Murrindindi - Marysville Bushfire Class Action

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.

This result means that the amount which was previously withheld from distribution to meet our potential taxation liability must be paid to the taxation office.

We have carefully reviewed the Court's decision and taken advice from our independent tax lawyers as to whether an appeal should be taken.

If an appeal was to be successful, it would likely have the effect that the Scheme Administrator could make a further distribution to claimants, rather than paying that money to the ATO. In all the circumstances, we consider than an appeal is in the best interests of the claimants.

Accordingly, our tax lawyers have now filed an appeal from the decision of the Federal Court. It is unclear as to exactly how long our proposed appeal might take to be heard and decided upon, but we will likely have more information in that regard shortly. 

For further information on the taxation dispute and decision of the Federal Court of Australia please refer to:

  • Reasons for Judgment 
  • Section G in the ‘Final report into the Bushfires class actions Settlement Administration‘ linked below  

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.

Read the Final Report, the related Deloitte Access Economics Report and the ALCG Report:

The costs of the preparation of the Final Report were borne entirely by Maurice Blackburn and have not been passed on to group members in either of the Kilmore-East Kinglake or Murrindindi Bushfire class actions.

These documents have also been published on the website of the Supreme Court of the Victoria.

About the Bushfire class action

Maurice Blackburn was instructed in a class action on behalf of those who suffered personal injury, loss or damage as a result of the Murrindindi Black Saturday bushfire of 7 February 2009.

The action alleged that the fire started at the rear of the Murrindindi Saw Mill, Wilhelmina Falls Road, Murrindindi, and that the cause of the fire was a break in a power line resulting from deficiencies in the construction and configuration of a power pole. The fire spread rapidly, killing 40 people, destroying over 500 homes, and causing millions of dollars of damage. The plaintiff alleged that the power utility company was negligent in, among other things, the construction and configuration of the power pole.

On 6 February 2015, the parties announced an in-principle agreement to settle the class action for the sum of $300 million dollars without admission of liability. This settlement was reached before the trial, originally due to start on 4 February 2015, commenced.

The settlement was approved on 27 May 2015 by Justice Emerton of the Supreme Court.

All payments to members of the Black Saturday Bushfire class actions have been finalised.

FAQs - your questions answered

The data for final distribution has now been sent to the external mailing house for printing. We anticipate that cheques will be sent by registered post in the next fortnight, i.e. cheques in the mail by 27th March 2017. Based on our experience with the personal injury settlement distribution, we anticipate that it will take Australia Post between a day and a fortnight to deliver the cheques once posted. Once the cheques have been posted, we will be able to provide you with a registered post tracking number so that you can track the location of your letter.

The recovery rate for the Murrindindi Marysville Bushfire is 64.86% of your assessed loss.

Once the cheques have been sent by registered post we can provide you with the Australia Post tracking number. You can then contact Australia Post and quote your tracking number to locate the post office where the letter and cheque is being held. You can then request that Australia Post transfer the letter to the Post office closest to you for collection.

EFT payments will be processed at the same time as cheques, within the next fortnight.

Where the split of compensation is disputed at a property we are unable to pay out any compensation for claims at this property until we are provided with satisfactory proof that there is agreement between the registered claimants, or there is a court order directing how compensation is to be paid.

Where a split of compensation dispute is resolved, each registered claimant is required to provide to us a statutory declaration notifying us of their agreement as to how compensation is to be paid. We require that all registered claimants or their authorised representative, declare their understanding of the agreement and provide to us a copy of their statutory declaration before compensation can be paid.

In the event that agreement cannot be reached between the registered claimants at this property, a copy of a relevant court order directing how compensation is to be paid must be provided to us in order for there to be a pay out of compensation.

Your compensation will be held on trust until we receive the statutory declarations or a court order.

As previously advised, where a person under a legal disability is awarded compensation in any proceeding in Victoria, that money must be held on trust for the benefit of that person by an office of the Supreme Court of Victoria known as Funds in Court. Funds in Court is supervised by the Senior Master.

For group members who are minors, this means that their compensation will be held on trust until the minor reaches 18 years of age; at which point it will be released to the group member.

Funds held on trust may be released to pay expenses such as living costs, school expenses, clothing and holidays. Money held on trust is held 'subject to the direction of the Senior Master', which means that only the Senior Master can authorise money to be paid out for specific purposes.

A contact person, known as a Trust Officer, will be appointed for each group member whose compensation is held by Funds in Court. The Trust Office will provide information and advice about how group members might access money from Funds in Court.

Once the compensation payable is transferred to Funds in Court, Maurice Blackburn will have no further role or authority in relation to those funds.

A cheque payable to the estate will be sent once we have received the required grant of representation or indemnity.

As previously advised Maurice Blackburn is continuing to work with its tax advisors PwC and the ATO to attempt to resolve issues relating to interest earned on the Distribution Sum and the deductibility of administration costs. Depending on the outcome of negotiations with the ATO regarding the tax treatment of interest on the settlement sum, there may be a second settlement distribution to claimants at a later date in the future. We will keep you updated regarding this issue.