As the COVID-19 public health crisis evolves, it is becoming increasingly clear that the spread of COVID-19 will cause a major disruption to global economic activity. In an effort to contain the spread of COVID-19, on Sunday, 15 March 2020, the Prime Minister and State and Territory leaders, acting on the advice of the Chief Medical Officer, announced a ban on non-essential outdoor gatherings of more than 500 people. On Wednesday, 18 March 2020, the ban was extended to include non-essential indoor gatherings of more than 100 people.
Following the declaration by the Governor-General on 18 March 2020 of a human biosecurity emergency, what obligations do event organisers have to ticketholders under the Australian Consumer Law (ACL) if an event is cancelled, and what steps should event organisers take to ensure they uphold their statutory obligations?
We must emphasise that this is a rapidly changing situation and, if you require specific legal advice, please do not hesitate to contact our Competition and Consumer team for assistance.
ACCC media release on event cancellations due to COVID-19
On 18 March 2020, the ACCC issued a media release on consumer rights in relation to event cancellations due to COVID-19. It is the ACCC’s expectation that, if an event is cancelled, an event organiser will provide a ticketholder with a refund or other remedy, such as a credit note or voucher, in most circumstances.
Consumer guarantees
In normal circumstances, following the cancellation of an event, an event organiser would be obliged to refund the ticket price to a ticketholder due to the operation of the consumer guarantees contained in Part 3-2 of ACL (consumer guarantees). The consumer guarantees provide consumers with a comprehensive set of rights for the goods and services they acquire. Suppliers of services, such as event organisers, automatically provide these consumer guarantees. These statutory obligations exist regardless of any warranty provided by the supplier and, importantly, cannot be contracted out of, limited or excluded in any way.
The sale of a ticket to an event is a supply of services from an event organiser to a ticketholder. There are three consumer guarantees relating to the supply of services from businesses to consumers, which deal with:
- due care and skill;
- fitness for purpose; and
- supply within a reasonable time.
Generally, if an event is cancelled, an event organiser would not be able to meet the consumer guarantees relating to the supply of services and would be obliged to refund a ticketholder the price of the ticket.
Federal Government response
In its Australian Health Sector Emergency Response Plan for Novel Coronavirus (COVID-2019), the Federal Government has indicated that, while Commonwealth biosecurity legislation and state and territory public health and emergency response laws provide a legislative framework to underpin actions that may be required, measures will rely on voluntary compliance rather than legal enforcement wherever possible.
However, the recent declaration by the Governor-General on 18 March 2020 of a human biosecurity emergency indicates that the Federal Government may be preparing to utilise its enforcement powers. Such a declaration has the effect of providing the Federal Health Minister with broad powers under the Biosecurity Act 2015 (Cth). These powers include:
- the power to determine any requirement necessary to prevent or control the emergence, establishment or spread of COVID-19 in Australia; and
- the power to give any direction to any person that is necessary to prevent or control the emergence, establishment or spread of COVID-19 in Australia.
Any such requirement or direction is valid despite any provision of any other Australian law.
It is an offence for a person to engage in conduct which contravenes a requirement or direction and penalties may apply.
Impact of Federal Government response on consumer guarantees
While it is unclear whether the new restrictions for indoor and outdoor gatherings are requirements and directions given pursuant to the Biosecurity Act 2015 (Cth), it is clear that event organisers should comply with the new measures.
If an event organiser cancels an event solelybecause the event is either:
- a non-essential outdoor gathering of more than 500 people; or
- a non-essential indoor gathering of more than 100 people,
then, as the event organiser’s subsequent failure to comply with the consumer guarantees was only because of an act of the Federal Government, a consumer may not be entitled to a refund under section 267 of the ACL.
However, an event organiser could still have contractual obligations to a ticketholder under the terms and conditions of the ticket. In such cases, event organisers should review the terms and conditions for their event.
If an event organiser cancels an event for other or additional reasons, such as concerns about the spread of COVID 19 or the safety of employees, then the consumer guarantees will continue to apply, and a refund should be given.
How should event organisers respond?
Given the exceptional circumstances, the ACCC has encouraged all businesses to treat consumers fairly. The ACCC has also said it will be alert to any instances of unfair or unconscionable conduct on the part of businesses in dealing with consumers during the current crisis. It therefore may be prudent for event organisers to err on the side of caution, follow the encouragement of the ACCC and offer refunds or other remedies to consumers when cancelling events.