Davies, Chris --- "Civil Liability and Cruise Ships: Moore v Scenic Tours Pty Ltd" [2020] JCULawRw 12; (2020) 26 James Cook University Law Review 175

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CIVIL LIABILITY AND CRUISE SHIPS: MOORE V SCENIC TOURS PTY LTD

Chris Davies^[1]

I Introduction

The COVID-19 pandemic created health problems around the world, including on board a number of cruise ships. The Ruby Princess was one such ship, arriving back in Sydney on 18 March with some of the 2700 passengers already ill. Eventually more than 600 of the passengers would test positive to COVID-19 with over 20 deaths. A class action against Carnival Cruises and its subsidiary Princess Cruise Lines, which owns the Ruby Princess, has now commenced. On the 24 April 2020, in the midst of the Australian-wide COVID-19 lockdown the High Court handed down its decision in Moore v Scenic Tours Pty Ltd^[1] involving a class action against another cruise operator, Scenic Tours. This case note will examine the contract issues, the application of the Competition and Consumer Act 2000 (Cth) (‘ACL’) and the Civil Liability Act 2003 (NSW) (‘CLA’) in the Moore case. It will also discuss what impact the decision may have on the Ruby Princess litigation.

II Moore v Scenic Tours

A Background Facts

David Moore and his wife had booked a two week tour with Scenic Tours that commenced in Paris on 31 May 2013. The river cruise component of the trip started in Amsterdam and involved travelling along the Rhine, Main and Danube Rivers to Budapest. It was promoted by Scenic as being ‘a once in a lifetime cruise along the grand waterways of Europe’ and its promotional material promised that the guests would be treated to ‘all-inclusive luxury.’ However, adverse weather conditions ‘severely disrupted’ the cruise due to high water levels on the rivers. This meant that only three days of cruising was possible, instead of the planned ten, the rest of the journey having to be completed by bus. The river cruise was also supposed to have been on the ‘luxurious Scenic Jewel.’ However, it began on another vessel and ‘by the time the cruise had concluded in Budapest, the Moores had changed ship at least twice.’^[2] Moore commenced legal proceedings in the Supreme Court of New South Wales^[3] ‘on his behalf and that of approximately 1500 other passengers’ who had been on ‘13 Scenic cruises that were scheduled to depart between 19 May 2013 and 12 June 2013.’^[4]

B The Claims

Moore’s claim was that Scenic should have known about how weather disruptions would have impacted on the cruises but it chose not to cancel them ‘or inform the passengers in a timely manner to give them the opportunity to cancel their booking.’ This, he said, meant Scenic had ‘failed to exercise due care and skill in the supply of the tours.’ He also alleged that was in breach of the consumer guarantee in s 60 of the ACL requiring those who supply services to consumers to render them with due care and skill. It was also alleged that the ‘severe disruptions’ had ‘rendered the services comprising the holiday tours unfit for the purpose’ for which they had been acquired. This was allegedly in breach of the consumer guarantee in s 61(1). It was also alleged there was a breach of s 61(2) because ‘the tours were not of a nature and quality as could be expected.’^[5]

Moore sought damages under s 267(4) of the ACL ‘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.’^[6] It was Scenic’s argument ‘that s 275 of the ACL picks up and applies’ Pt 2 of the CLA ‘as a surrogate law of the Commonwealth.’ The effect of this was ‘to preclude Mr Moore’s claim for damages for disappointment and distress.’^[7]

C Supreme Court and Court of Appeal Decisions

In the original trial Garling J had concluded that s 275 does pick up and applies s 16 of the CLA to proceedings in federal jurisdiction. However, his Honour then rejected Scenic’s argument that s 16 applied to the present case, concluding that it had ‘no application to loss suffered outside of New South Wales.’^[8] This meant that Moore’s claim for damages for disappointment and distress were unaffected by s 16. Moore was therefore awarded $10 900 damages for loss of value under s 267(3) of the ACL, and a further $2000 for disappointment and distress under s 267(4).^[9] The Court of Appeal^[10] agreed with Garling J’s conclusion that Scenic had breached the consumer guarantees under s 61.^[11] It also agreed that s 16 of the CLA was picked up and applied by s 275 of the ACL,^[12] but disagreed that it had no application to a loss sustained outside NSW.^[13] The $2000 originally awarded for disappointment and distress was therefore set aside. Moore appealed to the High Court.

