The government has won court approval to amend its defence mid-trial in a class action brought by businesses alleging they were harmed when the Rudd Government cancelled a program that subsidised home insulation installations during the economic downturn.
The trial kicked off April 23 in Melbourne, after the matter failed to resolve during mediation, and is expected to last six weeks.
The judge granted the bulk of the proposed amendments to the government’s defence, shooting down the plaintiffs’ argument that the amended defence, filed on the 20th day of trial, sought to withdraw admissions without leave and would force the plaintiffs to alter the way they proved their case.
In particular, the plaintiffs said the government wanted to withdraw admissions about the knowledge of the Commonwealth in order to advance a new case that various Commonwealth employees did not have authority to bind the Commonwealth, thereby seeking to absolve the government of negligence liability since the class had not brought claims of vicarious liability.
But Justice John Dixon said the government was responding to the plaintiffs’ so-called advice case raised in their new pleadings, which alleged the government breached its duty of care by accepting the negligently prepared advice of employees.
“The plaintiffs contended that the issue of whether the knowledge of public servants was capable of being the knowledge of the Commonwealth became a live issue on the basis of the most recent amendments to the defence. I cannot accept such a broad proposition. The interrelationship between the conduct, knowledge and responsibility of public servants and the conduct, knowledge and responsibility of Ministers is pleaded by the plaintiffs in paragraphs 3A – 3C of the [first amended statement of claim],” Judge Dixon said.
“In response to those paragraphs, the defendant has made some admissions, but in substance the defendant has pleaded that it cannot admit whether the knowledge of any particular public servant in relation to any specific material fact was knowledge that it accepted as imputed to the Commonwealth. The issue was joined.”
More than 150 business have joined the class action, which seeks more than $150 million for losses suffered as a result of the program’s termination.
The class action was brought in June 2015 on behalf of businesses that say they were harmed when the program was shuttered in February 2010 following the deaths of four home insulation installers. The lawsuit claims the negligent design and implementation of the program led well-established home insulation businesses to make major investments to meet an expected 15 fold increase in demand resulting from HIP, while countless other new businesses were formed.
Under the HIP, the government promised to pay $1,600 for home insulation for each eligible home for a two-and-a-half year period. Around $1 billion was left over in the HIP budget when the program was terminated, with 7,000 insulation installers registered, according to the lawsuit. 1.2 million homes had already been fitted with insulation when the program was shut down, but businesses had prepared to deliver insulation to 2.7 million homes, the class action claims.
Represented byACA Lawyers and McLaughlin & Riordan, the class includes installers and manufacturers of home insulation companies established before February 3, 2009, when the HIP program started, as well as manufacturers, installers and distributers that formed after the HIP start date.
A 2014 Royal Commission into the deaths, overseen by Ian Hanger AM QC, recommended that pre-existing businesses harmed by the cancellation be compensated. But lawyers for the class claim the compensation was inadequate for some businesses, while those businesses formed after the program began were not eligible for compensation.
The class seeks damages under the Trade Practices Act for the alleged losses suffered, including loss of profits, as well as interest and costs.
The class is represented by Jim Delaney QC, Catherine Button, Caryn Van Proctor and Roshan Chaile, all with Lisa A Barristers, and solicitors with ACA Lawyers. The Commonwealth of Victoria is represented by Rachel Doyle SC with List G Barristers, Renee Enbom with List A Barristers, Liam Brown with List G Barristers and Justin Hooper with Owen Dixon Chambers.
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