Abalone farm that released virus settles before trial

One of the defendants in an $82 million class action over the wipe-out of one third of Australia's abalone industry has settled before a Supreme Court trial.

Southern Ocean Mariculture, the abalone farm that unleashed a herpes-like virus in 2006, has reached an agreement in principle with 10 abalone licence holders.

Before the outbreak, the licence holders controlled about 32 per cent of Victoria's abalone exports, which generated about $70 million a year. Many have had their life savings eroded, the cost of commercial licences plunging from about $6 million in 2006 to less than $1 million.

Maurice Blackburn principal Jacob Varghese, who is acting on behalf of the licence holders, said the terms of the settlement were confidential and still being finalised.

Southern Ocean Mariculture was one of two defendants in the class action, the other being the Victorian government, which has been accused of failing to control the spread of the disease.

Mr Varghese welcomed the settlement and said the firm would pursue the state government.

"This settlement does not affect the outstanding issues in the class action still being run against the state government, which has always been the primary respondent," he said.

Southern Ocean Mariculture reported the outbreak to the Department of Primary Industries but the department failed to shut down the farm, allowing it to continue to pump contaminated water into the ocean, Mr Varghese said.

Infected wild abalone were found soon after on a reef near Port Fairy in Victoria, he said. It then spread from near the Victorian/South Australian border to Cape Otway.

Most of the abalone harvested in the affected area, known as the western zone, was exported to Asia.

Mr Varghese said it could take decades for the area to recover from the virus.

Victorian Premier Denis Napthine, whose electorate covers the bulk of the western zone, has previously declined to comment while the matter is before the courts.

But Dr Napthine has publicly accused the former Labor government several times of failing to control the outbreak.

The trial is set to begin in Victoria's Supreme Court on Monday.