Queenslanders who lost millions of dollars in the devastating 2011 floods - but whose properties suffered no physical damage - could receive compensation if a second class action against Seqwater is given the go-ahead on Friday morning.
But a lawyer warns that the fresh class action, quietly lodged in Sydney on January 9, could delay the October hearing for the almost-6800 flood clients who were part of a claim launched in 2014.
A directions hearing is set to start in the New South Wales Supreme Court on Friday for the second class action, a "pure economic loss" claim, alleging businesses and property owners lost millions of dollars in property value on vacant land that had never been recovered.
The Brisbane man who lodged the second class action, Phil Hassid, says he alone lost $3 million on his Ipswich riverside properties and $15 million in development profits on the riverside development concept he put forward on the Bremer River at Ipswich.
What is pure economic loss
Covered in the first class action lodged by Maurice Blackburn Lawyers in July 2014 is "consequential" economic loss, which happens when physical damage causes an economic loss.
"Pure economic loss" occurs without preceding physical or property damage, such as the negligence of one person causing another to miss a business opportunity.
Nothing was built on the Ipswich land while Mr Hassid owned it, but he argues the project was "a $200 million development".
"So that is pure economic loss, because the loss that we suffered did not derive from some physical damage that occurred. It wasn't that," Mr Hassid said.
He argues his class action could become as large as Maurice Blackburn's first flood class action.
Maurice Blackburn principal class action lawyer Vavaa Mawuli said Mr Hassid's class action faced significant hurdles and could delay the hearing for the earlier claim, set for October 3.
"But if it does come to that, then clients have a clear choice of which action to pursue," Ms Mawuli said.
"They will need to weigh up their option very carefully and consider which action would best represent their interests."
The directions hearing gets under way at 9.30am Sydney time before Justice Robert Beech-Jones.
Queensland's first 2011 floods class action
Almost 6800 Queenslanders joined the landmark 2011 Queensland floods class action being negotiated by Maurice Blackburn Lawyers, Australia's second-largest class action after the Victorian bushfires.
The first class action is, in effect, a "physical loss" claim - linked to flood-devastated houses and businesses - but includes some economic loss where it is linked to property damage.
Maurice Blackburn and its financial backer IMF Bentham is suing Seqwater, Sunwater and the Queensland government for inappropriately operating Wivenhoe and Somerset dams during the floods of December 2010 and January 2011.
They are seeking "hundreds of millions" in damages, according to Ms Mawuli.
They claim the release of water from the dams subsequently flooded people's properties to unnecessary levels.
The suit was brought in the New South Wales' Supreme Court because Queensland legislation does not allow class actions.
Queensland's second 2011 floods class action
Mr Hassid and his lawyers Gillis Delaney Lawyers are claiming economic loss linked to his planned $200 million luxury apartment development project East Bank, which he put forward to Ipswich City Council planners before the 2011 flood.
No physical work ever started on the project, on six blocks of land at Blackhall Street, East Ipswich, however Mr Hassid told Fairfax Media he had extensive talks with Ipswich City Council over the project.
"It was groundbreaking for Ipswich and the Ipswich City Council were champing at the bit to do the development," Mr Hassid said.
The development included seven six-storey accommodation blocks with the equivalent of 250 two-bedroom units along Blackall Street beside the Bremer River at East Ipswich, including a marina on the river.
Mr Hassid had applied for and received rezoning for six storeys along the river.
But a development application had not been lodged and no approval given before the floods.
Photo: Tony Moore
Today, Ipswich builder Frank Ribic, his wife and 12-month-old daughter Valentina (pictured above) live in a house he built on a block of land he bought from Mr Hassid in 2012.
"When we got it it was still zoned for six-storey high-rise," Mr Ribic said.
"But it's changed now."
Ipswich City Council rezoned the land in 2014 to become "part recreation and part residential low-density".
Now only one house can be built on each block, "irrespective of the size of the block," the council's planning and development committee chair councillor Paul Tully said.
Why is Mr Hassid taking a new class action?
Mr Hassid said because most people in Maurice Blackburn's class action were Brisbane-based, the issue of "pure economic loss" may not be as pressing for them because their property values had bounced back.
"But when you go to Ipswich - and all of our properties were in Ipswich, where we had a major development site - what I described as the market 'bouncing back', well, that is just not the case up there," he said.
"It's a tricky one because the Brisbane market is a much deeper and more resilient market than the Ipswich one."
Ms Mawuli said Maurice Blackburn decided against suing for "pure economic loss" after assessing the risk in pursuing the difficult claims, uncertainties, delays, time and expenses.
"After a careful weighing up of the process and the requirements from our (class action) group members, we made a decision that it would not be viable to pursue pure economic loss claims."
The NSW Supreme Court approved its decision and members were all notified, she said.
What the real estate figures show
Brisbane's median house price:
- December 2010 - $435,000.
- November 2016 - $532,050, tipped to grow to $553,332.
(Source: Domain)
Ipswich median house price:
- December 2009 - $325,000.
- March 2017 - $337,750.
(Source: Domain)
Mr Hassid's land was in the centre-right of this photograph along from a walkway along the Bremer River built by Ipswich City Council. Photo: Tony Moore
What does Ipswich City Council say?
Ipswich City Council flood mapping shows two-thirds of Mr Hassid's Blackall Street properties were under the Q 1:100 flood level in place at the time of the flood.
After the 2011 floods the council changed its Q 1:100 flood levels and based them on the 1974 flood levels.
"The entire site is affected by the new adopted flood regulation line, based on the 1974 flood level," a council spokesman told Fairfax Media.
Cr Tully said he remembered Mr Hassid's concept as "a series of plans" that were not submitted as "a firmed project".
Cr Tully said council officers checked and confirmed that after the 2011 floods Mr Hassid had offered to sell his land to the council for $1.5 million as parkland.
"On February 7, 2013, council made an offer to him to purchase the entire site for $800,000. He rejected the offer on February 13, 2013," Cr Tully said.
He said Ipswich City Council's legal advice was that new flood levels, backed by the state government, were not the base for compensation.
"Our advice is very strong that the legislation is very strong that bringing in new flood levels can't give rise to a compensation claim."
What impact will the second floods class action have on Maurice Blackburn's first floods class action?
Ms Maluwi of Maurice Blackburn said
there were several questions Justice Beech Jones had to consider about the impact of the second class action.
"Our main priority is to our clients who have been waiting patiently for years to have their rights determined in court," Ms Maluwi said.
"The impact at this stage is that there is some uncertainty about what they intend to do and how that might impact on the timetable to trial," she said.
"But we can only wait and see what happens in court."
Cr Tully, who lost his Goodna home in the 2011 floods and is a Maurice Blackburn class action client, said his biggest fear was a delay in the hearing of the first class action.
"I am extremely concerned that this could delay the current class action for a number of years," Cr Tully said.
Seqwater's response to potential second class action
"Seqwater remains acutely aware of the impact of the January 2011 flood event," a spokesman said in a statement.
"The event was the equivalent of two 1974 flood events 30 hours apart.
"We are confident that our management of the event, and the decisions made and actions taken by our flood engineers, will continue to be shown to have significantly reduced the impact of the flood as the matter progresses through the court."
Fairfax Media understands Seqwater's lawyers, King & Wood Mallesons, will be in court on Friday morning to question if Mr Hassid's claim constitutes a new class action.
