Insight Vacations Pty Ltd v Young

The applicant sought leave to appeal pursuant to s 127 of the District Court Act 1973. At issue in this Court was the constitutional finding and the award of damages for disappointment.

Per Spigelman CJ, Basten JA and Sackville AJA agreeing 1 The trial judge's comparison of s 68B of the Trade Practices Act and s 5N of the Civil Liability Act was misconceived. The definition of 'recreational services' in s 68B was irrelevant on the facts of this case. [21] [24] [87] [136]

Per Basten JA, Sackville AJA agreeing 2 Section 74(2A) of the Trade Practices Act picks up a State law that, in its own terms, restricts or precludes liability for breach of the statutory warranty. It does not pick up a State law that permits this result indirectly by authorising a contractual provision that limits or precludes liability for a breach of the implied statutory warranty. [96] [106] [151] [153] Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292; Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388, referred to.

3 Where a State law purports to give effect to a term of a contract modifying the liability implied by s 74(1), the contractual term is rendered void as a result of its inconsistency with s 68 of the Trade Practices Act . As s 74(2A) applies only to State laws that operate directly, it does not save such a term. [104] [154]

Per Basten JA 4 The exercise of federal jurisdiction in a State court is a matter that requires express identification. Once so identified, the whole of the proceeding becomes an exercise of federal jurisdiction. [85] Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; (2005) 223 CLR 251; Re Wakim; Ex parte McNally (1999) 198 CLR 511; Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; (2006) 67 NSWLR 9, referred to.

5 In considering the application of State law in federal jurisdiction, the conventional approach is to first inquire whether the law is invalid or inoperative as a result of the operation of s 109 of the Constitution. Neither party in the present proceedings identified the nature of the legal exercise. [86] [89] Austral Pacific Group Ltd (In liq) v Airservices Australia [2000] HCA 39; (2000) 203 CLR 136, referred to.

6 Failure to comply with s 78B of the Judiciary Act 1903 did not invalidate the trial judge's decision. [89] Glennan v Commissioner of Taxation [2003] HCA 31; (2003) 77 ALJR 1195, referred to.

7 Section 68 of the Trade Practices Act is unaffected by s 74(2A). Section 74(2A) picks up State laws which assume a breach and preclude liability for that breach, whereas s 68 is directed at contractual terms that exclude, restrict or modify the implied warranty. [103]

Per Sackville AJA 8 Section 74(2A) applies where a warranty exists by reason of s 74(1) and that warranty has been breached. In these circumstances, s 74(2A) picks up and applies a State law that limits or precludes liability for that breach. [141] Hooper v Hooper (1955) 91 CLR 529; Western Australia v Commonwealth (1995) 183 CLR 373, referred to.

9 As the operation of s 74(2A) is contingent on a breach of the warranty, it does not pick up and apply a State law which purports to exclude the warranty. Nor does s 74(2A) pick up and apply a State law that purports to authorise parties to contractually exclude the implied statutory warranty. [144] [146]

Per Spigelman CJ (dissenting) 10 Section 74(2A) of the Trade Practices Act picks up a State Act that "applies" to limit or preclude liability. The word "applies" is protean and takes its meaning from its context. There is nothing in the history or context of s 74(2A) that suggests a narrow interpretation should be given to the use of the word "applies" in s 74(2A). [30]-[32]

11 Section 5N(1) of the Civil Liability Act applies to limit or preclude liability, within the meaning of s 74(2A), by stating that a term of a contract limits or precludes liability "despite any other written or unwritten law". [30] Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388, referred to.

12 An exclusion clause, authorised by s 5N of the Civil Liability Act , is not a term of a contract that purports to exclude, restrict or modify the application of s 74(1) within the meaning of s 68 of the Trade Practices Act . Section 68 does not, therefore, render void such a term. [55]

13 Section 68 of the Trade Practices Act has no effect upon a term that purports to exclude a warranty which is expressed in a contract or which is implied at common law into a contract by law or by interpretation. [51]

Per Basten JA, Spigelman CJ agreeing 14 Grief, anxiety, distress and disappointment can be elements of pain and suffering and fall within the statutory definition of non-economic loss in the Civil Liability Act . [78] [125] State of New South Wales v Ibbett [2005] NSWCA 445; (2005) 65 NSWLR 168; State of New South Wales v Corby [2010] NSWCA 27; Baltic Shipping Co v Dillon (1993) 176 CLR 344, considered. Teubner v Humble (1963) 108 CLR 491, referred to.

15 The distinction drawn by the trial judge between damages for 'disappointment' and damages for 'distress' was unpersuasive. To excise one element so as to avoid the constraints imposed by s 16 of the Civil Liability Act is an artificial exercise that does not accord with the definition of non-economic loss. [79] [127] [129] Kokl v Kablar [1989] NSWCA 127; Pascoli v Spittle (1989) 9 MVR 573, considered.

Per Basten JA 16 Section 16 of the Civil Liability Act is a State law which limits liability for a breach of the implied warranty in s 74(1) and is, accordingly, applicable in assessing the extent of liability pursuant to s 74(2A). [110]

Per Sackville AJA 17 The award for disappointment made by the trial judge constituted personal injury damages within the meaning of s 11 of the Civil Liability Act . [164] [173] State of New South Wales v Ibbett [2005] NSWCA 445; (2005) 65 NSWLR 168, referred to.

18 The award for disappointment constituted non-economic loss, within the meaning of s 16(1) of the Civil Liability Act . The award fell within the statutory and general description of damages for 'loss of amenities'. [165]-[167] [174] Teubner v Humble (1963) 108 CLR 491; Baltic Shipping Co v Dillon (1993) 176 CLR 344; Dillon v Baltic Shipping Co (1989) 21 NSWLR 614, considered. Jarvis v Swan Tours Limited [1973] QB 233; Jackson v Horizon Holidays Limited [1975] 1 WLR 1468; Baltic Shipping Co v Dillon (1991) 22 NSWLR 1; Ichard v Frangoulis [1977] 2 All ER 461; McCreary v Whitney (1987) 6 MVR 303; Graham v Voigt (1989) 89 ACTR 11; Bosch v Liebe [1976] VR 265; North v Thompson [1971] WAR 103; Linke v Howard [1967] SASR 83, referred to.

19 Section 11A(2) of the Civil Liability Act contemplates that damages for non-economic loss can be awarded for personal injury in a claim brought in contract rather than tort. It makes no difference that the damages were for breach of the statutory warranty rather than breach of a tortious duty. [174] [176]

ORDERS (1) Grant leave to appeal in respect of the grounds set out in the draft notice of appeal other than ground 5 (which related to contributory negligence).

(2) Direct that the appellant file the draft notice of appeal within 14 days of the date of judgment.

(3) Allow the appeal in part and set aside the judgment given in the District Court in favour of the plaintiff.

(4) In lieu thereof give judgment for the plaintiff (Stephanie Young) in an amount of $11,500, such judgment to take effect on 4 June 2009.

(6) Grant the respondent a certificate under s 6 of the Suitors' Fund Act 1951 (NSW). IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 2009/00298451

SPIGELMAN CJ BASTEN JA SACKVILLE AJA

Friday 11 June 2010 Insight Vacations Pty Ltd v Stephanie Young Judgment 1 SPIGELMAN CJ: On 14 October 2005 the respondent was a passenger in a coach travelling on a motorway in Slovakia. She was standing next to her seat, in order to retrieve an item from the overhead compartment, when the driver of the coach slammed on the brakes to avoid colliding with the rear of a car. The respondent was thrown backwards, hitting her head on the floor of the coach and suffering injuries as a result. The driver's conduct was the consequence of a road rage incident in which both the coach driver and the driver of the car had earlier been involved. The visit to Slovakia was part of a 20 day European tour which the respondent and her husband had purchased from the applicant. The terms of the contract were contained in the applicant's brochure to which reference will be further made below. 2 The respondent instituted proceedings in the District Court of New South Wales seeking relief in contract and, alternatively, in tort. Her action was based, relevantly for purposes of this appeal, on the applicant's breach of its duty to act with reasonable diligence, care and skill in carrying out the services pursuant to the European tour organised by the applicant. 3 The matter was determined by Judge Richard Rolfe of the District Court on 4 June 2009. His Honour found in favour of the respondent on the basis that she had established a breach of contract. By reason of that finding, his Honour did not deal with the alternative claim in tort. 4 It was common ground before his Honour that damages were to be assessed in accordance with the provisions of the Civil Liability Act 2002. His Honour, pursuant to s 16 of the Civil Liability Act, found that the injury suffered by the respondent was 18 percent of a most extreme case and awarded $11,500 on this basis. His Honour also made an award for the disappointment attending the inability of the respondent to enjoy the remainder of her tour after the accident. His Honour awarded $8,000 under this head of damage. His Honour also awarded the plaintiff $2,871 interest on this component of her damages pursuant to s 100 of the Civil Procedure Act 2005. 5 In the proceedings before Judge Rolfe, and in this Court, the applicant sought to rely on two exclusion clauses in the contract which I will set out below. His Honour held that the applicant could not rely on these clauses due to their inconsistency with the terms of the contract implied by the Trade Practices Act 1974 (Cth). 6 The applicant seeks leave to appeal from his Honour's decision. Leave is required because the total amount in issue is only $22,371. The applicant also seeks leave to extend the time for the filing of a notice of intention to appeal up to 8 July 2009, pursuant to r 51.10 of the Uniform Civil Procedure Rules.

