Hotel quarantine class action to proceed, despite stay application
The Victorian Supreme Court ruled, earlier this afternoon (Friday, 3 February), against the state government’s application for a stay of proceedings in the hotel quarantine class action that has been brought on behalf of impacted businesses.
In August 2020, 5 Boroughs NY Pty Ltd brought proceedings, on behalf of a group of Victorian businesses claiming damages for alleged breach of its duty to take reasonable care in the implementation of infection prevention controls at quarantine hotels, resulting in the spread of COVID-19 into the population, and the subsequent economic loss suffered as a result of stage three and four lockdown restrictions on economic activity imposed during the second wave of the COVID-19 pandemic.
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The class is seeking compensation from the state. Other named defendants are former minister for health Jenny Mikakos; former minister for jobs, innovation and trade Martin Pakula; the former secretary, Department of Health and Human Services, Kym Lee-Anne Peake; and the Secretary, Department of Jobs, Precincts and Regions, Simon Grant Phemister.
Lawyers for the defendants had applied to stay the proceedings, pending the final resolution of the criminal prosecution against it, prosecuted by the Victorian Workcover Authority in respect of alleged breaches of the Occupational Health and Safety Act 2004 (Victoria), arguing that it was necessary for the state’s Department of Health to receive a fair criminal trial.
However, Justice John Dixon was “not satisfied” that it was in the interests of justice to grant the application to stay the proceedings.
In His Honour’s judgment, it was noted that the prejudice to group members, if the application for a stay was granted, “would be considerable”.
“The group members are some tens of thousands of businesses in Victoria. The plaintiff maintained that these persons experience ongoing financial hardship as a result of the second-wave lockdown and a delay in compensation is prejudicing their financial viability,” Dixon J outlined.
“This includes members that have to pay back rent which was subject to a moratorium during that lockdown, putting them under financial strain, some have been placed in administration or liquidation, and some are at risk of having their business deregistered as a result of losses incurred during the lockdown.”
“Therefore, while any delay in relief is an injustice, the harm is particularly acute in this case.”
The outcome was welcomed by Quinn Emanuel partner Damian Scattini, who is leading the class action.
In a statement, Mr Scattini noted that more than two years on, Victorian business owners are still paying the price for the lockdown and have a right to fight for compensation.
“When the Victorian government decided to run a mandatory hotel quarantine program, it took on a duty to ensure it was managed properly. If the hotel quarantine program had been handled competently by the people in charge, there would not have been a second lockdown,” he proclaimed.
“That lockdown decimated businesses and through this class action, we are giving business owners a way to get back some of what they lost.”
With regard to the criminal case being brought, Dixon J pointed out that interlocutory steps may progress the group proceeding “without prejudice to the state’s right not to assist the prosecution in proof of its case, to the extent such a right exists”.
“The proceeding is subject to close case management and appropriate directions can be given or protective orders made as found necessary to balance the competing concerns in respect of each proposed step in the group proceeding,” His Honour determined.
The case citation is 5 Boroughs NY Pty Ltd v State of Victoria (No. 3)  VSC 22.