An $82 million class action is seeking compensation after the wipeout of one-third of Australia's abalone industry following the Victorian government's alleged failure to control an outbreak of a herpes-like virus.
Maurice Blackburn is acting on behalf of 10 licence-holders who controlled 32 per cent of Australia's abalone exports. Those exports generated $70 million annually.
A trial is scheduled to begin in the Victorian Supreme Court next month.
The once lucrative industry was ravaged in early 2006, when the disease spread from an aquaculture farm in south-west Victoria into the ocean.
At the time, Victorian Premier Denis Napthine accused the then Labor government of "absolute failure" to control the outbreak.
Maurice Blackburn principal Jacob Varghese said the owner of the farm, Southern Ocean Mariculture, reported the outbreak to the Department of Primary Industries, but the DPI failed to shut down the farm, allowing it to continue to pump contaminated water into the ocean.
Infected wild abalone were found soon after on a reef near Port Fairy, he said.
Over the next few years the virus, which has a death rate of at least 90 per cent, spread from the South Australian border to Cape Otway.
Mr Varghese said life savings had been lost, with commercial licences plunging in value from $6 million to less than $1 million since 2006.
He said the virus-affected area, called the western zone, accounted for about 32 per cent of Australia's abalone exports before the outbreak. Most of those exports went to Asia, where abalone is considered a luxury food.
"Before the virus they were talking 220 tonnes [a year] out of the western zone. That has dropped to about 16 tonnes, so it's a huge drop," Mr Varghese said.
"There are a couple of licence-holders who have liquidated, while others have retired. Then there are others who are just holding on, hoping things improve."
But it could take decades for the western zone to fully recover from the virus.
This is something Dr Napthine, whose electorate covers the bulk of the virus-affected area, acknowledged in parliamentary speeches in 2007 and 2008.
"The time lag to recover from this disease could be five, 10 or 15 years. This is absolutely devastating," said Dr Napthine, a former veterinarian.
"I have described it previously as 'the foot-and-mouth of the sea' or 'the foot-and-mouth of the abalone industry'.
"If we had foot-and-mouth in our livestock in Victoria, we would have a massive response by all states and territories - all resources would be put into dealing with that disease - yet little or nothing has been done in this instance."
In another speech, he said: "The abalone virus is costing our abalone industry hundreds of jobs and millions of dollars, and it threatens the very future of our major fishery, which is one of the few remaining wild-catch abalone industries in the world."
Dr Napthine declined to comment to Fairfax Media because the case was now before the courts.
Maurice Blackburn is representing 10 of the 14 licence-holders in the western zone in the action against the state government and Southern Ocean Mariculture.
Mr Varghese estimated that each licence-holder had lost about $2.3 million, in addition to the devaluation of their licences.
He said further proceedings could potentially deal with abalone divers and processors, and licence-holders, in the central zone, which stretches from Warrnambool to Wilsons Promontory.