The Decision of Rolfe DCJ 7 His Honour found that the contract contained an implied warranty that the services promised by the applicant under the contract "would be rendered with due care and skill", by force of the operation of s 74 of the Trade Practices Act (Cth). I will set out this section below. 8 His Honour also referred to the plaintiff's reliance on s 68(1)(c) of that Act, which renders void provisions in a contract that exclude, restrict or modify liability for breach of a condition or warranty implied by the provisions of that Act, including s 74(1). His Honour then considered the proviso to s 68 set out in s 68B, which provides that a term is not void under s 68 by reason only that it excludes, restricts or modifies the application of s 74 to "recreational services", a term defined in the section. 9 His Honour noted s 74(2A), which picks up and applies a law of a State or Territory that limits or precludes liability for a breach of a warranty implied by s 74(1). His Honour noted that the applicant relied on s 74(2A) in order to pick up and render effective the operation of s 5N of the Civil Liability Act, which permits a term excluding, restricting or modifying liability in a contract for the supply of recreation services. The definition of "recreational services" in the Civil Liability Act is clearly different to the definition of "recreational services" in the Trade Practices Act (Cth). I will set out all of these sections below. 10 His Honour proceeded to consider whether there was a constitutional inconsistency between the applicable State and Commonwealth statutes. I note that his Honour did so without complying with the requirements of s 78B of the Judiciary Act 1903 (Cth), which requires a court to cease hearing a constitutional matter pending the issue of notices to the respective Attorneys-General. It was not submitted that the judgment should be set aside for that reason. A s 78B notice was filed with respect to this appeal and the Attorney General of New South Wales appeared in this Court. 11 His Honour found there to be such an inconsistency. His reasons were as follows: "[40] As can be seen, the definition of 'recreational services' set out in s 5N(4) of the Civil Liability Act is not co-extensive with the definition of 'recreational services' under the Trade Practices Act . The latter definition is narrower because it does not include services that are incidental to a leisure time pursuit. Thus, there can be services of a recreational nature which still attract the warranty under s 74 of the Act, to which extent s 5N of the Civil Liability Act will be inconsistent with the Trade Practices Act and therefore ineffective (Dominic Villa, Annotated Civil Liability Act 2002 (NSW) para 1A.5N.030). [41] In my opinion, when Mrs Young was injured on the motor coach on the motorway between Prague and Budapest in Slovakia, she was not engaging in 'a sporting activity or a similar leisure time pursuit' as defined under the Trade Practices Act . Rather, Mrs Young was being transported or carried by the defendant between the two destinations. To the extent that it might be suggested that this was a service which was 'incidental' to Mrs Young's pursuit of a 'recreational activity', (such as travel and leisure) within the meaning of those words in s 5N of the Civil Liability Act , then in my opinion, s 5N is inconsistent with the Trade Practices Act . Therefore, the defendant cannot rely on s 5N to defeat the plaintiff's claim. …" 12 His Honour proceeded to refer to the two exclusion clauses upon which the applicant relied before him. Clauses 3 and 4 of the section headed "Responsibility" in the contract were: "3 In the absence of their own negligence, neither the Operators nor their agents or co-operating organisations shall be responsible for any cancellations, delays, diversions or substitution of equipment or any act or omission whatsoever by air carriers, transportation companies, hotels or any other persons providing any of the services and accommodations to passengers including any results thereof, such as changes in services or accommodations necessitated by same. Nor shall they be liable for any loss or damage to baggage or property, or for injury, illness or death, or for any damages or claims whatsoever arising from loss, negligence or delay from the act, error, or negligence of any person not its direct employee or under its exclusive control. The Operators are not responsible for any criminal conduct by third parties. 4 Where the passenger occupies a motorcoach seat fitted with a safety belt, neither the Operators nor their agents or co-operating organisations will be liable for any injury, illness or death or for any damages or claims whatsoever arising from any accident or incident, if the safety belt is not being worn at the time of such accident or incident." 13 His Honour concluded, on the basis of the reasons given in his paragraph [41], set out at [11] above, that: "[41] … This means the defendant cannot rely on clause 4 under 'Responsibility'. [42] For the same reason, the defendant cannot also rely on the second sentence of clause 3 under 'Responsibility' (assuming a construction of that clause favourable to the defendant)." 14 His Honour further concluded: "[43] … I am satisfied that the driver of the coach drove the vehicle in an extremely dangerous manner by engaging in the incident with the driver of the car which overtook the motor coach. I am therefore satisfied that by driving in the dangerous manner, the motor coach driver caused the accident and the injuries sustained by the plaintiff. Since the driving of the motor coach driver was part of the transportation services rendered by the defendant to the plaintiff, it follows that the plaintiff has established a breach of the implied warranty and is therefore entitled to damages for breach of contract. [44] It is therefore unnecessary to consider the plaintiff's claim in tort." 15 His Honour proceeded to assess damages. With respect to the claim for disappointment, his Honour said: "[51] The plaintiff also claims damages for 'disappointment, distress and inconvenience' along the lines awarded to the plaintiff in Baltic Shipping Company v Dillon (1992-1993) 176 CLR 344. The plaintiff submits that such damages should be in the range of $10,000 to $15,000. The defendant submits that such damages are not recoverable as a separate head as they are covered by any award under s 16 of the Civil Liability Act . [52] In Baltic Shipping the High Court decided that where there is a contract the object of which is to provide enjoyment and relaxation, damages for disappointment and distress resulting from a breach are recoverable. Of course Baltic Shipping was decided before the Civil Liability Act commenced operation. In this respect, the definition of 'non-economic loss' in the Civil Liability Act needs to be borne in mind. Section 3 of the Civil Liability Act defines non-economic loss as meaning any one or more of the following: (a) pain and suffering, (b) loss of amenities of life, (c) loss of expectation of life, (d) disfigurement. [53] It seems to me that any distress suffered by the plaintiff is within the meaning of (a) pain and suffering. But disappointment is something different. As Mason CJ pointed out at 363 in Baltic Shipping , in earlier cases, plaintiffs had recovered damages for disappointment caused by the breach of a contract to provide a holiday, entertainment or enjoyment when the object of the contract was to provide pleasure or relaxation: Jarvis v Swan Tours Limited [1973] QB 233; Jackson v Horizon Holidays Limited [1975] 1 WLR 1468. An award of this type is based on the rule in Hadley v Baxendale (1854) 9 Ex 354 because the circumstances are such that the damages for the breach can fairly and reasonably be considered to arise naturally or may reasonably be supposed to have been in the contemplation of the parties. [54] I am satisfied that in the present case the plaintiff has suffered the disappointment of not being able to properly enjoy the remainder of her tour with the defendant after the accident. Effectively, the defendant's breach of contract ruined for the plaintiff the balance of the tour. Such a loss, in my opinion, flows naturally from the defendant's breach and is not 'non-economic loss' as defined in s 3 of the Civil Liability Act ."

The Statutory Context 16 The respondent successfully relied below on s 74(1) of the Trade Practices Act (Cth) which, relevantly, provides: "74(1) In every contract for the supply by a corporation in the course of a business of services to a consumer there is an implied warranty that the services will be rendered with due care and skill …" 17 The provision which is of particular significance for the present case is s 74(2A): "74(2A) If: (a) there is a breach of an implied warranty that exists because of this section in a contract made after the commencement of this subsection; and (b) the law of a State or Territory is the proper law of the contract; the law of the State or Territory applies to limit or preclude liability for the breach, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract." 18 An issue arises as to the interaction between this provision and s 68 which states: "68(1) Any term of a contract (including a term that is not set out in the contract but is incorporated in the contract by another term of the contract) that purports to exclude, restrict or modify or has the effect of excluding, restricting or modifying: (a) the application of all or any of the provisions of this Division; (b) the exercise of a right conferred by such a provision; (c) any liability of the corporation for breach of a condition or warranty implied by such a provision; or (d) the application of section 75A; is void. (2) A term of a contract shall not be taken to exclude, restrict or modify the application of a provision of this Division or the application of section 75A unless the term does so expressly or is inconsistent with that provision or section." 19 Section 68B, upon which his Honour relied, relevantly provides: "68B(1) A term of a contract for the supply by a corporation of recreational services is not void under section 68 by reason only that the term excludes, restricts or modifies, or has the effect of excluding, restricting or modifying: (a) the application of section 74 to the supply of the recreational services under the contract; or (b) the exercise of a right conferred by section 74 in relation to the supply of the recreational services under the contract; or (c) any liability of the corporation for a breach of a warranty implied by section 74 in relation to the supply of the recreational services under the contract… 20 Section 68B(2) contains a definition of recreational services as follows: "recreational services means services that consist of participation in: (a) a sporting activity or a similar leisure-time pursuit; or (b) any other activity that: (i) involves a significant degree of physical exertion or physical risk; and (ii) is undertaken for the purposes of recreation, enjoyment or leisure." 21 As appears from this definition, s 68B had no application to the type of tourist travel occurring in this case. It was simply not engaged. Notwithstanding his Honour's reliance upon this section, it was common ground in this Court that it was irrelevant. 22 The provision upon which the applicant relies in order to enforce the exclusion clauses is s 5N of the Civil Liability Act which, relevantly, provides: "5N(1) Despite any other written or unwritten law, a term of a contract for the supply of recreation services may exclude, restrict or modify any liability to which this Division applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill. (2) Nothing in the written law of New South Wales renders such a term of a contract void or unenforceable or authorises any court to refuse to enforce the term, to declare the term void or to vary the term. (3) A term of a contract for the supply of recreation services that is to the effect that a person to whom recreation services are supplied under the contract engages in any recreational activity concerned at his or her own risk operates to exclude any liability to which this Division applies that results from breach of an express or implied warranty that the services will be rendered with reasonable care and skill. (4) In this section, recreation services means services supplied to a person for the purposes of, in connection with or incidental to the pursuit by the person of any recreational activity." 23 Section 5K of the Act contains an inclusive definition of "recreational activity" which provides, relevantly: "5K Recreational activity includes: … (b) any pursuit or activity engaged in for enjoyment, relaxation or leisure …"

The Constitutional Finding 24 I have set out, at [11] above, paragraphs [40] and [41] of his Honour's reasons where he concludes that there is an inconsistency, within s 109 of the Commonwealth Constitution, between s 68B of the Trade Practices Act (Cth) and s 5N of the Civil Liability Act. His Honour's comparison of the definitions of recreational services was misconceived. The definition in s 68B was, as noted at [21] above, irrelevant on the facts of the case. 25 Furthermore, as I have indicated, his Honour referred to the applicant's reliance on s 74(2A) of the Trade Practices Act (Cth) but failed to apply that provision in his analysis. He referred to a text as authority for the inconsistency he found. However, that text was published prior to the inclusion of s 74(2A) in the Trade Practices Act (Cth). For the reasons discussed below, in my opinion, s 74(2A) is applicable. 26 His Honour's reasoning contains a fundamental defect. Notwithstanding the limited amount involved in this appeal, leave should be granted both to extend time to appeal and to appeal.

