Scenic Tours class action - High Court hears appeal

In brief - High Court reserves its decision on whether damages for loss of enjoyment when a cruise does not live up to expectations are circumscribed by the Civil Liability Act provisions relating to damages

Mr Moore and his wife booked a luxury European river cruise with Scenic Tours 18 months prior to its departure in June 2013. The cruise was scheduled to depart Amsterdam and arrive in Budapest two weeks later. 

In the months leading up to the cruise, Europe experienced heavy rainfall and flooding. The Moore's cruise was significantly affected by high water levels on the Rivers Rhine and Main. As a consequence, Mr and Mrs Moore experienced substantial disruptions to their scheduled itinerary. Among other problems, passengers were required to spend many hours on buses travelling from place to place rather than cruising along the rivers on a single "luxury" vessel.

Similar though not identical problems affected a number of other European river cruises conducted by Scenic Tours or associated entities at about the same time.

Class action proceedings commenced against Scenic Tours

In Moore v Scenic Tours Pty Ltd, Mr Moore commenced representative proceedings on behalf of himself and over one thousand other persons who booked and paid for 23 river cruises with Scenic Tours (Group Members). Mr Moore claimed compensation and damages arising from breach of the consumer guarantees for services under Schedule 2 of the Competition and Consumer Act 2010 (Cth), known as Australian Consumer Law (ACL). 

Mr Moore alleged that Scenic Tours contravened the statutory guarantees to consumers and that Scenic Tours supplied services to Mr Moore and each Group Member: 

• without due care and skill, in contravention of section 60 of the ACL (Care Guarantee),
• such that the services were not fit for the purpose for which Mr Moore and each Group Member acquired them, in contravention of section 61(1) of the ACL (Purpose Guarantee), and
• such that the services were not of a nature and quality as could reasonably be expected to achieve the result that Mr Moore and each Group Member wished the services to achieve, in contravention of section 61(2) of the ACL (Result Guarantee).

Broadly speaking, Mr Moore claimed that Scenic Tours breached the Care Guarantee in relation to a number of the cruises by failing to inform passengers in a timely manner of the disruptions it knew or should have known were likely to occur to each scheduled itinerary because of the adverse weather and river conditions. Given the information available to Scenic Tours, it should either have cancelled the cruise or given the passengers the opportunity to cancel.

Mr Moore's claim that Scenic Tours breached the Purpose and Result Guarantees rested on the disparity between the services promoted and offered by Scenic Tours to Group Members and the services actually supplied to them on the cruises. It was argued that the disruptions to the cruises were so great in each case that the services supplied were not reasonably fit for the purpose made known to Scenic Tours by the Group Members (section 61(1)) and could not reasonably be expected to achieve the result the Group Members wish to achieve (section 61(2)).

The primary judge found that Scenic Tours failed to comply:

• with the Care Guarantee because Scenic Tours, exercising due care and skill, should have recognised by 2 June 2013 (the day before Cruise 8 was scheduled to commence) that the river conditions did not enable the cruise to take place as promised and should have cancelled the cruise at that point
• with the Purpose Guarantee because the services it suppled to Mr Moore were not reasonably fit for the particular purpose he had made known, namely that he wished to take Cruise 8 and enjoy it together with all the services Scenic Tours said that it would provide, and
• with the Result Guarantee by not providing services to Mr Moore of a nature and quality that might reasonably have been expected to achieve the result that he desired to achieve, namely to cruise in the same cabin on the same ship for the entirety of the 15 day itinerary period in comfort while experiencing the waterways of Europe

The primary Judge also gave answers to a series of questions that were said to include questions common to the claims of all Group Members. In substance, his Honour found that Scenic Tours had breached the Purpose and Result Guarantees in relation to 10 of the remaining 12 cruises and had breached the Care Guarantee in relation to nine of the 12 remaining cruises. The Court also found that the defendant cannot use the terms and conditions of a contract to prohibit or limit the operation of consumer protections afforded under the ACL.

