[2015] NSWCA 219
Baltic Shipping Company v Dillon (1993) 176 CLR 344[1993] HCA 4
Baxter v Obacelo Pty Ltd (2001) 205 CLR 635[2001] HCA 66
Capic v Ford Motor Co of Australia Pty Ltd [2021] FCA 715(2021) 154 ACSR 235
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64[1991] HCA 54
Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307[2000] FCA 1099
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540[2002] HCA 54
Haines v Bendall (1991) 172 CLR 60
House v The King (1936) 55 CLR 499[1936] HCA 40
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377[1951] HCA 79
Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234
Milner v Carnival plc (t/as Cunard) [2010] 3 All ER 701(2022) 160 ACSR 232
Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326[2020] HCA 17
Moran v McMahon (1985) 3 NSWLR 700
Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388[2004] HCA 3
Plymouth Brethren (Exclusive Brethren) Christian Church v The Age Company Ltd (2018) 97 NSWLR 739[2018] NSWCA 95
Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd [2021] NSWCA 206(2021) 393 ALR 162
Robinson v Harman: see (1848) 1 Exch 850
154 ER 363
Ruaro v Ferrari [2007] FCA 2022
Valve Corp v Australian Competition and Consumer Commission (2017) 258 FCR 190
[2017] FCAFC 224
Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426
Judgment (40 paragraphs)
[1]
Consumer Commission (2017) 258 FCR 190; [2017] FCAFC 224
Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702
Texts Cited: N C Seddon and R A Bigwood, Cheshire & Fifoot: Law of Contract (11th Australian edition, LexisNexis, 2017)
Category: Principal judgment
Parties: Scenic Tours Pty Ltd (Appellant)
David Moore (Respondent)
Representation: Counsel:
D Weinberger and A Jordan (Appellant)
J Hogan-Doran SC, N Li and M Thompson (Respondent)
[2]
Solicitors:
SWS Lawyers (Appellant)
Somerville Legal (Respondent)
File Number(s): 2022/00136307
2022/00140758
Publication restriction: Nil
Decision under appeal Court or tribunal: Supreme Court of NSW
Jurisdiction: Common Law
Citation: [2022] NSWSC 270
Date of Decision: 14 April 2022
Before: Garling J
File Number(s): 2014/00223271
[3]
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
[4]
HEADNOTE
[This headnote is not to be read as part of the judgment]
In 2014 the respondent, Mr David Moore, commenced a representative proceeding on behalf of himself and approximately 1500 group members against the appellant, Scenic Tours Pty Ltd (Scenic Tours), in relation to 13 European river cruises conducted by Scenic Tours that were scheduled to depart between 19 May 2013 and 12 June 2013. Instead of the marketed "once in a lifetime cruise along the grand waterways of Europe", the conduct of those river cruises was substantially disrupted by the decisions and actions taken by Scenic Tours when it was confronted with high water levels on the rivers owing to heavy rainfall and flooding which occurred in Europe from April through June 2013.
In a judgment dated 31 August 2017 (Moore v Scenic Tours Pty Limited (No 2) [2017] NSWSC 733), Garling J relevantly found that Scenic Tours breached the consumer guarantees in ss 61(1) and 61(2) of the Australian Consumer Law (ACL) in respect of 10 of the 13 cruises, which findings were not disturbed by subsequent appellate processes. Section 61(1) provides that, where in relevant consumer transactions for the supply of services a consumer expressly or impliedly makes known to a supplier any particular purpose for which the services are being acquired, there is a guarantee that the services will be reasonably fit for that purpose. Section 61(2) imposes on such transactions a statutory guarantee that, where a consumer expressly or impliedly makes known to a supplier the result which the consumer wishes the services to achieve, the services will be of such a nature and quality, state or condition that they might reasonably be expected to achieve that result. Section 61(3) provides that the section does not apply if the circumstances show that the consumer did not rely on, or it was unreasonable for the consumer to rely on, the skill or judgment of the supplier.
In his 2017 decision Garling J found that the defence under s 61(3) of the ACL did not apply as regards Mr Moore. Whether the defence applied in respect of other group members was left for future determination. His Honour awarded damages to Mr Moore which comprised compensation both for a reduction in the value of services (under s 267(3) of the ACL) and damages for distress and disappointment (under s 267(4) of the ACL). His Honour did not then assess damages in respect of other group members.
The Court of Appeal overturned the award of damages in part, holding that Mr Moore and the other group members were precluded by s 275 of the ACL and s 16 of the Civil Liability Act 2002 (NSW) from claiming damages for distress and disappointment (Scenic Tours Pty v Moore [2018] NSWCA 238; (2018) 361 ALR 456). That decision was overturned by the High Court (Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17), which held that Mr Moore and the other group members were entitled to damages for distress and disappointment pursuant to s 267(4) of the ACL. The Court reinstated the primary judge's initial award of damages to Mr Moore for distress and disappointment.
The matter returned to Garling J. In the judgment under appeal his Honour considered the availability of the defence in s 61(3) of the ACL as regards group members other than Mr Moore and assessed damages for a sample of group members. His Honour found that the s 61(3) defence did not apply. On appeal, Scenic Tours submitted that this conclusion was erroneous (grounds 1 and 2).
His Honour also awarded damages to various group members comprising one or more of the following three components:
1. an amount representing the reduction in the value of the services arising from Scenic Tours' breach of the statutory guarantees under s 267(3)(b) of the ACL (Reduction in Value Damages) - these awards were challenged by ground 3 on appeal, with related grounds 4 and 5 not being pressed;
2. an amount for distress and disappointment under s 267(4) of the ACL (Distress Damages) - these awards were challenged by ground 6 and 7 on appeal; and
3. an amount for the refund of airfares to and from Europe under s 267(4) of the ACL (Airfares Damages) - these awards were challenged by grounds 8 and 9 on appeal.
The Court held, unanimously dismissing grounds 1-3 and 6-7 and upholding grounds 8-9 by majority (per Kirk JA, Ward P agreeing, Griffiths AJA dissenting):
As to the application of the defence in s 61(3) of the ACL (grounds 1-2)
1 Contrary to Scenic Tours' submissions, the relevant services the subject of the findings of breach of the statutory guarantees were not confined to cruising and extended to a broader concept of "services". This is consistent with the pleadings and the conduct of the case up until this appeal, the terms of the contract between Scenic Tours and the relevant consumers, and the agreed Common Questions and Answers providing the framework within which the primary judgment was decided: at [112]-[129], [138]-[139].
2 Contrary to its submission, Scenic Tours' statements in its Brochures and Terms and Conditions did not intimate to passengers that it could not guarantee to provide services in accordance with the Brochures if external circumstances beyond its control made it impossible to do so: at [131]-[137]. Further, the mere fact that consumers were urged to take out insurance does not suggest, expressly or by implication, that consumers could not rely on Scenic Tours to use its skill or judgment in providing the services: at [158].
3 The primary judge properly construed and applied s 61(3), taking into account the effect of s 61(3) and issues such as partial and unreasonable reliance. His Honour did not err in not addressing the s 61(3) on a cruise-by-cruise basis: at [140]-[157], [159]-[170].
As to the Reduction in Value Damages (ground 3)
4 The primary judge did not err in preferring the evidence of Mr Moore's expert, Ms Butler, over that of Scenic Tours' expert, Mr Hoffmann, on the issue of Reduction in Value Damages. Contrary to Scenic Tours' submission, the primary judge made an allowance for vicissitudes: at [173]. Ms Butler further correctly focused upon the market value of a cruise by reference to what a reasonable consumer fully informed would have paid for the cruise at the time of booking: at [174]-[176].
5 Scenic Tours did not make good its allegations that Ms Butler assumed the consumers' sole purpose in travelling to Europe was to take a Scenic Tours cruise (at [177]), nor that she erred by failing to take into account evidence that some consumers wrote to Scenic Tours congratulating it for having handled the difficulties presented by the flooding, a matter which was never put to Ms Butler in cross-examination: at [178].
6 The primary judge explained why, despite the criticisms concerning Ms Butler's experience, his Honour preferred her evidence to that of Mr Hoffman. The matters referred to were all plainly relevant and provided a sound basis for the primary judge's assessment of the experts' respective evidence: at [179]-[181].
As to the Distress Damages (grounds 6-7)
7 The assessment of Distress Damages is a very fact-rich and individual assessment and turns on its own particular facts and circumstances rather than the application of a rigid rule: at [188]-[190]. The primary judge gave careful and detailed attention to the individual circumstances of the relevant group members and the Distress Damages awarded were not manifestly excessive in the particular circumstances of this case: at [191]-[192].
Milner v Carnival plc (t/as Cunard) [2010] 3 All ER 701; [2010] EWCA Civ 389 at [36]-[46] and [60]; Baltic Shipping Co v Dillon (1993) 176 CLR 344; [1993] HCA 4, considered
8 Scenic Tours failed to make good its individual complaints under ground 7 regarding the primary judge's use of Ms Butler's evidence in assessing Distress Damages (at [193]-[194]); the primary judge's alleged identification of "a rule of thumb acquired by a form of convention" by reference to earlier authorities (at [195]-[196]); the primary judge's alleged failure to consider whether the group members' distress and disappointment was caused not by any breach of the consumer guarantees but rather by matters such as bad weather which were beyond its control (at [197]); and that the award of Distress Damages duplicated the component of Reduction in Value Damages relating to the value of the lost enjoyment benefit (at [198]).
As to the Airfares Damages (grounds 8-9)
Per Kirk JA, Ward P agreeing:
9 The primary judge's conclusion appears to have depended on a conclusion that the relevant group members would not themselves have acquired the services if they had known how unsatisfactory they would be, but his Honour did not in fact make any such findings: at [37]-[38].
10 The claims on consumer guarantees set out in s 61(1) and s 61(2) are a statutory cause of action conferred by s 267. The close links between these statutory provisions and contractual rights make contractual principles relevant but not determinative in interpreting these statutory causes of action: at [4]-[8]. Wasted expenditure is recoverable in contract claims where it is not possible to predict the plaintiff's position had the contract been fully performed; it is not awarded in order to put the claimant back in the position as if no transaction occurred: at [11], [13] and [39]. The rights given to the consumer relating to a failure to comply with a consumer guarantee are of a kind with contractual rights in presupposing the transaction has taken effect: at [23]-[29].
McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85-86; [1991] HCA 54; Baltic Shipping Company v Dillon (1993) 176 CLR 344 at 372, 387 and 406; [1993] HCA 4, 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]-[73], considered
11 The airfares were a necessary cost of the contract being fulfilled. The claimants here are approbating and reprobating by claiming damages for breach of the consumer guarantees whilst also seeking a refund of an inevitable cost of being in a position where the consumer guarantees were or were not fulfilled. To do so is contrary to the strong principle that a plaintiff cannot recover more than he or she has lost, where there is no reason to consider that s 267 was intended to be inconsistent with that principle: at [1], [39]-[44].
Baltic Shipping Company v Dillon (1993) 176 CLR 344; [1993] HCA 4; Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 at [57], applied
Per Griffiths AJA dissenting:
12 Damages were properly awarded to Mr Moore and five group members for the loss of the cost of airfares, which was "wasted expenditure" having regard to Scenic Tours' breach of the relevant statutory guarantees. Scenic Tours' conduct with respect to the breach of the guarantees was causative of this loss and the loss was clearly foreseeable: at [203] and [209].
Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 81-82 and 126-127; [1991] HCA 54; Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234 at [29]; 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]-[73]; Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702 at [293; Capic v Ford Motor Co of Australia Pty Ltd [2021] FCA 715; (2021) 154 ACSR 235 at [912], considered
13 There is no inconsistency in the fact that the primary judge awarded Reduction in Value Damages under s 267(3) of the ACL, and Distress Damages and Airfares Damages under s 267(4). They represent separate heads of compensation and/or damages (see s 267(5)). The award of Distress Damages is in the nature of damages for non-economic loss, while the Airfares Damages relates to economic loss and is a separate head. It is clear from the primary judge's reasons regarding the award of Distress Damages that he did not take into account the cost of airfares under that head of damages: at [210].
Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 at [66], considered
[5]
Contents
HEADNOTE
JUDGMENT
The nature of the rights
Contractual claims
The statutory rights to compensation or damages
The approach of the primary judge
Determination
Orders
Common Questions and Answers
2022 primary judgment summarised
Some preliminary matters
Scenic Tours' s 61(3) defence (reliance)
Reduction in Value Damages
Distress Damages
Airfares Damages
Proceedings on appeal
Section 61(3) of the ACL (grounds 1 and 2)
Scenic Tours' claims regarding the breadth of the relevant services
Scenic Tours' other submissions on grounds 1 and 2
Statements in the Brochures and the Terms and Conditions
The terms of Scenic Tours' formal defence
Scenic Tours' overstatement of the effect of s 61(3)
The proper sequence in applying s 61(3)
Partial reliance
Section 61(3) and individual cruises
Travel insurance
Unreasonable reliance
Scenic Tours' other criticisms
Conclusion on grounds 1 and 2
Reduction in Value Damages (ground 3)
Distress Damages (grounds 6 and 7)
Airfares Damages (grounds 8 and 9)
Determination of application seeking leave to appeal
Determination of notice of contention
Conclusion
[6]
JUDGMENT
WARD P: I have had the considerable benefit of reading in draft the judgments of both Griffiths AJA and Kirk JA. I agree with Griffiths AJA as to the disposition of grounds 1-3 and 6-7 of the grounds of appeal. I agree with Kirk JA , for the reasons that his Honour gives, that grounds 8-9 of the grounds of appeal are made good and that the orders his Honour proposes should be made. Awarding some of the group members damages for wasted expenditure by reference to the airfares incurred in travelling to Europe for the river cruises the subject of the claims is inconsistent with the award of damages to compensate for the reduction in value of the services provided by the appellant and would in effect provide double recovery to that extent for their loss.
KIRK JA: I have had the advantage of reading the comprehensive judgment of Griffiths AJA. I agree with his Honour's reasons for granting leave to appeal and for rejecting appeal grounds 1-3 and 6-7, noting that grounds 4-5 were not pressed. As to grounds 8-9, with respect to claiming damages for airfares, I respectfully disagree with his Honour for the reasons set out below. In the result, in my view the appeal should be dismissed save as to grounds 8-9, with respect to which the appeal should be upheld and consequential orders made.
The issues raised by grounds 8-9 are not without complexity. They received relatively little attention from the parties. The factual context in which they arise is set out in the judgment of Griffiths AJA and need not be repeated.
[7]
The nature of the rights
The damages awarded to Mr Moore and the sample 31 group members were awarded under s 267 of the federal version of the Australian Consumer Law (ACL), set out in Sch 2 of the Competition and Consumer Act 2010 (Cth). The damages were for failure to comply with the consumer guarantees in Div 1 of Pt 3-2 of the ACL, specifically those set out in s 61(1), relating to fitness for purpose, and s 61(2), relating to achieving a desired result. That division "adopts the mechanism of providing that certain consumer guarantees apply to certain transactions, in contrast to the mechanism (adopted by the predecessor provisions) of implying terms into a contract": Valve Corp v Australian Competition and Consumer Commission (2017) 258 FCR 190; [2017] FCAFC 224 at [106] (Full Court). Thus, in contrast to claims made under the predecessor regime in Pt 5 Div 2 of the Trade Practices Act 1974 (Cth), the types of claims at issue here are not for breach of contract. They are claims on a statutory cause of action conferred by s 267.
The guarantees are not expressed to depend upon there being a contract between the consumer and the supplier: note Valve Corp at [106]; Alameddine v Glenworth Valley Horse Riding Pty Ltd (2015) 324 ALR 355; [2015] NSWCA 219 at [77]. And the guarantee in s 59 that a manufacturer will comply with any express warranty given by it, for example, clearly does not depend upon there being a contract between the consumer and the manufacturer.
Nevertheless, it will commonly be the case that the guarantees arise in transactions governed by a contract. Some of the rights granted by the statute with respect to the consumer guarantees seem to presuppose that there is a contract: ss 265, 267(2)(b)(ii), 267(3) and 269. And to some extent the damages that can be sought under s 267 can be limited by contract. For example, a contract for the supply by a person of services - other than services of a kind ordinarily acquired for personal, domestic or household use or consumption - can limit the supplier's liability for failure to comply with a guarantee to the supplying of the services again or the payment of the cost of having the services supplied again: ACL, s 64A(2). What is more, the language in s 267 of a "failure to comply" with a "guarantee" is not far removed from a "breach" of a contractual "warranty". There are thus close links between the statutory provisions at issue here and contractual rights.
[8]
Contractual claims
The basal compensatory principle for claims in contract or tort is well settled (Haines v Bendall (1991) 172 CLR 60 at 63; [1991] HCA 15; citations omitted):
The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed.
In contract law that principle is sometimes referred to as the principle in Robinson v Harman: see (1848) 1 Exch 850; 154 ER 363.
Claims based upon the tort of deceit - or statutory claims for misleading conduct - relating to the consequences of entering a transaction may be put on a "no transaction" basis. If it is shown that but for the relevant wrongful conduct the claimant would not have entered the transaction, then they may claim compensation on the basis that the effects of the transaction are unwound. Such a claim might also be put on a "different transaction" basis, saying that but for some misrepresentation the transaction still would have been entered but on different terms.
In a claim for damages for breach of contract the relevant wrong is the breach of the contract. The necessary premise of the claim is a contract. Neither a no-transaction nor a different-transaction claim is available, of itself, for breach of contract. Such a claim would proceed on the basis that but for the wrong the contract would not have been entered, or a different contract would have been entered, which is inconsistent with then suing on the contract in question. There can be a common law right to rescind a contract for misrepresentation, but that does not involve awarding damages for breach of contract: note Re York Street Mezzanine Pty Ltd (2007) 162 FCR 358; [2007] FCA 922 at [41].
In some circumstances, the damages awarded for a breach of contract may be much the same as would have been awarded on a no-transaction basis. Notably, in McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79 damages were awarded for amounts spent by plaintiffs who had contracted with the Commonwealth to salvage a stranded oil tanker and its contents, but where the ship was ultimately nowhere to be found. That was the measure adopted because of "the impossibility of assessing damages on the basis of a comparison between what was promised and what was delivered", which arose "not because what was promised was valueless but because it is impossible to value a non-existent thing" (at 414).
[9]
The statutory rights to compensation or damages
Section 267 of the ACL provides for the type of statutory claim made here with respect to services (s 259 is in similar terms relating to goods):
267 Action against suppliers of services
(1) A consumer may take action under this section if:
(a) a person (the supplier) supplies, in trade or commerce, services to the consumer; and
(b) a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3-2 is not complied with; and
(c) unless the guarantee is the guarantee under section 60 - the failure to comply with the guarantee did not occur only because of:
(i) an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or
(ii) a cause independent of human control that occurred after the services were supplied.
(2) If the failure to comply with the guarantee can be remedied and is not a major failure:
(a) the consumer may require the supplier to remedy the failure within a reasonable time; or
(b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time - the consumer may:
(i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii) terminate the contract for the supply of the services.
(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) terminate the contract for the supply of the services; or
(b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
(4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
(5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).
The notion of "major failure" is defined in s 268, and includes that "the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure".
Section 269 applies if the consumer terminates the contract for supply pursuant to the right to do so in s 267(3)(a). It addresses the effect of such a termination, making clear that a termination under s 267(3)(a) is not ab initio. The termination takes effect when made known to the supplier (or, in some circumstances, when reasonable means are used by the consumer to indicate termination). It also provides that the consumer is entitled to recover a refund of any money paid for the services (and an amount equal to any other consideration provided) "to the extent that the consumer has not already consumed the services at the time the termination takes effect". That qualification indicates that the consumer cannot expect to receive the benefit of any services already used without having to pay for them. Section 270 deals with the situation where the consumer has been supplied with some goods in connection with the supply of services and the consumer terminates the contract. Such a termination is taken to be a rejection of the goods, which are (in general) to be returned, with any money paid for the goods to be refunded.
[10]
The approach of the primary judge
The primary judge awarded damages for three types of claims: first, the reduced value of the services actually provided compared to what the consumers paid; secondly, distress and disappointment damages; thirdly, the "wasted airfares". The former was claimed and awarded under s 267(3). The latter two categories were claimed and awarded under s 267(4). As his Honour noted, s 267(5) provides that claims can be made under both: Moore v Scenic Tours Pty Ltd (No 4) [2022] NSWSC 270 at [788].
His Honour said that "consistently with the remarks of Edelman J in the High Court's judgment in this matter, there is no reason to assess damages according to any different principle than that applicable for breach of contract or tort": at [795]. In fact, Edelman J had referred to the parties' assumption that "the damages recoverable under s 267(4) for non-economic loss are governed by the same principles as common law damages for breach of contract" (at [67]). He had not suggested that tortious principles were an appropriate guide. This point has possible significance given that no-transaction claims can be made in tort but not in contract.
After reciting the parties' arguments, the primary judge said the following:
[805] It seems to me that the starting point of the analysis on this question is to identify the nature of the breach of the consumer guarantees. As earlier indicated, the breach of the consumer guarantees was found to be a major failure because I was satisfied that the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure. This finding is undisturbed and applies to all the group members and in respect of each of the 10 Cruises.
[806] If the consumer would not have acquired the services, then they would not have flown to Europe for the purpose of taking the Cruise. Accordingly, consistently with the remarks of Mason CJ and Dawson J in Amann Aviation, the consumers would not have purchased the airfares and would not have expended the cost of the airfares. In those circumstances, I am satisfied that the cost of airfares can be regarded as falling within the description of wasted expenditure. …
[808] There are those for whom the sole purpose of travelling to Europe and incurring the airfares was to take the Cruise. In respect of group members falling into that category, I am satisfied that the airfares were wasted, and that they are entitled to damages by way of the cost of the airfares and taxes actually paid by them.
[11]
Determination
There is an elision in the primary judge's analysis at [805]-[806], which was repeated by the respondent in submissions to this Court. His Honour had earlier reiterated (at [789]) his finding in his earlier decision in Moore v Scenic Tours Pty Ltd (No 2) [2017] NSWSC 733 that Scenic Tour's failure to comply with the purpose and result guarantees was a "major failure" within s 268(1)(a) of the ACL. But as his Honour had said in his earlier judgment (at [774]):
However, s 268(1)(a) focusses not on a particular individual but on whether a 'reasonable consumer fully acquainted with the nature and extent of the failure' would not have acquired the services. This is an objective test. … I am satisfied that no reasonable consumer would have gone ahead and acquired the services at the price which was being charged.
His Honour's finding about not acquiring the services was thus about the nominal reasonable consumer. He had not made any finding that Mr Moore or any of the other relevant group members would not themselves have acquired the services if they had known how unsatisfactory they would be. Yet to conclude that "the cost of airfares can be regarded as falling within the description of wasted expenditure" (at [806]), at least insofar as it was meant to be applicable to this group of claimants, was seemingly premised on that being so. So much is manifest in the sentence that "[i]f the consumer would not have acquired the services, then they would not have flown to Europe for the purpose of taking the Cruise".
His Honour did say at [805] that his earlier finding about being a major failure "is undisturbed and applies to all the group members and in respect of each of the 10 Cruises". That is a generic statement about all group members and can only sensibly be understood to mean that they all had the benefit of the objective "major failure" finding. It cannot be understood to mean that he was persuaded that all group members in fact, subjectively, would not have gone on the tour if they had known that the consumer guarantees would be breached in the manner that occurred. Such a finding would require reasoning by reference to evidence. A factual premise of the analysis was thus not addressed by his Honour and not found to be made out.
The expenditure would not be regarded as wasted if the particular group members would have gone on the tour anyway, even knowing how unsatisfactory it would be. He identified which group members should receive a refund of their airfares not based upon whether they would have gone on the trip if they had known how it would turn out, but rather upon whether or not the sole purpose of their flight to Europe was to join the trip.
[12]
Orders
The conclusion that appeal grounds 8-9 should be upheld means that some variation to the orders made below is required. It is not clear exactly what orders should be made in that regard, taking account of the fact that orders were made below dealing with Mr Moore and the 31 sample group members and with some provision for other members of the class. An issue also arises as to costs in the Court below and on appeal. The parties should be given the opportunity to make further brief written submissions on the precise orders that should be made in light of the Court's judgment, and on costs, with a view to the Court resolving what orders should be made on the papers (assuming that the parties cannot reach an agreed position on the orders).