Does s 74(2A) Apply? 27 In written submissions the respondent appeared to accept that s 74(2A) operated to avert a constitutional inconsistency between s 74(1) of the Commonwealth Act and s 5N of the State Act. The possibility that s 74(2A) may not pick up s 5N was raised by the bench with counsel for the applicant. That proposition was adopted by counsel for the respondent in oral submissions. 28 Basten JA and Sackville AJA conclude that s 5N does not fall within the protective umbrella of s 74(2A) as a matter of statutory interpretation. Their Honours interpret s 74(2A) to apply only to a State law which, in terms, precludes liability for breach. Section 5N does not have that direct effect. It protects a contractual provision which so provides. Their Honours distinguish between a statutory limitation on, or preclusion of, liability and a contractual limitation or preclusion. 29 Both Basten JA and Sackville AJA refer to Wallis v Downard-Pickford (North Queensland) Pty Ltd (1994) 179 CLR 388 as supportive of the interpretation they prefer. The background of s 74(2A) indicates that it was the legal effect of that judgment which concerned the legislature. However, that legal effect was not confined by the facts of that case. 30 The issue turns on the meaning of the words "applies to limit or preclude", a phrase which appears twice in s 74(2A). The section picks up a State Act which "applies" with the relevant effect or consequence. In my opinion, s 5N(1) does so 'apply' by stating that a term of a contract has such an effect or consequence "despite any other written or unwritten law". 31 The word "apply" is protean and takes its meaning from its context. In s 74(2A), in my opinion, it bears the second meaning in the Macquarie Dictionary, 5th ed (2009): "to bring to bear; put into practical operation, as a principle, law, rule, etc". 32 The word "applies" is of too general a character to ordinarily require direct or immediate application. Although general words can be read down, nothing in the history or context of the section suggests that a narrow interpretation should be given to the use of the word "applies" in s 74(2A). The section itself indicates that it is not intended to have a restricted operation by encompassing provisions which "limit" as well as "preclude" liability and, further, by extending to provisions that limit or preclude "recovery of that liability". 33 However, the most significant aspect of the statutory context in which s 74(2A) appears is the legal effect of s 74(1) itself. As with other, analogous provisions in Pt V Div 2, that section does not create a statutory warranty i.e. it does not have a direct effect. It operates by inserting a provision into a contract. Indeed, s 74(2A) itself has effect, by force of paragraph (a), only in a case in which the "implied warranty … exists because of this section", that is to say, when the warranty is implied by s 74(1). I can see no reason why s 74(2A) should be given a distinctively different operation to the very section which it modifies. In my opinion, it would be anomalous if s 74(2A) were not to be given the same kind of application as the section which it modifies. 34 Section 74(1) inserts a term into a contract. Section 5N provides statutory protection for a term of a contract that excludes a term of the very kind inserted by s 74(1). Both s 74(2A) and s 5N(1) have effect upon breach of the same kind of provision. Neither case involves the direct application of a statute. 35 Unusually for the national scheme of consumer protection contained in the Act, s 74(2A) focuses on a contract of which "the proper law" is that of a particular State. This unique provision suggests, of itself, an intention to give State legislation a wide application. It contrasts with s 67, which expressly overrides a contractual choice of law clause purporting to substitute a State law for a provision of Div 2 of Pt V of the Trade Practices Act (Cth). 36 Identical provision is made in s 12ED(2A) and s 12EA of the Australian Securities and Investment Commission Act 2001 (Cth) with respect to financial services. Section 12ED(2A) was inserted by the same Act that inserted s 74(2A) into the Trade Practices Act (Cth), namely the Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth). 37 The legislative history also suggests that a narrow reading of s 74(2A) is inappropriate. The Civil Liability Act, its interstate equivalents and the relevant amendments to the Trade Practices Act (Cth), were part of a process of co-operative federalism that occurred over a period of years. This process was driven by a political perspective that recovery of damages for personal injury was adversely affecting Australian society and its economy, particularly through increased insurance premiums. Although there are differences in the provisions adopted by different jurisdictions and nothing that could be seen as a single, coherent, uniform regime was implemented, the broad thrust of this process of statutory change was to nevertheless restrict the scope of recovery for negligence. 38 Within this process it was recognised that, in certain critical respects, the law of contract represented an alternative to the tort of negligence. It was also recognised that, by reason of the scope of the Trade Practices Act (Cth), the provisions in that Act could override State statutory changes. 39 The insertion of s 74(2A) into the Trade Practices Act (Cth) was one of several statutory changes, made by the Commonwealth, intended to support State and Territory reforms to the law of negligence. The various statutory changes which involved action by the Commonwealth were as follows: The Trade Practices Amendment (Liability for Recreational Services) Act 2002 (Cth) which inserted s 68B and, accordingly, permitted the contractual exclusion of a warranty implied by relevant provisions of the Act in the case of "recreational services" as defined in the Commonwealth Act. The announcement of the intention to enact what became the Trade Practices Amendment (Liability for Recreational Services) Act (Cth) coincided with the announcement of the intention to appoint an Expert Panel to review the law of negligence. The terms of reference of that Panel included the following: "Review the interaction of the Trade Practices Act 1974 (as proposed to be amended by the Trade Practices Amendment (Liability for Recreational Services) Bill 2002) with the common law principles applied in negligence (particularly with respect to waivers and the voluntary assumption of risk). In conducting this inquiry, the Panel must: (a) develop and evaluate options for amendments to the Trade Practices Act to prevent individuals commencing actions in reliance on the Trade Practices Act , including actions for misleading and deceptive conduct, to recover compensation or personal injury and death; and (b) evaluate whether there are appropriate consumer protection measures in place (under the Trade Practices Act , as proposed to be amended, or otherwise) and if necessary, develop and evaluate proposals for consumer protection consistent with the intent of the Government's proposed amendment to the Trade Practices Act ." The Report of the Panel ( Review of the Law of Negligence: Final Report (September, 2002) - generally referred to as the "Ipp Report") made recommendations with respect to a number of the provisions in Pt IVA, Pt V and Pt VA as "the potential bases of claims for personal injury and death" (at [5.5]). Relevantly, no provision in Div 2 of Pt V, in which s 74 appears, was so identified. The Ipp Report considered s 74 in the context of reporting on the Trade Practices Amendment (Liability for Recreational Services) Bill 2002 (Cth) upon which it was expressly asked to report and which was limited only to recreational services (at [5.48-5.61]). The Trade Practices Amendment (Personal Injuries and Death) Act (No 2) 2004 (Cth) gave effect to recommendations of the Ipp Report, so that the limitation of actions and quantum of damages recommended in that Report would apply to proceedings under Pt IVA, Pt V Div 1A, Pt V Div 2A and Pt VA of the Act. The Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth), which introduced s 74(2A) was designed to support professional standard laws already in force in certain States and expected to be adopted by others. It included the amendments to s 74 of the Trade Practices Act (Cth) and the parallel provisions in the Australian Securities and Investment Commission Act (Cth). Neither of these matters was considered in the Ipp Report. The Trade Practices Amendment (Personal Injuries and Death) Act 2006, which had been introduced in a previous Parliament as the Trade Practices Amendment (Personal Injuries and Death) Bill 2003 only to lapse and be reintroduced in 2004, implemented the recommendations of the Ipp Report to prevent actions for damages for personal injury and death under Pt V Div 1. 40 Although not directly arising from the Ipp Report, the amendments made by the Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth) are clearly part of the collaborative process that had been engaged in by the Commonwealth and the States with respect to liability for negligence, whether under tort, contract or statute. 41 The Second Reading Speech for the Trade Practices Amendment (Personal Injuries and Death) Bill (No 2) 2004 (Cth) (which came into force at the same time as the Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth)) identified the overall context as follows: "In the past two years the Minister for Revenue and Assistant Treasurer has chaired six meetings with her state and territory counterparts to provide leadership and develop a national approach to resolving the issues of rising premiums and a reduction in the availability of insurance cover." 42 The Parliamentary Secretary to the Treasurer went on to refer to the Ipp Report and noted: "The review concluded that, for many cases, the cause of action under the Act is a real alternative to a cause of action in negligence. Thus any reform by the states and territories of common law negligence could be undermined unless the Commonwealth make complementary changes to the Act." 43 When the Treasury Legislation Amendment (Professional Standards) Act 2004 was first introduced in the Commonwealth Parliament it dealt only with professional standards and did not incorporate the amendments including s 74(2A). The original Second Reading Speech stated: "The purpose of this Bill is to amend the Trade Practices Act 1974 and other relevant Commonwealth legislation to support professional standards laws which are currently in force in New South Wales and Western Australia and which other jurisdictions are expected to adopt in due course. Professional standards laws seek to minimise damages claims against professionals through improved professional standards - by requiring risk management strategies, compulsory insurance cover, professional education and appropriate complaints and disciplinary mechanisms - in return for caps on the liability of professionals who are covered by schemes which have been gazetted under the relevant state or territory professional standards law." 44 Prior to the Bill being passed by the House of Representatives, the government moved amendments to the Bill that included s 74(2A). The Parliamentary Secretary moving the amendments for the government explained the additions in the following way in the Consideration in Detail Speech: " … [T]he intention of this bill is to support state professional standards laws by allowing liability for broad ranging provisions which might provide an alternative cause of action to the law of negligence to be limited in certain circumstances. It is in that context that the prohibition of misleading and deceptive conduct in section 52 of the Trade Practices Act has been broadly recognised as having the potential to be used as an alternative cause of action to negligence. Other provisions which are similarly capable of being used as an alternative to negligence in a wide range of circumstances are those in the Trade Practices Act and the Australian Securities and Investment Commission Act 2001. Those provisions imply into contracts an obligation to supply services with 'due care and skill' - a concept which has remarkable similarities to the duty of care required by the law of negligence. Contract law is ordinarily dealt with by the states and territories. Based on legal advice, the Commonwealth has concerns that some actions in contracts based on a breach of the condition that services be provided with due care and skill may not be subject to any limitations which might be applied by a state or territory contractual remedy. To this end, the Commonwealth has decided to make a minor amendment to clarify this issue. The proposed amendments will seek to ensure that state and territory reforms of the law of contract are not undermined." 45 The Supplementary Explanatory Memorandum issued with respect to these provisions (including s 74(2A) and its equivalent in the Australian Securities and Investment Commission Act (Cth)) stated: "1.1 The amendments to the Treasury Legislation Amendment (Professional Standards) Bill 2003 (the Bill) are to ensure that the Government's goal of supporting State and Territory reforms to improve the cost and availability of insurance to the Australian community is achieved. 1.2 The Bill supports State professional standards laws by allowing liability for broad-ranging provisions which might provide an alternative cause of action to the law of negligence to be limited in certain circumstances. In that context, the prohibition of misleading and deceptive conduct in s 52 of the Trade Practices Act 1974 had been broadly recognized as having the potential to be used as an alternative cause of action to negligence. 1.3 Other provisions which are similarly capable of being used as an alternative to negligence in a wide range of circumstances are those in the Trade Practices Act and the Australian Securities and Investments Commission Act 2001 which imply into contracts an obligation to supply services with 'due care and skill', a concept which has remarkable similarities to the duty of care required by the law of negligence. 1.4 While contract law is ordinarily dealt with by the State and Territories, the Commonwealth has been provided with legal advice that the effect of the High Court's decision in Wallis v Downard-Pickford (North Queensland) Pty Ltd is that actions in contract based on a breach of the condition that services be provided with 'due care and skill' would not be subject to any limitations which might be applied by a State and Territory to contractual remedies. 1.5 The amendments will seek to ensure that State and Territory reforms of the law of contract are not undermined." 46 In my opinion, this legislative history supports the interpretation of s 74(2A) which I have set out above. The principal focus of the legislature was on the capacity of the implied warranty of due care and skill to offer an alternative to the tort of negligence. A narrow reading of "applies" is not appropriate in this context.

