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Class Actions And Duplicative Litigation

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Question:

Discuss about the Class Actions and Duplicative Litigation.
 
 

Answer:

Introduction:

Class action is one of such lawsuits in which a group of people, come together and commence claims against another person. Such a group is collectively represented by one of the members, who belong to the group (Greer, 2010). Characteristically, the plaintiff sues the defendants in a class action on behalf of a group, which also consists of people who are not present at the time of litigation. This is one of the key differentiating points in a normal litigation and a class action, as in the former, the parties are required to be physically present while the proceedings are continued (Anderson and Trask, 2012).

The laws of each and every nation define the manner in which a class action has to be governed and dealt with. Though, generally, the group in class action belongs to such individuals who have been harmed in same way, by the same defendant (Eisenberg, 2016). So, instead of initialing different proceedings for a similar matter, the class action helps the individuals belonging to such a class action in a single lawsuit and this decides upon the injury claimed. Through the review of the relationship amongst an employer and an employee, a class action could be avoided, provided such a review is done in a periodical manner (McDermott Will & Emery, 2007).

The engineers can benefit from the class actions for avoiding the issues which have been claimed against them. Even if in a class action, one of the injured parties can be proved as wrong, the foundation of the entire class action can be shook. And so, the closure of such actions can become easier. Also, the damages claimed through such class actions can be reduced. Class actions also help in unifying of the damages to be paid, and hence avoiding duplicative litigations (Sherman, 2017). The issues which have been raised in the previous litigations against the company, or against some other organization, can be used as a guiding light for handling the current action, along with taking precautions so as to avoid future claims (Johnson, 2013).

In Matthews v AusNet Electricity Services Pty Ltd & Ors [2014] VSC 663, the class action was brought against SPI, i.e., Electricity Services Pty Ltd, previously known as the SPI Electricity Pty Ltd; against UAM, i.e., the maintenance contractor who has the responsibility of periodical inspection of the power line; and against the State parties, i.e., the different entities belonging to State of Victoria, as they had the duty of fighting of fires, managing forest land and policing of emergencies (Australasian Legal Information Institute, 2014).

 

Here, a range of people can come together to initiate class actions against the parties highlighted above. The class action was initially brought up by Leo Keane; though, later on, the plaintiff was substituted by Carol Ann Matthews (Milovanovic, 2011). The class action made by Mathews was on behalf of the individuals summarized below:

  • The individuals who claimed for a personal injury;
  • The individuals who suffered an economic loss, which was not due to the damage caused to their properties or for the injury caused to such individuals;
  • As per Part 3 of the Wrongs Act 1958, the individuals who died due to fire; and
  • The individuals who suffered a loss or damage to their property (State Government of Victoria, 2014).

In the quoted case, a settlement to the value of almost A $500 million was achieved; though, the liability was no admitted by any of the parties. This however, does not mean that there was no liability in the given case (Farnsworth, 2016). There is a strong base for attribution of liability for the damages resulting from the Black Saturday bushfires, and these are in the nature of negligence and negligent pure economic loss. Before applying these to the case here, the base of these laws have been highlighted.

Negligence is one of the torts in Australia. Under negligence, an individual owes a duty of care towards another and there is a breach of this duty, which results in a harm to the other person (Kelly, Hammer and Hendy, 2014). In order to establish a case of negligence, the duty of care has to be clearly established (Turner, 2013). This has to be followed by a breach of duty of care and this breach has result in an injury or loss. These are the essential elements of negligence, without which a case of negligence cannot be made (Greene, 2013).

The justification behind negligence is to affix an obligation of care on people doing some activity, which can pose as a threat resulting in an injury to another person (Trindade, Cane and Lunney, 2007). However, there has to be a direct causation between the injury caused and the negligence. The injury caused also has to be substantial in nature and cannot be remote. Lastly, there has to be a foreseeability of the risk, so that a breach of duty of care can be established (Statsky, 2011).

