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.

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.

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.

The Scheme Administrator will now need to carefully consider the implications of the judgement for claimants in both the Murrindindi and Kilmore Kinglake-East matters.

This will require the Scheme Administrator to take advice from our tax lawyers as to whether an appeal to the High Court is in the best interests of claimants. 

If, based on the advice of the tax lawyers, no further appeal is lodged, there is unlikely to be any further distribution to claimants. If an appeal is lodged, it will be some time before the matter is finally resolved.

A further update will be provided once the Scheme Administrator has had an opportunity to receive and consider advice from our tax lawyers.

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

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.