The Respondent's Contentions 47 The Court has before it an application for leave to appeal. As is the Court's frequent practice, the matter was set down for a concurrent hearing of the leave application and, if leave is granted, of the appeal. Where that occurs the Court expects the respondent to identify in a formal way any steps that the respondent wishes the Court to take, should leave be granted and the appeal allowed. Specifically, the Court expects a contingent notice of contention to be prepared with respect to any propositions which the respondent wishes to submit support the orders of the first instance court on a basis different from that in the judgment. 48 In the present case, no such notice of contention was prepared. Nevertheless, written submissions were filed raising matters of that character. The applicant had adequate notice of the respondent's alternative contentions. Particularly in a context where the respondent did not seek to uphold the trial judge's reasons, the Court should accept the matters raised in such submissions as constituting, in effect, a notice of contention. 49 As I have noted above, his Honour dealt only with the claim in contract. His Honour did not deal with the alternative claim in tort. The respondent did not contend in her written submissions that the matter should be remitted for further determination of the claim in tort, a case which had been significantly attenuated at first instance. 50 The first contention advanced was that s 74(2A) of the Trade Practices Act (Cth) had no effect if the implied term to exercise reasonable skill and diligence was implied at common law, rather than by force of s 74(1) of the Trade Practices Act (Cth). Whether that is so, it remains necessary for the respondent to establish that the exclusion clauses relied on here are not effective. 51 The respondent submitted that s 68 of the Trade Practices Act (Cth) operated so as to avoid any purported exclusion of a common law implied term. This submission should be rejected. I have set out s 68 above. It clearly applies only to terms that exclude, restrict or modify the application of a warranty implied under the Trade Practices Act (Cth). Section 68 has no effect upon a term, such a those presently under consideration, that purports to exclude a warranty which is expressed in a contract or which is implied at common law into a contract by law or by interpretation. 52 In the circumstances of the present case, it is unnecessary to determine whether a term requiring the exercise of reasonable care, skill and diligence will be implied in a contract of this character. There is clear authority that such a term will be implied into professional contracts. (Astley v Austrust Ltd (1999) 197 CLR 1 at 21-23; Helicopter Sales (Australia) Pty Ltd v Rotor-work Pty Ltd (1974) 132 CLR 1 at 15; Breen v Williams (1996) 186 CLR 71 at 90-91.) There is authority in the Privy Council that such a term will be implied into a contract with a tour operator. (Wong Mee Wan v Kwan Kin Travel Services Ltd [1996] 1 WLR 38 at 46.) There is authority for implying a term of this character into a crop-spraying contract. (Costa Vraca Pty Ltd v Berrigan Weed & Pest Control Pty Ltd (1998) 155 ALR 714 at 720.) However, the authorities relied upon in that case were medical negligence cases. 53 The argument for extending an implied term of this character beyond the settled class of professional contracts would need to take into account the existence of overlapping duties in tort and the detailed provision for such terms made by the Trade Practices Act (Cth), subject to specific statutory exclusions. The Court was not addressed on the appropriateness of implying a term of this character into non-professional contracts. In any event, in view of my above conclusion, it is unnecessary to consider the matter. 54 Insofar as the respondent relied on s 68 to render void the exclusion clauses on which the applicant relies, my conclusion that s 74(2A) is applicable to s 5N(1) leads to the rejection of that submission. 55 By force of s 74(2A), s 5N of the Civil Liability Act has effect to "limit or preclude liability for … breach" of the term implied in the contract by s 74(1), by allowing the operation of a clause which excludes it. Accordingly, an exclusion clause so authorised, does not answer the description of a "term of a contract … that purports to exclude, restrict or modify … the application of" s 74, within the meaning of s 68(1)(a). That is confirmed by s 68(2) which provides that such a clause does not "exclude, restrict or modify", relevantly, s 74(1) unless it is "inconsistent" with s 74(1). Section 74(2A) ensures that there is no inconsistency. 56 The second submission made by the respondent was that his Honour did not in fact make a finding that the act of transportation from one tourist site to another was a "recreational service" within the meaning of s 5N(4) of the Civil Liability Act. This, apparently, is based on the reference in paragraph [41] of his Honour's reasons, set out above, where his Honour identified the alleged inconsistency between the concepts of "recreational activity" in s 5N of the Civil Liability Act and in the definition in s 68B(2) of the Trade Practices Act (Cth). His Honour indicated that this was not a "sporting activity or similar leisure time pursuit" within the definition in the latter Act. His Honour added: "To the extent that it might be suggested that this was a service which was 'incidental' to Mrs Young's pursuit of a 'recreational activity' (such as travel or leisure) within the meaning of these words in s 5N of the Civil Liability Act, then in my opinion s 5N is inconsistent with the Trade Practices Act ." 57 In view of this finding that s 5N did not apply at all, it was unnecessary for his Honour to expressly find, in terms, that what was involved was a "recreation service" within s 5N(4), picking up the definition of "recreational activity" in s 5K. The words "to the extent that it might be suggested" directly qualify the words "incidental to", which is an error. The phrase in s 5N(4) is broader extending to "in connection with or incidental to". 58 The better view of paragraph [41] of his Honour's reasons is that his Honour intended to conclude that the words in the parentheses, ie, "such as travel or leisure" do satisfy the concept of "recreational activity" in s 5K and, therefore, "recreational services" in s 5N(4). This is a finding. 59 In any event, the respondent made no submission to the effect that travel for holiday purposes did not fall within the concept of "activity engaged in for enjoyment, relaxation or leisure" on the proper interpretation of the statute. It was not suggested that some more limited meaning should be applied to the statutory formulation. The submission with which this Court must deal is based simply on the fact that there is no express finding. 60 In my opinion, even if I am wrong and there was no express finding, his Honour did implicitly make a finding that that was the case. His Honour had earlier set out a summary of the brochure for the "Romantic European" 20 day tour, which was described as "a tour of a lifetime", and had also found that the various services, including both accommodation and transportation, were included within the contract. His Honour added: "[34] … It goes without saying that these services were to be provided to ensure the defendant's patrons experienced pleasure, relaxation, comfort, enjoyment and safety." 61 Furthermore, his Honour went on to award damages for the disappointment of not being able to complete the tour. This is the subject of the second ground of appeal. 62 In these circumstances it appears to me that his Honour found that the relevant services, including transportation, were provided for the "enjoyment, relaxation or leisure" of the respondent within the natural meaning of those words. 63 Alternatively, on his Honour's findings of fact, I would find that the activity falls within the natural and ordinary meaning of "enjoyment, relaxation or leisure". 64 The respondent's next contention is that the terms of the exclusions in cl 3 and cl 4 of the contract do not apply on the facts of this case. The two exclusion clauses are set out at [12] above. 65 With respect to cl 3, the respondent contended was that it does not apply because the applicant failed to discharge its onus of proving that the bus driver was not under the "exclusive control" of the applicant. It was common ground that the bus driver was not employed by the applicant. However, counsel appearing below for the respondent contended that, even though the driver was not a direct employee, he did not accept that the driver was not under "exclusive control" of the applicant. 66 No express finding is made in this respect. His Honour did not need to make one on his approach to the case. Nevertheless, Rolfe DCJ engaged counsel in a discussion in which he appeared to suggest that it was up to the respondent to prove the proposition that the driver was not under the exclusive control of the applicant. This would have been in error, as the onus would have lain on the applicant in this respect. (The Glendarroch [1891] P 266 at 231; Shipping Corporation of India Ltd v Gamlen Chemical Co (A/Asia) Pty Ltd (1980) 147 CLR 142 at 168.) 67 His Honour indicated his approach in response to the respondent's counsel's contention that it was a reasonable inference to draw that the applicant was in control, in the following exchange: "HIS HONOUR: They can't be under their exclusive control. Someone owns the bus company. I mean they'd be under the control of whoever the owner of the bus company is. (COUNSEL): There's no allegation that - there hasn't been proof by the defendant equally that the tour director was employed by the bus company. HIS HONOUR: You're asking the Court to draw a ridiculous inference. (COUNSEL): All right we'll move on your Honour …" 68 Notwithstanding this exchange, no finding that the driver was not under the direct control of the respondent appears in the judgment. The applicant cannot rely on this exchange as if it were such a finding. 69 In this Court, counsel for the applicant did not identify any evidence which indicated the specific relationship that existed between the applicant and the operator of the bus. It may be that some inferences were available from the brochure to the effect that services were to be provided by an independent contractor. However, the extent of the control by the representative of the applicant escorting the tour over the driver during the course of the transportation was not the subject of any evidence. Nor was the Court's attention drawn to any particular matters which could ground an inference. In these circumstances, the submission that the applicant cannot rely on cl 3 should be upheld. 70 With respect to cl 4, the respondent contends that it did not apply because the exclusion is contingent on satisfaction of the introductory words, ie, "where the passenger occupies a motorcoach seat fitted with a safety belt …". The finding is, the respondent submits, that at the relevant time the respondent was not "occupying the seat but was standing to retrieve" items from her bag. On this basis the respondent submitted that the clause has no operation. 71 In my view, the submission should be rejected. The reference to the passenger 'occupying' a seat is not a reference to a particular point of time, but a reference to the availability of the seat belt in the particular seat at a time when the vehicle is in motion. That is to say, the word "occupies" is not to be understood in the sense that the tourist is in fact sitting down at the relevant time, but that he or she has a seat which has a seat belt. The intent of the clause was to ensure that the tourist wore the seat belt at all appropriate times, specifically whilst the bus was in motion. The term "occupies" was not to be understood in the sense of applying only to the period that the tourist was actually sitting down. 72 Accordingly, on this basis, the applicant is entitled to rely on cl 4. No other reasons for its inapplicability have been advanced.

Alternative Causes of Action 73 As I have indicated above, Rolfe DCJ did not deal with the claim in tort. In oral submissions the respondent raised the possibility of further consideration of the particulars of negligence in the pleadings. However, those submissions were directed to the reference in the first sentence of cl 3, set out at [12] above, which begins: "In the absence of their own negligence". This is immaterial because the applicant relied on the second sentence. In any event, I have found that the applicant cannot invoke cl 3. 74 The case pleaded in tort was significantly reduced at trial so as not to encompass the bus driver's conduct. The respondent did not seek any remitter of that cause of action. Save insofar as the word "negligence" had effect under cl 3, the respondent did not pursue the pleaded case in negligence in this Court. 75 In oral submissions, counsel for the respondent referred to the pleaded case of misrepresentations contrary to s 52 of the Trade Practices Act (Cth). There is no cross appeal. Counsel submitted that it should not have been obliged to proceed in that way because the Court only had before it an application for leave to appeal. 76 As I have noted above, this matter was set down for a concurrent hearing. No issue of this character was raised in written submissions. It arose for the first time at the end of counsel's oral submissions. The issue is not directly related to the appeal. If a breach of s 52 occurred, then the award of damages under s 82 of the Trade Practices Act (Cth) would be unconstrained by the Civil Liability Act. I would not have given leave to raise this issue. 77 In any event, counsel for the applicant submitted that, notwithstanding the pleadings, no case based on s 52 was advanced at trial. That appears to be correct. As factual findings are clearly required for a case based on s 52, this is not a matter that can be raised for the first time on appeal.

Damages 78 In view of the conclusion to which I have come it is not strictly necessary for me to deal with the appeal on damages. However, because of the possibility I advanced in State of New South Wales v Ibbett [2005] NSWCA 445; (2005) 65 NSWLR 168 at [21]-[22], I should indicate that I accept the reasoning of Basten JA and Sackville AJA on this issue. I accept Basten JA's analysis of the applicability of the reasoning in State of New South Wales v Corby [2010] NSWCA 27 and of the reasoning of Ipp and Basten JJA in Ibbett. I prefer the characterisation that grief, anxiety, distress and disappointment are elements of pain and suffering, rather than of "loss of amenities of life", within the definition of "non economic loss" in s 3 of the Civil Liability Act. 79 I agree with Basten JA that the distinction between "distress" and "disappointment" drawn by the trial judge is unpersuasive. I agree that his Honour erred in awarding damages for disappointment.

Conclusion 80 The appeal should be allowed. The orders I propose are:

1 Extend time to file a Notice of Intention to Appeal up to and including 8 July 2009.

3 Direct the applicant to file the notice of appeal within 14 days.

4 Upon filing of the notice pursuant to Order 3, allow the appeal and set aside the orders of Rolfe DCJ.

5 In lieu thereof, order that the proceedings in the District Court be dismissed with costs.

6 Grant the respondent a certificate under the Suitors' Fund Act 1951.

7 Order the respondent to pay the costs of the appeal. 81 BASTEN JA: In February 2005 the respondent (referred to below as "the plaintiff"), her husband and two other family members, through a travel agency in Burleigh Heads, agreed to purchase a European tour package provided by Insight Vacations Pty Ltd ("the applicant"). The tour commenced in October 2005 from London. 82 On 14 October 2005, whilst travelling by coach from Prague to Budapest, the plaintiff stood to take a highlighter from her hand luggage in an overhead compartment. As she was standing the driver of the coach braked suddenly causing her to fall and suffer injuries. At the time of the accident, the coach was on a motorway in Slovakia. 83 The plaintiff brought proceedings against the applicant, alleging that it was liable for the negligence of the coach driver, either in tort or pursuant to contract. In the District Court, Rolfe DCJ upheld the plaintiff's contractual claim and awarded damages: Young v Insight Vacations Pty Ltd [2009] NSWDC 122. Because of the relatively small award ($22,371) the applicant required leave to appeal: District Court Act 1973 (NSW) s 127. 84 The contractual liability of the applicant depended upon an implied warranty that the services which it supplied would be rendered "with due care and skill" within the meaning of that phrase in the Trade Practices Act 1974 (Cth), s 74(1). His Honour's finding of breach of that term, based on the finding of negligent, indeed dangerous, driving is not challenged. As explained by Spigelman CJ, the defence depended on a provision which relieved the applicant from liability for any injury arising from an accident or incident where the passenger occupied a motor coach seat fitted with a safety belt, which was not being worn at the time of the accident: cl 4. The primary question on liability was whether the applicant could rely upon that exclusion clause in the contract.