The orders of the Court should be as follows:
1. To the extent necessary the applicant/appellant has leave to appeal.
2. The parties may file and serve submissions of no more than 5 pages relating to what final orders the Court should make, together with any relevant supporting materials, within 14 days of these orders.
3. The parties may file and serve submissions in reply of no more than 3 pages within 21 days of these orders.
4. Final orders will be made on the papers and without a further oral hearing.
GRIFFITHS AJA: This appeal, which arises in the context of a representative proceeding (commonly known as a class action), concerns the proper application of the defence in s 61(3), and the proper assessment of damages under s 267(3)(b) and (4), of the Australian Consumer Law (ACL). There is also an application for leave to appeal by which Scenic Tours Pty Ltd (Scenic Tours) seeks to challenge orders relating to group members not the subject of final orders and, to the extent necessary, in relation to orders relating to group members who were the subject of final order. Mr Moore filed a notice of contention on 12 July 2022 seeking to uphold on additional or alternative grounds the primary judge's rejection of Scenic Tours' defence based on s 61(3) of the ACL.
The proceedings have a regrettably protracted and complicated procedural history. In brief, as long ago as 2014 the respondent, Mr David Moore, commenced representative proceedings on behalf of himself and approximately 1500 group members against the now appellant, Scenic Tours. The proceedings as initially pleaded related to 13 European river cruises conducted by Scenic Tours (or its related trading entity, Evergreen Tours, which conducted Cruises 3 and 9 ) that were scheduled to depart between 19 May 2013 and 12 June 2013. These cruises had been marketed by Scenic Tours as a "once in a lifetime cruise along the grand waterways of Europe". Instead, the conduct of those river cruises was substantially disrupted by the decisions and actions taken by Scenic Tours when it was confronted with high water levels on the rivers owing to heavy rainfall and flooding which occurred in Europe from April through June 2013. Many towns and cities in Europe, including those along the planned cruise routes, were flooded. Locks along the rivers were either damaged or inoperative. Ships were unable to pass under bridges crossing the rivers and some docking facilities could not be used and had been washed away. Consequently, Mr Moore and the other group members were shuffled between coaches and different cruise ships and had to change hotels multiple times rather than being accommodated and conveyed on the cruise ships in the grand style they had expected.
[13]
Common Questions and Answers
Before turning briefly to summarise Garling J's reasons in the 2022 primary judgment, reference should be made to what are known as the Common Questions and Answers. It is desirable briefly to explain the genesis and evolution of this document (a more detailed history is at [225]-[231] below). In the 2017 judgment, the Court was asked to, and answered, various questions which were common between Mr Moore's claim and the claims of other group members. After the 2018 CA judgment, the parties agreed to a revised version of the Common Questions and Answers. After the 2020 HCA judgment, the Common Questions and Answers were further amended. The Common Questions and Answers all relate to Scenic Tours' breach of the statutory guarantees. The agreed Common Questions and Answers which provided the framework for the primary judge's assessment of damages in the 2022 primary judgment are set out in full in an annexure to these reasons for judgment (Annexure A).
It should be noted that, for the purposes of the hearing which resulted in the 2022 primary judgment, the answers to Common Questions 7, 8 and 15 each had a preliminary qualification or rider in the terms of: "Subject to any s 61(3) defence made out …". Significantly, with the consent of the parties, this qualification was deleted following the determination of the 2022 primary judgment. As an aside, it appears that the omission of the qualification or rider following the 2022 primary judgment may initially have been overlooked by counsel for Scenic Tours in this appeal. Early in his oral address (but not in the lengthy pre-hearing written submissions filed on behalf of Scenic Tours), counsel repeatedly claimed that Scenic Tours' s 61(3) defence was still "live", at least in respect of the balance of the group members. Considerable time was spent by Scenic Tours' counsel in seeking to justify that position, which position drew strong protests from the respondent.
What shaped to be a major point of dispute between the parties which would require resolution by this Court then evaporated. The Court was informed by senior counsel for the respondent at the start of the second day of the hearing that the question of the applicability of the primary judge's determination of the s 61(3) defence to the whole of the class of group members had "gone away". The Court was informed that Scenic Tours intended to raise the matter with the primary judge when the proceeding below resumed and further witnesses were called. Accordingly, the Court does not need to resolve the matter now.
[14]
Some preliminary matters
In its outline of written submissions filed in this appeal, Scenic Tours provided the following description of where matters stood at the outset of the hearing below and following the 2017 judgment, the 2018 CA judgment and 2020 HCA judgment:
7. Following appeals to the Court of Appeal and High Court, the outcome of the proceedings immediately prior to the hearing at first instance was as follows:
(a) as to the "services" to be provided by Scenic to Group Members, for the purposes of the ACL claims (the Services):
(i) the Services were "the benefits and facilities of each cruise tour they booked and paid for (or had booked and paid for on their behalf), as described in Scenic's Tour Brochure";
(ii) the Services did not extend to the supply of information to Group Members before the embarkation of their respective cruises;
(b) as to Cruises 10, 12 and 13, Scenic has either not been found to have breached any of the Consumer Guarantees in relation to those cruises or, alternatively, the Group Members who were passengers on those cruises have been found not to have sustained any compensable loss or damage;
(c) as to Cruises 4, 5, 6 & 7:
(i) the Care Guarantee was breached in respect to those cruises; and
(ii) Group Members on those cruises are entitled to receive compensation under s.267(3)(b) for any reduction in the value of services received below the price they paid, arising from Scenic's non-compliance with the Care Guarantee;
(d) as to Cruises 1-9 and 11:
(i) subject to any s.61(3) defence made out, the Purpose Guarantee and Result Guarantee were breached in respect to those cruises;
(ii) subject to (i), Group Members on those cruises are entitled to receive compensation under s.267(3)(b) for any reduction in the value of services received below the price they paid, arising from Scenic's non-compliance with the Purpose Guarantee and Result Guarantee;
(e) Group Members on Cruises 1-9 and 11 are also entitled to damages under s.267(4) for any loss or damage suffered because of a failure to comply with the Consumer Guarantees if such loss or damage was reasonably foreseeable as a result of such failure, which damages may include disappointment and distress suffered by reason of Scenic's failure to comply with the Consumer Guarantees.
Scenic Tours identified the following issues as remaining to be determined by Garling J:
8. The following issues remained to be determined by the Court:
(a) Scenic's pleaded defence under s.61(3) of the ACL;
(b) the Group Members' claims for compensation for reduction in value pursuant to s.267(3)(b) of the ACL by reason of Scenic's breach of the Care Guarantee in relation to Cruises 4, 5, 6 and 7;
(c) the Group Members' claims for compensation for reduction in value pursuant to s.267(3)(b) of the ACL by reason of Scenic's breach of the Purpose and Result Guarantees in relation to Cruises 1-9 and 11;
(d) the Group Members' claims for damages for disappointment and distress pursuant to s.267(4) of the ACL; and
(e) the Group Members' claims for damages for the cost of their airfares pursuant to s.267(4) of the ACL.
[15]
Scenic Tours' s 61(3) defence (reliance)
Section 61(3) of the ACL provides:
…
(3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier.
This defence to the purpose and result guarantees has two limbs. The first is where the circumstances show that the consumer did not rely upon the skill or judgment of the supplier. The second and alternative limb is that it was unreasonable in the circumstances for the consumer to rely on the skill or judgment of the supplier.
The primary judge's reasons for dismissing both limbs may be summarised as follows.
First, the primary judge acknowledged that the purpose and result guarantees were separate from the contract under which a consumer is to be provided services (PJ[737]).
Secondly, the primary judge well understood the need to identify with some precision what "services" Scenic Tours was providing (see PJ[723]). His Honour proceeded on the basis that those services were as described in the answers to Common Questions 1 to 3 which, for convenience, are set out in full:
Q1: How are the 'services' supplied, or to be supplied, by Scenic to group members to be characterised, for the purposes of their claims under the Australian Consumer Law?
A1: The services to be provided by Scenic to group members were the benefits and facilities of each cruise tour they booked and paid for (or had booked and paid for on their behalf), as described in Scenic's Tour Brochure.
Q2: Were the said services merely co-extensive with or limited by the Terms and Conditions by which group members were contractually bound?
A2: No.
Q3: Did the 'services' extend to the supply of information to group members:
(a) before the embarkation of their respective cruises; and/or
(b) after the embarkation of their respective cruises?
A3: (a) No.
(b) Yes. The services extended to the provision of timely information about substantial disruptions to the respective itineraries known to Scenic or of which it ought to have known.
Because of the importance of defining the relevant services in determining grounds 1 and 2 of the appeal, it is desirable to set out PJ[97]-[99], where the primary judge highlighted key parts of the Brochure which his Honour found at PJ[96] "was the only document which comprehensively described the services which Scenic was promoting and which it 'enticingly' was to provide" (emphasis in original):
97 I set out, and adopt without repetition, from [312]-[342] the relevant passages from the Brochure which cast light on the expectations from Mr Moore and, in the absence of any specific evidence to the contrary, each of the group members. Mr Moore and the group members were entitled to expect that the particular river cruise which they chose would be: a "once in a lifetime cruise along the grand waterways of Europe"; one where the passengers would be "immersed in all-inclusive luxury"; "a truly unforgettable" journey; and one where the passengers would be provided with "meticulous attention to detail, first-class service and intimate personal touches".
98 Passengers were led to expect that they would experience the "ultimate river cruise experience" during which they would enjoy a level of inclusive "luxury and service which is unsurpassed on the waterways of Europe".
99 Other features were also emphasised: the number of different cafes and restaurants available on board where passengers could choose to eat; the range of indoor and outdoor viewing locations; and the availability at all times of the "sanctuary of your own private suite or stateroom", which, in some cases, included an exclusive private balcony which was "perfect" for viewing in "all kinds of weather".
[16]
Reduction in Value Damages
As noted above, Mr Moore and the group members claimed, pursuant to s 267(3)(b) of the ACL, compensation for the reduction in value of the services below the price paid. The primary judge observed at PJ[37] that such damages were available because of his Honour's finding in his 2017 judgment that Scenic Tours' breaches of the relevant consumer guarantees constituted a "major failure" within the meaning of s 268 of the ACL (relevantly, that the service "would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure").
The primary judge considered that he was bound to assess such damages in the following way, having regard to the 2018 CA judgment (see PJ[42]):
1. Any assessment was to be made by having regard to objective considerations and circumstances, and not to any subjective matters.
2. The value of the services actually supplied by Scenic Tours should be determined by reference to "market considerations".
3. A means of assessing the "market value" of the services provided would be to estimate the amount "a fully informed customer would have been prepared to pay for those services".
4. A market-based assessment of the value of the services actually provided, applying objective criteria, is a matter which required, or else ought to have as its foundation, evidence led in the proceedings.
In support of his case, Mr Moore called Ms Diane Butler to give expert evidence on this aspect of the damages claim. Ms Butler described herself as a "tourism management and marketing expert". The primary judge noted at PJ[49] Ms Butler's initial opinion that none of the cruises, as they actually took place, would be a marketable tour package. That is, a fully informed, reasonable consumer would not purchase any of the cruises as a tour package and the cruises would have no, or nominal, market value. Ms Butler also conducted an assessment based on an alternative methodology, which assumed that a hypothetical consumer was "willing to accept a tour that was not marketed as a luxury cruise package, or a luxury coach holiday, but, rather, was marketed having regard to price and was targeted at the consumer who would accept the package for what it was" (PJ[51]). The primary judge accepted at PJ[53] that the alternative methodology reflected "one reasonable way of attempting to ascertain a market value of the services in fact provided" by Scenic Tours.
[17]
The primary judge accepted the experts' view that the percentage difference between the base cabin price and the value of the services provided could be applied to all cabin grades to ascertain the value of the services provided to occupants of other cabin grades (PJ[77]-[79]). His Honour noted that, as this part of the assessment of damages was referable only to objective considerations, the determination of the value of the services which were provided, expressed as a percentage, could be applied to each passenger on the same cruise (PJ[80]-[81]). His Honour held that interest on Reduction in Value Damages should be calculated from the time that the major failure occurred and the loss of value was capable of being ascertained (PJ[82]).
