A man who was shot by police while engaged in a fancy dress sex act at a swingers party was not holding a gun at the time, despite the claims of police, a nightclub owner says.
The man, dressed as Batman character the Joker, and a woman in a Harley Quinn costume popularised by the movie Suicide Squad, were shot by police at Inflation nightclub on King Street at 3.41am on Saturday.
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Nightclubber shot in police standoff
Police have shot a man after he produced 'what looked like' a real handgun inside a Melbourne Nightclub. Vision: Channel Seven
The man was taken to the Royal Melbourne Hospital in a critical condition, but was stabilised later.
The woman, who was shot in the leg by police, was taken to The Alfred hospital with non-life-threatening injuries.
Police said they shot the man after he aimed a gun at police, but the club security claim the gun was fake and that he was not holding it at the time.
The pair were attending the erotic Saints & Sinners Ball, which is described as "Australia's raunchiest party" for "broadminded adults".
It is believed the couple were engaged in a sexual act in front of other party-goers when about 40 police from the heavily-armed Critical Incident Response Team stormed into the club.
Security had verified that the gun was a plastic toy and that information was passed on to police.
Inflation owner Martha Tsamis, who has been locked in several battles with police over the years, said that security had not been approached by any concerned patrons prior to the raid. It is unknown who informed police about the gun.
"Venue staff have stated that the male victim was not holding anything in his hand but rather he was in a compromising position with his female partner, which is a normal activity with the nature of this event," she wrote in a statement on Facebook.
It is understood the shooting was captured by CCTV cameras. Police removed vision and a computer hard drive from the club about 8am on Saturday.
Victoria Police Northwest Metro region Superintendent Lisa Hardeman said after entering the club police called on the male, who took the gun from his pants and aimed it at police, to drop the weapon, then fired a number of shots.
"I do believe that security were informed that it was a fake gun," she said.
The "erotic fancy dress ball" had a rockers, punks and goths theme, according to a flyer for the event. On the Saints & Sinners website, it states that erotic dress is part of the entry requirements for every guest.
"Remember, just about anything goes … there are open areas where people are talking, dancing, drinking, meeting, feeling and… there are more secluded areas where people can play a little more discreetly," the website said.
Ms Tsamis said the club had hosted Saints & Sinners events for 20 years without incident.
"Participants are generally older adults who come in costume and engage with each other in adult fantasies," she said in a statement.
"The outfits and accessories are always shown to security as a condition of entry."
Superintendent Hardeman wouldn't confirm if the man was Tasered after he was shot, saying a "number of police options were used".
Superintendent Hardeman wouldn't confirm how many shots were fired or how many police were involved in the shooting.
She said police received "a number of phone calls in relation to the male with the firearm, including from the venue".
"People observed the firearm down the front of his pants."
Superintendent Hardeman said she was satisfied with the conduct of the police members involved in the incident.
Superintendent Hardeman said there were around 100 people at the venue at the time of the incident which occurred in "nightclub conditions" with low lighting and noise but that the shooting took place in front of about 10 people.
Detectives will investigate the shooting with oversight by Professional Standards Command as is usual when there has been a police shooting.
The shooting could further inflame tensions between the club and police.
The club's owner Martha Tsamis is suing the state government over interviews given by the now boss of Victoria Police's Professional Standards, Assistant Commissioner Brett Guerin.
The legal action relates to comments made by Mr Guerin to the Herald Sun and radio station 3AW that the club was a "honeypot" for drug dealers.
Any witnesses have been asked to contact CrimeStoppers on 1800 333 000 or go to www.crimestoppers.vic.com.au