this has happened quite a few times for me. ive done it with Sunburst most memorably. its the exact same thing that happens on the planes when you randomly get hit with 20x bursts.
It's a long-standing bug. As it happens occasionally on non-custom scripted servers too, I'm guessing it is a Bioware bug with area-effect spells targeted in a particular way. It's like the game engine "sees" a single target multiple times. Not a lot you can do if it's a problem with one of the hard-coded bits other than enjoy the occasional cheesey goodness.
On NS 3.5, it happens sometimes with the beefed-up spells, so you can occasionally get a fireball that does more damage than a Greater Ruin or Hellball.