[18]
Distress Damages
In respect of Distress Damages, which were sought under s 267(4) of the ACL, the primary judge noted at PJ[84]-[85] that in "holiday cases" such as the case here, an assessment of damages proceeds in accordance with the principles developed for breach of contract cases: "[w]hat is involved is a comparison between the expectations of the individual traveller and the reality of what that traveller was provided". His Honour considered that the authorities required that an assessment of damages under this head "ranges across all kinds of mental distress, inconvenience, anxiety, disappointment, frustration or vexation arising because the services to be provided were not, or else as here, the purpose of the acquisition of the services failed" (PJ [93]).
Acknowledging that each group member was entitled to have Distress Damages individually assessed, the primary judge considered it appropriate to have regard to the objectively determined facts about the extent to which each cruise failed to achieve the purpose and result guarantees (PJ[94]). By reference to Scenic Tours' Brochure his Honour considered that Mr Moore and the group members were entitled to expect inter alia a "once in a lifetime cruise along the grand waterways of Europe" during which passengers would be provided "meticulous attention to detail, first-class service and intimate personal touches" (PJ[97]). The primary judge also had regard "by way of context and background" to some of Ms Butler's evidence, namely to the five stages of holiday experiences to which she referred (dreaming, planning, booking, experiencing and remembering) and her evidence that the opportunity for travellers in undertaking any holiday is to do so for enjoyment, self-fulfilment, self-development and relaxation (among other things) (PJ[100]-[107]). His Honour reiterated the need to assess damages for distress and disappointment on an individual basis, noting in particular at PJ[117] that he "[did] not regard it as correct that an award for [Distress Damages] should be only made in a token or nominal sum. The assessment of the sum for this head of damages is undertaken in the individual case by an evaluative process applying a sense of fairness and justice to the circumstances proved".
Ultimately, having regard to each of the group members' individual experiences (see PJ[123]-[718]), Distress Damages were awarded in the range of $6,000 and $12,000 for 31 group members.
[19]
Airfares Damages
As noted above, the group members sought damages pursuant to s 267(4) of the ACL in respect of the fares paid for the air travel involved between their home countries and Europe so as to enable them to embark on the cruise which they had booked.
Accepting that the preconditions to the availability of such damages pursuant to s 267(1)(a)-(c) of the ACL were satisfied (see PJ[790]-[792]), his Honour turned to address the question whether the claim for Airfares Damages was consequential upon the breach of the consumer guarantees (ie a loss which was reasonably foreseeable). His Honour concluded at PJ[795] that such damages were reasonably foreseeable for the following reasons:
1. Many, but not all, of the group members had their flights booked by Scenic Tours as part of their cruise package. Sometimes the cost of the flights was included in the price of the cruise package itself.
2. Even if Scenic Tours did not itself make the bookings, it seemingly knew with respect to almost all of the passengers when they were arriving at the embarkation port. This was because it included airport transfers as part of the cruise package.
3. It was obvious to Scenic Tours that, as its cruise bookings were made by people outside Europe, the passengers had to get themselves to the embarkation port and then back home.
In the light of the fundamental compensatory principle and the finding that the group members would not have acquired the services owing to the "major failure" as contemplated by the ACL (see PJ[789], [796]-[799]), the primary judge concluded that 5 group members for whom the sole purpose of travelling to Europe and incurring the airfares was to take the cruise was wasted were entitled to damages by way of the cost of the airfares and taxes actually paid by them (PJ[800]-[811]). Mr Moore, for whom the dominant purpose of travelling to Europe was to take the cruise, was also awarded damages under this head (PJ[812]-[813]). Interest was ordered to be paid on these damages (PJ[820]). His Honour viewed this "wasted expenditure" as being recoverable, consistently with the remarks of Mason CJ and Dawson J in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 81-82; [1991] HCA 54.
Given the varying individual circumstances of the other group members, the primary judge declined to award Airfares Damages in respect of the balance of the class (PJ[814]-[817]). It would seem, however, that the parties agreed to a broader group of members being eligible to receive Airfares Damages in the time after the 2022 primary judgment was handed down and before formal orders giving effect to the judgment were made on 24 June 2022, as those orders also awarded Airfares Damages to an unnamed class of group members who fit at least one of three specified criteria (see further at [211] below).
[20]
Proceedings on appeal
As noted, there are two proceedings. First, Scenic Tours seeks leave to appeal pursuant to s 103 of the Supreme Court Act 1970 (NSW) in relation to orders relating to group members who are not the subject of the final orders made by Garling J in conjunction with the primary judgment (and, to the extent necessary, in respect of the orders relating to group members the subject of those final orders).
Secondly, the primary proceeding (which was the subject of virtually all the written and oral submissions) is the substantive appeal raised by the amended notice of appeal filed on 4 July 2022.
As originally filed, the amended notice of appeal contained 9 grounds of appeal. At the commencement of the hearing on appeal, counsel for Scenic Tours informed the Court that grounds 4 and 5 were no longer pressed. He said that the primary focus of the appeal is on the s 61(3) defence (ie grounds 1 and 2 of the amended notice of appeal). The remaining grounds of appeal relate to Reduction of Value Damages (ground 3); Distress Damages (grounds 6 and 7) and Airfares Damages (grounds 8 and 9). I will set out the terms of the remaining grounds later in these reasons for judgment.
On 12 July 2022 Mr Moore filed a notice of contention directed toward upholding the primary judge's finding that Scenic Tours' defence based on s 61(3) of the ACL should fail on various additional or alternative grounds.
It is convenient first to address the appeal, then the application for leave to appeal and finally the notice of contention.
I propose to address the various grounds of appeal by reference to the four headings set out in the amended notice of appeal.
[21]
Section 61(3) of the ACL (grounds 1 and 2)
Grounds 1 and 2 are as follows:
Section 61(3) of the ACL
1 His Honour erred in failing to find that, for the purposes of s.61(3) of the Australian Consumer Law, the group members did not rely on, or that it was unreasonable for the group members to rely on, the skill or judgment of the defendant.
2 His Honour should have found that, for the purposes of s.61(3) of the Australian Consumer Law, the group members did not rely on, or that it was unreasonable for the group members to rely on, the skill or judgment of the defendant.
The primary judge's reasons for rejecting Scenic Tours' s 61(3) defence (relating to both actual and reasonable reliance) are summarised at [77]-[86] above.
On appeal, Scenic Tours repeated many of the submissions which were made below which were rejected by the primary judge. Two principal submissions advanced by Scenic Tour warrant an immediate response. The first concerns Scenic Tours' misunderstanding of the nature and ambit of the purpose and result guarantees in ss 61(1) and (2) respectively. It is important to note that the operation of both those guarantees is qualified by the concept of reasonableness. Thus, where the purpose guarantee applies, it involves a guarantee that services (and any product resulting from the services) will be reasonably fit for that purpose. Where the result guarantee applies, it involves a guarantee that the services (and any product resulting from the services) will be of such a nature and quality, state or condition, that they might reasonably be expected to achieve that result. The limiting effect introduced by the concept of reasonableness in both guarantees was often disregarded by Scenic Tours in the presentation of its appeal. Its case was frequently presented on the basis that if services were not fit for a particular purpose or the services did not achieve the desired result this meant that there was a breach of the consumer guarantees and the supplier would be liable. This seriously misstates the true position. The result guarantees operate by reference to what is reasonably fit for purpose or a particular result. In the case of the purpose guarantee, this is further reinforced by the terms of s 61(3). They create an exception to the purpose guarantee where the evidence demonstrates that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier in providing the relevant service. The exception plainly operates by reference to the guarantee being one that the services will be reasonably fit for the particular purpose and not an unqualified and absolute guarantee.
[22]
Scenic Tours' claims regarding the breadth of the relevant services
In its written submissions in reply on the appeal Scenic Tours repeatedly claimed that the pleaded case against it, and the case run in the hearing below, was that "Scenic was unable to cruise due to high water levels, lock closures and decisions taken by government agencies and the failure to so cruise was the cause of the breaches of the guarantees". Further, at [5] of that reply, Scenic Tours submitted that Mr Moore's submissions on the appeal concerning the s 61(3) defence "proceeds on the wrong proposition that it was the quality of the substitutions to the services that was the cause of the breaches of the Purpose and Result Guarantees".
In support of its pleading complaint, Scenic Tours pointed to the following parts of the FFASOC (emphasis added by Scenic Tours):
1. At [7] and [8] of the FFASOC, the particular purpose and desired result which the group members allegedly made known to Scenic Tours was the "experience of enjoying travel and accommodation, by cruise, along European rivers to a range of tourist destinations".
2. At [13]-[14], the services provided by Scenic Tours were not reasonably fit for purpose, nor of such nature and quality as reasonably might be expected to desire the desired result because "the plaintiff and group members did not enjoy, or substantially enjoy, the benefit of travel and accommodation by cruising European rivers to scheduled destinations".
3. At [15], it was claimed that Mr Moore or the group members suffered loss or damage because of the breaches of the statutory guarantees because, having embarked upon their respective tour itineraries, they did not experience, or substantially experience, "travel and accommodation on cruises along the European rivers and touring to scheduled destinations by river cruise at all".
4. At [17H(b)], it was claimed that the purpose and result to be derived from the tours was frustrated because of the experience which involved "substantially limited or no travelling by cruise, the substitution of coach travel and on-shore accommodation and dining".
For the following reasons, I do not accept Scenic Tours' claims regarding the pleadings and the conduct of the case below (including with reference to relevant parts of the Common Questions and Answers).
Scenic Tours has not accurately summarised the FFASOC which, fairly read, was not confined to cruising per se. Notably, Scenic Tours omitted any reference to the fact that [4] of the FFASOC contained the following definition of services (emphasis added):
As to 'services', rights, benefits, privileges or facilities were provided, or were to be provided, by the defendant to the plaintiff and all group members in trade or commerce, to arrange for and facilitate travel cruises along European rivers for the use, amusement, entertainment, recreation or instruction of the group members. Without limitation, the services included the defendant arranging for the tours and monitoring and assessing (and thereafter communicating with the plaintiffs and group members), up to the dates for departure for the cruises, whether their tour itineraries could proceed in accordance with the existing arrangements, or should be varied, cancelled or delayed.
[23]
Scenic Tours' other submissions on grounds 1 and 2
Also in support of its appeal against the primary judge's rejection of its defence based upon actual and/or reasonable reliance as referred to in s 61(3) of the ACL, Scenic Tours raised numerous individual claims, many of which related to a greater or lesser extent on its primary claim concerning the scope of the subject services. The claims also overlapped in several instances.
[24]
Statements in the Brochures and the Terms and Conditions
In support of its s 61(3) defence, Scenic Tours pointed to the fact that there were explicit statements in the Brochures and the annexed Terms and Conditions that "intimated" to passengers that Scenic Tours could not guarantee to provide services in accordance with the Brochures if external circumstances beyond Scenic Tours' control made it impossible to do so. Scenic Tours acknowledged that those statements were not terms or conditions which purported to "exclude, restrict or modify" the application of the statutory guarantees so as to be void under s 64 of the ACL, but contended that they were relevant to the issue of reliance under s 61(3).
The statements upon which Scenic Tours relied, both below and on appeal, are as follows. First, the following statement on pages 42-43 of the Scenic Tours Brochure where, under a map relating to Cruise 2, it is explicitly stated that the map is provided as a "guide only" and the reader was referred to the Terms and Conditions. In addition, at the bottom of page 43, it is stated:
Tour Maps: any map or other route depictions are intended as an indication only and should not be relied upon. Please refer to terms and conditions clause 4.2. Disruptions to cruising and itinerary arrangements may occur. For full terms and conditions please refer to pages 218 and 219.
Secondly, Scenic Tours relied upon the following clauses in the Terms and Conditions:
2.7 What are Our Tour obligations?
We will use reasonable endeavours to provide the Tour You have booked in accordance with Your Itinerary. However, due to the nature of travel, it may not always be possible for Us to adhere strictly to Your Itinerary. Where, due to circumstances outside of Our control, We are unable to provide the Tour in accordance with Your Itinerary, We will use reasonable endeavours to provide or arrange appropriate alternatives.
…
2.10 How can We vary this Contract?
(a) Subject to the remainder of this clause 2.9, We may amend these Terms and Conditions at any time.
…
Tour Variations
(d) We may change or vary Your Itinerary.
