Australian hotel quarantine class actions fail to demonstrate breach of care

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By these somewhat adventurous claims, two plaintiffs, 5 Boroughs and Roberts, seek damages from the State of Victoria (Victoria) in separate proceedings for economic loss suffered as a result of the stage 3 and 4 lockdown restrictions on economic activity imposed during the second wave of the Covid-19 virus, alleged to have been caused by the State’s negligent conduct of hotel quarantine.

In respect of each plaintiff’s claim, the State applied for summary judgment pursuant to ss 62 and 63 of the Civil Procedure Act 2010 (Vic), contending that the claims have no real prospect of success, and, in the alternative, sought an order pursuant to r 23.02(a) of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (Rules) striking out the whole of the statement of claim on the ground it does not disclose a cause of action.

The judgment dealt with these largely overlapping claims separately.

5 Boroughs

5 Boroughs put its claim as follows:

• the plaintiff, and the class members it represents, carried on a retail business as at 1 July 2020, which involved the supply of goods or services in Victoria to members of the public in attendance at their premises;
• the plaintiff and class members claim to have suffered economic loss sustained because they were prevented from supplying goods or services as a result of the imposition of stage 3 and 4 restrictions, including workplace closures;
• the duty of care alleged to be owed by the defendants is a duty to take reasonable care to ensure that ‘effective infection prevention and control measures’ were implemented in respect of hotel quarantine;
• the defendants breached that duty by failing to procure the implementation of effective prevention and control measures at certain hotels;
• the breach of duty was a necessary condition of, or materially contributed to, or materially increased the risk of, ‘transmission events’ which caused a significant second wave of increased new daily Covid-19 cases in Victoria and which ‘substantially caused’ the imposition of stage 3 and 4 restrictions, leading to the closure of class members' businesses or a decrease in demand for their goods and services which caused them economic loss.

The defendants’ primary submission was that no duty of care of the novel type contended for arose in the circumstances, on the following grounds:

• hotel quarantine amounts to government policy involving weighing up of financial, economic, social and political factors and such policy decisions are not justiciable in negligence;
• that legal incoherence arose on several integers of the pleaded case, including between: the objects of implementing hotel quarantine as against the duty to avoid commercial harm to business owners; the objects of limiting loss of life and negative impacts on the health of Victorians, as against preventing economic loss to the plaintiff and class members; and the posited duty as against the statutory scheme for compensation in Part 10, Division 3 of the Public Health Act;
• recognising pure economic loss pursuant to this proposed novel duty of care would create indeterminate liability; and
• a ‘fatal disconnect’ in the plaintiff’s case between the alleged breach and the economic loss suffered, because the proximate cause of the loss was the imposition of restrictions in a suite of directions made by authorised officers under the Public Health Act, independently exercising discretionary powers conferred on them by the Act.

Over his 111-page judgment John Dixon J engaged in a thorough analysis of the underlying principles which pertain to the defendants’ grounds for dismissal.

For the purpose of this note it suffices to note that his Honour refused the application for summary dismissal but struck out the statement of claim pursuant to r 23.02, with leave to replead. That outcome followed his Honour’s analysis that, although the defendants had identified problems in 5 Boroughs’ case, the submissions did not demonstrate that the plaintiff’s claim is fanciful with no real prospect of success at trial, absent a detailed factual inquiry.

5 Boroughs therefore lives to fight another day.

Roberts

Roberts purported to act for class members including affected businesses and affected employees who suffered psychiatric injury and/or income loss as a result of stage 3 and 4 restrictions. Roberts’ case was broadly overlapping to that brought by 5 Boroughs, and the defendants made similar submissions in pursuit of the same orders, being dismissal and strike out.

His Honour held that the more significant pleading deficiencies that Roberts’ case suffered meant that it was appropriate to order summary dismissal of the claim.

Those deficiencies included primarily:

• Roberts not being a member or representative of either pleaded sub-group;
• failure to properly articulate duty and breach;
• the remoteness of the alleged losses from the alleged breach; and
• the missing links in the causal chain,

although his Honour considered that the pleading suffered from various additional problems.

5 Boroughs NY Pty Ltd v State of Victoria; Roberts v State of Victoria [2021] VSC 785

Supreme Court of Victoria, John Dixon J,
2 December 2021

First Plaintiff's Solicitors: Quinn Emanuel Urquhart & Sullivan;
Second Plaintiff's Solicitors: Carbone Lawyers;
Defendants' Solicitors: Herbert Smith Freehills;
First Plaintiff’s Funder: Regency V Funding Pty Ltd;
Second Plaintiff’s Funder: N/A

Austlii Link: Available here

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