Port Sorell Bowls Club, where the incident occurred during a barefoot evening in November 2015, argued the sum awarded to Kraig Anthony Dann two years ago was "manifestly excessive".
The full court of the Supreme Court of Tasmania on Wednesday unanimously dismissed the appeal.
Mr Dann was cooking a "large quantity" of sausages when a ceramic mug underneath the barbecue collecting dripping fat caught alight.
He instinctively removed it to stop the fire spreading but it spilled on his right hand, causing partial-thickness burns to several fingers.
In the 2020 judgment, Justice Helen Wood found the club breached its duty of care and the mug collection method was "completely flawed".
Mr Dann hasn't been able to work as a tradesman since the accident and has suffered severe depression and anxiety, she wrote.
Justice Wood found the club failed to provide a suitable fat-collection container and didn't ensure it was in a safe position and empty.
Mr Dann was awarded $1,074,800 in total for lost and future earnings, general damages and future medical expenses.
The figure was reduced by 15 per cent from $1.2 million due to Mr Dann's contributory negligence.
Lawyers for the Port Sorell Bowls Club had argued the 15 per cent reduction was not enough.
Mr Dann said his main concern at the time was for "a lot of kids" who were at face height with the barbecue.
According to court documents, he put on his sunglasses and told another man "we need to get this out" and "we need to stop this danger".
Justice Wood wrote the club didn't provide adequate instructions to volunteers using the barbecue, proper cooking gear, such as mitts, or tell Mr Dann where fire extinguishers were located.
She said the mug collection method was common knowledge among regular barbecue operators but Mr Dann was not informed about the practice.
The barbecue, which was purchased about four years earlier, had "EMPTY FAT CONTAINER" written in black pen on its lid.
However, the lid stayed in the shed and was not pointed out to new volunteers, Justice Wood wrote.
"The fat collection set up was not what would be anticipated by anyone with a general familiarity of gas barbecues," she said.
The defendant told an earlier hearing a reasonable course of action would have been for Mr Dann to clear the area and get a fire extinguisher.
However, Justice Wood said she was satisfied Mr Dann's response to grab the cup was a "natural reaction" of someone under pressure.
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