Claim in federal jurisdiction 85 The exercise of federal jurisdiction in a State court is a matter which requires express identification, in order to address the applicable legal principles. Once a claim was filed invoking an implied warranty under s 74 of the Trade Practices Act there was a matter in federal jurisdiction: Agtrack (NT) Pty Ltd v Hatfield [2005] HCA 38; 223 CLR 251 at [32] (Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ). The whole of the proceeding was then an exercise of federal jurisdiction: Re Wakim; Ex parte McNally [1999] HCA 27; 198 CLR 511 at [135] (Gummow and Hayne JJ). The jurisdiction of the District Court was conferred by s 39(2) of the Judiciary Act 1903 (Cth) and, generally, the applicable law was given effect by ss 79 and 80 of the Judiciary Act: see Bitannia Pty Ltd v Parkline Constructions Pty Ltd [2006] NSWCA 238; 67 NSWLR 9 at [32]-[33]. 86 The conventional approach, in considering the application of State law in federal jurisdiction, is to inquire first whether the law is invalid or inoperative as a result of the operation of s 109 of the Constitution. The relationship between s 109 and the provisions of the Judiciary Act (or at least s 79) has been described as "sequential rather than concurrent", because the operation of the constitutional provision is "anterior to any commencement or prosecution of a proceeding in a court": Agtrack, at [62]-[63]. However, it should not be inferred from that description that the applicable legal principles do not exist to govern the relevant conduct, prior to the institution of proceedings in which the legal effect of the conduct is in issue: Austral Pacific Group Ltd (In liq) v Airservices Australia [2000] HCA 39; 203 CLR 136 at [11]. The fact that the Constitution may preclude a law of a State operating in a court exercising federal jurisdiction is expressly recognised in the terms of s 79. 87 Pursuant to s 68(1) of the Trade Practices Act, any term of a contract that purported to exclude, restrict or modify the liability of a corporation for breach of a condition or warranty implied by Part 5, Division 2 (which included s 74) "is void". The avoidance of the exclusion clause is itself subject to two exceptions contained in s 68B, which applied in respect of a contract for the supply of "recreational services". For reasons given by the Chief Justice, those exceptions were not engaged. 88 However, the non-engagement of that provision did not exhaust its relevance. Although the reasoning is not set out in full in the judgement below, it appears that the trial judge considered that, to the extent that s 5N of the Civil Liability Act might have permitted a broader exclusion of liability than that provided by s 68B of the Trade Practices Act, s 68B was intended to cover the field and the State legislation would, to the extent of the inconsistency, be invalid: Constitution, s 109, judgment below, at [40]. 89 Two omissions arose, in part at least because neither party appears to have identified the nature of the legal exercise. The first was the omission to give notice to Attorneys-General pursuant to s 78B of the Judiciary Act, the cause involving a matter arising under the Constitution or involving its interpretation. The result was that no Attorney, not even the New South Wales Attorney, was heard in defence of the validity of a State law. (Failure to comply with s 78B did not invalidate the decision: Glennan v Commissioner of Taxation [2003] HCA 31; 77 ALJR 1195 at [13] (Gummow, Hayne and Callinan JJ).) 90 Secondly, the failure to address expressly the mechanism by which a State law might operate in federal jurisdiction may have resulted in the effect of s 74(2A) of the Trade Practices Act being overlooked. Section 74(2A) is one of several provisions in the Trade Practices Act which seek to identify expressly the inter-relationship between State law and the provisions of the Act: see, also, s 75. For the purposes of considering constitutional inconsistency between the Trade Practices Act and a State law, it was necessary to take into account the operation of such provisions. Thus, the applicant sought to rely on the exception contained within s 74 itself which was in the following terms: " 74 Warranties in relation to the supply of services … (2A) If: (a) there is a breach of an implied warranty that exists because of this section in a contract made after the commencement of this subsection; and (b) the law of a State or Territory is the proper law of the contract; the law of the State or Territory applies to limit or preclude liability for the breach, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract." 91 One possible operation of s 74(2A) was to pick up s 5N(1) of the Civil Liability Act (set out at [22] above) and apply it as federal law. If that were indeed a purpose and effect of s 74(2A), that would tend to undermine the conclusion that s 5N(1) was inoperative because it was inconsistent with the scope of s 68B. For reasons which will appear below, s 74(2A) should not be construed as giving effect to s 5N(1). Nevertheless, it was erroneous to consider the question of inconsistency without taking the possible operation of other provisions in the Trade Practices Act into account. 92 Further, s 74(2A) picks up and applies a law of the State which satisfies expressly identified conditions. In that respect, it is a law of a different kind from ss 79 and 80 which operate at a level of generality and which recognise that other laws of the Parliament may "otherwise provide". While it may be entirely appropriate to consider constitutional inconsistency before considering the operation of ss 79 and 80, it may invite error to adopt the same approach with respect to a specific provision which expressly picks up particular State laws and which is therefore likely to have a significant part to play in determining whether there is constitutional inconsistency.

Construction of Trade Practices Act (1) operation of s 74(2A) 93 The statutory context raises two inter-related questions. The first concerns the combined operation of s 74(2A) of the Trade Practices Act and s 5N of the Civil Liability Act; the second concerns the inter-relationship of s 68 of the Trade Practices Act with either or both of the other provisions. 94 Section 5N is found within Division 5 of Part 1A of the Civil Liability Act. That Division applies in respect of negligence for harm resulting from "a recreational activity engaged in by the plaintiff": s 5J(1). The term "recreational activity" is defined to include "any pursuit or activity engaged in for enjoyment, relaxation or leisure": s 5K(b). It is not in doubt that the plaintiff in the present case was involved in a recreational activity. It followed that the applicant was supplying her with "recreation services" for the purposes of s 5N of the Civil Liability Act. The language of s 5N(1) is apt to apply to a warranty implied in a contract pursuant to s 74(1) of the Trade Practices Act. 95 Linguistically, there is a mismatch between s 74(2A) and s 5N(1). The latter is not a provision which, in its terms, limits or precludes liability for breach of a contractual term. Rather, s 5N(1) permits the contracting parties to agree to a term to that effect. 96 It may be possible to read s 74(2A) as picking up a State or Territory law which either limits or precludes liability directly, or which permits that result indirectly, by authorising the parties to adopt such a contractual arrangement. However, there are contextual considerations which favour adoption of the former more restricted construction, in keeping with the language used. That language, it may be noted, does not in terms characterise the State legislation: it does not refer to a State law "which limits or precludes liability", nor to a State law which "authorises the parties to a contract to limit or preclude liability". Rather, it describes the effect or operation of the law. The question is whether that effect or operation is limited to the direct effect of the law itself, or whether it includes an effect or operation achieved by the term of a contract. 97 Although the terms of the legislative history, set out by the Chief Justice, do not assist in resolving the specific problem of construction of s 74(2A), the section itself reveals that it is intended to pick up laws from various jurisdictions and with ambulatory temporal operation, according to their effect, which may require a degree of flexibility in applying principles of statutory construction, to avoid anomalous and unintended results: see, eg, Bermingham v Corrective Services Commission of New South Wales (1988) 15 NSWLR 292 (Hope, Mahoney and McHugh JJA). Nevertheless, to give effect to that principle, it is necessary to discern the purpose of the legislation in order to identify the ordinary meaning of the language used as giving rise to some anomalous and unintended result. Neither interpretation of s 74(2A), as identified above, could be described as anomalous or necessarily unintended. 98 The first contextual consideration is the 'mischief' which the provision was intended to rectify namely, as explained by Sackville AJA, the consequence revealed in Wallis v Downard-Pickford (North Queensland) Pty Ltd [1994] HCA 17; 179 CLR 388. That case involved a claim for damages for goods damaged in transit as a result of the carrier's failure to use due care and skill. The claim relied upon a breach of the implied warranty in s 74(1) of the Trade Practices Act. The question was whether the damages were limited by a cap imposed on such claims by a Queensland Act. The High Court held that the Queensland legislative provision was inoperative because inconsistent with the scope of liability arising under the Trade Practices Act. The corrective amendment, now found in s 74(2A), was intended to avoid that consequence. 99 Secondly, there is no doubt that the Parliament was conscious of the need to protect statutory caps at the time of the amending Act, being the Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth), No 118 of 2004, given assent on 13 July 2004. Given assent on the same day was the Trade Practices Amendment (Personal Injuries and Death) Act (No 2) 2004, No 113 of 2004, which introduced Part VIB into the Trade Practices Act. That new Part had the effect of imposing statutory caps on damages for death or personal injury arising in proceedings under the Act. 100 Thirdly, the distinction between a contractual limitation on liability and a statutory limitation was reflected in the language of s 68, also contained within Part V, Div 2 of the Trade Practices Act at the time of the 2003 amendments. Section 68 rendered void a "term of a contract" that purported to exclude, restrict or modify either the application of provisions of the Division or liability of a corporation for breach of such a provision: s 68(1)(a) and (c). It is not merely that s 74(2A) could have expressly applied to laws of the State which permitted limitations on liability by way of a term of a contract, but rather that the Parliament might have been expected so to provide had that been its intention. (Such express provision may be found in the State equivalent of s 68, namely s 40M of the Fair Trading Act 1987 (NSW), referring directly to s 5N of the Civil Liability Act; an equivalent provision in the Trade Practices Act would have rendered s 68 subject to the operation of laws given effect by s 74(2A).) Significantly, that would have avoided the problem which must now be addressed, namely as to the inter-relationship of ss 68 and 74(2A). 101 Before turning to the second and related issue, namely the scope and operation of s 68, it is convenient to note two aspects of s 74 identified by the Chief Justice, which do not appear to me to affect the reasoning set out above. First, the fact that s 74(2A) is directed to the law of a State or Territory which is "the proper law of the contract" is, in my view, unsurprising. Section 74 operates with respect to the terms of certain contracts for the supply of services: when picking up and applying the law of a State or Territory which limits or precludes such liability, it is necessary to adopt a choice of law rule to identify the relevant State or Territory law. In my view neither the adoption of such a rule, nor the adoption of the particular rule, affects the issue now under consideration. 102 Secondly, I am unable to discern contextual significance in the operation of s 74(1). The question is whether s 74(2A) gives effect only to a State law which limits or precludes liability, or whether it extends to a State law which authorises the parties to a contract to limit or preclude liability by a term of the contract. The fact that s 74(1) operates by subjecting the contracts to which it applies to an "implied warranty" does not assist in answering that question.

(2) operation of s 68 103 By way of contrast to s 74(2A) the subject matter of s 68 is not a law of a State or Territory, but a term of a contract. It renders void any such term which purports to exclude, restrict or modify the application of, amongst other things, s 74(1): see s 68(1)(a). It will have that effect only where the term "does so expressly or is inconsistent with" that provision: s 68(2). This provision would seem to be unaffected by s 74(2A), even if the latter picked up a State law which permitted a contractual variation of liability. Section 74(2A) assumes the existence and operation of the implied warranty under s 74(1) and assumes that there has been a breach of that implied warranty: it does not pick up a State law which purports to exclude the existence of the implied warranty nor, a fortiori, a State law which permitted a contract to exclude the operation of the implied warranty. Accordingly, the addition of s 74(2A) cannot have affected the operation of s 68(1)(a), although there may be a fine distinction between a State law which assumes breach and precludes liability for the breach and one which purports to preclude the existence of a liability in the first place. 104 For present purposes, the key question arises where the term of a contract purports to exclude, restrict or modify "any liability of" a corporation for breach of an implied warranty under s 74(1): see s 68(1)(c). A State law which has that effect will be untouched by s 68(1), on any view of its operation. It can preclude liability for the breach of s 74(1) warranties. However, where the State law purports to give effect to a term of a contract, as does s 5N(1), it will have no effect because, pursuant to s 68(1)(c), the contractual term will have been rendered void as a result of inconsistency between the State law and the Commonwealth law. Because s 68 had long pre-dated the amendment to s 74, one might have expected s 74(2A) to reverse the operation of s 68(1), within its terms, had it wished to give effect to a State law which operated indirectly, through the term of a contract. No attempt was made to do that, either by rendering s 68(1) subject to s 74(2A) or by expressly addressing the issue in s 74(2A). 105 The effect of a State law which, in its own terms, restricts or precludes liability is a known quantity, not manipulable by contractual arrangements. The purpose of a Commonwealth law accepting the operation of such a State law is, therefore, also a known quantity. Different considerations might arise in relation to a State law which gave carte blanche to contracting parties to exclude the operation of a contractual term which would otherwise give rise to liability. Given that the Commonwealth law addressed the former class of State provisions and was effective in doing so, it is undesirable to extend it by judicial fiat to include a broader class of State provisions absent linguistic, historical or contextual support. Particularly is that so where the effect of that expansion is to limit the effectiveness of relief otherwise available under Commonwealth law. 106 It follows that s 74(2A) does not limit liability arising under s 74(1) by way of a State provision in the form of s 5N(1). To the same effect, s 5N(1) does not give effect to the term of a contract rendered void by s 68 of the Trade Practices Act. It could not have that effect otherwise than by the operation of a Commonwealth law. It is not suggested that there is any contender having that operation, other than s 74(2A). 107 For reasons given by the Chief Justice, the exclusion provided by cl 3 of the contract is unavailable to the applicant. On the basis that the exclusion provided by cl 4 is also unavailable, the applicant's challenge with respect to its liability must be rejected.

