Consumer rights regarding COVID-19 event cancellations

Consumer rights regarding COVID-19 event cancellations

Consumer rights regarding COVID-19 event cancellations

In light of the nation-wide ban on non-essential gatherings in response to the COVID-19 epidemic in Australia, many ticketed events, including music concerts and festivals, have been cancelled or are likely to be cancelled shortly.

It is important for consumers to understand their rights under the Australian Consumer Law (ACL) when this occurs, and equally important for event organisers to understand their statutory obligations when dealing with ticketholders for cancelled events.

The ACCC has released guidance on this issue, and many state bodies, such as NSW Fair Trading and the WA Commerce Department, also have material which is relevant for both consumers and organisers. This article sets out the general position regarding consumer rights in relation to cancelled events and considers how the government’s COVID-19 directives may impact this.

Under ordinary circumstances, event organisers must generally offer refunds for cancelled events

The general legal position in ordinary circumstances is that, if an event is cancelled, the event organiser will usually be obligated under the ACL to offer refunds to affected customers. This is because the ACL contains consumer guarantees that goods or services purchased by a consumer will be supplied within a reasonable time and will be ‘fit for purpose’. These guarantees apply to all consumer transactions in Australia and cannot be excluded or limited by contract.

Where an event is delayed for a significant period of time or cancelled entirely, this will likely constitute a breach of the consumer guarantee that services will be supplied within a reasonable time and/or that services will be “fit for purpose”. This entitles ticketholders to a full refund for the price they paid for the ticket. An event organiser may breach its statutory obligations if it:

  • offers only a partial refund;
  • offers credit which can only be spent on future purchases;
  • insists that ticketholders keep their tickets to the rescheduled event; or
  • imposes significant “refund fees”.

A credit towards future purchases or keeping tickets to the rescheduled event are acceptable options to offer to consumers, but they should be accompanied by an offer to instead refund the ticket price.

Where an event is only slightly delayed or changed (for example, if a concert changes venue or shifts to the following night), the question will be whether this amounts to an “unreasonable” delay and/or a change significant enough that the services are not “fit for purpose”. This will always be a question of fact and degree, and it is arguable that the consumer guarantees will not provide an entitlement to relief in these circumstances. Rather, the contractual agreement between the event organiser and the ticketholder is likely to govern the obligations of the organiser.

Consumers may not be entitled to refunds for events cancelled due to government directives regarding COVID-19

As mentioned above, the ACCC has issued guidance regarding consumer rights in light of the government’s response to COVID-19. The guidance acknowledges that “many businesses are struggling to manage cancellations at this time”, but also reaffirms that “the ACCC is alert to any instances of unfair or unconscionable conduct on the part of businesses in dealing with consumers during the current crisis”.

The guidance states that the ACCC “expects” that consumers will receive refunds for tickets to cancelled events. However, the guidance indicates that, in the view of the ACCC, if an event is cancelled due to government restrictions, then this will impact the consumer guarantees under the ACL. In other words, if an event organiser is forced to cancel an event in order to comply with a government directive (for example because the event is considered a non-essential gathering), then consumers may not be entitled to a refund. The legal basis for this view is not entirely clear, but it may be that the consumer guarantees would be void for illegality (or would not be enforced by the regulator as a matter of practicality) if they required the event organiser to hold the event illegally, in breach of government restrictions.

In these circumstances, the terms and conditions of the ticket or any other contractual relationship between the ticket purchaser and the event organiser may provide for a right to a refund or other remedy for the consumer. The ACCC guidelines imply that, where the consumer guarantees do not apply, a credit note or voucher may be an acceptable solution.

In contrast, if an event organiser cancelled an event due to concerns over COVID-19 (prior to the government restrictions), then the consumer guarantees would apply and ticketholders would be entitled to a full refund.

In relation to events that are going ahead despite the government’s directives, assuming that these events comply with the directives, ticketholders who do not wish to attend in light of COVID-19 are unlikely to be entitled to refunds under the ACL, as this may be treated as a “change of mind”.

The declaration of a “human biosecurity emergency” may further impact consumer rights

On 18 March 2020, the Governor-General made the Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) Declaration 2020 (Cth), which declared that COVID-19 is a “human biosecurity emergency”. This declaration gives the Minister for Health personal powers to issue directions to address the emergency “despite any provision of any other Australian law”.

It is possible that these powers may be used to issue directions which modify, or create exceptions to, the consumer rights under the ACL.

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