Precisely CC. E is specifically designed to allow aircraft to come within close proximity in an uncontrolled manner.
And Leadie old fruit, it doesn't matter whether pilots do something stupid or not in any airprox - the pilots are human & will handle things less than optimally at times. That has to be allowed for in any modelling.
E airspace is specifically designed to allow them to get into that position in the first place, allowing the mistakes to have serious consequences.
Apply your vast statistical skills to analysing the actual data around Launceston when they had E over D. Probably closer to 1e-4 than 5e-9. Strikes me as a severe failure of the modelling. It is totally nonsensical to apply average risk figures to a specific locale - it assumes an homogeneous environment with minimal variations. A very large & unjustified assumption.