D The High Court Decision

The first issue addressed by the High Court was whether s 275 of the ACL picked up and applied s 16 of the CLA. In a joint judgment Kiefel CJ, Bell, Gageler, Keane, Nettle and Gordon JJ noted that ‘for the purposes of s 275, the proper law of the contract’ between Moore and Scenic was NSW law and that this included the CLA.^[14] Moore’s argument was s 16 of the CLA was a ‘law that governs an assessment and quantification of the “damages” rather than being a law that imposes a limit on “liability.”’^[15] The Court stated however that ‘Mr Moore’s argument sits uneasily with the ordinary meaning of the text of s 275.’^[16] The Court then pointed out that the natural meaning of s 275 allowed a State law ‘comprehensively to limit or preclude both liability and recovery of compensation by way of damages for that liability if the State or Territory law has that effect in relation to other contracts governed by the law of the State or Territory.’^[17] It was held that ‘the enactment of s 275 of the ACL was to ensure the application of State and Territory laws that limit the extent of recovery for breach of contract otherwise governed by that law.’^[18] It was further stated that it was ‘difficult to see any reason why the purpose would be to apply State and Territory laws limiting heads of compensable loss but not to apply State or Territory laws regulating the quantification of damages recoverable.’^[19] Thus, there was no ‘reason why s 275 should not pick up and apply State laws, like s 16 of the CLA, which regulate the quantification of the damages to extinguish a liability for loss.’^[20]

The second issue was the question as to whether damages for disappointment and distress constituted personal injuries for non-economic loss. As the High Court noted ‘Scenic submitted that Mr Moore’s disappointment and distress was “an injury” for the purposes of Pt 2 of the CLA because it was an impairment to his mental condition.’^[21] It was noted, however, that ‘[f]rustration and indignation as a reaction to a breach of a contract under which the promisor undertook for reward to provide a pleasurable and relaxing holiday is, of itself, a normal, rational reaction of an unimpaired mind.’^[22] The Court then cited Baltic Shipping Co v Dillon^[23] as authority for the proposition that ‘disappointment and distress “caused by the breach of a contract ... the object of the contract being to provide pleasure or relaxation” is a compensable head of loss separate and distinct from injured feelings.’^[24] Thus, while the general rule was that ‘damages could not be recovered for injured feelings caused by a breach of contract’ an exception existed for ‘for distress, vexation and frustration where the very object of the contract has been to provide pleasure, relaxation or freedom from molestation.’^[25] It was noted that with Moore’s case ‘no physical injury was alleged and no psychological illness was alleged to have resulted from a breach of the consumer guarantees in the ACL.’^[26] It was held that Moore’s right to recover damages for disappointment and loss ‘was securely established ... by Baltic Shipping [and that] [n]othing in the text of the CLA suggests that Pt 2 was enacted with a view to limiting the liability of a defendant for claims that do not involve personal injury.’^[27]

Thus, the joint judgment held that s 16 does not affect Scenic’s liability in regard to the claim of damages for disappointment and distress, while it was unnecessary to consider whether it was subject to a geographical limitation.^[28] Garling J’s order of damages for disappointment and distress under s 267(4) was therefore reinstated.

Justice Edelman agreed with the reasons and proposed orders in the joint judgment but sought to add further comments in regard to why Pt 2 of the CLA was ‘concerned exclusively with damages for personal injury.’^[29] His Honour noted that: ‘[a]lthough contract law recognised a category of damages for “pain and suffering” where the breach of contract resulted in physical injury, this head of damages was concurrent with the far more common means by which a plaintiff would claim for breach of their rights resulting in physical injury, namely by a claim based on a tort, usually the tort of negligence.’^[30] It was further noted that s 16 of the CLA ‘borrows heavily from the law concerning compensation for personal injury in the law of torts.’^[31] Thus, the scheme in Pt 2 of the CLA ‘is concerned only with claims for personal injury, assertions of violations of body and mind that have traditionally been brought as a claim for a tort.’^[32] While Pt 2 ‘may be comprehensive in its coverage of damages that are consequential upon physical injury’ it does not apply to harm where the claim is for a breach of contract or statutory guarantee that ‘is not for damages that are consequential upon physical injury.’^[33]