(e) Although We will use reasonable efforts to operate the Tour as close as possible to Your Itinerary, changes or substitutions may be necessary for reasons outside Our control. These circumstances may include, but are not limited to:
(1) road, river or weather conditions;
(2) national or local holidays affecting the closure of public buildings and attractions;
(3) strikes; or
(4) civil disturbances and advices by governments or other Force Majeure Events.
(f) Cruise itineraries may be varied due to high or low water levels, flooding, lock closures, unscheduled vessel maintenance or for any other circumstances beyond Our control.
(g) We may substitute (at the nearest reasonable standard) another vessel or motorcoach for all or part of the Itinerary and also provide alternative accommodation, where necessary.
(h) Where We make a variation to the Itinerary, We are not liable to You for such variations.
…
2.12 Notification of General Risks
(a) You acknowledge and agree that there are general risks associated with travelling, which are beyond Our control and We are not liable to You for any loss, cost or damage You may incur as a result of these general risks. Such general risks include:
(1) Tour variations or interruptions caused by road, river or weather conditions; national or local holidays affecting the closure of public buildings and attractions; strikes, civil disturbances and advices by governments; Force Majeure Events; … high water levels; low water levels; flooding; lock closures; unscheduled vessel … maintenance;
…
(3) any other circumstances beyond Our control.
[25]
The terms of Scenic Tours' formal defence
The unduly narrow and erroneous view taken by Scenic Tours regarding the ambit of the services the subject of complaint by Mr Moore and the group members is also reflected in the terms of its formal defence. As particularised, Scenic Tours claimed that group members did not or could not reasonably have relied upon it "to the extent that" matters such as water levels, lock closures and decisions of government agencies (which were matters beyond its control) impeded its ability to operate the cruises.
For completeness, it might also be noted that, inconsistently with Scenic Tours' view of the ambit of the services, findings of fact were made in both the 2017 judgment and in the 2022 primary judgment that the cause of its breaches of consumer guarantees included matters which were within its control or turned upon the exercise of its skill or judgment. For example, in the 2017 judgment at [447], after noting that the flooding and related river infrastructure damage was a cause of Scenic Tours' failure to comply with the purpose and result guarantees and was independent of human control, the primary judge explicitly stated that, having regard to the articulation of the claims of Mr Moore and the group members, "this is one, but not the only, cause of the failure by Scenic to comply with the relevant consumer guarantees". His Honour proceeded then at [448] to find that the other causes of the failure to comply with those guarantees "were entirely within the control and influence of Scenic". Thus the primary judge concluded at [450] that he was satisfied "that the failures of Scenic relied upon by Mr Moore and the group members, were not caused only by circumstances outside human control" and he expressly rejected Scenic Tours' reliance upon the defence in s 61(3) with respect to the purpose and result guarantees insofar as it related to Mr Moore (see at [451]). His Honour then considered each of the 13 cruises, made relevant findings of fact and determined whether or not any of the consumer guarantees were breached. With only few exceptions, the primary judge's findings of breach in relation to 10 cruises were upheld.
[26]
Scenic Tours' overstatement of the effect of s 61(3)
Scenic Tours submitted that the effect of the relevant clauses in the Terms and Conditions was to convey to the plaintiff and group members that they could not rely upon Scenic Tours having skill or judgment to ensure that services would be provided precisely or strictly in accordance with the tour itinerary and the standards published in the Brochure. The problem with this submission is that it overlooks the fact that, in its terms, s 61(3) does not address the precise or absolute provision of services; rather, the actual or reasonable reliance to which the defence is addressed is reliance in respect of the achievement of a purpose or result by services which are either "reasonably fit" for the identified purpose or "might reasonably be expected" to achieve the identified result (emphasis added). In his 2022 primary judgment, the primary judge properly construed and applied s 61(3).
[27]
The proper sequence in applying s 61(3)
Scenic Tours contended that the primary judge erred in not considering first the defect which had occurred in fact before his Honour considered the question of reliance (citing Emmett J's judgment in Ruaro v Ferrari [2007] FCA 2022 at [68]-[71]). Scenic Tours submitted that the relevant question is "whether the consumer relied upon the supplier's skill or judgment to ensure that the services were free from the defect which has occurred in fact", which, in this case, it contended in the proceeding below, was the inability to cruise due to circumstances beyond its control owing to a 1-in-600 year flood. Scenic Tours contended that the primary judge should then have asked whether the plaintiff and group members placed actual or reasonable reliance upon its skill or judgment to ensure that the subject services were free from the defects which in fact occurred.
There are several reasons why Scenic Tours' submissions should be rejected. First, Ruaro is distinguishable. That case concerned a contract to supply a mooring service. The mooring service was supplied by a licence given to the applicant to use an existing mooring and the licence contained a condition which excluded any liability for "care" and "protection". The applicant's boat was licensed to swing freely on its mooring in an open harbour as opposed to being restrained within a marina anchorage. The licensor's skill or judgment was not directed to the event which then caused the mooring line to be severed, namely when another yacht dragged its mooring for 100 metres in severe weather conditions and collided with the applicant's boat in a manner which severed the mooring rope.
Secondly, contrary to Scenic Tours' submission, the primary judge did in fact consider why consumers could reasonably rely on Scenic Tours' skill or judgment to deal with a cruise being interrupted by flooding. This is evident from PJ[776], where his Honour emphasised that, even if group members had knowledge that high water might affect a cruise, any such knowledge would be relatively limited when compared with the knowledge of Scenic Tours because of its far greater experience in operating cruises.
Thirdly, at PJ[732], the primary judge acknowledged Scenic Tours' submission that group members could not rely on its "skill or judgment to ensure that either the purpose or result guarantee was fulfilled in circumstances which were beyond its control". That submission was rejected for reasons explained above. His Honour also found at PJ[774] that Scenic Tours had failed to demonstrate the occurrence of any 1-in-600 year flood. The claim was "simply unproved" and his Honour said that the evidence rose no higher than an internal Scenic Tours email as described in the 2017 judgment at [231].
[28]
Partial reliance
The primary judge was criticised for not having considered whether partial reliance had any relevance to Scenic Tours' defence under s 61(3). Scenic Tours claimed that the primary judge treated reliance as an "all or nothing" proposition. It contended that its case involved partial reliance because it intimated to consumers that it could be relied upon to provide the services in ordinary circumstances or for its ordinary purposes, but could not be relied upon to provide the services in accordance with the tour itinerary where it was impossible to do so.
These criticisms have no foundation. Partial reliance was considered. At PJ[771], the primary judge said that he was satisfied that each group member had relied on Scenic Tours' skill and judgment and that, contrary to its submissions, he was "not satisfied that Scenic said or did anything to discourage that reliance, make it only a partial reliance or in any other way make such reliance unreasonable" (emphasis added).
Moreover, at PJ[735(b)], the primary judge acknowledged Scenic Tours' claim that it "provided services of cruising but had no means of ensuring that waterways, docking locations and weather could be controlled". Contrary to that claim, however, the primary judge found at PJ[771] that the terms of the Brochure were inconsistent with Scenic Tours' belated attempt to differentiate between "services it provides and those that are beyond the control of Scenic".
[29]
Section 61(3) and individual cruises
Scenic Tours contended that the primary judge erred in not addressing its s 61(3) defence on a cruise-by-cruise basis. In apparent support of this contention Scenic Tours attached to its lengthy written submissions a 23-page Annexure which summarised the evidence of various group members in relation to reading and understanding the Terms and Conditions. As the respondent pointed out, despite this Annexure, Scenic Tours made submissions on this topic with respect to just three of the group members in connection with Cruise 2 only, as well as a submission that many of the group members had in fact read the Terms and Conditions.
The primary judge did not err in determining Scenic Tours' s 61(3) defence in the way that he did, and without descending into further detail on a cruise-by-cruise basis. His Honour was well aware of the findings he made in the 2017 judgment regarding Scenic Tours' breach of guarantees under s 61(3) of the ACL (see, for example, PJ[720]). Nor was it necessary, for example, in determining whether the s 61(3) defence applied for his Honour to make individual findings as to whether group members on each of the 10 relevant cruises had read the Terms and Conditions. As his Honour found at PJ[770] there was nothing about those Terms and Conditions, even if read, which was inconsistent with a consumer either actually, or not unreasonably, relying on Scenic Tours' skill and judgment.
Turning to Scenic Tours' submissions concerning Cruise 2 specifically, I accept the respondent's submissions as to why those submissions should be rejected. First, the complaints raised by Scenic Tours at [72] to [80] of its written submissions were not raised below.
Secondly, as to the evidence given by the three group members concerning Cruise 2, none had read the Terms and Conditions but each gave evidence that they had read the Brochures and expected Scenic Tours to provide a high quality holiday. Their evidence amply demonstrated that, at the time of booking, they relied upon Scenic Tours to provide services which were fit for both the purpose and the result guaranteed.
Thirdly, Scenic Tours did not put to any of these three witnesses in cross-examination that, if their cruise proceeded without cancellation, they did not rely on Scenic Tours to deliver services which were reasonably fit for the purpose or might reasonably be expected to comply with the result, as guaranteed. In addition, none was asked whether, in those circumstances, he or she accepted that Scenic Tours could provide the poor quality services and substitutes which were in fact supplied because of the disruption caused by the flooding.
[30]
Travel insurance
Scenic Tours contended that because consumers were urged by cl 2.16 of the Terms and Conditions to arrange comprehensive travel insurance to cover any unforeseen circumstances that may arise during the tour, this constituted further intimation that group members could not rely, or reasonably rely, on its skill or judgment. This submission cannot be accepted for the following reasons:
1. Properly read, cl 2.16 appears to be directed to standard travel insurance covering such matters as medical and repatriation expenses, lost luggage, theft etc.
2. Even if comprehensive travel insurance were obtained and covered the cancellation of a cruise because of flooding, that is not what occurred here. More broadly, the mere fact that consumers are urged to take out insurance does not suggest, expressly or by implication, that consumers could not rely on the supplier using skill and judgment in providing the services.
3. The recommended comprehensive travel insurance was for "unforeseen circumstances", as opposed to events which were foreseen but beyond Scenic Tours' control as described in cl 2.10(e)(1)-(4) of the Terms and Conditions.
4. At PJ[779], the primary judge gave additional reasons why he rejected Scenic Tours' reliance on cl 2.16, with which I respectfully agree:
... First, whether or not a consumer takes out travel insurance will depend upon a broad variety of factors including what the consumer was intending to do whilst away from Australia, what personal health conditions the intending passenger suffered and how that might affect the taking out of insurance. Secondly, what the cost of the insurance was. Thirdly, what the terms and conditions of any available insurance policy were. Naturally, both the cost and terms would relate to coverage and exclusions within the policy. The mere fact that it was possible for a group member to take out insurance does not mean that a decision not to or, alternatively, a failure to take it out constitutes that traveller as a consumer who is not reasonably relying on Scenic's skill and judgment with respect to the purpose and results to be achieved by the provision of the services.
[31]
Unreasonable reliance
As to the issue of unreasonable reliance, Scenic Tours placed heavy reliance on what Lindgren J said in Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307; [2000] FCA 1099 at [524] (noting that this issue did not arise in the subsequent appeal in Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54):
Against this background, in what circumstances, it may be asked, might the consumer's actual reliance on the skill or judgment of the manufacturer have been unreasonable? It might be if, for example, the manufacturer had notified the particular consumer that it could not guarantee the goods' fitness for the consumer's particular purpose or if the particular consumer's knowledge or means of knowledge was equal to or exceeded that of the manufacturer. Perhaps, in addition, for the purpose of the application of the provision, there should be imputed to the particular consumer the knowledge that "a reasonable consumer" would have. Perhaps the particular consumer should also be treated as having taken any steps for his or her own protection that "a reasonable consumer" would have taken, having regard to the nature of the goods and the circumstances of the case. Be this as it may, in my view, ordinarily, there should not be imputed to the consumer special technical knowledge touching the process of manufacture of the goods. Yet it is knowledge of that kind that Barclay Oysters contends should be imputed to Mr Ryan.
Scenic Tours contended that the "circumstances" mentioned by Lindgren J included the following relevant matters here:
1. By the statements referred to above in the Brochures and the Terms and Conditions, Scenic Tours had notified consumers that it could not guarantee fitness of the services for the consumers' particular purpose. Even if consumers did not read the Terms and Conditions they ought to have been aware that Scenic Tours could not give such a guarantee.
