Compensation for victims of bushfires at Toodyay, 85km northeast of Perth, may be sought through the courts unless negotiations between the WA Government, Western Power and its insurers result in a compromise.

The 2009 fires destroyed more than 38 homes and caused $100 million in damage. More than $7.4 million in insurance claims relating to the fire have been tallied by the Insurance Council of Australia.

Despite two reports finding the most likely cause of the fire was high-voltage conductors falling to the ground and igniting nearby vegetation, the state’s power utility is adamant it is not to blame.

An August report by the energy watchdog Energy Safety has been supported by the findings of the Fire and Emergency Services Authority, which released its report earlier this month.

The past few weeks have seen the WA Government lead talks with Western Power and its insurers – who are being kept anonymous by the power utility – in an attempt to broker a deal.

A Western Power spokesman told insuranceNEWS.com.au that information on its insurers is “commercially sensitive and confidential”.

“Western Power has responsibilities to its insurers and therefore cannot disclose any further details with respect to its insurance program.”

Kevin Banks-Smith, the lawyer representing 60 people affected by the fires, told the West Australian newspaper that Western Power has a “moral obligation” to compensate victims of the fire.

He says he will delay Supreme Court action until negotiations between the Government and Western Power are complete.

Energy Minister Peter Collier has already agreed that court action may be the only way to determine if Western Power was liable for the fire.