A recent decision from the High Court of Australia is particularly topical due to the large number of holidays disrupted as a result of the COVID-19 pandemic.

In a unanimous decision[1], the High Court awarded damages to a cruise passenger (the Appellant, Mr Moore) for disappointment and distress for breach of a contractual obligation by Scenic Tours to provide a relaxed and pleasant holiday[2].

Implications for different groups

• Insurers and Defendants can take comfort in this decision as it confirms the limits placed on recovery in personal injury claims in the Civil Liability Act 2002 (NSW) (CLA) apply to personal injury claims brought under the Australian Consumer Law (ACL)
• Tourism operators need to take care to ensure that any marketing material does not overstate what is being offered to passengers. Any limitations or changes in trips as a result of changed circumstances need to be communicated clearly and in a timely manner
• Passengers could claim damages for disappointment and distress when a holiday does not meet the promised expectations, following this decision. While the facts of this case relate to a cruise, it is open to passengers to claim damages for disappointment and distress for any type of holiday where a breach of contract to provide a relaxed and pleasant holiday is found.

What do we expect now?

Given the number of cruises and holidays that have been disrupted following the declaration of the COVID-19 pandemic, it is anticipated that claims seeking damages for disappointment and distress may significantly increase, placing increased pressure on tourism operators hit hard by the pandemic, as well as an already over-stretched Court system.

Background to the case

In 2012 Mr Moore booked a European river cruise described by Scenic Tours to be ‘a once in a lifetime cruise along the grand waterways of Europe’. Mr Moore chose a river cruise because he wanted to see various European locations without having to unpack his bags more than once and also because he was unable to sit for long periods of time following spinal cord surgery.

The tour was to start in May 2013 but high water levels on the Rhine and Main rivers resulted in the cruise being significantly disrupted. Instead of the scheduled ten days cruising, Mr Moore only spent three days cruising on two separate ships, with the remainder of the trip spent travelling by bus.

The tour fell far short of the cruise he had been promised by Scenic Tours.

Detail of the proceedings

Representative proceedings were commenced in the Supreme Court of NSW against Scenic Tours by Mr Moore and 1,500 other passengers of 13 Scenic Tours’ cruises.

Mr Moore alleged, amongst other arguments, that he was entitled to an award of damages pursuant to s267(4) of the ACL for disappointment and distress on the basis that the loss and damage suffered was reasonably foreseeable.Mr Moore argued that s267(4) of the ACL allowed an award of damages for disappointment and distress because the contract with Scenic Tours was one aimed at providing relaxation, enjoyment, entertainment and pleasure. Scenic Tours argued that s275 of the ACL applies Part 2 of the CLA and in particular s16 which acted to preclude Mr Moore’s claim for damages for disappointment and distress.

Section 16 of the CLA is aimed at personal injury damages for non-economic loss and provides that no damages are to be awarded unless the severity of the loss is at least 15% of the most extreme case. The parties agreed that Mr Moore did not meet this threshold.

In response, Mr Moore argued that s16 of the CLA was not relevant, as his claim for disappointment and distress was not a claim for personal injury, while Scenic Tours argued that disappointment and distress constituted an impairment of mental condition that fell within the definition of personal injury.

The decision at first instance and on appeal

The primary judge, Garling J, awarded Mr Moore compensation as a result of Scenic Tours’ failure to exercise due care and skill in supplying the tour in breach of the ACL, as well as $2,000 in damages for disappointment and distress.

Garling J determined that s275 of the ACL picks up and applies s16 of the CLA with the result that he was bound by authority to find that a claim for damages for disappointment and distress is a claim for personal injury.

Notwithstanding this finding, Garling J concluded that s16 had no application outside NSW and because Mr Moore suffered his disappointment and distress in Europe his claim was not precluded.

Scenic Tours appealed to the NSW Court of Appeal on numerous bases including the damages awarded for disappointment and distress. Sackville JA (with whom Payne JA and Barrett JA agreed) overturned Garling’s J decision on the basis that s16 of the CLA was not subject to any geographical restriction.

The high court decision

Mr Moore was granted leave to challenge the Court of Appeal’s decision.

The issues considered by the High Court were:

• Does s275 of the ACL pick up and apply s16 of the CLA?
• Are damages for disappointment and distress precluded by Part 2 of the CLA?
• Does s16 of the CLA apply where the loss is suffered outside NSW?

In relation to the first issue, the High Court upheld the decision of the Courts below and determined that the purpose of s275 of the ACL was to apply the laws of a State or Territory, such as s16 of the CLA, that limit or exclude liability.

The appeal was allowed on the second issue, with the High Court opining that ‘(d)isappointment as a breach of a promise to provide recreation, relaxation and peace of mind is not impairment of the mind or a deterioration or injurious lessening or weakening of the mind.’[3].

The High Court went on to find that Mr Moore’s loss and Scenic Tours’ liability to compensate him for that loss had nothing to do with Part 2 of the CLA. The disappointment and distress claimed by Mr Moore was not non-economic loss under the CLA as no personal injury was alleged. The claim for disappointment and distress was to compensate Mr Moore for what he was ‘promised where the expectation of a peaceful and contended holiday has been unfulfilled’[4].

The High Court concluded that ‘the claim of the type made by Mr Moore in this case stands separately and apart from a claim for damages for disappointment and distress associated with personal injury’[5].

As the appeal was allowed at this point, it was unnecessary for the High Court to rule on the third issue.

The above content is commentary rather than legal advice and was prepared on the basis of applicable legislation, government programs and initiatives that were in place as of the date of publication. Given the ongoing evolution of both the COVID-19 pandemic and frequent consequential changes to the various laws and programs within all Australian states and territories, readers should seek legal advice on the current situation as applicable to their specific circumstances before taking any action in relation to the above.

[1] Edelman J agreed with the reasons and orders in the joint judgment, however he provided additional comment on Pt 2 of the Civil Liability Act 2002 (NSW).
[2] Moore v Scenic Tours Pty Ltd [2020] HCA 17
[3] [2020] HCA 17 at [41].
[4] Ibid at [48].
[5] Ibid at [57].