The organiser of the festival, which was to take place in the NSW Hunter region, is suing Lloyd's in Federal Court for around $900,000 after the insurer said the event could still have gone ahead despite bushfires raging in the area.
By contrast, the festival's organiser and applicant in the matter, Scott Commens, claims the December 2019 axing was necessary due to the extreme weather threat, according to documents previously filed with the court.
Subsonic had taken place from 2010 until 2019 at the Riverwood Downs camping grounds on the banks of the Karuah River, near the NSW town of Monkerai.
At a case management hearing on Friday, the court heard Lloyd's stood by not paying out to the festival organiser, with the insurer's barrister Mark Newton pointing to the venue taking other bookings in the month of December.
Mr Newton described the major issue in the case as a question of fact about the "policy trigger" for the cancellation.
"There was a variety of reasons why the landowner decided the event could not take place," Mr Newton told the court.
Chief Justice James Allsop said while he was not being critical of the respondent, the bushfires at the time were some of the "worst in living memory" in the region, and that even the Sydney Opera House was shrouded in smoke.
"It was a pretty dire circumstance," the judge said.
Stephen Walsh, counsel for Mr Commens, said around 5000 festival-goers were expected at the event and that his client was seeking compensation for expenses incurred that had been calculated in a forensic accountant's report.
He urged separate proceedings on the questions of liability and quantum, which he said would likely enhance the prospects that the case could settle.
Chief Justice Allsop adjourned the matter to a date yet to be set in February.
The Black Summer bushfires of 2019-2020 burned more than 24 million hectares, directly causing 33 deaths and almost 450 more from smoke inhalation, according to the CSIRO.
