SYDNEY - A class action in Australia is being launched against the Victorian state government by businesses which say failures to prevent the spread of Covid-19 led to the current costly lockdown.
The lawsuit, which is set to be one of the largest class actions in Australian history, will examine the crucial question of government liability for business losses caused by potentially avoidable shutdowns.
Compensation could be in the billions of dollars.
The lead plaintiff is a restaurant in Melbourne, but thousands of Victoria's 650,000 businesses are expected to join the lawsuit.
The restaurant owner, Mr Anthony Ferrara, said the store's revenue has dropped substantially during the lockdown and it is able to serve takeaway food only.
"Our situation is not our doing," he told The Australian Financial Review. "We are calling to account those who put us in this dire position."
Victoria is currently nearing the end of a six-week shutdown that has involved the closure of schools and most businesses, as well as an 8pm to 5am curfew.
The state recorded 70 new Covid-19 cases on Tuesday (Sept 1), the lowest level in two months.
Case numbers have fallen sharply since a peak of 725 new infections on Aug 5. The state's restrictions are due to ease from Sept 13.
Outside Victoria, most states and territories have been recording few or no new cases of Covid-19. On Tuesday, the only new cases were in New South Wales, which recorded 13, and Queensland, which had two.
Victoria's outbreak began to run rampant in early June, ending a period of almost no community transmission in Australia.
It is believed to have started with infections of security guards at two quarantine hotels in Melbourne.
This has prompted criticism of the State Government over concerns it should have employed police and the military rather than private security guards and that it failed to adopt adequate health and safety procedures.
A public inquiry is currently investigating the cause of the hotel outbreak. It is due to deliver its report by Nov 6.
A lawyer leading the class action, Mr Damian Scattini, from the firm Quinn Emanuel Urquhart & Sullivan, said the plaintiffs will argue that the failures that led to the spread of Covid-19 cases from designated hotels were avoidable and unreasonable.
"It's not the fact they put the second lockdown into effect, it's the fact it was done after the botched hotel quarantine," Mr Scattini told the SmartCompany website.
"(The virus) was containable and contained until the hotel quarantine was messed up."
Legal experts gave mixed views on whether the case would succeed.
The dean of Swinburne Law School, Professor Mirko Bagaric, said the Victorian government's decision to use private security guards at quarantine hotels appeared to be a "profound error of judgment".
He said that the plaintiffs may be able to show these failings caused the outbreak because epidemiological evidence indicates that almost all cases in the current wave can be traced to the two quarantine hotels.
But a successful legal action, he said, would lead to "almost incalculable" damages that could financially cripple the state.
"The only way to avoid this potential legal catastrophe for the state is for the government to legislate to grant itself immunity from any Covid-19-based legal actions," he wrote in The Australian.
"The choice between risking state financial ruin by being drawn into a pandemic class action or undermining a cornerstone of democracy is not an enviable one."
Victoria's shutdown is set to cost the country about A$12 billion (S$12.04 billion). But the state is starting to prepare to return to normal.
State Premier Daniel Andrews will announce a roadmap for easing restrictions on Sunday. The plan will be based on discussions this week with businesses groups, unions and community organisations.
"It's about a steady and safe easing out of these rules and then finding a normal that we can lock in for many, many months," he said on Tuesday.