III Conclusion

The High Court decision in Moore confirms a number of legal points. The first is that, for contracts, the applicable law is the law of the place where the contract was formed and that, for the purposes of s 275 of the ACL, this meant it included the relevant CLA, namely that of NSW. Thus, s 16 applied to limit the quantum of the damages that were recoverable. However, the High Court also confirmed what had been held in Baltic Shipping’ namely that with contracts which include the objective of pleasure, damages are available for disappointment and distress and this was not limited by Pt 2 of the CLA. The High Court also confirmed that Pt 2 of the CLA applies to tortious situations involving personal injury, but not breaches of contract where there are no such injuries. The decision in Moore also indicates that if cruise operators are going to advertise their tours as being ‘luxurious’ and ‘a once in a lifetime opportunity’ they may be liable for breach of contract if they cannot deliver what they have advertised. In the situation that arose in Moore, Scenic Tours would have been aware that high river levels were going to have a significant impact on the tour. It should therefore have made the passengers aware of this, offering them the chance to cancel on an individual basis, or even taken the step of cancelling the whole of the cruise themselves.

In regards to the question as to the significance of the decision in Moore to the pending Ruby Princess litigation it should be noted there are factual differences. The main one is that it does not appear that the passengers on the Ruby Princess were disappointed with the cruise itself. On the contrary, vision of the onboard final night party appears to show a happy group of passengers.^[34] Thus, unlike Moore, there would not appear to be any breaches of contract due to disappointment and distress from the cruise itself. Instead, the problems and legal issues arose at the end of the cruise and in its aftermath. It would appear that those in charge of the ship were aware of sick passengers on board when it arrived back in Sydney and should also have been aware that COVID-19 had become a major international medical issue. It is also arguable Carnival was aware of the potential problems even before the Ruby Princess left Sydney on 8 March for the cruise to New Zealand. There would therefore appear to have been a breach of a duty of care by Carnival. That is one of the plaintiffs’ arguments, the others being breaches of consumer laws and misleading or deceptive conduct.^[35]

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^&#6[1] Associate Professor, College of Business, Law and Governance, James Cook University.

^[1] [2020] HCA 17.

^[2] Ibid, [6]-[7].

^[3] Moore v Scenic Tours Pty Ltd (No 2) [2017] NSWSC 733.

^[4] [2020] HCA 17, [8].

^[5] Ibid, [9]-[10].

^[6] Ibid, [13].

^[7] Ibid, [14].

^[8] Ibid, [24] citing Moore v Scenic Tours Pty Ltd (No 2) [2017] NSWSC 733 [943].

^[9] Ibid, [26] citing Moore v Scenic Tours Pty Ltd (No 2) [2017] NSWSC 733 [944].

^[10] Scenic Tours Pty Ltd v Moore [2018] NSWCA 238.

^[11] Ibid, [396].

^[12] Ibid, [388].

^[13] Ibid, [389].

^[14] Moore v Scenic Tours Pty Ltd [2020] HCA 17, [16].

^[15] Ibid, [32].

^[16] Ibid, [34].

^[17] Ibid.

^[18] Ibid, [38].

^[19] Ibid.

^[20] Ibid.

^[21] Ibid, [39].

^[22] Ibid, [41].

^[23] [1993] HCA 4; (1993) 176 CLR 344.

^[24] Moore v Scenic Tours Pty Ltd [2020] HCA 17, [43].

^[25] Ibid, [44].

^[26] Ibid, [46].

^[27] Ibid, [47].

^[28] Ibid, [60].

^[29] Ibid, [62].

^[30] Ibid, [70].

^[31] Ibid, [73].

^[32] Ibid, [74].

^[33] Ibid, [75].

^[34] See also F Harari, ‘All in the same boat’, The Weekend Australian Magazine, 2 May 2020, 12-17.

^[35] K Gair, ‘Ruby Princess danger ignored ‘for profits’ ’ The Australian, 10 September 2020, 5.