In a comprehensive judgment, the Full Federal Court (comprising Markovic, Sarah C Derrington and Jackson JJ) has unanimously dismissed appeals and cross-appeals by each of the lead applicant passenger and the cruise-line respectively, in the long-running class action arising from the ill-fated coronavirus outbreak on The Ruby Princess in March 2020.   

The case concerned a 13-day cruise which departed from Sydney on 8 March 2020, heading towards New Zealand. The cruise was cut short due to the unfolding COVID-19 pandemic.

The lead applicant in the proceedings, Susan Karpik, and her husband, Henry Karpik, were among the passengers. During the voyage, Mr Karpik contracted COVID-19 and became gravely ill, spending nearly two months in hospital. Mrs Karpik also claimed to have contracted the virus, although her symptoms were less severe.

The day after disembarkation, Mr Karpik was taken to hospital, where he was intubated, ventilated, and placed into an induced coma. Mrs Karpik witnessed her husband's suffering but was unable to spend time with him, as she was required to isolate at home for 16 days following the voyage.  

Mrs Karpik commenced a representative proceeding against Carnival plc and Princess Cruise Lines Ltd (cruise-line), seeking damages exceeding $300,000 for personal injuries, distress and disappointment. In particular, she alleged that:

a) The services provided by the cruise-line failed to comply with the guarantees in section 61 of the Australian Consumer Law (ACL), which required the services to be reasonably fit for the intended purpose of providing a safe, relaxing, and pleasurable holiday;

b) the cruise-line contravened section 18 of the ACL by making misleading representations regarding the safety measures in place; and

c) relying on section 60 of the ACL (being the guarantee as to due care and skill) and the tort of negligence, the cruise-line owed her a duty of care to take reasonable precautions to protect her from illness and mental harm resulting from Mr Karpik's illness, which they breached.  

The cruise-line defended the allegations at first instance. However, the trial judge, His Honour Justice Stewart, found that the cruise-line:

a) Did not comply with the guarantees in subsections 61(1) and (2) of the ACL, as the services were not reasonably fit for the purpose of providing a safe, relaxing, and pleasurable cruise;

b) owed Mrs Karpik a duty to take reasonable care for her health and safety, including with regard to the risk of harm caused by COVID-19 infection and with respect to a recognised psychiatric illness arising from Mr Karpik having contracted COVID-19 on the voyage, namely an adjustment disorder; and

c) had breached their duty of care in several ways, including failing to cancel the cruise, failing to warn passengers about the heightened risk of contracting COVID-19, and failing to implement adequate pre-embarkation screening and physical distancing measures.

Notwithstanding her success at first instance in relation to liability, the trial judge awarded Mrs Karpik just over $4,000 by way of damages, being the refund of the ticket price. This amount was also treated as a credit against damages for distress and disappointment (known as Dillon damages), following the decision of the High Court in Baltic Shipping Co v Dillon (1993) 176 CLR 344, to which it was held she was entitled.

Mrs Karpik appealed the trial judge's award of damages, and the cruise-line cross-appealed each of the liability findings made against it.  

In responding to the cruise-line's cross-appeal, the Full Court dealt first with the fitness for purpose guarantees. In this regard, and in summary, they held that:
"It can readily be accepted that the purpose that is made known to a provider of services must have a sufficiently precise meaning. It must be specific enough to allow the provider to judge the extent of the risk that the services are not reasonably fit for that purpose." They agreed with the trial judge that the particular purpose that Mrs Karpik had made known “was to have a safe, relaxing and pleasurable cruise holiday substantially in accordance with the advertised and booked itinerary”. Importantly, Mrs Karpik "did not have a safe, relaxing or pleasurable cruise, meaning that the purpose and result that she had made known were not achieved."

The Full Court then considered the allegations of breach of duty under both the common law and the statutory guarantee in section 60 of the ACL. They were unable to discern any error in the trial judge's determination that the cruise-line owed its passengers a duty to take reasonable care for their health and safety. The Court agreed that COVID-19 constituted a reasonably foreseeable risk of harm, as the cruise-line was aware of the nature of the virus, its transmissibility, the limited treatment options available, the absence of a vaccine, and the risk of its spread on cruise ships.

Further, the Full Court rejected the cruise-line's contention that the trial judge had erred in finding a breach of duty in failing to cancel the cruise, given the prevailing "Australian policy settings" as at March 2020. The Full Court agreed that the cruise-line had failed to warn Mrs Karpik of the heightened risk of COVID-19 on board the cruise. Additionally, they agreed that there needed to be other sufficient measures to minimise the risk of infection, such that the risk would be reduced. However, the trial judge had not been satisfied that was the case.

In responding to Mrs Karpik's appeal concerning her entitlement to damages, the Full Court found no reason to disturb the trial judge's assessment of:

a) Nil damages for non-economic loss for personal injury claims under sections 60, 61(1) and 61(2) of the ACL or in negligence, given that he had assessed Mrs Karpik's case as being below the statutory threshold;

b) $4,423.48 for out-of-pocket expenses (namely the ticket price of the cruise) awarded for personal injury claims under sections 60, 61(1) and 61(2) of the ACL and in negligence; and

c) nil damages for distress and disappointment (Dillon damages) because, although they were available, on the evidence before the trial judge, they would not have exceeded the out-of-pocket refund expenses which were awarded. The Full Court held further that "the evidence which was said to have given rise to Mrs Karpik’s feelings of stigmatisation was so insignificant that it could not reasonably be considered to have made any material difference to the quantum of Dillon damages arrived at by the primary judge."  

Given that both the appeal and cross-appeal failed in their entirety, the Full Court has ordered that, in each case, those costs should follow the event.  

The Full Court decision adopts and confirms findings which had been made by the trial judge regarding liability, namely that, in the circumstances of this case, the cruise-line owed a clear duty to all passengers to take reasonable care to avoid a foreseeable risk of injury. This duty extended to the cruise-line taking reasonable care to avoid the risk of those persons suffering physical harm caused by contracting a communicable disease such as COVID-19 from others onboard.

It is anticipated that now that these issues of liability, causation and damage have been addressed by the Full Court, the quantum assessments for the remaining passengers, who are members of the class, can proceed.

If you would like advice or support regarding these developments or related matters, please contact our Transport & Logistics team.