Melbourne nightclub shooting case settles

Caroline Schelle and Angus Livingston
Zita Sukys and Dale Ewins were shot by police at an erotic costume party in a Melbourne nightclub

A couple who police shot during an erotic fancy dress party at a Melbourne nightclub have confidentially settled their lawsuits against the state of Victoria.

Dale Ewins and former girlfriend Zita Sukys were dressed like punk icon Sid Vicious and a naughty schoolgirl at the Inflation nightclub's Saints and Sinners party in July 2017.

Heavily armed police stormed the venue after a patron reported Mr Ewins' having a gun in his pants and the pair were shot while performing a sex act. The gun was a plastic toy.

On Wednesday afternoon it was revealed the case had settled but no details were revealed in court.

Mr Ewins was shot twice in the back, tasered three times, beaten and stomped on, while Ms Sukys was shot in the leg.

Ms Sukys received an apology that she was an "innocent bystander who was injured through no fault of her own in the circumstances of the case".

Inflation nightclub owner Martha Tsamis also settled with Victoria Police over the shooting and said she was thrilled with the confidential settlement.

"Sometimes cool heads come together and decide what the success of something can be, and I think maybe cool heads prevailed," she told AAP.

"As far as I'm concerned we've done nothing wrong and we were prepared to fight it all the way."

Ms Tsamis also recently won a defamation case against Victoria Police over an unrelated incident.

"I'm hoping it's all going to settle down but I just think if you're going to talk to Victoria Police you talk to them in the Supreme Court," she said.

The trial began on Monday in the Supreme Court but the proceedings were dismissed by both parties on Wednesday after a mediation session on Tuesday.

"I thank the parties in particular for negotiations on their positions and accepting some compromise," Justice John Dixon told the court.

He said it was "not necessarily an easy thing to do" but the decision saved the court considerable resources.

The court had been told a critical incident response team was sent to investigate reports of the gun, but a staff member told officers he was confident it was a toy.

Mr Ewins denies having pointed the toy at police during the confrontation, but police are adamant he did.

Footage from the nightclub shows Mr Ewins laughing as he points the fake gun at a bartender as he buys drinks with Ms Sukys.

But not long after police with ballistic shields, batons, semi-automatic guns, Tasers and a shotgun firing non-lethal bullets stormed the club.

Chris Blanden QC, for the state of Victoria, said the initial report characterised Mr Ewins as "looking like a bikie with a tattoo on his forehead".

Audio from the aftermath of the shooting records Mr Ewins and Ms Sukys screaming in pain and swearing after they were shot.

Outside court, Ms Sukys and Mr Ewins declined to answer questions about the case.

Victoria Police did not comment on the outcome of the case or whether any officers were reprimanded after the incident.