2. At the time of booking, the group members' knowledge or means of knowledge as to the possibility, for example, of a 1-in-600 year flooding event disrupting the cruises was equal to that of Scenic Tours.
As to the first matter, I have explained above why those statements did not provide a sufficient foundation for Scenic Tours' s 61(3) defence. As to the second matter, it also has been considered and rejected for reasons given at [144] above.
[32]
Scenic Tours' other criticisms
In oral address, counsel for Scenic Tours criticised the primary judge's reasoning in various paragraphs commencing at PJ[751]. Many of the criticisms overlapped and related in one way or another to Scenic Tours' core claim that the subject services were limited to cruising, a proposition which I have already rejected.
There are additional reasons for rejecting each of the criticisms. As to PJ[751] and his Honour's finding that, when they booked the cruises, group members could not exercise any control over the provision of a cruise or the level of services to be provided in respect of matters that were covered by the purpose and result guarantees, plainly what his Honour said there goes beyond cruising per se and I do not see the primary judge as saying anything more than, at the time of booking, group members could not control the weather (nor could Scenic Tours) but group members reasonably relied on Scenic Tours to use its skill and judgment to provide the subject services to achieve the purpose and result guarantees.
As to the criticisms directed at PJ[754], where his Honour rejected what he regarded as a submission by Scenic Tours that "group members or any of the passengers on these Cruises had any ability at all to influence the provision of the services such that one would conclude they were not relying on the skill and judgment of Scenic to provide those services", even if it be the case that in fact no such submission was made, the substance of his Honour's reasoning is correct. Accordingly, any error in attributing this submission to Scenic Tours is immaterial.
As to PJ[756], where the primary judge repeated his finding at [382] of the 2017 judgment (regarding the font size, layout and location of the Terms and Conditions), the primary judge was merely reiterating a finding which was open on the evidence that Scenic Tours did not, by these matters, do anything which enabled consumers easily to read and understand the Terms and Conditions. This reveals no appellable error.
As to PJ[771], Scenic Tours complains that no authorities were cited by the primary judge on the topic of reasonable reliance. That is true, but his Honour must have been conscious of the already significant length of his reasons. He did not need to analyse authorities as long as he correctly identified and applied the relevant legal principles. In my respectful view, that is what he did.
[33]
Conclusion on grounds 1 and 2
For all these reasons, grounds 1 and 2 are rejected.
[34]
Reduction in Value Damages (ground 3)
Ground 3 of the amended notice of appeal is as follows:
Damages for reduction in the value of the Services (s.267(3)(b) of the ACL)
3 The amounts awarded for reduction in the value of the Services with respect to Cruises 3, 4, 6, 7, 8 and 11 were excessive.
The gravamen of Scenic Tours' claim is that the primary judge erred in preferring the lower valuations of Mr Moore's expert (Ms Butler), as opposed to the higher valuations of Scenic Tours' expert (Mr Hoffmann) in respect of the six relevant cruises. Scenic Tours criticised Ms Butler's alternative methodology (which was relied upon in valuing the services actually provided by Scenic Tours) in respect of five matters. First, Scenic Tours submits that Ms Butler was wrong not to make any allowance for vicissitudes. There is no substance in this complaint. As the respondent pointed out, the transcript below makes plain that vicissitudes were taken into account by the primary judge because the market price for a cruise itself included vicissitudes, a proposition which was accepted by Scenic Tours' counsel below, as is reflected in the following extracts from the transcript below:
HIS HONOUR: … I've held, and the Court of Appeal has held, in respect of the nominated cruises, one or other or both of the consumer guarantees were breached. So, one's not looking at vicissitudes, one's now saying the breach of the purpose guarantee, or result guarantee, it matters not, meant that the services which were, in fact, provided, had a lesser value than those that were paid for. That's a monetary calculation, fixed by reference to objective factors, not how someone felt about it at that point.
WEINBERGER: I accept all that.
HIS HONOUR: In other words, what was purchased, or sold, what was provided, what's the value of each of those things, answer X and Y.
WEINBERGER: I entirely accept that your Honour, but the point I'm making is, maybe I can do it this way, group member gets in the witness box, prepares 120 paragraph affidavit and says, "I was distressed and disappointed for all these reasons".
HIS HONOUR: I can understand the submission entirely with respect to distress and disappointment, I'm having the greatest difficulty understanding it with respect to what I thought you were making submissions on, being reduction value.
WEINBERGER: Yes, it's --
HIS HONOUR: Because the value of the trip, as sold, includes vicissitudes. It's the market price for a trip, which includes vicissitudes.
WEINBERGER: Yes, and perhaps I've put it - it's more complex to put it when dealing with reduction in value, but what I'm coming to is, both experts, it seems, in prising (sic) the cruises, don't make an allowance for - they might do the calculation, say, seven days they cruise, seven days we didn't cruise, 50%, or whatever. But, if you assume it's within the reasonable vicissitudes, or latitude, to be interrupted for three days, or whatever it might be, two days, ten minutes, then there should be no reduction in the value for that component, that's what I'm putting to your Honour. It's easier, I accept, to articulate the submission by reference to distress and disappointment, you've got 120 paragraphs of distress, but some of that is within vicissitudes anyway, so shouldn't get all of that.
…
HIS HONOUR: You say there are vicissitudes that are wrapped up in that price. So the price of $7,000 is the market value of the services to be provided, including such vicissitudes as may reasonably occur, short of a breach of the consumer guarantees.
WEINBERGER: Accept that.
[35]
Distress Damages (grounds 6 and 7)
Grounds 6 and 7 of the amended notice of appeal are as follows:
Damages for distress and disappointment (s.267(4) of the ACL)
6 The amounts awarded for distress and disappointment were excessive.
7 His Honour erred in the assessment of damages for distress and disappointment by:
(a) having regard to the evidence given by Ms Butler referred to at J[100]-[108] in assessing damages for distress and disappointment in circumstances were (sic):
i. Ms Butler's evidence was relevant to the assessment of a different head of damages, namely damages for reduction in the value of the Services;
ii. the evidence given by Ms Butler referred to at J[100]-[108] had already been taken into account by Ms Butler in her valuations of the reduction in the value of the Services;
(b) considering the awards given for damages for distress and disappointment in the cases referred to in paragraph 914 of his Honour's first judgment and using them to identify "a rule of thumb acquired by a form of convention" (paragraph 917 of his Honour's first judgment, which is picked up at J[117]);
(c) failing to consider whether the group members' distress and disappointment was caused by the defendant's breach of the consumer guarantees or, instead, caused by matters outside of the control of the defendant (such as bad weather in general);
(d) failing to consider the duplication of damages where compensation for the value of the lost enjoyment benefit has been provided in the compensation awarded under s.267(3) of the ACL.
As noted above, the range of the Distress Damages awarded was between $6,000 and $12,000. Scenic Tours claims that these amounts were manifestly excessive, relying upon the residual kind of error in House v The King (1936) 55 CLR 499; [1936] HCA 40. Ground 7 also claims that the primary judge erred in his assessment of Distress Damages in the four ways particularised there.
In support of the claim that these damages were excessive, Scenic Tours relied primarily on the decision in Milner v Carnival plc (t/as Cunard) [2010] 3 All ER 701; [2010] EWCA Civ 389 at [36]-[46] and [60]. That case related to a 15-week cruise on the maiden world cruise of the Queen Victoria. The cost of the cruise for both Mr and Mrs Milner was almost £60,000. The constant noise and vibrations in the Milners' allocated cabin caused them sleeplessness and other health conditions. After four weeks they disembarked the Queen Victoria in Hawaii, spent six weeks there at their own expense and then joined (also at their own expense) a different cruise ship to return to England.
[36]
Airfares Damages (grounds 8 and 9)
Grounds 8 and 9 of the amended notice of appeal are as follows:
Damages for the cost of airfares (s.267(4) of the ACL)
8 His Honour erred in awarding damages for the cost of airfares to those group members for whom the sole purpose of incurring the airfares was to take the Cruise.
9 His Honour should have found that damages for the cost of airfares are not recoverable under s.267(4) of the ACL.
Reference should be made at the outset to the relevant provisions in the ACL concerning compensation and damages for breach of the statutory guarantees. Sub-section 267(1) empowers a consumer to take action under that section if the supplier (as defined) fails to comply with a relevant statutory guarantee in the supply, in trade or commerce, of services. The compensation or damages which may be recovered by the consumer in such a case are set out in sub-ss 267(2, (3) and (4)(it is important also to note that sub - s 267(5) confirms that the right to consequential loss damages under sub - 2 267(4) is in addition to the relief available under sub - ss 267(2) and (3):
267 Action against supplier of services
…
(2) If the failure to comply with the guarantee can be remedied and is not a major failure:
(a) the consumer may require the supplier to remedy the failure within a reasonable time; or
(b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time--the consumer may:
(i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or
(ii) terminate the contract for the supply of the services.
(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:
(a) terminate the contract for the supply of the services; or
(b) by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.
(4) The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
(5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).
[37]
Determination of application seeking leave to appeal
By its amended summons filed on 4 July 2022, Scenic Tours seeks leave (1) in relation to orders relating to group members not the subject of final orders, and (2) "to the extent necessary", in respect of the orders relating to group members the subject of final orders.
Leave is sought pursuant to s 103 of the Supreme Court Act, which provides:
An appeal shall, by leave of the Court of Appeal, lie to the Court of Appeal from a decision in proceedings in the Court of any question or issue ordered to be decided separately from any other question or issue.
It is apparent from its summary of argument dated 12 May 2022 that, at least in respect of issue (1) above, Scenic Tours seeks leave "to the extent the relief sought challenges answers to common questions affecting the basis on which the claims of other Group Members are determined" (emphasis added). It contends that such leave should be granted because the issues form a common substratum for the individual and representative claims, and because the representative claims collectively involve a sum many times greater than the threshold identified in s 101(2)(r) of the Supreme Court Act (ie $100,000) (citing Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd [2021] NSWCA 206; (2021) 393 ALR 162 at [20]).
It may be noted that the focus in Scenic Tours' summary of argument is on challenging certain answers to Common Questions, which differs from the wording of the amended summons, which focuses upon the final orders.
Scenic Tours' summary of argument in support of its application for leave is dated 12 May 2022 (ie it predates the date of the filing of the amended summons). This may explain why the summary of argument does not address why leave should be granted ("to the extent necessary") in respect of issue (2). To the contrary, it is asserted there that, as the 2022 primary judgment was a final order resulting in the award of damages in excess of $100,000, leave is not required insofar as the appeal seeks relief in respect of orders made concerning relevant group members.
In brief (one page) written submissions on the issue of leave dated 15 September 2022, Mr Moore indicated that he took no position as to whether leave to appeal is required in respect of any of the awards of damages to the group members. Mr Moore states there, however, that if leave is required in respect of the award of Distress Damages, leave should be refused on the basis that there are insufficient prospects of success for reasons explored in its submissions on the substantive appeal.
[38]
Determination of notice of contention
It is unnecessary to set out the terms of the notice of contention. It is sufficient to note that this notice relates only to the issue whether Scenic Tours could rely upon the s 61(3) defence. By this notice, Mr Moore sought to raise additional or alternative grounds upon which that defence should be rejected. Given the rejection of grounds 1 and 2 of the appeal (which both relate to the s 61(3) defence), it is unnecessary to determine the notice of contention.
[39]
Conclusion
For all these reasons, I consider that the following orders should be made:
1. To the extent necessary, the applicant have leave to appeal.
2. The appeal be dismissed, with costs.
[40]
Amendments
20 April 2023 - Hyperlink to Annexure A added
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 20 April 2023
In the earlier decision in this matter in the High Court, Edelman J noted that the parties assumed that the damages recoverable under s 267(4) were governed by the same principles as common law damages for breach of contract: Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 (2020 HCA judgment) at [67]. There are dangers in assuming that statutory compensation rights are limited by common law analogues or forebears: note Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3 at [44]. That said, "analogies may be helpful": ibid. Here, it is useful to refer to relevant contractual principles whilst recognising that they are not determinative.
