Big Red Bash loses cancellation cover battle
The organiser of the annual Big Red Bash music festival in outback Queensland has lost a court battle with Lloyd’s underwriters over a $3.18 million event cancellation claim triggered by the pandemic.
Federal Court Chief Justice James Allsop ordered yesterday that the application made by Outback Music Festival Group, formerly known as Big Run Events, “be dismissed with costs”.
The Big Red Bash, which was expected to attract some 10,000 attendees, was officially cancelled on April 3 2020 in a notice advising the decision was due to a “focus on ensuring the health and safety of everyone involved in the event from patrons, crew, volunteers, artists, vendors and local communities”.
Queensland outback towns and shires were at the time discouraging tourists and travellers, and relevant local councils had “in effect” requested that the event, west of Birdsville, shouldn’t go ahead, meeting minutes from March 2020 say.
The organiser’s minutes highlight health and safety, operational and reputational risks and mention state border closures, other pandemic restrictions and the lack of an intensive care unit at the Birdsville medical clinic.
“In this situation there would be no experienced, professional and responsible event organisation willing to continue on with planning and investing in the delivery of the event under these circumstances,” the minutes say. “As a result, we have decided that our only option is to cancel the event.”
Cover under the event cancellation policy was declined by the insurers, with an exclusion clause referencing communicable diseases that lead to the imposition of quarantine and movement restrictions by “any national or international body or agency”. The clause also refers to travel advisories.
Festival organisers argued state border closures were mentioned in the background section of the minutes and were not the cause of the cancellation and loss, while the exclusion wordings refer to a national body, as opposed to state or local governments.
Chief Justice Allsop found the exclusion provision was engaged given the nature of COVID-19, and that advice from National Cabinet could be seen as that of a national body dealing with a national emergency.
“The event had to be cancelled for the safety of all concerned in the context of the overwhelming operational difficulties thrown up by COVID-19, any number of which was or were sufficient to make holding the event impossible,” he said.
“COVID-19 was a communicable disease of the character contemplated by the provision: It is a disease which leads, and had at the time of the decision led, to the imposition of quarantine and restriction in movement of people by a national body or agency being the Australian Government and State and Territory Governments.”
Insurers also had a Federal Court win yesterday in a food spoilage dispute that emerged as a side issue in the business interruption dispute with The Star Entertainment Group.
The claim involved $154,183 for spoilage at the Treasury Casino and Hotel in Brisbane, $227,109 for the Star Hotel and Casino on the Gold Coast and $230,380 for the Star Hotel and Casino in Sydney.
Chief Justice Allsop determined that a $750,000 deductible in the policy included the food spoilage, and given the total from the three sites was within that amount no payment was required.
The main business interruption issue in the dispute between Star Entertainment and Chubb was decided in August, with the Full Court later hearing an appeal alongside Insurance Council of Australia test case matters.
Chief Justice Allsop said he had anticipated a judgment by the end of last year, and had considered that the appeal outcome might “conceivably affect the reasoning for the spoilage claim”.
“In the light of the Full Court’s decision not being handed down in December 2021, I think it is appropriate that I finalise the claims in this proceeding by dealing with this last part of the proceeding,” he said.
The decisions are available here and here.
