The Australian government has settled a $70 million compensation claim from asylum seekers on Manus Island

The Turnbull government has avoided the scrutiny of a Supreme Court trial over the treatment of asylum seekers by settling a massive compensation claim by nearly 2000 people detained on Papua New Guinea’s Manus Island

The class action from law firm Slater and Gordon involving 1905 people detained at the centre between 2012 and 2016 was due to get under way in a six-month trial in the Victorian Supreme Court today, but reached a $70 million last minute settlement.

The lead plaintiff in the case was an Iranian, Majid Karami Kamasaee, 35, who spent 11 months on Manus Island in 2013-14. He is now in detention in Melbourne.

The detainees sought compensation from the Australian government and centre operators Transfield and G4S for alleged physical and psychological injuries resulting from their time in detention. The group alleged the Commonwealth breached its duty of care, as well as false imprisonment after the centre was declared illegal.

The in-principal deal struck between the Commonwealth and the claimants still needs to be approved by the court.

The government did not admit liability and Slater and Gordon lawyer Rory Walsh said the government denied it was responsible for any false imprisonment.

“The Commonwealth defence was that it was the PNG authorities doing the imprisoning and detaining and not them,” he said.

The government will also pay the legal bills of the plaintiffs, estimated at least $20 million. Some estimates have put to the total legal costs for both sides at more than $100 million.

The trial had been delayed twice after being scheduled to begin last month. The Commonwealth has routinely settled compensation claims brought by asylum seekers.

Last year PNG prime minister Peter O’Neill announced the Manus Island detention centre will close in the wake of a PNG Supreme Court ruling that it was illegal.

The court ruled that keeping 850 people — around half of them already determined to be refugees — in the centre contravened the constitution.

The Australian government ruled out accepting any of the refugees, but last year prime minister Malcolm Turnbull struck a one-off deal with the outgoing Obama administration to resettle an unspecified number currently in detention on Nauru and Manus Island in the US.

The resettlement deal was criticised by new president Donald Trump, but is believed to be proceeding.

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