The Federal Government is considering joining the Kilmore East-Kinglake Black Saturday bushfire class action to recoup some of its $450 million in costs associated with the deadly 2009 fires, a court has heard.

But Maurice Blackburn barrister Lachlan Armstrong, who is representing 1500 of the busfire victims, has told Victoria’s Supreme Court today that allowing the government to join the fight  for damages could dilute the pool of compensation available for victims.

Jonathan Beach, QC, for electricity company SPI Electricity, told the court the parties needed to know before the matter went to mediation next month whether the government was likely to join the class action, or potentially launch a separate law suit at a later stage.

The Kilmore East blaze claimed more lives than any other bushfire in Australia’s history, with 119 lives lost, 1242 homes destroyed and a total of 125,383 hectares burned.

The Victorian Bushfire Royal Commission found the blaze was caused by a faulty powerline owned and maintained by the electricity company, trading as SP AusNet.

The total losses sustained in the bushfire was estimated at the Royal Commission hearings as high as $1 billion.

In addition to the victims’ class action, the Victorian Government is seeking more than $22 million in compensation from SP AusNet and its contractor, Utility Services Corporation Limited, claiming they breached their duty of care by failing to maintain the power line which it claims caused the fatal blaze on February 7, 2009.

Justice Jack Forrest has adjourned the matter for a fortnight so the Federal government can decide whether "they’re in or out".