A Newfoundland and Labrador Supreme Court justice has ruled that a class-action lawsuit filed against Nalcor Energy and the provincial government for damage to houses in Mud Lake, Labrador, after flooding in the Churchill River in the spring of 2017, can go ahead.

The case will examine whether the flooding, which devastated part of the community, was caused by the Muskrat Falls hydroelectric project.

"It's a big victory for the plaintiffs, in our view," said Ray Wagner, the Halifax lawyer who launched the suit.

Without a class action, the plaintiffs wouldn't have the financial capacity to file a suit on their own and seek compensation for the damage to their homes caused by the floods, he said.

Water levels in the Churchill River began rising on May 11, 2017. Five days later, half a kilometre of Mud Lake Road was underwater, the court documents said. Mud Lake residents were forced to evacuate the next day.

It was months before some residents felt they could return.

The hearing to have the case classified as a class action was held April 26. Justice Gillian Butler delivered her written decision approving the class-action suit on Thursday.

Wagner said the case will now go to a common issues trial, where the liability of the province and of Nalcor Energy will be assessed.