Event organisers face new liability challenge

An increase in class action suits could mean new headaches for event organisers if they do not have the correct liability cover in place.

Major sports events and music concerts have become part of South African life, attracting eager throngs of spectators and sponsors alike. For those who attend these events they are fun-filled occasions but for event organisers they are serious business which require a lot of planning and precision on the day.  Among the things which event organisers must take into account is the public’s safety. In the event of a disaster or injury to anyone attending the event, organisers could be found liable for damages.

An increase in class actions in South Africa means that this is now a growing reality.  Liability cover requirements for public events have changed significantly since the Safety at Sports and Recreational Events Act (SASREA) came into effect in 2010. SASREA did away with the easy-going system of allowing the venue owner to take out liability insurance which also covered other event stakeholders – sponsors, for example – indemnifying them against potential damages claims.

Now SASREA equitably spreads the responsibility for the safety and well-being of people attending a sports or recreational event among all the “event organisers” – referring not just to the venue or event owner but to every party with a material stake in the event. That includes the venue owner, event manager, stadium management, sponsors, public relations and marketing firms, as well as the performers.

Like the Consumer Protection Act, which makes the whole retail chain accountable for consumer protection, SASREA provides for the accountability of all event role players. Should a spectator at a sports event or concert be injured or aggrieved, he or she can sue any or all of the event organisers, regardless of who was actually at fault.

In legal terms, this means the event organisers can be held “jointly and severally liable” for claims or damages arising from an event.  If that weren’t enough to make insurers and their clients sit up and take notice, the prospect of facing a class action suit certainly should.

Class actions – brought by a number of individuals who seek to achieve a common purpose – have long been the norm in the international arena. They are now on the increase in South Africa, not just in the mining sector which has been hard hit by high profile class action suits, but also in the retail and hospitality sectors with regards to product and public liability.

A repeat of the Ellis Park Stadium tragedy of 2001, today would most definitely give rise to a class action. In that disaster, 42 people were crushed to death during a soccer match watched by 120 000 fans – double the 60 000-spectator limit of the stadium.

What’s more, insurers and event organisers need to be aware that SASREA does not apply only to events held at a fixed venue, such as concerts, sports matches and expos, but also to road and cycle races, fun-runs and processions. Any event for 2 000 people or more, or any venue that can cater for 2 000 people or more, is subject to SASREA.

The implications of all this for insurers and event organisers are serious.  First and foremost, all event role players, from the performers to the sponsors, need to ensure they have sufficient public liability cover in place.

Secondly, everyone in the event value chain should understand that the indemnities traditionally governing the relationships between them would not be enforceable. The courts no longer readily uphold disclaimers and indemnities.

Thirdly, insurers need to make sure they get the underwriting right. Specifically, they need to make provision for potential class actions arising from events. They also need to be keenly aware of the interplay between the policy wording, applicable deductibles and the cover provided. All parties must be on the same page when it comes to liability cover or risk the chance of litigation which could result in serious financial and reputational damage.

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