Australia: State of Victoria faces class action over abalone virus

Last Updated: 18 October 2013
Article by Jeremy Loeliger, Leigh Krafchek and Ben McKinley
Most Read Contributor in Australia, September 2016

7 years after the outbreak of a virus called the Abalone Viral Ganglioneuritis (AVG) that decimated as much as one third of Australia's abalone, an $82 million class action brought by abalone licence holders and divers is currently being heard in the Supreme Court of Victoria. The action has been brought against the State of Victoria over its alleged failure to control the virus. The virus originated in late 2005 at an aquaculture farm trading as Southern Ocean Mariculture Pty Ltd (SOM) near Port Fairy in south-west Victoria and spread into the open ocean in early 2006. AVG is a herpes-like virus which causes inflammation of the nervous tissues in the abalone with the death rates from the virus normally ranging from 90% to 100%.

The claimants allege that the Victorian State Government's Department of Primary Industries (DPI) was the entity responsible for regulating the aquaculture and wild harvest abalone industries. This regulatory role included responding to, controlling and managing emergency aquatic disease situations. The claimants also allege that the DPI acted negligently in failing to require SOM to do more to eradicate the virus from its abalone farm, halt operations or to stop discharging effluent water into the ocean during the relevant period.

The claimants to the class action are seeking compensation for damages and losses suffered because of the outbreak of the virus, which allegedly caused a reduction of the permitted annual abalone harvest quota, decreased abalone sales, and reduced profits and the value of holding an abalone licence.

The plaintiff's statement of claim states that the DPI owed a duty of care to the Victorian abalone fishery (in this case, the definition of fishery would apply to the licence holders) due to the abalone being part of an area that was under a management plan for which the DPI was responsible. The management plan was required to identify measures to minimise the impact on the environment, control disease and protect genetic integrity of abalone, and manage the possible transfer of disease and genetic material to the wild. Under the Fisheries Act 1995 (Cth) (Act), the DPI, through its Secretary, has the power to impose conditions on aquaculture farms, such as SOM.

The plaintiff contends that the DPI breached its duty of care by not acting in the manner permitted under the Act when it knew, ought to have known, or became aware that the mortalities of abalone in the SOM farm were occurring, and that the later was occurring because of the AVG disease. The plaintiff's claim is that the breach of duty caused AVG to spread causing loss and damage as described above.

The DPI claims that there is no direct evidence as to when the virus breached the containment of the farm and that in taking enforcement action it had to weigh up the possibility of an outbreak in the wild versus shutting down the farm, which would have caused instant loss and the death of approximately one million abalone.

The virus was first reported in Australia on December 2005, when several abalone aquaculture farms in western Victoria, including SOM, experienced unusually high levels of abalone deaths. Although the Victorian Government began investigations at this time and declared the virus an "exotic" disease under the Livestock Diseases Control Act 1994 in February 2006 (once AVG was identified as the cause of the virus outbreak), the DPI continued to allow the farm to pump millions of litres of virus infected water into the Southern Ocean each day directly onto a wild abalone habitat. The virus spread more than 100 kilometres along the coast from Port Fairy to Cape Otway between March and May 2006.

Once the virus was detected, abalone licence holders saw their catch drastically drop by as much as 90%.

The virus-affected area accounted for approximately 32% of Australia's abalone exports before the outbreak. Most of those exports went to Asia, where abalone is considered a luxury food.

The Victorian Government has declined to comment, saying the matter is now before the courts. However, at the time of the outbreak of the virus, the current Victorian Premier, Dr. Denis Napthine, accused the then Labour Government of an "absolute failure" to control the epidemic. Dr. Napthine compared the epidemic to the foot-and-mouth disease of the abalone industry. He also pointed out that it would take as much as 10 or maybe 15 years for the industry to recover from this virus. Experts, however, cannot predict if and when abalone will repopulate to the point where the industry will recover.

An in-principle settlement has been reached between members of the class action and SOM, however the terms of the settlement are confidential. The settlement does not affect the class action against the DPI.

We will keep you updated in relation to the class action against the DPI.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Jeremy Loeliger
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