The effect was that suppliers of travel services would be held accountable for promises and enticements made through advertising and promotional activities. The judgment represented a major step forward for class actions in the travel services domain.

Findings of the New South Wales Court of Appeal

Scenic Tours appealed to the New South Wales Court of Appeal. The Court of Appeal found:

1. The primary Judge's finding that Scenic Tours breached the Care Guarantee in relation to Cruise 8 could not be sustained

2. The primary Judge's finding that Scenic Tours breached the Purpose and Result Guarantees in relation to Cruise 8 should not be disturbed

3. The primary Judge's award of $10,990 in respect of Mr Moore's claim for compensation pursuant to section 267(3)(b) of the ACL for Scenic Tours' breach of the Purpose and Result Guarantees was affected by an error of law and must be set aside

4. Mr Moore's claim for compensation pursuant to section 267(3)(b) of the ACL should be remitted to the primary Judge for determination in conformity with this (the Court of Appeal's) judgment

5. Mr Moore is precluded by section 275 of the ACL and section 16 of the Civil Liability Act 2002 (NSW) (CLA) from establishing that Scenic Tours is liable pursuant to section 267(4) of the ACL to pay damages for distress and disappointment by reason of Scenic Tours' breach of the Purpose and Result Guarantees, and

6. Accordingly, the award of damages in Mr Moore's favour of $2,000 pursuant to section 267(4) of the ACL must be set aside and his claim for damages dismissed

The Court of Appeal therefore accepted that the provisions of section 16 of the CLA "Determination of damages for non-economic loss" applied. It says that "no damages may be awarded" for such loss "unless the severity of the non-economic loss is at least 15% of a most extreme case". The legislation provides that the maximum amount of such loss is $350,000. 

High Court appeal

Leave was granted in the High Court to appeal from the Court of Appeal's judgment. The hearing took place on 11 February 2020. 

During the hearing, Mr Gleeson SC, on behalf of Mr Moore, identified three conclusions of law which he asserted the Court of Appeal had reached in error:

1. that section 275 of the ACL picks up and applies section 16 of the CLA

2. that section 16 on its proper construction precludes Mr Moore's claim for damages for inconvenience, distress and disappointment

3. that notwithstanding the breaches complained of occurred outside Australia the second conclusion applies

In making his submissions, Mr Gleeson SC argued that Mr Moore's case was "not in the universe that this Act" (the CLA) " was designed to deal with, which was essentially tort, negligence, personal injuries". In his response to that line of argument, Mr Williams SC for Scenic Tours asserted that the claim which Mr Moore was bringing fell within the definition in the CLA of "impairment of a mental condition". Some of their Honours appeared from their questioning to have difficulty with that proposition.

Section 275 of the ACL provides:

If:

(a) there is a failure to comply with a guarantee that applies to a supply of services under subdivision B of Division 1 of Part 3-2; and 

(b) the law of a State or a Territory is the proper law of the contract;

that law applies to limit or preclude liability for the failure, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of any liability, for a breach of a term of the contract for the supply of the services.

Both counsel took the Court to two of its earlier decisions: 

1.  Baltic Shipping Company v Dillon [1993] HCA 4 in which the plaintiff, Mrs Dillon, recovered damage for disappointment and distress and physical inconvenience flowing from the cruise liner's failure to supply her with a pleasurable cruise when its ship the "Mikhail Lermontov" sank mid cruise, and Mr Williams argued that the High Court assimilated such damages to "pain and suffering".

2. Insight Vacations Pty Ltd v Young [2011] HCA 16 in which the plaintiff, Mrs Young, had sought damages for personal injuries when she was injured while on a tour bus in Europe when she stood up to retrieve something from her bag stored in an overhead locker and the coach braked suddenly, causing her to fall backwards. 

We will report on the result of this case when the High Court hands down its decision.