Understanding Class Actions And Liability For Damages From Fire - Case Study Analysis

What is a class action and its relevance for engineers

1.What is a class action  and what relevance do class actions have in engineers planning to avoid claims and Identify the person or groups of people referred to in the case le that could have a claim damages at law against?

2.What is the basis of attributing any liability for the damage arising from the fire?

3.In the case where there is a legal liability what are the limits imposed and recovery in respect of the various classes of persons referred to above to whom the damage was caused ?

4.Having regard to the problems experienced what procedures would you put into place to limit exposure to claim of negligence. Refer to the principles of law as applied in the case and use the examples mentioned in the cases?

1. A class action, representative action or a class suit is amongst one of types of lawsuits where one side of the parties involves a group of individuals or people, who are collectively represented by a member belonging to that group (Anderson and Trask, 2012). In an archetypal class action, the defendant or a number of defendants, are sued by the plaintiff on behalf of a class or group of absent parties. This is different from a traditional law suit as where one party is sued by the other party, in order to correct the wrong done, and the parties are also required to be present in the court (Greer, 2010).

Even though there are varied standards depending upon the nations and the states, the class actions are common mostly where the claims involve a group of people, who have been harmed by the common defendant in a similar manner (Eisenberg, 2016). Instead of each and every single party bringing a claim against the defendant through an individual lawsuit, the assertion made under class action allows the members of such class to be resolved through a single proceeding, whether they are aware of the fact that they have been injured or not (Grave, Adams and Betts, 2012). The best manner of avoiding a collective action is by reviewing the relationship between the employer and the workers in a periodical and thorough manner (McDermott Will & Emery, 2007).

The class action can prove to be helpful for the engineers who plan on avoiding the claims made.  As the class action is brought by a group of individuals, the engineers can prove the claims of one of such groups’ wrong, to try to bring an end to the class action as a whole.  Once the claim of a member of group of class action can be established to have been made wrongly, or is proved as fault or false, the class action can be closed a bit easily. The other manner in which it can prove helpful is that instead of paying the compensation for the same issue in tens of different cases, the claim is made at a unified place, where the duplicative litigations can be avoided (Sherman, 2017). The class actions which had been raised in the past or the ones which have been successful against the other companies can be taken as guidance in dealing with the present class action, in addition to avoiding the class actions, which can be raised in the future (Johnson, 2013).

Groups of people who could have a claim for damages

In the given case study, a class action was initiated against Electricity Services Pty Ltd, which was formerly known as the SPI Electricity Pty Ltd, and has been referred to as ‘SPI’ in the following parts; the maintenance contractor who was in charge of carrying out a intervallic examination of the power line and has been referred to as ‘UAM’ in the following parts; and the various other bodies of the State of Victoria, who had the responsibility of managing the forest land, the policing of emergencies and the fighting of fires and has been referred to as ‘the State parties’ in the following parts (Australasian Legal Information Institute, 2014).

In this case, there are a number of individuals who could claim damages as per the law, against the defendants mentioned above. These include the individuals who were injured due to the fire, the ones who lost their lives, the people who had to lose their property to the fire, the people who lost their livelihood earnings and the source of earning due to this incident, and by all such individuals who were dependent upon the aforementioned individuals (Jade, 2014). The proceedings were initiated with the group being led by Leo Keane but later on Carol Ann Matthews substituted her as the plaintiff (Milovanovic, 2011). The plaintiff made the claims on behalf of the individuals summarized in the list, and these included the individuals:

 

• Who made a claim for their personal injury
• For the death of another person due to fire, as per Wrongs Act 1958’s part 3.
• Claims made by people who suffered a damage or property loss
• Economic losses suffering individuals’, which was not consequent upon the damaged caused to the property of such individual or for the injury caused to them (State Government of Victoria, 2014).
  
  

2. Even though the settlement on this case was attained, but none of the parties admitted any liability (Farnsworth, 2016). Yet, there is a strong base for liability in this case. The base for attributing liability for the damages caused as a result of the fire in the Black Saturday bushfires, predominantly relate to the tort of negligence and the negligent pure economic loss.

A civil wrong done is considered as a tort and negligence is one of the tort laws in Australia. Negligence stems from the failure of the individuals’ fulfillment of duty of care, which was owed by such an individual to some other person and this failure causes some injury or loss to such other person (Kelly, Hammer and Hendy, 2014). In other words, when a duty is owed by a person to another, and there is a failure in performance of this duty, which results in a harm to the individual to whom the duty of care was owed, it is a case of negligence (Abbott, Pendlebury and Wardman, 2007).

The raison d'être of negligence is to fix the responsibility on the individuals, while performance of certain task, which could result in an injury, harm, loss or the threat of same over the other individual (Turner, 2013). Though, for negligence, the other person has to be in the periphery of such an individual. In other words, there has to be a proximity or direct causation amid the breach of duty and the resulting harm (Statsky, 2011). Moreover, such an injury has to be foreseeable and cannot be remote (Greene, 2013).