Once negligence can be established, with the help of elements quoted above, the injured party can take action for claiming damages in form of monetary compensation, or for the non-pecuniary damages for the emotional distress (Latimer, 2012).

 


The snail in the bottle case or Donoghue v Stevenson [1932] UKHL 100 is a prime example of negligence and its claims. In the mentioned case, Donoghue was the consumer, who drank the ginger beer from the bottle manufactured by Stevenson, and fell ill, as a result of the dead snail found in the bottle. The manufacturer held that the plaintiff should sue the café owner, which was located in Paisley, Renfrewshire as he had served the bottle. But the court held that the manufacturer owed the duty of care to its consumers and hence, had to compensate Donoghue for her loss, resulting from negligence (Harvey and Marston, 2009). A similar view was taken in Grant v The Australian Knitting Mills [1935] UKPC 2, where the manufacturer had to compensate Grant for the resulting dermatitis due to negligence of the defendant in manufacturing of the woolen underpants (Australasian Legal Information Institute, 2014).

In this case study, the negligence was applied through the statutory legislation of the Wrongs Act 1958. Section 48 of this act covers the basic principles associated with negligence. This section mandates that the risk has to be predictable or foreseeable and cannot be inconsequential. Along with this, a sensible person, in similar situation, would have taken a precaution against the risk of harm. As per section 49 of this act, the burden of taking precautions is ascertained through the fact of avoidance of the risk of harm, in addition to the succeeding acts which could have been undertaken to mitigate such risk of harm (Australasian Legal Information Institute, 2014).

For this case, the plaintiff had to establish the negligence of SPI, under section 51(1), was the reason for the occurrence of harm. Moreover, the burden of establishing this was placed over the plaintiff under section 52, based on the balance of probabilities, in addition to the pertinent facts as regards to the issue of causation (Australasian Legal Information Institute, 2014).

It had been successfully shown for SPI that there was a presence of real risk of failure related to scheduled inspection. For SPI, the negligence was claimed to be regarding the nuisance in legal sense, the asset management, the oil-operated circuit re-closer, the targeted damper, and the management of electricity. In the view of Osborn J, SPI had to have known regarding the potential risks (State Government of Victoria, 2014).

Apart from SPI, there is also a segment of liability which falls over UAM as the maintenance contractor. This related to his failure in taking the care and skill while carrying out the pre-fire scheduled inspection in Februarys 2008. So, for SPI and UAM, the liability arises from negligence (State Government of Victoria, 2014).

The previous part highlighted how the legal liability of negligence was fixed over SPI and UAM due to the negligence which resulted in loss for the individuals raising the class action. Though, there are some limitations which are applicable for the recovery of damages. These limitations are limited to the claims raised purely for economic loss due to negligence. Negligent pure economic loss relates to the loss which is to be borne by the individuals, not resulting from a physical injury but from the economic loss (Harp, 2009). The class action initiated against SPI and others by the individuals, who suffered an economic loss, would be restricted through the applicability of this principle. 

Where the case of negligent pure economic loss is established, the general rule states that a no recovery rule has to be applied (Hunag, 2011). The base of this rule was born through the case of Rylands v Fletcher (1868) LR 3 HL 330, [1868] UKHL 1. In this, the mill was owned by the defendant and he constructed a reservoir on his land. This reservoir was put over a mine which was abandoned.  The water of this reservoir was filtered through this very abandoned mine. Later on, this water spread over the mine of plaintiff, which was a working mine. And this resulted in far-reaching damages to the working mine. The court in this held that the claim for recovery of pure economic loss could not be held. Furthermore, the defendant could only be held liable for using the land in a manner in which it was not allowed (Swarb, 2015a).

 


Another case where this principle was established was the case of Weller v Foot and Mouth Disease Research Institute [1966] 1 QB 56. In this case, a virus escaped from the premises of the defendant and infected the cattle of the plaintiff. Due to these reasons, the cattle were rendered unsellable. The plaintiff brought a case against the defendant for the loss of profit, highlighted that the cattle would have been fine, had the virus not leaked. Though, the claims of plaintiff failed, owing to pure economic loss, which is not recoverable (Swarb, 2015b).