In other words, in giving damages equivalent to the wasted expenditure of the plaintiffs the Court was adopting a convenient and just means of approximating the minimum benefit which plaintiffs would have enjoyed had the contract not been breached. This approach can thus be reconciled with an assumption that the contract would have been performed as promised. It does not involve adopting a premise that the plaintiff is to be put back in the position they would have been in had the relevant transaction not occurred. Mason CJ and Dawson J explained as much in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85-86; [1991] HCA 54:
An award of damages for expenditure reasonably incurred under a contract in which no net profit would have been realised, while placing the plaintiff in the position he or she would have been in had the contract been fully performed, also restores the plaintiff to the position he or she would have been in had the contract not been entered into. In this particular situation it will be noted that there is a coincidence, but no more than a coincidence, between the measure of damages recoverable both in contract and in tort.
It should be observed that, in a case where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed, as was the case in both McRae and Anglia Television, it is not possible as a matter of strict logic to assess damages in accordance with the principle in Robinson v Harman. But the law considers the just result in such a case is to allow a plaintiff to recover such expenditure as is reasonably incurred in reliance on the defendant's promise. In this case, the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed.
This type of compensation is sometimes labelled "reliance damages" as opposed to "expectation damages". However, as Mason CJ and Dawson J said at 82, such terms are "simply manifestations of the central principle enunciated in Robinson v Harman rather than discrete and truly alternative measures of damages which a party not in breach may elect to claim"; see further N C Seddon and R A Bigwood, Cheshire & Fifoot: Law of Contract (11th Australian edition, LexisNexis, 2017) at [23.7].
A similar explanation of the ability to recover such wasted expenditure was given by Deane J in Amann at 126-127 (citation omitted):
In a case where a plaintiff has incurred expenditure either in procuring the contract or in its performance but it is impossible or difficult to establish the value of any benefits which the plaintiff would have derived from performance by the defendant, considerations of justice dictate that the plaintiff may rely on a presumption that the value of those benefits would have been at least equal to the total detriment which has been or would have been sustained by the plaintiff in doing whatever was reasonably necessary to procure and perform the contract. …
The presumption will be rebutted if it be self-evident or established that the plaintiff would have derived no financial or other benefit from performance of the contract or that any financial or other benefit which would have been derived from future performance would not have been sufficient in value to counterbalance the past expenditure.
The issue is further illuminated by the judgment of Brereton JA in 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]-[73].
Damages for breach of contract may not merely be for lost profit, wasted expenditure, or the like, but may extend to consequential losses. For example, where an adviser breaches a contractual duty of providing services with due care the client may be able to claim losses resulting from entering a subsequent transaction which would not have been entered but for the negligent advice: see Amann at 81-82. The no-transaction element of such a claim relates to the subsequent contract, not the contract with the adviser which is the basis of the claim.
A case of some potential relevance to this matter is Baltic Shipping Company v Dillon (1993) 176 CLR 344; [1993] HCA 4, involving another unpleasurable pleasure cruise. A cruise ship sank off the South Island of New Zealand on the tenth day of a 14 day cruise. A passenger, Mrs Dillon, sought damages. The amount awarded by the trial judge included $5,000 damages for disappointment and distress and $1,417 as a refund of that part of the purchase price of the cruise which had not already been refunded (the disputed sum related in effect to the 10 days of cruising she had already enjoyed). The High Court upheld the award for disappointment but overturned the refund.
Mrs Dillon had sought to justify the refund either on contract or as founded on a restitutionary claim for total failure of consideration. The Court rejected the restitutionary claim on the basis that there had not been a total failure of consideration. But in any event, whether put in terms of restitution or contract, a refund was not payable in circumstances where the contract was being sued upon. Mason CJ said that "full damages and complete restitution will not be given for the same breach of contract" (at 359). Deane and Dawson JJ explained at 379:
[Mrs Dillon] has sought and obtained an order against Baltic for compensatory damages for Baltic's failure to perform its contractual promises to her. In particular, she has received a refund of a proportionate part of the fare and has obtained and will retain … the benefit of an award of damages for the disappointment and distress which she sustained by reason of Baltic's failure to provide her with the full pleasure cruise which it promised to provide. In these circumstances, Mrs Dillon has indirectly enforced, and indirectly obtained the benefit of, Baltic's contractual promises.
As Gaudron J put it, pithily, "[i]f Mrs Dillon were to receive damages and a refund of her fare as well, she would, in effect, take the benefit of the contract without an obligation to give consideration for it" (at 387; see also Brennan J at 372, McHugh J at 406). For Mrs Dillon to have sued for both breach of the contract and for return of the price of the contract she would, in effect, have been seeking to claim on a no-transaction basis, where doing so would conflict with the basal premise that there was a contract.
The qualification in s 269 is also consistent with the fact that s 267(3) provides that if the failure is major or cannot be remedied then the consumer may either (a) terminate or (b) take action to recover compensation for any reduction in the value of what is provided. The provision in s 267(3)(b) thus also indicates that the consumer's claim must give credit for the value of what has been provided.
The rights given in s 267(3) are premised on the transaction having taken effect, and do not provide for it to be completely unwound. Thus Edelman J indicated in the 2020 HCA judgment that s 267(3) is equivalent to compensation for the "performance interest" arising from a breach of contract, that is, providing "the promisee with the difference between the value of what was promised and the value of what was received" (at [64], and generally [63]-[66]).
As for the separate right to compensation given by s 267(4) for reasonably foreseeable loss or damage suffered by the consumer because of the failure to comply with the guarantee, Edelman J equated that with the recognition in contract law to compensation for consequential losses (at [67]). As noted above at [17], an example of such damage is where loss is suffered by acting on an adviser's negligent advice. This characterisation is supported by the explanatory memorandum for the bill which introduced the ACL, the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (at [7.114], and see similarly at [7.95] with respect to goods):
If a consumer suffers losses as a result of a failure of a supplier of services to comply with guarantees, the consumer can recover those losses from the supplier. This type of loss is often known as "consequential loss". The losses that are recoverable are limited to those that are "reasonably foreseeable" to result from the failure. In other words, the consumer can recover those losses that are a probable consequence of the failure. [Schedule 1, item 1: Chapter 5, Part 5-4, Division 1, subsection 268(4)]
Example 7.15
An example of this type of loss is a house fire caused by incorrect installation of electric lighting in the home of a consumer.
The premise of this type of right to compensation is, again, that the services have been supplied pursuant to the transaction but the supplier did not comply with a relevant consumer guarantee.
That same premise applies with respect to the other rights granted in s 267, namely those in subsection (2). If the failure to comply with the guarantee can be remedied and is not major then the consumer may require the supplier to remedy the failure. If the supplier does not do so within a reasonable time then the consumer may either claim the costs of having the failure remedied themselves or they may terminate the contract.
The rights given to the consumer relating to a failure to comply with a consumer guarantee are thus of a kind with contractual rights in presupposing the transaction has taken effect. They do not, of themselves, provide a means of obtaining compensation on a no-transaction basis. Of course, analogously with the discussion by Mason CJ and Dawson J in Amann, in some situations it is possible that the damages or compensation may coincide with what would have been awarded on such a basis.
The approach of Perram J in Capic v Ford Motor Co of Australia Pty Ltd (2021) 154 ACSR 235; [2021] FCA 715 appears consistent with this view. His Honour suggested at [891] that the point of an award under s 272 of the ACL was to put the claimant "in the position she would have been in if the [thing acquired] had been of acceptable quality". Section 272 is another remedial provision, dealing with damages claims against manufacturers for breach of consumer guarantees.
His Honour declined to award damages in this regard to those for whom there was more than one purpose of flying to Europe, on the basis that to then seek to apportion some part of the airfare to going on the cruise and another portion to pursuing other ends "is not consistent with wasted expenditure" (at [817]).
There are more fundamental difficulties with his Honour's approach. The reliance on the notion of wasted expenditure, as discussed by Mason CJ and Dawson J in Amann, is inapposite. As addressed above at [12]-[14], the law may allow recovery of wasted expenditure in contract cases "where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed" (quoting Mason CJ and Dawson J in Amann at 86). But this is not such a case. Such a prediction is not only possible but has been made.
If Scenic Tours had complied with the consumer guarantees then Mr Moore and the relevant group members would have received the tour that they had paid for, and the implicit promise of enjoyment would have been fulfilled. Scenic Tours did not comply. The claimants have thus been awarded a sum to compensate for the lesser value tour that they received, and a further sum for distress and disappointment to compensate for their lack of enjoyment. In these ways the Court has sought to put them in the same position, as best as money is able, as if the consumer guarantees had been fulfilled.
Another way of expressing the problem with the award for airfares is to note the analogy with Baltic Shipping. The wasted airfares at issue here were not part of the consideration paid by the claimants to Scenic Tours. However, they were an inevitable and necessary cost of being able to undertake the river cruises. The premise of the claim for the airfares is that the claimants in question should be returned to the position which they would have been in if they had not cruised at all. That is inconsistent with the other two heads of damage, which presuppose that they did go on the cruises. Mrs Dillon was approbating and reprobating by claiming damages for breach of contract whilst also seeking a refund of the contract price. The claimants here are approbating and reprobating by claiming damages for breach of the consumer guarantees whilst also seeking a refund of an inevitable cost of being in a position where the consumer guarantees were or were not fulfilled.
It is not necessary to consider here whether there are some circumstances in which a separate cost incurred by the consumer, not being part of the consideration payable for the transaction, could be recovered pursuant to s 267(4) of the ACL on the basis, for example, that what was obtained was of no value at all. Here, the breach of the consumer guarantees was not suggested to be so substantial as to render the services provided worthless. The primary judge effectively noted as much at [39]-[40].
As Mason CJ and Dawson J said in Amann at 82, the "corollary of the principle in Robinson v Harman is that a plaintiff is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed". In this case, by obtaining compensation for a necessary cost of the contract being fulfilled, whilst also obtaining compensation to put them in a position as if the consumer guarantees had been fulfilled, the relevant claimants are placed in a superior position to what they would have been in had the consumer guarantees been fulfilled by Scenic Tours. That is a form of double recovery, to which the law has an abhorrence, reflecting in turn "the 'universal' rule that a plaintiff cannot recover more than he or she has lost": Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 at [57]. There is no reason to consider that s 267 was intended to be inconsistent with that strong principle.
A further, related way of expressing the difficulty with the approach of the primary judge to the wasted airfares claim is to note that in substance it involves a no-transaction premise because it seeks to compensate the relevant claimants as if the transaction involving the consumer guarantees had not occurred. As explained above, such an approach is not consistent with s 267 of the ACL.
For these reasons, the primary judge erred in concluding that it was open in this case to award damages under s 267(4) of the ACL with respect to the "wasted airfares".
Mr Moore claimed that Scenic Tours failed to provide the luxurious European river cruise experience which it had promised and, consequently, breached consumer guarantees in ss 60 and 61 of the ACL. In brief, s 60 provides that, "[i]f a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill" (due care and skill guarantee). Under sub-s 61(1) where a person (supplier) supplies, in trade or commerce, services to a consumer, and the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired, there is a statutory guarantee that the services (and any product resulting from the services) will be reasonably fit for that purpose (purpose guarantee). Sub-section 61(2) imposes a separate statutory guarantee on such a supplier where the consumer makes known, expressly or by implication, to inter alia the supplier the result that the consumer wishes the services to achieve. The statutory guarantee is that the services (and any product resulting from the services) will be of such a nature and quality, state or condition that they might reasonably be expected to achieve that result (result guarantee).
In a judgment dated 31 August 2017 (Moore v Scenic Tours Pty Limited (No 2) [2017] NSWSC 733) (2017 judgment), Garling J found that Scenic Tours was in breach of the purpose and result guarantees in respect of 10 of the 13 cruises, which findings were not disturbed by subsequent appellate processes. His Honour also found that Scenic Tours breached the due care and skill guarantee in respect of Cruises 1, 4, 5, 6, 7, 8, 9, 10, 11 and 13 (some of these findings were set aside on appeal). In this judgment the primary judge also ruled that the defence under s 61(3) of the ACL did not apply to Mr Moore. The issue whether or not the defence applied to other group members was left for future determination. The primary judge made an award of damages to Mr Moore which comprised compensation both for a reduction in the value of services (under s 267(3) of the ACL) and damages for distress and disappointment (under s 267(4) of the ACL). The primary judge did not assess damages in respect of other group members.
