The High Court of Australia has recently determined that damages can be awarded for disappointment and distress after a cruise did not proceed as promised.
The plaintiff (‘Mr David Moore’) booked a holiday for himself and his wife with Scenic Tours Pty Ltd. The tour was promoted by Scenic in its brochure as “a once in a lifetime cruise along the grand waterways of Europe”, with guests on board the Scenic vessel treated to “all inclusive luxury.” The plaintiff and his wife had chosen Scenic’s river cruise because they wanted to see different locations in Europe without having to unpack their belongings more than once. The cruise suited the plaintiff because he had undergone spinal surgery and found it difficult to sit in confined spaces. The plaintiff and his wife paid for the tour 12 months in advance with their life savings.
Unfortunately, the cruise was severely disrupted by adverse weather conditions that resulted in high water levels on the Rhine and Main Rivers. Instead of cruising for 10 days as scheduled, the plaintiff cruised for 3 days and then found himself travelling for hours by bus for the rest of the trip. The holiday fell well short of the “once in a lifetime cruise” in “all inclusive luxury” that Scenic had promised.
Representative proceedings (also known as a ‘class action’) were commenced in the Supreme Court of NSW against Scenic by the plaintiff and 1500 other passengers of 13 Scenic cruises that were scheduled to depart between 19 May 2013 and 12 June 2013.
The plaintiff’s case was that Scenic knew, or should have known, about the weather disruptions that were likely to occur to each scheduled itinerary; and it chose not to cancel or inform the passengers in a timely manner to give them the opportunity to cancel their booking.
The plaintiff claimed compensation pursuant to section 267(3) of the Australian Consumer Law (‘ACL’) for the difference between the value of the services provided by Scenic and the amount that he had paid for the services. He also claimed damages for disappointment and distress on the basis that ‘loss or damage’ of that kind was ‘reasonably foreseeable’ as a result of Scenic’s failure to comply with the consumer guarantees.
The plaintiff claimed that section 267(4) of the ACL permitted the Court to award damages for disappointment and distress because his contract with Scenic was one aimed at providing enjoyment, relaxation, pleasure and entertainment.
Scenic defended the claim and alleged that the plaintiff’s claim for damages for disappointment and distress was in effect a claim for personal injury damages. and came under the provisions of the Civil Liability Act 2002 (NSW). The term ‘personal injury damages’ is defined in section 11 of the Civil Liability Act to mean ‘damages that relate to the death of or injury to a person.’ The Civil Liability Act also defines ‘injury’ as including ‘impairment of a person’s physical or mental condition.’ Scenic argued that distress and disappointment were an impairment of the plaintiff’s mental condition, therefore the Civil Liability Act applied to his claim.
This was significant because section 16 of the Civil Liability Act states that no damages can be awarded for non-economic loss unless the plaintiff’s injury exceeds 15% of a most extreme case. If Scenic’s argument was accepted by the court, then the plaintiff would not be entitled to receive damages for disappointment and distress because his ‘injury’ did not exceed this threshold.
The Supreme Court rejected Scenic’s argument that the Civil Liability Act applied to the plaintiff’s claim. The Supreme Court decided that because the plaintiff’s distress and disappointment was suffered overseas, the Civil Liability Act, being a NSW law, did not apply to his claim.
The Supreme Court determined that Scenic had failed to comply with the consumer guarantees in the ACL. The Supreme Court awarded Mr Moore $10,990.00 in compensation for loss of value and $2,000.00 in damages for disappointment and distress plus interest.
Scenic appealed the Supreme Court’s decision and the matter was heard before the Court of Appeal of NSW. The Court of Appeal agreed that Scenic had breached the consumer guarantees in the ACL, however the Court of Appeal also decided that the Civil Liability Act applied to the plaintiff’s claim. The Court of Appeal determined that it did not matter if the plaintiff’s distress and disappointment happened overseas, it still applied to his claim. This meant that the award of damages for distress and disappointment was set aside.
The plaintiff appealed the Court of Appeal’s decision in the High Court of Australia.
Ultimately, the High Court found that the Civil Liability Act did not apply to the plaintiff in this case. In reaching this decision, the High Court determined that disappointment and distress was not a personal injury, therefore the Civil Liability Act did not apply.
In reaching this decision, the court decided that the plaintiff’s disappointment and distress was not caused by any physical injury. The High Court noted that the plaintiff did not make any claim that he had suffered any physical injury or recognised psychiatric illness by reason of his experience. The court accepted that the plaintiff’s reaction of disappointment and distress was a normal and healthy response to a breach of a promise by Scenic to provide recreation, relaxation and peace of mind.
The High Court allowed the plaintiff’s appeal and, inter alia, reinstated the Supreme Court’s order of damages for disappointment and distress pursuant to section 267(4) of the ACL.
It will be interesting to see whether the High Court’s view in relation to the definition of ‘personal injury’ is adopted in other cases for compensation such as aggravated and exemplary damages in causes of action for nuisance and trespass to land.