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February 9, 2026 — 5:30am
The Victorian government is spending $40 million of taxpayer money to defend a class action brought by thousands of business owners for the financial hit they took during the state’s deadly second-wave lockdown at the height of the COVID-19 pandemic.
The government’s legal bill was revealed during a preliminary hearing in the Victorian Supreme Court ahead of a three-month trial starting next month, where former government ministers and departmental secretaries responsible for the state’s hotel quarantine program will be called to give evidence.
Former health minister Jenny Mikakos, former minister for jobs Martin Pakula and the former heads of their respective departments, Kym Peake and Simon Phemister, are atop a long list of witnesses in a case that will re-prosecute the state’s costliest COVID-19 episode – the quarantine failures which seeded the 2020 winter outbreaks which killed 768 people and plunged Melbourne into lockdown for 112 days.
The rising legal costs were detailed to the court last week by counsel for the Victorian government, Renee Enbom KC, who said the state would spend an estimated $36 million defending the case. GST brings the bill to $40 million.
The figure did not raise an eyebrow from trial judge Andrew Watson, who told Enbom: “The $35 million number or $40 million number probably does not surprise me.”
As part of this expense, Victoria has secured the $US950 ($1354)-an-hour services of a California-based economist, Christopher Pleatsikas, for about 2000 hours of work.
The principal solicitor acting on behalf of the Victorian businesses, Quinn Emanuel partner Damian Scattini, told The Age that Pleatsikas’s advice, contained in court documents not yet publicly available, was that businesses should have insured themselves against the pandemic, and it would create a “moral hazard” for the government to compensate those who hadn’t.
The economist also argues that the pandemic would have been good for most businesses because of the economic upswing they enjoyed when the last lockdown lifted.
Scattini said that due to policy changes prompted by the earlier global outbreaks of SARS and avian flu, pandemic insurance was not available to Victorian businesses in 2020.
“If you had rung up as a business and said you want to insure against a pandemic, they would have been told they can’t,” he said.
“Why spend so much money running spurious arguments like no one lost money, and it’s a moral hazard to compensate people? Why not just do the right thing? This $40 million would have gone a long way to helping businesses affected by the botched hotel quarantine operation.”
About 16,000 businesses have registered to be part of the class action. If they are successful, total damages could run into several hundred million dollars. The lead plaintiffs are the owners of 5 Boroughs NY, a chain of US-style hamburger joints including a store in the Melbourne suburb of Keilor Park.
The class action was initiated in 2020 but delayed for several years by a now discontinued WorkSafe prosecution against the Department of Health for alleged criminal breaches of occupational health and safety laws in its management of the state’s hotel quarantine program.
After the WorkSafe case collapsed in May 2024 due to a procedural misstep, mediation between the class action plaintiffs and the government at the end of that year failed to reach settlement.
The trial will re-open one of the most painful episodes of Victoria’s pandemic experience. When then-premier Daniel Andrews and chief health officer Brett Sutton announced on July 1, 2020 that parts of Melbourne were going back into lockdown to contain the fast-spreading, second-wave epidemic, the rest of the country was enjoying the easing of public health restrictions.
Genomic testing commissioned by the government confirmed nearly all cases within that epidemic could be traced to security guards working at two Melbourne quarantine hotels – the Stamford Plaza and Rydges on Swanston. The subsequent Coate Inquiry culminated in Mikakos quitting as health minister and the state’s most senior public servant, Chris Eccles, resigning as Department of Premier and Cabinet secretary.
Andrews testified to the Coate inquiry, but is not on the witness list for the Supreme Court trial.
The plaintiffs’ case is that the state government was negligent and breached its duty of care in failing to ensure that proper infection prevention and control practices were followed by all staff working in hotel quarantine. The Coate inquiry heard extensive evidence that security guards hired at short notice to work in the hotels were not provided with the training, advice and personal protective equipment they needed to avoid becoming infected and taking the virus home.
The government denies this. It argues, in its written defence, that even if security guards had followed the best advice to the letter, some of them would have still gotten sick from airborne particles circulated through the hotel air-conditioning system. This argument – that air-conditioning units caused Victoria’s second wave epidemic – was not made during the Coate inquiry.
The government also denies it had a duty of care to Victorian business owners to help them avoid economic loss when its priority was preventing the spread of a deadly virus.
“The purported duty of care to avoid economic loss would have required the state to act in favour of the economic interest of one group in the Victorian community rather than in what it determined to be in the public interest and in the interests of the Victorian community for the public health imperative.”
The trial is listed to start on March 10 and run for 12 weeks.
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