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The disease arrived in New Zealand in 2010 and brought losses to the kiwifruit industry of an estimated $900 million.
Strathboss Kiwifruit Limited, representing a group of growers, and Seeka Limited, a post-harvest operator, and others, have agreed to accept a Crown offer of $40m, which includes a $15m contribution from the Crown's insurers. The plaintiffs had brought a claim for $450m plus interest.
Legal challenges have been running since 2014, when the claimants filed against the Crown for what they alleged was actionable negligence in allowing PSA into the country.
In a statement, Ministry for Primary Industries chief executive Ray Smith said all parties agree that it is time to move on.
"This payment to settle is a sensible one on a per-head basis given the number of claimants in the class action, and their legal and litigation funder costs.
"But the settlement acknowledges the grievance felt by the kiwifruit sector plaintiffs," he said.
Smith said the issue goes back 11 years but New Zealanders can have confidence in the current biosecurity system.
"Since that time, much work has been done to enhance and improve the way we manage pre-border risk, import processes at the border and incursions that inevitably occur."
Kiwifruit Claim chairman John Cameron said the settlement concludes what has been a very long, hard, and stressful fight for the kiwifruit growers.
"This settlement provides some compensation to growers whose livelihoods were devastated by the biosecurity incursion, and very importantly we also achieved what we set out to do which was to hold the Government accountable for its negligent actions which caused the PSA outbreak," he said in a statement.
Cameron said the Kiwifruit Claim Committee explored every option to ensure growers got the best outcome and received legal advice to accept this settlement.
Settlement voids appeal hearing
An earlier Court of Appeal ruling stated that public officials may have been negligent but they had statutory immunity from liability.
"In its decision of April 2020, the Court of Appeal found it would not be fair, just or reasonable to make the Crown legally responsible for losses of this kind, and that therefore, no legal duty of care was owed by the relevant MAF staff to the plaintiffs. The staff were protected by a statutory immunity, as was the Crown," Smith said.
The claimants had appealed this ruling in the Supreme Court with a hearing set down for five days, beginning on 15 February 2020. The agreement means this hearing will now not go ahead.
Cameron said it was a very tough decision to accept the offer.
"Our case was meritorious and deserving but we understand litigation is extremely risky and uncertain even for cases with such strong facts such as this one.
"While both the High Court and the Court of Appeal confirmed MPI was responsible for the incursion, the Court of Appeal found the Government was not liable for the losses," he said.