Damages 108 The draft notice of appeal contained a ground alleging error on the part of the trial judge in failing to reduce the plaintiff's damages on account of contributory negligence. With respect to a judgment based on breach of contract alone, that complaint would give rise to significant legal issues, which were not addressed either in written submissions or in the course of oral argument. Indeed, it was unclear if the ground was pressed. Further, his Honour rejected, on a factual basis, the claim that the plaintiff had caused or contributed to her own injuries by standing up from her seat: at [45]. Given these circumstances and the small amount of the damages, there should be no grant of leave to appeal in respect of that matter, if it were indeed pursued. 109 The second matter challenged in relation to damages was the inclusion of an amount of $8,000 on account of disappointment and inconvenience, in diminution of the contractual purpose, which was to provide a holiday, pleasure and relaxation, being matters compensable in accordance with Baltic Shipping Company v Dillon [1993] HCA 4; 176 CLR 344. The applicant did not seek to challenge the existence of such a head of damages; rather, it complained that the award of an additional amount for such a factor contravened s 16 of the Civil Liability Act. Section 16 provided that "the damages for non-economic loss are to be determined in accordance with the following Table", specifying a proportion of a maximum amount, depending upon an assessment of the suffering of the plaintiff as a proportion of a most extreme case. 110 On the reasoning set out above, this was a provision of State law which limited liability for a breach of the implied warranty under s 74(1) of the Trade Practices Act: it was, accordingly, applicable in assessing the extent of liability, pursuant to s 74(2A). The limited issue in dispute was whether s 16 applied in relation to that element of the award now in issue. 111 Although the amount in issue was small ($8,000), the application of the provision involves an issue of principle which can appropriately be addressed in the present context. In that respect, leave to appeal should be granted. 112 Section 16 appears in Part 2 of the Civil Liability Act, which applies "to and in respect of an award of personal injury damages": s 11A(1). The phrase "personal injury damages" is in turn defined to mean damages that "relate to the death of or injury to a person". The word "injury" is defined in s 11 to mean "personal injury" and to include: "(a) pre-natal injury, (b) impairment of a person's physical or mental condition, (c) disease". 113 One question raised by the definitions in s 11 is whether injury to feelings, disappointment, inconvenience, or any other similar state of affairs, can constitute an "impairment" of a person's mental condition. Secondly, even if the injury does not fall within the terms of the definition, the definition is inclusive and not necessarily comprehensive. Thirdly, damages for a particular loss may constitute "personal injury damages" because they are damages that "relate to" an injury to a person and may relate to another injury (such as a physical impairment) which does fall within the definition. Fourthly, and to the contrary effect, some forms of monetary compensation for injury may not constitute "personal injury damages", because they are not of a kind usually recoverable on an action in negligence. 114 Other provisions give rise to two distinctions relevant in this context. First, it is clear that Part 2, dealing with the assessment of "personal injury damages" distinguishes between economic loss and non-economic loss: Part 2, Division 2 (economic loss) and Part 2, Division 3 (non-economic loss). The phrase "economic loss" is not defined, but "non-economic loss" is, for the purposes of the whole Act, in s 3: " non-economic loss means any one or more of the following: (a) pain and suffering, (b) loss of amenities of life, (c) loss of expectation of life, (d) disfigurement." 115 The second distinction may be found in Part 3, dealing with "mental harm". In that Part, mental harm generally is distinguished from mental harm which consists of a recognised psychiatric illness: see, eg, ss 31 and 33. Relevantly for these purposes, there are definitions in s 27, to the following effect: " 27 Definitions In this Part: consequential mental harm means mental harm that is a consequence of a personal injury of any other kind. mental harm means impairment of a person's mental condition. … personal injury includes: (a) pre-natal injury, and (b) impairment of a person's physical or mental condition, and (c) disease. pure mental harm means mental harm other than consequential mental harm." 116 The first matter which may be derived from s 27 is that, by describing mental harm as a consequence of personal injury of "any other kind", the Act appears to treat mental harm as a form of personal injury. That is confirmed by the fact that "mental harm" means "impairment of a person's mental condition", and thus falls within the definition of personal injury, both in s 27 and in s 11. Although the definition of personal injury in s 27 is differently structured (not involving a separate reference to "injury"), it would be surprising if the definitions, being otherwise identical, meant something different in each part of the Act. 117 One effect of Part 3 is to deny an entitlement to an award of damages for economic loss for consequential mental harm not constituting a recognised psychiatric illness: s 33. If the impairment were "pure mental harm", there would be no liability to pay any damages unless the harm consisted of a recognised psychiatric illness: s 31. The present case involves consequential mental harm which, because it does not rise to the level of a recognised psychiatric illness, would not permit an award of damages for economic loss. Because none was made in the present case, this issue may be put to one side. 118 The analysis so far does not, however, answer the question whether damages for injury to feelings, disappointment and inconvenience fall within the concept of "non-economic loss" and are thus regulated by s 16. This question might be addressed by one of two approaches: on the one hand, it may be possible to distinguish different elements of harm, "distress" being an element of pain and suffering recoverable as non-economic loss, but "disappointment" being something different; that being the approach adopted by the trial judge in the present case, at [53]. On the other hand, the question may be approached at a higher level of generality, by saying that the kinds of damages which may be awarded for a breach of contract fall outside the scope of tortious damages, to which the Act was directed. The latter approach was adopted by Spigelman CJ in State of New South Wales v Ibbett [2005] NSWCA 445; 65 NSWLR 168 at [20]-[22]. 119 In Ibbett, a question arose as to the application of Part 2 of the Civil Liability Act in respect of damages for an assault. Part 2 of the Act does not apply in respect of "an intentional act that is done with intent to cause injury": s 3B(1)(a). The assault was pointing a gun at the plaintiff in manner likely to cause an immediate apprehension of harm. Assuming such an intention, did the apprehension of harm constitute an "injury" for the purposes of s 3B? The Court held that it did, although there was some variation in the process of reasoning. The Chief Justice was satisfied that, in s 3B, an apprehension of physical violence was a relevant injury: at [16]. Accordingly, Part 2 of the Act did not apply and it was not necessary to determine whether the exclusion of awards of exemplary and aggravated damages in s 21 had any operation, in relation to the assault. In its terms, s 21 applied in an action for an award of "personal injury damages", as defined for the purposes of Part 2 in s 11 and including damages relating to the impairment of a person's mental condition. The Chief Justice dealt with the application of this provision in the following passage: [21] The concept of 'personal injury' is reasonably well established in Australian legal practice. It has rarely, if ever, been used to refer to harm to reputation, deprivation of liberty, or to injured feelings such as outrage, humiliation, indignity and insult or to mental suffering, such as grief, anxiety and distress, not involving a recognised psychological condition. (See e.g. Baltic Shipping Co v Dillon ….) An award for the emotional harm involved in apprehension of personal violence would not generally be regarded as an award for 'personal injury damages'. [22] The issue is whether such harm should be so regarded by reason of the reference, in the inclusive definition of 'injury' in s 11, to 'impairment of a person's … mental condition'. I incline to the view that the emotional reaction, often called 'injured feelings', arising from the apprehension of physical violence and the accompanying sense of outrage or indignation is not an 'impairment of a mental condition'. However, the state of the law on mental harm at the time the Act was passed would need to be carefully reviewed before reaching a concluded view. The submissions did not undertake that task. This issue need not be determined." 120 It followed that the Chief Justice was inclined to treat the term "injury" as having a different meaning in s 3B and in Part 2. Because of the different purposes of the differing provisions and because the Act identifies definitions with a degree of confinement in their operation (s 11 definitions appear in Part 2 and apply only to Part 2) such a conclusion would clearly be available. However, other members of the Court did not approach the matter on that basis. Ipp JA held that "anxiety and distress would be an 'impairment' of a person's mental condition in accordance with the ordinary meaning of 'impairment', as the word is used in s 11": at [124]. 121 I was disinclined, in Ibbett, to divide the elements of s 21 so as to deal separately with the cause of the injury, required to be negligence, and the scope of "personal injury damages". Because the action was not in negligence, s 21 did not apply: at [216]. 122 A similar question arose in State of New South Wales v Corby [2010] NSWCA 27, in relation to a different provision in the Civil Liability Act. Mr Corby was an offender in custody at the time of alleged assaults. Absent a condition which Mr Corby did not satisfy, s 26C of the Act precluded an award of damages for economic and non-economic loss. Mr Corby accepted that he could not obtain compensatory damages, but nevertheless maintained a claim for aggravated and exemplary damages. The Court rejected his entitlement to aggravated damages, but allowed a claim for exemplary damages to proceed. Part 2A, within which s 26C is found, applied to and in respect of an award of "personal injury damages" in respect of "an injury to a person caused by negligence": s 26B. The question was whether factors of the kind identified by the Chief Justice in Ibbett fell outside the concept of an injury in s 26B. 123 In Corby, I noted that Ipp JA in Ibbett had concluded that the word "injury", whether in its ordinary meaning or as defined in s 11, was wide enough to encompass "anxiety and stress": at [41]. I noted that I had taken a similar view in Ibbett, namely that the ordinary meaning of the term "may not reflect a distinction drawn by the law between emotional distress and a psychiatric condition": at [212]. That was because emotional distress, at least when consequent upon a medically identifiable injury, could be reflected in an award of non-economic loss for pain and suffering. I further stated (with the agreement of Beazley and Tobias JJA) in Corby at [47]: "In the present case, the plaintiff sought to contend that even aggravated damages fell outside the concept of 'personal injury damages' in the Civil Liability Act . However, to reach that conclusion, it was necessary to adopt a definition of 'injury' which did not include matters such as humiliation and injury to feelings. That position is untenable. The general damages available for compensation for tortious conduct include damages for pain and suffering. There is no basis for limiting pain and suffering to physical suffering." 124 The present claim invoked a principle adopted in Baltic Shipping v Dillon; the significance of that decision was that it permitted recovery for disappointment and distress for breach of contract, in the absence of any physical injury. In considering whether such a claim should be allowed, Mason CJ stated at 359-360: "Pain and suffering is a well-known common law head of damage recoverable in actions for damages for personal injury, whether awarded for tortious conduct or conduct which constitutes a breach of statutory duty. And, in some circumstances at least, a plaintiff can recover damages for injury to his or her feelings caused by tortious conduct; assault, false imprisonment, malicious prosecution and defamation are causes of action in which a plaintiff may recover damages on that score. This is not surprising. As Lord Cranworth V-C observed in Kemp v Sober [61 ER 200, at p 201], 'the feeling of anxiety is damage'. No doubt his Lordship, by that statement, intended to convey that damages could be recovered by a plaintiff for anxiety, disappointment or distress when those feelings were the consequence of conduct for which damages are recoverable and the damages recoverable for that actionable wrong include compensation for injured feelings of that kind." 125 It is undoubtedly true, as the Chief Justice noted in Ibbett at [21], that injury to reputation, deprivation of liberty and outrage, humiliation, indignity and insult are not commonly referred to as forms of personal injury; rather they usually derive from torts other than negligence, often intentional torts. Matters such as grief, anxiety, distress and disappointment, may fall into a different category. They can be elements of pain and suffering which are the subject of awards for non-economic loss. Similarly, as reflected in the definition of non-economic loss in the Civil Liability Act, an award may be made for "loss of amenities", to cover the non-economic loss resulting from "the deprivation of the ability to participate in normal activities and thus to enjoy life to the full and to take full advantage of the opportunities that otherwise it might offer": Teubner v Humble [1963] HCA 11; 108 CLR 491 at 506 (Windeyer J). This is not a different concept from that accepted in Baltic Shipping; where such damages are said to flow from a breach of contract, they are limited to the loss of the benefit to be provided under the terms of the contract. These, however, are heads of damage which fall within the general law understanding of non-economic loss and the statutory definition of that term. Accordingly, they are subject to the constraints imposed by s 16. 126 The trial judge was conscious of the fact that some at least of the elements for which the plaintiff was seeking compensation were covered by that definition. He accepted that "any distress suffered by the plaintiff" was within the concept of pain and suffering, but held that "disappointment is something different": at [53]. Thus his Honour purported to award a separate amount for damages for disappointment only, namely $8,000: at [56]. 127 With respect, the distinction is not persuasive. Distress and disappointment are closely related concepts, in a practical sense, and each is concerned with the loss of enjoyment of an opportunity for recreation and relaxation. That loss falls within the scope of available compensation under general law principles for the tort of negligence. To excise one element so as to avoid the constraints imposed by s 16 of the Civil Liability Act is an artificial exercise which does not accord with the definition of "non-economic loss". Such an exercise will almost inevitably give rise to a risk of double-counting, as noted by Samuels JA in Kokl v Kablar [1989] NSWCA 127: "… I have never in my experience encountered a suggestion that separate estimates should be made for each of the components, that is to say, for pain and suffering separately from loss of amenities and separately for loss of enjoyment, and that element itself segregated from the second of the three." 128 Because, in the reasons of the trial judge in Kokl, there had been discussion of the separate elements, his Honour noted that there could have been an appearance of double-counting. In Pascoli v Spittle [1989] 9 MVR 573, the complaint was that the trial judge had made an award for pain and suffering and general discomfort, and a separate award for what he described as "loss of enjoyment of life". In rejecting the appeal against those amounts, Hope AJA stated (Samuels and Priestley JJA agreeing): "The problem involved in adopting such an approach is that there is almost inevitably an overlapping between the injury itself and the consequential pain, suffering and discomfort on the one hand and the interference with the enjoyment of life on the other hand, and it is very difficult to disentangle them, even though in approaching the total amount to be awarded for damages some preliminary view may be adopted by the trial judge as to the relative seriousness of each element." 129 It is sufficient for present purposes to conclude that elements of distress and disappointment resulting from the physical injury in the course of the holiday, would have warranted inclusion in an award of damages for non-economic loss under the general law in relation to negligence. Accordingly, his Honour was in error in seeking to separate out some element on account of disappointment. 130 It is, of course, possible that, had his Honour included the element of "disappointment" in his assessment of the proportion of a most extreme case under s 16, he might have reached a higher degree of severity than 18%. However, the plaintiff did not seek to justify the result in the present case on a different basis and that possibility should be put to one side. The award of damages should be reduced by the amount allowed as a separate head for "disappointment", that is a reduction of $8,000. Because interest was awarded only on that component of her damages, the final award must be reduced by the further amount of $2,871. The remaining amount is that assessed for non-economic loss, in accordance with s 16 of the Civil Liability Act, namely $11,500.