Upon a case of negligence been successfully established, through laying down the breach of duty of care, resulting in a harm, along with foreseeability, causation and the loss not being remote, the injured person can claim for monetary compensation (Latimer, 2012). In addition to such monetary compensation, an individual can also apply for non-pecuniary damages, arising due to mental or emotional distress (Trindade, Cane and Lunney, 2007).

Basis for attributing liability for the damages caused by the fire

A prime case for negligence is the matter of Donoghue v Stevenson [1932] UKHL 100 or the snail in the bottle case. In this case, the defendant was Stevenson, who used to manufacture the ginger beer bottle and the plaintiff was Donoghue, who consumed the ginger beer which was manufactured by the defendant while she was at one of the cafés in Paisley, Renfrewshire. The bottle of ginger beer contained a dead snail, and upon the consumption of ginger beer from this bottle, the plaintiff fell sick. The manufacturer claimed that he had no duty of care towards the consumer, when she raised claims against the manufacturer. The court held that the manufacturer was responsible and he had to compensate the consumer for negligence (Harvey and Marston, 2009).

In the matter of Vaughan v Menlove (1837) 132 ER 490 (CP), the breach of duty of care was successfully established against the defendant, as he failed to pay head over the numerous warnings which were given to him before the actual fire. The base of these warning was the poor ventilation of the room where the hay was kept (E-Law Resources, 2017a). Another leading case in this matter is Wagon Mount case or the Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd [1961] UKPC 2 where the key grounds for the fire were held to be remote and so, the damages for the resulting fire were not payable by the defendant by the Court of law (Emanuel and Emanuel, 2008). In Grant v The Australian Knitting Mills [1935] UKPC 2, the manufacturer of the woolen underpants was held liable to the plaintiff for the dermatitis caused to Grant (Swarb, 2016).

In the given case, the claim of negligence, due to the failure in taking the requisite precautions were applicable through the Wrongs Act 1958’s section 48 and 49. The general principle is covered under section 48. This is in line with the common law tort of negligence. As per this, the risk has to be foreseeable, not inconsequential, and in similar conditions a prudent individual would have taken the requisite safety measures. For determining whether a prudent individual would have undertaken the safety measures against the threat of harm, the court mulls over the seriousness of harm, social utility of the activity which created the risk of harm, probability of harm and the burden of taking the safety measures for avoiding the risk of harm. In section 49, the provisions regarding the burden of taking safety measures, the fact that risk of harm could have been evaded and the subsequent taking of act that could have mitigated the risk of harm (Australasian Legal Information Institute, 2014).

Under 51(1) of this act, the plaintiff had to prove that the negligence of SPI was crucial condition for the happening of harm. And the burden of proving this was placed on the plaintiff through section 52 on the balance of probabilities, along with the relevant facts to the issue of causation (Australasian Legal Information Institute, 2014).

Limits imposed and recovery for various classes of persons to whom the damage was caused

The court had already established that for SPI, there was a real risk of failure of the scheduled inspection. The negligence was alleged on part of SPI for its management of electricity infrastructure, targeted damper, asset management case, oil-operated circuit recloser, and nuisance in legal sense. Osborn J, at 149, stated that SPI knew of should have known about the possible risks. There is also an aspect of liability which would fall over the maintenance contractor UAM. He had failed to apply the required due care and skill when he was undertaking the pre-fire scheduled inspection which last occurred in February 2008, of the Valley, which was just before twelve months of this fire. Hence, for both the parties, the base for legal actions stemmed from negligence. Though, the liability of SPI was higher than UAM, as the latter was only responsible for a part of the negligence (State Government of Victoria, 2014).

3. As has been highlighted in the previous segment, for SPI and UAM, there is a legal liability arising out of the negligence resulting in injury/ loss/ damage to the various individuals forming a part of the class action. However, there are certain limits which are imposed regarding the recovery, with respect to the different classes of individuals which have been referred earlier and to whom the damage has been caused. These relate to the negligent pure economic loss. This refers to the economic loss suffered by an individual which was not a result from the physical injury caused to such individual, but for the economic loss caused (Harp, 2009). So, the class action highlighted above, under which there are individuals who lost their livelihood or income gaining source, as a result of the fire, would be the ones on whom the negligent pure economic loss principle would apply.

In case this principle can be established, the no recovery rule can be applied (Hunag, 2011). This rule was established Rylands v Fletcher [1868] UKHL 1, where the judges held that the pure economic loss is not recoverable. In this case, the defendant was the owner of a mill and a reservoir was constructed on their land a reservoir. This reservoir was positioned over a disused mine. The reservoir’s water was filtered through this disused mine and consequently, it spread over a working mine, which was owned by the plaintiff, due to the extensive damage caused to his mine. The defendant was held to be legally responsible for only the non-natural use of the land and not for the economic loss caused (E-Law Resources, 2017b).

In the same manner, in Weller v Foot and Mouth Disease Research Institute [1966] 1 QB 569, from the premises of the defendant, a virus had escaped and this had infected the cattle, as a result of which, they could not be sold. The auctioneer was the plaintiff in this case, who brought an action as per Rylands v Fletcher for the loss of profit, which could have been made, had the cattle remained unaffected. However, the claim failed as the quoted case clearly stated that the pure economic losses are not recoverable (E-Law Resources, 2017c).

