litigation – “every round of evidence was like giving birth to an elephant”.
• Finding the right experts and ones who were not already engaged.
• The complexities – the trial judge said the case had the turning circle of the Queen Mary, there was no quick manouvering.
• MB had to assemble a core team by moving resources around the national practice and engaging contract paralegals. Hours were long and it was a challenger to keep the team “working in a sustainable way”.
• They achieved that by breaking phases of the trial into chunks and celebrating completing each phase.
• Losing senior counsel within 6-8 months of the trial starting and finding many people were conflicted out.
• In late 2016, MB realised there was uncertainty about limitation periods and had to file 6,800 individual proceedings before January 2017 (the Lynch proceedings). “The risk of potentially making a mistake was a real low point and it was a stupid issue because the Qld Government kept delaying [class action] legislation, which would have solved the problem.”
• Before the trial started, MB used performance psychologists to help the team manage potential mental health issues.

Ms Hobson, who in 2011 was defending insurers in Victorian bushfire class actions, had to pivot quickly. “Insurers knew immediately the floods would be a big case and sought advice.”

Norton Rose Fulbright Australia’s (NRFA) challenges included:

• Technical aspects of the claim – 50 volumes of technical evidence.
• Assembling a team able to go the distance. “We knew it would be big and need a lot of resources. We needed to assess what’s important for multiple stakeholders, what’s the core strategic value for them? In one respect it was small, defending one engineer, who was trying his best in difficult circumstances. It was paramount to protect him. But it was a human tragedy and we had to be fair to the people who had suffered losses. We needed the right people with the right attitudes.”
• Ms Hobson had a personal crisis when the litigation was moved from 2017 into 2018, when she was scheduled to take over global management of NRFA. However, live streaming of the case enabled her to manage the case and fulfil her global responsibilities.
• NRFA viewed the case as “a marathon” and also managed it “in chunks, we set horizons and celebrated when we reached them”.
• The firm had to “trawl the world for experts”, but that did enable some team bonding time in Texas.
• Keeping spirits buoyed. “We constantly emphasised the importance of the case for Australia and the insurance industry.”

Ms Gilsenan and Ms Hobson said they shared a collaborative relationship “across the aisle”. Ms Hobson said: “You need to be tough, but aggression is not my style. We worked well together and could communicate and get things moving. I have seen two big men like rhinos going at each other and it gets you nowhere in negotiations.”

Ms Gilsenan agreed: “We didn’t compromise on litigation strategy by having a good relationship. In the settlement process, trust is important to get things done.”

NSW Supreme Court documents for the case.

Proposed settlement notice.

MB information on the class action.