Conclusions 131 There should be a grant of leave to appeal in respect of the liability of the applicant and the elements of damages last discussed. Otherwise leave should be refused. 132 The appeal with respect to the question of liability must be dismissed. The challenge to the assessment of damages, should be upheld and a lower figure substituted, to have effect from the date of the judgment below. Costs 133 The appellant was ordered to pay the plaintiff's costs in the District Court. As the plaintiff has retained a judgment, but for a lesser amount, and in the absence of any submissions contending for a different result, she should retain the benefit of that order. 134 In respect of the costs of the appeal, each party has had a degree of success. With respect to liability, the appellant has successfully challenged aspects of the reasoning of the trial judge, but has not achieved a different result with respect to liability. It has been successful on an issue with respect to damages, although the argument in that respect was a secondary part of the hearing and no reference was made by either party to the relevant authorities in this Court. In these circumstances, each party having been partly successful and partly unsuccessful, it is appropriate that there be no order as to the costs of the appeal. It is, however, appropriate that the plaintiff (as the respondent in this Court) have a certificate under the Suitors' Fund Act 1951 (NSW), in respect of her costs.

(1) Grant leave to appeal in respect of the grounds set out in the draft notice of appeal other than ground 5 (which related to contributory negligence).

(2) Direct that the appellant file the draft notice of appeal within 14 days of the date of judgment.

(3) Allow the appeal in part and set aside the judgment given in the District Court in favour of the plaintiff.

(4) In lieu thereof give judgment for the plaintiff (Stephanie Young) in an amount of $11,500, such judgment to take effect on 4 June 2009.

(6) Grant the respondent a certificate under s 6 of the Suitors' Fund Act 1951 (NSW). 136 SACKVILLE AJA: I have had the advantage of reading the judgment of Spigelman CJ in draft. Subject to what is said below concerning the relationship between s 74(2A) of the Trade Practices Act 1974 (Cth) ("TP Act") and s 5N of the Civil Liability Act 2002 ("CL Act"), I agree with his Honour's reasons. However, because of my view that s 74(2A) of the TP Act does not pick up or apply s 5N(1) of the CL Act, I have concluded that the primary Judge's finding that the applicant is liable to the respondent for breach of the term implied in the contract by s 74(1) of the TP Act must stand, although not for the reasons given by the primary Judge. This conclusion requires me to consider the challenge to the primary Judge's award of damages for "disappointment".

Relationship Between Commonwealth and State Provisions 137 The precise relationship between s 74(2A) of the TP Act and s 5N of the CL Act was referred to in argument but was not the subject of detailed submissions. Nonetheless, I think that it is necessary to address the issue to resolve the appeal. 138 Section 74(1) of the TP Act implied in the contract between the applicant, as a corporation supplying services, and the respondent, as the consumer of those services, a warranty that the services would be rendered with due care and skill. As was explained by the High Court in Wallis v Downard-Pickford (North Queensland) Pty Ltd [1994] HCA 17; 179 CLR 388 ("Wallis"), s 74(1) creates an obligation which takes effect by a legal fiction, namely that the parties have made a contract which includes the implied term: at 398, per Toohey and Gaudron JJ (with whom Deane, Dawson and McHugh JJ agreed). 139 Section 74(2A) of the TP Act (reproduced at [17] above) applies the law of New South Wales to the contract between the applicant and the respondent, provided two conditions are satisfied. The two conditions are, relevantly, that: (a) there is a breach of an implied warranty that exists in the contract because of s 74(1); and (b) the law of New South Wales is the proper law of the contract.

If these conditions are satisfied, the effect of s 74(2A) is that the law of New South Wales: "applies to limit or preclude liability for the breach, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of a liability, for breach of another term of the contract." 140 Section 74(2A) of the TP Act must be construed taking into account s 75(1), which provides that, subject to an immaterial exception, Part V of the TP Act (including s 74) is not intended to exclude or limit the concurrent operation of any law of a State. The effect of this provision is that Part V of the TP Act is not an exhaustive enactment on the topics with which it deals and is not intended to operate to the exclusion of State laws on those topics, although it does not avoid any direct inconsistency between Part V and a law of a State: The Queen v Credit Tribunal; Ex parte General Motors Acceptance Corporation [1977] HCA 34; 137 CLR 545, at 564, per Mason J. 141 Section 74(2A) of the TP Act appears to contemplate a situation where a warranty exists by reason of s 74(1) and the warranty has been breached. In these circumstances, if the preconditions are satisfied, s 74(2A) applies a State law which limits or precludes liability for that breach. In other words, s 74(2A) proceeds on the basis that the statutory implied warranty forms part of the contract and that the warranty has been breached. Section 74(2A) of the TP Act then applies as federal law a State law which limits or precludes liability for breach of the implied warranty: cf Hooper v Hooper [1955] HCA 15; 91 CLR 529, at 536-537, per curiam; Western Australia v Commonwealth [1995] HCA 47; 183 CLR 373, at 484-485. 142 The structure of s 74(2A) would seem to be explained by its origins. The subsection was inserted into the TP Act by the Treasury Legislation Amendment (Professional Standards) Act 2004 (Cth). The Supplementary Explanatory Memorandum to the legislation states that the Commonwealth had been given advice that the effect of the decision of the High Court in Wallis was that: "actions in contract based on a breach of the condition that services be provided with 'due care and skill' would not be subject to any limitations which might be applied by a State … to contractual remedies."

The object of the legislation was said to be to " ensure that State … reforms of the law of contract are not undermined ". 143 In Wallis, it was held that s 74(1) of the TP Act, by implying a warranty into certain contracts, created not merely contractual rights, but "full contractual liability for breach": 179 CLR at 396, per Toohey and Gaudron JJ. The Queensland legislation at issue in Wallis provided that a carrier was not to be liable under a contract for loss of or injury to goods entrusted to the carrier in an amount greater than $20 per package, unless disclosure of true value was made in advance. The legislation therefore took effect once the carrier was liable for loss and limited that liability to a fixed dollar amount. Since the Queensland Act purported to limit the liability of the carrier for breach of the contractual warranty implied by statute, there was a direct inconsistency between it and s 74(1), in the sense that the Queensland Act detracted from the full operation of a right granted by the TP Act. The limitation of liability in the Queensland Act was therefore rendered invalid by reason of s 109 of the Constitution. 144 The drafter of s 74(2A) of the TP Act appears to have accepted that s 74(1) creates both a contractual right and a "full contractual liability for breach". Since the operation of s 74(2A) is contingent on a breach of an implied warranty (not merely an allegation of breach), it applies only a State law limiting or precluding the full contractual liability for breach. The language of s 74(2A) is not apt to pick up or apply a State law which purports to negate the very existence of the statutory warranty. 145 It is true that s 74(2A) applies State laws that go further than the Queensland legislation considered in Wallis. That legislation did not preclude all liability of the carrier for breach, but merely limited the carrier's liability to a specified amount per package. Section 74(2A) applies a law of a State that not only limits liability but precludes liability and recovery of liability for breach of the implied warranty. 146 Even so, the language of s 74(2A) appears to require the existence of the implied warranty and a breach of that warranty before the provision applies a State law. If this is correct, s 74(2A) would not pick up and apply a State law which purported to exclude the implied statutory warranty. (Leaving aside s 74(2A), a State law which purported to exclude the statutory warranty would be directly inconsistent with s 74(1) and, to that extent, would be rendered invalid by s 109 of the Constitution). Nor would s 74(2A) pick up and apply a State law which purported to authorise a service provider to exclude the implied statutory warranty from the contract. (Leaving aside s 74(2A), a term of a contract that purported to exclude the implied statutory warranty, even if the term was authorised by a State law, would be rendered void by s 68(1)(a) of the TP Act.) 147 A State law that does not purport to exclude or authorise a term excluding the implied statutory warranty, but merely limits or precludes liability for breach of the warranty, is picked up and applied by s 74(2A). There is, however, a question as to whether s 5N(1) of the CL Act is a law that limits or precludes liability for breach of the implied warranty in the relevant sense. 148 Section 5N of the CL Act (reproduced at [22] above) uses language similar to that employed by s 74(2A) of the TP Act. It applies, relevantly, where:

a contract contains an implied warranty that services will be rendered with reasonable care and skill;

but for s 5N, the service provider would be liable for the breach.

In these circumstances, s 5N provides that a term of the contract may exclude, restrict or modify any liability that results from breach of the implied warranty. 149 Section 5N of the CL Act does not purport to exclude the warranty implied into a contract by s 74(1) of the TP Act. Nor does s 5N purport to permit the parties to a contract to exclude the implied warranty. Rather, s 5N allows the contract to include a term that excludes or limits liability for breach of the warranty. 150 If cl 4 of the contract in the present case (reproduced at [12]) purported to exclude the warranty implied in the contract by s 74(1) of the TP Act, it would not come within the language of s 5N of the CL Act. However, cl 4 does not purport to exclude the warranty, but to deny liability for breach of the warranty where a passenger in a motor coach is injured while not wearing a seat belt. Clause 4 is therefore a term of a contract that excludes or restricts liability that results from the breach of the implied statutory warranty. Accordingly, cl 4 is, in my opinion, within s 5N(1) of the CL Act. 151 The question is then whether s 74(2A) of the TP Act applies s 5N(1) of the CL Act to the present case. The answer turns on whether s 74(2A) of the TP Act picks up and applies only a State law that, by its own terms, limits or precludes liability for breach of the implied statutory warranty, or whether it also picks up and applies a State law that authorises the inclusion of a contractual provision that limits or precludes liability for such a breach. Examples of laws that, by their own terms, limit or preclude liability are the Queensland Act in issue in Wallis and legislation imposing a cap on damages recoverable for breach of warranty such as Part VIB of the TP Act (which limits the sums recoverable as personal injury damages for contraventions, inter alia of s 74(1) of the TP Act). As Basten JA points out, Part VIB was introduced into the TP Act at the same time as s 74(2A). 152 The parties' written submissions did not address this question of construction. Nor did the oral submissions address it in any depth. However, the point was raised directly in argument and was put to Mr Campbell SC, who appeared with Mr Talintyre, for the applicant. Mr Campbell appreciated the point put to him. 153 In these circumstances, I think it is appropriate for this Court to deal with the question of construction. I agree with Basten JA that the language of s 74(2A) of the TP Act does not provide an unequivocal answer, but that the better view is that s 74(2A) does not apply a State law which merely authorises a contractual provision that limits or precludes liability for a breach of the implied statutory warranty. Section 74(2A) of the TP Act applies only State laws which, by their own terms, limit or preclude liability for breach of the implied statutory warranty. My reasons for reaching this conclusion are essentially those given by Basten JA at [96]-[102] of his Honour's judgment. 154 It follows that s 74(2A) of the TP Act does not pick up or apply s 5N(1) of the CL Act to the contract. Clause 4 of the contract is rendered void by s 68(1)(c) of the TP Act, since it is a term of the contract that purports to have the effect of restricting or modifying the liability of the appellant for breach of the statutory warranty.

