Andrews faces multibillion-dollar COVID-19 class action claim

Patrick Durkin

Aug 31, 2020

AFR

The Andrews Labor government is facing a multibillion-dollar COVID-19 bill from businesses shut down during the stage four lockdown for failures in hotel quarantine, in a landmark class action that names Health Minister Jenny Mikakos, Jobs Minister Martin Pakula and their department secretaries.

The man who successfully sued the Queensland government for as much as $1 billion following the 2011 floods is launching one of the country’s largest claims, expected to be worth billions of dollars and potentially crippling to Victoria, after Premier Daniel Andrews went it alone this year to pass laws that support the class action industry.

Mr Andrews’ latest woes comes as federal Treasurer Josh Frydenberg labelled the Premier’s handling of the pandemic as a “slow car crash” and a “massive drag on the national economy”, as the state recorded 114 new cases and 11 deaths.

Meanwhile Mr Andrews is believed to have secured enough crossbench support for a six-month extension of lockdown powers, although crossbenchers are laying low after receiving death threats over the secret deal.

A New York-themed restaurant in Keilor Park north-west of Melbourne, shutdown as a hotspot suburb in Victoria’s second wave, is the lead plaintiff in the class action filed and served on the Andrews government. Thousands of the roughly 650,000 businesses in the state are expected to join the action.

“Victorian businesses don’t need charity or kind thoughts from politicians,” the owner of the 5 Districts NY restaurant, Anthony Ferrara, said. “We need certainty and we need it soon. Our situation is not our doing. We are calling to account those who put us in this dire position.”

Mr Ferrara normally makes tens of thousands of dollars each week but is now open just for takeaways and is making less than $10,000 a week.

When multiplied across at least two-and-a-half months of the lockdown and by thousands of businesses, the total compensation bill is expected to quickly climb into the billions.

Tracey Lester, the owner of popular pubs The Carlton Club in the Melbourne CBD and the Windsor Castle and Gertrude Hotel, is among the others expected to join the class action.

The founder of Jim’s Mowing, Jim Penman, is waging a one-man war against Mr Andrews’ “arbitrary” restrictions, and has been backed by Victorian Liberal senator Sarah Henderson to use state laws to seek financial redress if Health secretary Kym Peake determines there were insufficient grounds for restrictions, which can be appealed to a Victorian tribunal.

The lawyer who sued QLD

Melbourne-based class action law firms Maurice Blackburn and Slater & Gordon, who have close connections to the Andrews government, have avoided the case but the US and Sydney-based law firm Quinn Emanuel Urquhart & Sullivan is launching the action and it is available for all businesses shut down after July 1 in Victoria’s second wave.

Class actions law firms Phi Finney McDonald and Arnold Thomas Becker have also flagged they are conducting class action investigations.

Damian Scattini is leading the class action after successfully winning a class action against the Queensland government in November after the 2011 floods, in a decision that found two water authorities were negligent and gave rise to a compensation bill estimated to total between $400 million and $1 billion.

The Queensland government was caught short on insurance in that case, and The Australian Financial Review has asked the Andrews government to clarify its insurance position.

Closed Melbourne businesses are looking for compensation from the Victorian government

Mr Scattini said there was also an inquiry in Queensland that exonerated the water authorities but the court still found against them, indicating that the class action case could ultimately override any findings by the Coate inquiry into hotel quarantine established by Mr Andrews and which continues this week.

“It’s quite plain what happened with hotel quarantine which enabled the virus to escape and cause these restrictions and losses for business,” he told the Financial Review.

“These people need help now … They have been snake bitten by this quarantine breach and some will not be around much longer,” he said, adding that none of the businesses would be double-dipping on any government support received.

Most Melbourne CBD workers would have had a drink at The Carlton Club on Bourke St which now stands empty with the owners looking to join a class action against the Andrews government. Michael Clayton-Jones

Six month extension

Mr Andrews is believed to have enough support from at least three crossbenchers for a six-month extension of state of emergency powers with regular four-week parliamentary updates, but upper house member Fiona Patten said crossbenchers had been deluged with abuse including death threats.

“I know my crossbenchers are receiving a deluge of emails and I myself have received death threats for supporting a six-month extension,” she said.

Mr Andrews promised on Sunday he was not interested in fighting Mr Frydenberg and repeated: “There is no economic recovery until you get the health problem fixed.”

He said an exit plan would be released soon and he would reveal details of business engagement on Monday.

“As soon as we can provide a clear pathway forward – and that will be quite soon – we will do that,” Mr Andrews said on Sunday. “We’ve got to have a plan that is not just a statement of what we hope to be able to deliver – it needs to be a clear plan that we are confident we can actually deliver.”

But the Victorian head of the Australian Industry Group, Tim Piper, warned that many businesses could not last that long.

“We have members losing significant orders, money and customers, and a lot of them feel they have been left out to dry,” he said. “Companies are losing business to interstate and a lot of them are considering their options to move. These are not empty threats.”