Hence, on the basis of these two cases, the people in the class action, who have lost their housing or source of income, could be restricted from claiming damages, due to those being pure economic losses.

The Black Saturday bushfires case can be taken as a leading example for dealing with the claims which arise due to negligence against any organization. Furthermore, for future claims also, this case provides guidance for limiting the exposure for claims being raised. This can be done by undertaking the care in points where SPI and other failed, so as to avoid the occurrence of fire. For instance, had the UAM undertaken the inspection work properly, the propensity of the fire could have been decreased.

The organizations, for avoiding claims of negligence being raised, should pay attention to the precedents. Precedents are the court orders, or the verdict of case which have been decided in the court of law, for some other case (Legal Information Institute, 2017). Precedents, or the prior decisions, are applicable on such courts which are subordinate in hierarchy to the court, which has given the particular derision (Duxbury, 2008). In addition to the precedents, the established case laws are also to be taken care of, while undertaking the actions required for avoiding a claim of negligence being raised. Moreover, once a case of negligence has been used, such cases can be relied upon, for established their side of the story, as the precedent would support their side. To show how a case can be used in a particular case, some of the cases related to the case of Mathews, have been elaborated below.

In the case of Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27, an explosion took place as a result of the carelessness of the defendant in maintenance of the plant. The plaintiff initiated a case against Esso, the defendant in the Supreme Court of Victoria. Most of the claims raised in this particular case were related to the pure economic loss. While giving their judgment, the court held that this particular case was similar to that of Donoghue v Stevenson, in addition to that of Grant v Australian Knitting Mills. The similarity was drawn for the duty of care which Esso owed to its customers, for avoiding the stopping of the gas, which ultimately led to the property damage. However, the statutory framework could not put a duty on Esso for such economic loss and so, Gillard J held that a duty for economic loss was not owed by Esso (Sweeney, 2004).

In the case of Woolcock Street Investments v CDG Pty Ltd [2004] HCA 16, the question raised in front of the High Court was about the accountability of the architect or builder of any commercial building to a person who purchases the building subsequently, for the faults in the construction or designing of a particular building, resulting in economic loss. The decision given by the High Court in this case was quite significant, especially for all the architects and builders, as they denied their liability in such cases (Allens, 2004). Hence, for the future, this case can be used for establishing that the builder or architects did not have the liability for the negligence claims.

If there are cases which support a particular stance, there are those which can be used to oppose the same. An example of this is the case of Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520. Here Burnie was the defendant and General Jones was the plaintiff. The property of the plaintiff was kept at the building owned by the defendant. While carrying on the construction work, by the independent contractors hired by Burnie, the building was burnt down in its entirety and the property of Burnie was destroyed. While giving the decision of this case, the High Court decided that the verdict of Rylands v Fletcher had to be discontinued. As a result of this, General Jones could successfully claim the damages from Burnie for the loss caused (Sappideen at al. 2009).

 


This shows that for the case of Matthews, the case of Burnie can be used for claiming the economic loss. And so, the individuals under the class action, who claim for economic loss due to damage of house or loss of source of income, could be held successful in their claims. This affirms the manner in which the precedents and the established case laws can be used for supporting or opposing a particular claim raised in case of negligence. So, the organizations have to use these to their benefit, and be ready to defend themselves against the cases, which can be used against their claims.

In the given case study, the settlement amount was the only thing decided and the particular faults were never fixed. However, if the fault had to be fixed, the above highlighted case laws could be used as a weapon or shield, depending upon the side of the party. When such a situation arises, where both parties have strong case against the each other, the judgment of the established case which is most similar to the problem case is adopted. So, for Matthews, the most appropriate case would be that of Johnson Tiles Pty Ltd v Esso Australia Pty Ltd. This is because of the similarity in the facts of the case. And using the verdict of this case, SPI and others could avoid the claims of negligence, in form of pure economic loss. Though, they would still remain liable for the physical loss.