Damages 155 The final issue is whether the primary Judge erred in awarding the respondent damages of $8000 for the "disappointment" she experienced in not being able to enjoy properly the remainder of the tour following the injuries she sustained as a passenger in the coach. This turns on the operation of Part 2 of the CL Act which is picked up and applied in the present case by s 74(2A) of the TP Act.

Legislation 156 Part 2 of the CL Act (ss 11-26) applies "to and in respect of an award of personal injury damages": s 11A(1). Part 2 applies regardless of whether the claim is brought in tort, in contract, under statute or otherwise: s 11A(2). 157 Section 11 of the CL Act contains the following definitions: "In this Part: injury means personal injury and includes and following: (a) pre-natal injury, (b) impairment of a person's physical or mental condition, (c) disease. Personal injury damages means damages that relate to the death of or injury to a person." 158 Section 16 of the CL Act relevantly provides as follows: "(1) No damages may be awarded for non-economic loss unless the severity of the non-economic loss is at least 15% of a most extreme case. … (3) If the severity of the non-economic loss is equal to or greater than 15% of a most extreme case, the damages for non-economic loss are to be determined in accordance with the following Table …" 159 The expression "non-economic loss" is not defined in Part of the CL Act, but is defined in s 3, as follows: "(a) pain and suffering, (b) loss of amenities of life, (c) loss of expectation of life, (d) disfigurement."

Section 3 also defines " damages " to include any form of monetary compensation.

Primary Judgment 160 The primary Judge accepted that the respondent could not recover damages for any "distress" that she suffered in consequence of the injuries sustained by her on the coach as the result of the coach driver's negligence. His Honour held that "distress" had to be regarded as "pain and suffering" and thus constituted "non-economic loss" as defined in s 3 of the CL Act. He considered that the respondent's claim for damages in respect of distress was precluded by s 16, except presumably insofar as it could be taken into account in determining the severity of the respondent's non-economic loss for the purposes of applying the Table in s 16(3). There is no challenge to the rejection of the respondent's claim for damages in respect of distress. 161 The primary Judge nonetheless held (at [54]) that the respondent was entitled to damages for: "the disappointment of not being able to properly enjoy the remainder of her tour."

His Honour noted (at [51]-[52]) the respondent's claim was similar to that made by the plaintiff in Baltic Shipping Co v Dillon (1993) 176 CLR 344, where the High Court had: "decided that where there is a contract the object of which is to provide enjoyment and relaxation, damages for disappointment and distress resulting from a breach are recoverable." 162 The primary Judge considered that the claim for damages for disappointment was "something different" from the claim in relation to distress. According to his Honour (at [53]) a damages award of the kind made in Baltic Shipping Co v Dillon and the earlier English decisions of Jarvis v Swan Tours Ltd [1973] 1 QB 233 and Jackson v Horizon Holdings Ltd [1975] 3 All ER 92, is based on the principle that damages are recoverable for losses flowing from a breach of contract if they: "can fairly and reasonably be considered to arise naturally or may reasonably be supposed to have been in the contemplation of the parties."

Reasoning 163 The primary Judge found (at [43]) that the applicant breached the implied statutory warranty requiring the services provided to the respondent to be rendered with due care and skill and that the respondent was therefore entitled to damages for breach of contract. His Honour also found that the breach of contract caused the physical injuries sustained by the respondent. 164 Whatever uncertainties may arise in relation to the expression "personal injury" in Part 2 of the CL Act (State of New South Wales v Ibbett [2005] NSWCA 445; 65 NSWLR 168, at 172 [21], per Spigelman CJ), in the present case the respondent clearly sustained personal injury in consequence of the applicant's breach of contract. If the damages awarded for disappointment flowing from the respondent's inability, by reason of the personal injury, to enjoy the remainder of her holiday, were damages that "relate[d] to" her injury, they were "personal injury damages" (s 11) and Part 2 of the CL Act applied in respect of the award of such damages (s 11A(1)). 165 Under the general law, the usual heads of non-pecuniary damage are the four heads identified in the definition of "non-economic loss" in s 3 of the CL Act: H Luntz, Assessment of Damages for Personal Injury and Death: General Principles (2006), at [5.1]. In Teubner v Humble [1963] HCA 11; 108 CLR 491, Windeyer J said (at 506) that "loss of amenities" is the name commonly and conveniently, although not happily, given to the non-economic result of the destruction or diminution of a faculty: "because of the deprivation of the ability to participate in normal activities and thus enjoy life to the full and to take full advantage of the opportunities that otherwise it might offer." 166 It has been accepted for a considerable time that damages for personal injuries occasioned by the negligence or breach of duty can include compensation for the ruination or loss of a holiday attributable to the injuries. Such damages are ordinarily assessed as part of the damages for non-pecuniary or non-economic loss sustained by the plaintiff in consequence of his or her injuries: Ichard v Frangoulis [1977] 2 All ER 461, at 462, per Peter Pain J; McCreary v Whitney (1987) 6 MVR 303, at 306-307, per Cox J (S Ct Tas); Graham v Voigt (1989) 89 ACTR 11, at 20, per Kelly J; Bosch v Liebe [1976] VR 265, at 266, per Dunn J, (with whom Gowans and Menhennit JJ agreed); North v Thompson [1971] WAR 103, at 107 per Burt J; Linke v Howard [1967] SASR 83, at 86, per Hogarth J. 167 Damages so assessed answer the description of damages for loss of amenities of life in the sense used by Windeyer J in Teubner v Humble. Thus learned text writers have classified damages awarded for loss of enjoyment of a holiday, where the loss is occasioned by the negligence or breach of duty of the defendant, as damages for loss of amenities of life: H Luntz, Assessment of Damages for Personal Injury and Death (4th ed 2002), at [3.3.7]; McGregor on Damages (19th ed 2009), at [35-263]. 168 As the primary Judge noted, it is also well established that breach of a contract under which the party allegedly in breach has agreed, for example, to provide pleasure, entertainment or relaxation, may lead to an award of damages for disappointment and distress: Baltic Shipping Co v Dillon (1993) 176 CLR 344, at 381, per Deane and Dawson JJ; see also at 363-365, per Mason CJ (with whom Toohey and Gaudron JJ agreed). Such an award can be made regardless of whether the plaintiff has suffered any physical injury or psychiatric condition. Thus in Jarvis v Swan Tours and Jackson v Horizon Holidays, each of the plaintiffs recovered damages for disappointment and distress by reason of the holiday provider's failure to live up to contractual promises, without having alleged that they had sustained physical injury or psychiatric illness. 169 The facts of Baltic Shipping Co v Dillon were different. There a cruise ship sank off the coast of New Zealand eight days into a fourteen day cruise. The trial judge (Carruthers J) found that the plaintiff sustained significant physical injuries and was left with "serious emotional scars" in consequence of her terrifying experience: Dillon v Baltic Shipping Co (1989) 21 NSWLR 614, at 669. The defendant, the operator of the cruise vessel, ultimately admitted that it was vicariously liable for the negligence of the pilot of the vessel: 21 NSWLR, at 618. Carruthers J awarded the plaintiff $35,000 as damages for personal injuries, an award upheld by the New South Wales Court of Appeal: see 21 NSWLR, at 669-670; Baltic Shipping Co v Dillon (1991) 22 NSWLR 1, at 25-26, per Kirby P. Although it is not entirely clear whether the damages award for personal injuries was based on the defendant's admitted negligence (as distinct from any breach of contract), it would seem that the damages were awarded by reason of the defendant's tortious breach of duty. 170 Carruthers J also awarded the plaintiff $5,000 as compensation (at 668): "for her disappointment and distress at the loss of the entertainment and facilities for enjoyment which had been promised by the defendant."

His Honour noted that this claim was founded on the principles laid down in Jarvis v Swan Tours and Jackson v Horizon Holidays , and was: "made quite distinctly from the personal injuries claim for the psychological trauma resulting from the casualty." 171 Neither Carruthers J nor the judgments in the Court of Appeal explain why the plaintiff did not seek compensation for disappointment and distress as a component of her damages for non-economic loss caused by the defendant's breach of duty. Presumably, however, the view was taken that the disappointment and distress was not a result of the plaintiff's injuries but of the sinking of the ship. 172 The High Court, in upholding the award of damages for disappointment and distress, did not classify the award by reference to the four heads of non-pecuniary damage. However, Mason CJ pointed out (at 362) that: "it is beyond question that a plaintiff can recover damages for pain and suffering, including mental suffering and anxiety, where the defendant's breach of contract causes physical injury to the plaintiff." It would seem to follow, as a matter of principle, that a plaintiff who suffers physical injury by reason of the defendant's breach of contract may also recover damages for loss of amenities. As Windeyer J pointed out in Teubner v Humble , at 505, the amount awarded for general damages is a single amount that is appropriate in the circumstances and " is not the sum of rigidly separate and independent items ". 173 In my view, the damages awarded by the primary Judge in the present case for disappointment constituted "damages that relate to the … injury of a person" within the definition of "personal injury damages" in s 11 of the CL Act. The disappointment, on the primary Judge's findings, resulted from the respondent's inability to enjoy her tour by reason of the injuries sustained in the course of the tour. These injuries were the consequence of the applicant's breach of the implied term of the contract obliging it to render the relevant services with due care and skill. It follows that Part 2 of the CL Act applies to the award. 174 I also think that the damages were awarded to the respondent for non-economic loss, within the meaning of s 16(1) of the CL Act. It is true that damages were awarded for breach of contract on the Baltic Shipping Co v Dillon principle, rather than in respect of a tortious breach of duty. Nonetheless, s 11A(2) of the CL Act plainly contemplates that damages for "non-economic loss" (as defined in s 3) can be awarded as compensation for personal injury in a claim brought in contract. The assumption underlying s 11A(2) is borne out by the observations of Mason CJ in Baltic Shipping Co v Dillon to which I have referred. 175 The damages awarded by the primary Judge for "disappointment" fall within the description of damages for loss of amenities given by Windeyer J in Teubner v Humble. The award in the present case therefore was compensation for loss of amenities of life. The fact that the loss was less serious and related to a shorter period than, say, the loss of amenities associated with a permanent physical disability does not detract from that conclusion. 176 The primary Judge did not find it necessary to consider the respondent's claim in tort. Had he done so and had he found the applicant liable to the respondent for breach of the applicant's duty to exercise reasonable care, the applicant's damages would have included compensation of distress and disappointment. Such an award would clearly have been caught by s 16(1) of the CL Act and thus the damages under this head could not have been awarded otherwise than in accordance with the Table in s 16(3). In view of s 11A(2) of the CL Act, it should make no difference that the respondent is entitled to the same damages for breach of the applicant's contractual duty to render services with due care and skill. 177 It follows that the primary Judge was in error in awarding damages for disappointment independently of the Table in s 16(3) of the CL Act.

Conclusion 178 I agree with the orders proposed by Basten JA.

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