Taxpayers stung $125m to cover COVID class action payout

Taxpayers will foot a $125 million bill after the Victorian government settled a class action brought by thousands of businesses over the financial hit from hotel quarantine failures that sparked the state’s deadly second COVID-19 wave.

The agreement spares former ministers from testifying in a high profile public trial before the November state election and ends one of the most painful periods of Victoria’s pandemic response.

At a Supreme Court of Victoria directions hearing on Monday, Adam Hochroth, SC, acting on behalf of the Victorian businesses, said the parties had reached a settlement agreement.

“The terms of the settlement deeds are confidential at this stage, but I can tell your honour that the amount of settlement is $125 million – inclusive of everything, costs interest etc,” he said.

The payout, which will be subject to an approval application in the court, would be one of the largest class actions in Victoria’s history but avoids a three-month trial, which The Age previously revealed was set to cost taxpayers $40 million in legal bills.

It also means former health minister Jenny Mikakos, former minister for jobs Martin Pakula and the former heads of their respective departments, Kym Peake and Simon Phemister, will not have to give evidence.

About 16,000 businesses registered to be part of the class action; the lead plaintiffs were the owners of 5 Boroughs NY, a chain of US-style hamburger joints, including a store in the Melbourne suburb of Keilor Park.

They were claiming costs for the economic damage caused by failures in the state’s hotel quarantine program, which led to the 2020 winter outbreaks that killed 768 people and plunged Melbourne into a 112-day lockdown.

Principal solicitor acting on behalf of the Victorian businesses, Quinn Emanuel partner Damian Scattini, said the agreement was a significant outcome for eligible businesses.

“The $125 million settlement that we have achieved on their behalf is recognition of this hardship, and I hope it provides some measure of relief for eligible businesses,” he said.

If the settlement is approved, funds will be distributed to eligible group members according to a distribution scheme which must also be approved by the court.

Caterina’s Cucina E Bar owner Caterina Borsato, a plaintiff in the case, said the decision offered some vindication for people who lost their businesses due to the government’s actions.

“People like me survived, but so many didn’t,” she said.

“The government obviously realised the impact of their decisions. It’s a good win for the little guys.”

Borsato said the most significant part of the settlement was not the money, but the moral justice for the small businesses that suffered.

“The CBD has been ghost town for a long time now,” she said.

Public Transport Minister Gabrielle Williams said settling would prevent further protracted legal proceedings, “which obviously come at significant cost”.

“I think that’s reasonable when we’ve got to weigh and balance those important considerations and being fiscally responsible within that context as well,” she said.

Williams said that the government acted to the best of its ability with the knowledge available at the time, given that COVID-19 was unprecedented in anyone’s lifetime.

“We saw governments around the world work hard in the face of some incredibly frightening data that talked about prospective harm to a community that we’ve never seen before,” she said.

“So governments did all they could around the world to make sure that they were protecting their communities from potentially large-scale death.”

Shadow attorney-general James Newbury said accused the government of agreeing to the payout to cover up the decisions made during the pandemic.

“Labor will do anything to hide from an open court case in an election year,” he said.

“This government has professionalised a culture of cover up and using taxpayers money to do it.”

The plaintiffs had alleged the government was negligent, breached its duty of care and failed to ensure proper infection prevention and control practices were followed by staff working in hotel quarantine.

The government denied this, arguing in its written defence that airborne particles had circulated through the hotel air-conditioning system.

The hotel quarantine outbreak forced Melbourne back into lockdown from July 1 until October 2020 to contain a surging second wave, even as the rest of the country began to reopen.

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