Black Saturday Bushfire class actions

Update on Taxation Dispute

On 28 February 2019, the Court handed down a decision which held that the Scheme Administrator is not entitled to deduct the costs incurred by the Settlement Distribution Scheme (Scheme) from the interest which was earned on the settlement monies, in calculating the taxable income of the Scheme.

On 22 August 2019, the Full Court of the Federal Court heard the appeal of a decision in relation to a dispute about certain deductions that would reduce the amount of tax payable by the Scheme Administrator.

On 27 May 2020, the Full Court handed down its decision on the appeal in favour of the ATO. The Full Court found that certain deductions that would reduce the amount of tax payable by the Scheme Administrators were not allowed.

Following the decision of the Full Court, the Scheme Administrator received advice from our independent tax lawyers including an eminent Queen’s Counsel who specialises in tax matters. Having carefully considered this advice and the implications of the decision for claimants in both the Murrindindi and Kilmore Kinglake-East matters, the Scheme Administrator lodged an application for special leave to appeal to the High Court of Australia on 24 June 2020.

On 14 October 2020 the High Court handed down its decision and unfortunately denied the application for special leave to appeal. This application to the High Court was the final avenue of appeal. The consequence of the High Court’s decision is that the Australian Tax Office’s (ATO) assessment of the tax payable by the Scheme Administrator is upheld.

There are no further steps that can be taken to challenge the ATO’s assessment of the tax payable.

Throughout the appeal process, we have taken advice from tax specialists who have consistently maintained that there were grounds upon which to challenge the ATO’s assessment of the tax payable and reasonable prospects that an appeal could be successful.

While we are disappointed by the High Court’s decision to deny the application for special leave to appeal, we were advised that it was appropriate to pursue the issue to the High Court because had the Scheme Administrator ultimately been successful the result would have been a reduced amount of tax payable to the ATO and a further distribution of settlement funds to group members.

Given the High Court’s decision there will be no further distribution to group members, and the Scheme Administrator will now take the necessary steps to conclude the Administration.

Final report into the Bushfire class actions Settlement Administration

The Settlement Administration of the Kilmore East – Kinglake & Murrindindi – Marysville Black Saturday Class Actions is now substantially completed. The primary outstanding issue to be resolved is a dispute as to the taxation of the settlement monies, which has proceeded to litigation in the Federal Court of Australia.

The Settlement Administration has been overseen by the Supreme Court of Victoria and the Scheme Administrator has provided regular updates to the Court by attending case management hearings and filing written materials containing information about the Settlement Administration and its progress.

So that group members have access to a single, comprehensive analysis as to the operation of the Settlement Administration, Maurice Blackburn has prepared a Final Report into the Black Saturday Bushfire Class Actions Settlement Administration and filed it with the Supreme Court of Victoria.

About the Bushfires class actions

All payments to members of the Black Saturday Bushfire class actions have been finalised. Nearly $700 million in compensation was distributed in December 2016 and February 2017.

Distribution of compensation to the economic loss and property damage (ELPD) group members occurred in February 2017.

Prior to Christmas 2016, compensation was paid to over 1,770 of the personal injury group members from the Black Saturday Bushfire class actions.

The actions

The Kilmore East/Kinglake class action encompasses the area burnt including Kilmore East, Kinglake, Strathewen, Steels Creek and other towns.

The Murrindindi/Marysville class action encompasses the area burnt including Murrindindi, Narbethong, Marysville, Buxton, Taggerty.