Procedures to limit exposure to claims of negligence

So, as per Rylands v Fletcher and Weller v Foot and Mouth Disease Research Institute, the individuals in the class action, who lost their houses and their source of earnings, would not be able to recover the damages, as these were economic losses.

4. The case of Matthews v AusNet Electricity Services Pty Ltd & Ors presents a great example for the managing of claims arising due to negligence, against a company. This also presents an opportunity for limiting the exposure to the claims of negligence.

For any organization, to evade the chances of such claims being raised against it, it should keep updated regarding the precedents. Precedents are the decisions which have been taken by the judges, in some previous cases (Legal Information Institute, 2017). Precedents are applicable on the courts, which fall below in the hierarchy chart to the court which gave the decision in a particular case (Duxbury, 2008). Even beyond the case laws, the established/ prime/ leading cases can be used as an example to evade the claims of negligence. And even if such claims are raised, these case laws can be used to favor the point being proved in the given case, where such point has been successfully raised in some previous one. This has further been explained with the help of examples.

In Woolcock Street Investments v CDG Pty Ltd [2004] HCA 16, a question was raised before the High Court regarding the liability of an architect or a builder of a commercial building, towards a succeeding purchaser of such a building, for the defects in the design or construction of the building, which resulted in an economic loss to the subsequent purchaser. The High Court gave a landmark decision and denied the liability of the architect or the builder in such a case. Now, this case can be used by the builder or architects working in the current scenario, where a subsequent purchaser raises a claim against them (Allens, 2004).

In Burnie Port Authority v General Jones Pty Ltd (1994) 179 CLR 520, General Jones was the plaintiff and his property was kept in the building belonging to Burnie, the defendant. Burnie had contracted a few independent contractors to carry out certain work. Due to the negligence of these contractors, the building caught fire and was burnt down. Consequently, the property of the plaintiff was destroyed (Sappideen, Vines, Grant and Watson, 2009).

This case was the one in which the High Court decided that the rule given under Rylands v Fletcher would be abolished. So, by use of Burnie Port Authority v General Jones Pty Ltd, for giving away with the liability for economic loss, as highlighted in the previous question, the individuals belonging to the class action who could have been denied the recovery of damages can now easily claim the same. This shows how each and every case can be used for the advantage or disadvantage in a particular case. Hence, the companies have to pay heed not only to the claims they are going to support through established cases, but also the ones, which can be used against the company for cancelling their claims, by the other party.

To contradict the point raised in Burnie, the case of Johnson Tiles Pty Ltd v Esso Australia Pty Ltd [2003] VSC 27 can be used by the defendants. In this case, owing to the recklessness of Esso in maintaining its plant, the explosion was caused. In the Supreme Court of Victoria, a claim was raised against Esso. The majority of claims in this case were purely economic in nature. The judges held that this case was identical to that of Grant v Australian Knitting Mills and Donoghue v Stevenson regarding the duty of care owed by Esso to his customers regarding avoidance of a stoppage of gas which resulted in property damage. Though, the statutory framework could not inflict a duty for pure economic loss on Esso. Hence, Gillard J held that Esso did not owe a duty for the economic loss (Sweeney, 2004).

Even though in Mathews, only the compensation amount was decided upon and the faults were not fixed. Though, if the faults had to be established, instead of achieving a settlement amount, Johnson Tiles Pty Ltd v Esso Australia Pty Ltd would have been the most helpful case. This is because the facts of this case match the case of fire in Matthews. So, by use of this case, along with the ones mentioned earlier, SPI and UAM would have been able to evade the claim of negligence due to pure economic loss. And so, they would have been required to only compensate for the physical loss caused.

In Australia, the engineers have to comply with a Code of Ethics which relate to their field of experience and knowledge, and is known as Engineers Australia code of ethics. The code has been segmented into four core areas, whereby the engineers have to demonstrate integrity, practice competently, promote sustainability and exercise leadership (Engineers Australia, 2015). This code of ethics acts as a standard, and its compliance helps in barring the claims of negligence in a successful manner. The reason behind this lies in the four areas in which it is segmented.

The engineers are required to act on well-informed conscience, have to respect the dignity of others, and be trustworthy and honest in their work. They also have to maintain their professional competence by learning more and more. By recognizing the stakeholders, their needs and requirements are kept in mind, along with that of the future generations. This helps in avoiding an act, which could result in a harm or injury. Moreover, it also ensures that steps are taken to avoid the occurrence of such incidents, which could result in harm to the present or to the future generations (Engineers Australia, 2015).

However, even though the engineers opt for such code of ethics, there are chances of claims being raised for the negligence caused. This is because the adherence to the code is dependent on the human nature and their capability. So, even though the code has been drawn, an engineer may breach it, which results in negligence claims being brought forward. But, for such claims, the Code would have been breached. In other words, a strict adherence to the Code could avoid the claims of negligence and a breach of the same, would result in a successful claim being raised.

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