Current Standards

The Engineers Australia Code of Ethics is the code which is applicable over the engineers in Australia and it is such a code, which is related to their field of knowledge and experience. This code has been broadly divided into four key areas as per which, the engineers are required to exercise leadership, promote sustainability, demonstrate integrity, and practice competently.

By adhering to this code in a strict manner, the chances of a claim being raised for negligence can be minimized. The reason behind this stems from the requirements of this code. Under this code, the engineers have to identify the stakeholders, their needs and requirements, and that of the upcoming generations. They have to act based on properly informed conscience, be honest and trustworthy and also have to respect the other’s dignity while doing their work. They are also required to maintain professional competency by attending regular sessions (Engineers Australia, 2015). By ensuring that their work is done in a proper manner, a slip up or negligent act could be avoided altogether and so, the loss could be easily eradicated. Though, in case this code is not followed to the spirit and letter, a case of negligence could easily be raised.

 

References

Allens. (2004) Litigation & Dispute Resolution. [Online] Allens. Available from: https://www.allens.com.au/pubs/ldr/recall2jun04.htm [Accessed on: 03/04/17]

Anderson, B., and Trask, A. (2012) The Class Action Playbook. Oxford: Oxford University Press.

Australasian Legal Information Institute. (2014) Matthews v AusNet Electricity Services Pty Ltd & Ors [2014] VSC 663 (23 December 2014). [Online] Australasian Legal Information Institute. Available from: https://www.austlii.edu.au/cgi-bin/sinodisp/au/cases/vic/VSC/2014/663.html?stem=0&synonyms=0&query=title(Matthews%20and%25 [Accessed on: 03/04/17]

Duxbury, N. (2008) The Nature and Authority of Precedent. Cambridge: Cambridge University Press.

Eisenberg, J.N. (2016) Litigating Securities Class Actions. New York: LexisNexis.

Engineers Australia. (2015) The Ethical Engineer. [Online] Engineers Australia. Available from: https://www.engineersaustralia.org.au/portal/news/ethical-engineer [Accessed on: 03/04/17]

Farnsworth, S. (2016) Black Saturday bushfires: Victims to get compensation payouts before Christmas. [Online] ABC News. Available from: https://www.abc.net.au/news/2016-12-07/black-saturday-bushfire-survivors-to-receive-payout-christmas/8099322 [Accessed on: 03/04/17]

Greene, B. (2013) Course Notes: Tort Law. Oxon: Routledge.

Greer, M.H. (2010) A Practitioner's Guide to Class Actions. Illinois, United States: American Bar Association.

Harp, V.H. (2009) Modern Tort Law. 7th ed. Oxon: Routledge-Cavendish.

Harvey, B., and Marston, J. (2009) Cases and Commentary on Tort. 6th ed. New York: Oxford University Press.

Huang, Y. (2011) Recoverability of Pure Economic Loss Arising from Ship-source Oil Pollution. Berlin: Lit Verlag.

Johnson, E. (2013) To Establish Justice for All: The Past and Future of Civil Legal Aid in the United States [3 volumes]: The Past and Future of Civil Legal Aid in the United States. California: ABC-CLIO.

Kelly, D., Hammer, R., and Hendy, J. (2014) Business Law. 2nd ed. Oxon: Routledge.

Latimer, P. (2012) Australian Business Law 2012. 31st ed. Sydney, NSW: CCH Australia Limited.

Legal Information Institute. (2017) Precedent. [Online] Legal Information Institute. Available from: https://www.law.cornell.edu/wex/precedent [Accessed on: 03/04/17]

McDermott Will & Emery. (2007) Defending Against Class and Collective Employee Actions. [Online] McDermott Will & Emery. Available from: https://files.mwe.com/info/news/wp0207a.pdf [Accessed on: 03/04/17]

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