30 November 2016

Speech: Maurice Blackburn must urgently provide bushfire victims the payout they were promised

Almost 12 months ago, a dreadful bushfire swept through the Great Ocean Road townships of Wye River and Separation Creek, destroying 116 homes. On that fateful Christmas Day, it was a miracle that no-one died. But many are still suffering, including a group of AAMI Insurance policyholders. The evidence shows that AAMI was deliberately under-quoting the cost of rebuilding their homes. After speaking out in this place and raising AAMI’s conduct with the financial services minister, ASIC is now investigating. A number of claims have been resolved, but there is still more work to be done.

On 7 February 2009 there was a far more serious bushfire tragedy in Victoria. The Black Saturday bushfires claimed the lives of 119 people, injured more than 1,000 people, destroyed or damaged 1,727 homes and properties and caused an estimated $1 billion in damage. There were two class actions. A $300 million settlement for the Murrindindi-Marysville class action was approved in May last year and has been paid out. But the plaintiffs in the Kilmore East-Kinglake class action have not been so fortunate.

In what became the largest class action payout in Australian history, the defendants, including SP Ausnet and asset managers Utility Services Group, agreed to pay $494 million to the Kinglake plaintiffs represented by Maurice Blackburn Lawyers. This was approved by the Victorian Supreme Court on 23 December 2014. Yet, almost two years on, hundreds of Black Saturday bushfire victims have not received one dollar, despite promises of a full distribution by the end of last year. This money continues to be held by Maurice Blackburn Lawyers on trust—but what about the trust that the thousands of Kinglake plaintiffs placed in this law firm to do the right thing?

Maurice Blackburn says the complexity of this case has delayed these payments. And, yet, while nothing has been paid to so many victims, Maurice Blackburn has received a reported $20 million in legal fees from the Marysville class action and $60 million in legal fees from the Kinglake class action. Survivor Denis Spooner has described these fees as obscene. It was revealed in the Victorian parliament in April this year that Maurice Blackburn equity partners also received $16 million in dividends. As the delay over distributing these proceeds continues, many survivors, including those who lost loved ones, have spoken out over the terrible way they have been treated by flaw firm they thought would protect their interests in this gruelling fight for justice. This is a clear case of justice delayed, justice denied.

There is growing evidence that this plaintiff law firm does not have the capacity or skill to manage such large-scale class action litigation. In a remarkable case of incompetence, it now appears the firm has mismanaged these settlement monies by creating a reported $20 million tax liability on interest earned from the proceeds. Rather than establish tax arrangements with the Australian Taxation Office which do not give rise to a tax bill, it appears Maurice Blackburn has set up a class action trust fund which is not exempt from being taxed. This $20 million tax bill is a kick in the guts for Black Saturday victims. There is no basis for Maurice Blackburn charging one more billable hour in the administration of this $494 million settlement. As Denis Spooner has said, ‘There should be a limit to what they can make from other people’s misery.’

Rather than threaten the ATO with legal action, Maurice Blackburn must own up to its mistake, take responsibility for paying this tax bill and urgently provide these bushfire victims the payout they were promised so long ago. Justice must be done and must be done urgently.

30 November 2016