On 24 October 2018, the Court of Appeal overturned the 2017 judgment in part in Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; (2018) 361 ALR 456 (2018 CA judgment). The Court held that Mr Moore and the other group members were precluded by s 275 of the ACL and s 16 of the Civil Liability Act 2002 (NSW) (CLA) from claiming damages for distress and disappointment under s 267(4) of the ACL. The Court also held that in assessing compensation for the reduction in the value of the services provided to Mr Moore caused by Scenic Tours' failure to comply with the consumer guarantees, the assessment was required to take place by reference to objective, rather than subjective, considerations. Accordingly, the Court directed that on further hearing of the matter before the primary judge, Mr Moore's claim for compensation for reduction in value of the services pursuant to s 267(3)(b) of the ACL be assessed in conformity with its reasons.
As noted, the Court of Appeal did not disturb Garling J's findings in the 2017 judgment that Scenic Tours had breached the purpose and result guarantees. The Court of Appeal also upheld Garling J's findings that Scenic Tours had breached the due care and skill guarantee in respect of Cruises 4, 5, 6 and 7. But it set aside his Honour's findings of breach of s 60 in respect of Cruises 1, 8, 9 and 11. No issue was taken on appeal regarding Garling J's findings as to breach of the due care and skill guarantee in respect of Cruises 10 and 13, which breaches were found by Garling J not to have resulted in compensable loss. (It may be interpolated here that the defence relating to reliance under s 61(3) of the ACL has no application to the due care and skill guarantee and only applies to the purpose and result guarantees).
The High Court then granted special leave to appeal. Mr Moore's appeal was successful: Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 (2020 HCA judgment). The High Court held that Mr Moore and the other group members were entitled to damages for distress and disappointment pursuant to s 267(4) of the ACL and that s 16 of the CLA did not affect Scenic Tours' liability in this respect. The assessment of damages insofar as it related to the question whether group members may recover damages for distress and disappointment was remitted to Garling J. The Court also reinstated the primary judge's initial award of damages for distress and disappointment relating to Mr Moore.
By a fourth further amended statement of claim (FFASOC) filed on 6 March 2020 in the Supreme Court, Mr Moore sought "relief on his behalf and on behalf of other group members" inter alia under ss 267(3) and (4) of the ACL. On 31 July 2020, Mr Moore filed a notice of motion in that proceeding seeking orders pursuant to sub-ss 177(1)(e) and (f) of the Civil Procedure Act 2005 (NSW) (CPA) for an award of damages (with interest) for Mr Moore and a sample of group members. The claim for damages had the following three components:
1. the reduction in the value of the services arising from Scenic Tours' breach of the statutory guarantees under s 267(3)(b) of the ACL (Reduction in Value Damages);
2. distress and disappointment under s 267(4) of the ACL (Distress Damages); and
3. refund of airfares to and from Europe under s 267(4) of the ACL (Airfares Damages).
Against this background, the primary judge came to determine Moore v Scenic Tours Pty Ltd (No 4) [2022] NSWSC 270; (2022) 160 ACSR 232 (2022 primary judgment or PJ), which is the judgment the subject of the present appellate proceeding.
The primary judge rejected Scenic Tours' s 61(3) defence and awarded Reduction in Value Damages in respect of Mr Moore and 33 group members, Distress Damages in respect of 32 class members, and Airfares Damages in respect of Mr Moore, 5 other named group members and an unnamed class of group members who otherwise fit at least one of three specified criteria (see further at [211] below). These figures are based on the terms of the final orders dated 24 June 2022 arising from the 2022 primary judgment, even though the primary judge referred in the body of those reasons at [15] to the judgment dealing with the assessment of damages for 31 group members in addition to Mr Moore. The primary judge ordered that the claims of other group members not affected by those orders be stood over for directions in mid-2022.
To provide background to the 2022 primary judgment, the primary judge summarised some of his key factual findings in the 2017 judgment as to what occurred on each of the relevant 10 cruises at PJ[16]-[36]. I do not understand any of these findings to be challenged on the appeal but they provide necessary context.
As to Cruise 1, it cruised on only 1 of the 12 planned cruising days. Passengers were instead offered coach trips, which took "many, many hours". Passengers travelled to various locations and then returned to the docked ship by coach. For three nights the passengers were accommodated in hotels. They had to pack and unpack their suitcases several times.
As to Cruise 2, cruising proceeded as scheduled from 20 to 28 May 2013. But there was no cruising at all from 28 to 30 May 2013, when the ship was docked and the passengers unable to leave. The passengers were then transferred by coach to another ship on 31 May 2013, when the cruising resumed overnight. From 1 June to 3 June 2013 it proceeded as scheduled.
As to Cruise 3, it proceeded as scheduled from 25 to 28 May 2013. But the balance of the tour consisted of coach travel over long distances and for many hours. Only 2 of the 10 scheduled days for cruising occurred. The passengers were accommodated on two different ships and in two different hotels.
As to Cruise 4, there were only three days of cruising (one of which was incomplete). From the fourth day onwards, all touring was done by coach. The passengers stayed on three separate ships and in a hotel in Budapest.
As to Cruise 5, there was no cruising at all on 8 of the 10 days, with all touring being by coach. The passengers were obliged to change ships twice and to undergo lengthy coach trips in changing ships.
As to Cruise 6, there were only two full days of cruising. There were 10 days during which the passengers stayed on the ship and/or took bus trips. They stayed on two separate ships and in a hotel and experienced "very lengthy motor coach trips".
As to Cruise 7, the passengers experienced only 3 out of 10 days of scheduled cruising.
As to Cruise 8, passengers travelled on three different ships. They cruised for only 3 of the 10 scheduled cruising days.
As to Cruise 9, the passengers were "significantly disrupted". They only experienced four days of cruising. They were accommodated in a hotel in Budapest, not a ship. Between Budapest and Nuremberg, they travelled by motor coach. They were accommodated on two ships and there was no cruising until the eighth day of the scheduled cruise.
As to Cruise 11, four days of cruising were entirely lost and one day of cruising was partially disrupted. Passengers were unable to enjoy Budapest nor the vast majority of the Danube River.
I will now briefly summarise the primary judge's reasons for rejecting Scenic Tours' s 61(3) defence, as well as his Honour's reasons for awarding damages (noting that the reasons for judgment are comprehensive and total 831 paragraphs).
Thirdly, relying upon the answers to Common Questions 5 and 6, the primary judge found that Mr Moore and the group members had proved that they had made known to Scenic Tours that they were acquiring the services for the purpose described therein and, in addition, the result which they wished to achieve (PJ[739]). Thus the purpose for which the services were acquired was "to enjoy an all-inclusive five-star luxury river cruise experience with the additional services promised" and the result sought was "to receive the services that Scenic had assured them they would receive in the Brochure" (PJ[740]).
Fourthly, the primary judge concluded that, having regard to the contents of both the Scenic Tours Brochure and the Evergreen Tours Brochure, and in circumstances where, when the cruises were booked, group members could not exercise any control over the provision of a cruise and the level of services that were to be provided, each group member was entitled to, and did, rely on the skill and judgment of Scenic Tours to provide the services sufficient to achieve the purpose and result guarantees (PJ[751]).
Fifthly, after considering relevant clauses in the Terms and Conditions set out in the Brochures, the primary judge concluded that those Terms and Conditions did "not suggest that Scenic is abrogating the exercise of its skill and judgment for the provision of cruise services as Scenic now submits" (PJ[769]). Nor was the primary judge persuaded that the combined effect of various clauses in the Terms and Conditions (as distinguished from a reading of cl 2.7 in isolation, as advanced by Scenic Tours below) was to intimate to a reasonable consumer or any of the group members that they could not rely on Scenic Tours' skill and judgment or, alternatively, that it would be unreasonable to so rely (PJ[758]-[769]). As will shortly emerge, Scenic Tours relies heavily on the wording of cll 2.7, 2.10 and 2.12 in particular as being inconsistent with this finding.
Sixthly, the primary judge rejected Scenic Tours' submission that its knowledge or means of knowledge with respect to weather conditions as at the time of booking was no greater than those of group members (at PJ[772]-[777]).
Seventhly, the primary judge rejected Scenic Tours' submission that, in circumstances where customers were urged by the Terms and Conditions to arrange comprehensive travel insurance to cover any unforeseen circumstances it was unreasonable for the consumer to rely on Scenic Tours' skill and judgment to deliver the purpose or result guarantees in the event of any unforeseen future circumstances making it impossible to deliver the notified purpose or result (PJ[778]-[780]).
Eighthly, the primary judge concluded that all the circumstances showed that, as at the time of booking, group members relied upon Scenic Tours to provide the services in a way that would achieve both the notified purpose and result (PJ[782]) and that Scenic Tours could have chosen (but did not) to cancel or defer the tours (PJ[784]). As will emerge, Scenic Tours challenges this finding on the basis that all but 2 of the cruises were interrupted mid-tour with the consequence that the time for cancellation had passed when it became apparent that the cruises would be interrupted. Moreover, Scenic Tours complains that the primary judge's finding is inconsistent with the 2018 CA judgment at [301] which, it submitted, held that "the Services did not extend to cancelling a tour once embarked".
Scenic Tours called Mr Phillip Hoffmann as an expert witness on this aspect of the damages claim. Mr Hoffmann had decades of experience in the travel agency business. The primary judge considered, however, that Mr Hoffmann was a "problematic expert" (PJ[56]) for reasons which include the following (PJ[57]-[63]):
1. While Mr Hoffmann had personally travelled on a river cruise with Scenic Tours, he did not advise the Court that he had travelled for free as a guest of Scenic Tours for a fraction (about one third) of that cruise. His Honour was not persuaded that the circumstances of this river cruise could be compared to those of a consumer who had booked a holiday package, nor that Mr Hoffmann would have the same view of the passenger experience as a passenger paying for an entire package.
2. Mr Hoffmann's report did not identify that his business had an ongoing commercial relationship with Scenic Tours, namely the receipt of various forms of commission for the sale of Scenic Tours' holiday packages.
3. Mr Hoffmann did not reveal, until being cross-examined, that he had had considerable assistance from a manager of one of his travel agencies in preparing his report. There was no evidence as to that manager's qualifications, training or experience in the travel industry. Nor did the fact of joint authorship of the report give the Court much confidence in assessing which opinions expressed in it were Mr Hoffmann's.
4. Mr Hoffmann did not make detailed reference to the way in which he went about assessing the price at which each cruise in the circumstances which occurred could be priced for sale.
5. Contrary to Ms Butler's approach, Mr Hoffmann did not take account of where the ship was in fact moored and treated each day of a cruise as being equally valuable.
Ultimately, the parties' joint experts reached agreement on the damages to be paid in respect of Cruises 1, 2, 5 and 9. The primary judge accepted those valuations at PJ[73]. In respect of Cruises 3, 4, 6, 7, 8, and 11, the primary judge noted at PJ[74] his preference for Ms Butler's evidence to the effect that there was no real market value for these cruises and accepted the lower of her valuations for these cruises.
The primary judge's individual conclusions are recorded in a table at PJ[75], which is reproduced below:
Cruise No. Base Cabin Price Expert Opinion - Market Value Court Finding % Value Received Damages
1 $7645 $2905 $2905 38% 62% of price paid
2 $7195 $4290 $4290 60% 40% of price paid
3 $6495 $1299 - $1599 $1299 20% 80% of price paid
4 $7195 $719.50 - $1999 $720 10% 90% of price paid
5 $7195 $2439 $2439 34% 66% of price paid
6 $7195 $2249 - $3580 $2249 31% 69% of price paid
7 $7195 $2878 - $4199 $2878 40% 60% of price paid
8 $7195 $719.50 - $1599 $720 10% 90% of price paid
9 $6495 $2999 $2999 46% 54% of price paid
11 $7195 $1654.85 - $1999 $1655 23% 77% of price paid
The second aspect of Scenic Tours' appeal which warrants correction at the outset relates to its repeated contention that the group members could not reasonably have understood Scenic Tours to be accepting responsibility for the fitness of the services for the purpose of experiencing the tour in accordance with the itinerary and standards in the Brochure if adverse river conditions or other external circumstances prevented Scenic Tours from performing those services. In support of this contention, Scenic Tours relied upon the following matters (the quotations are from Scenic Tours' written submissions):
1. At the time of contracting Scenic Tours made plain that it was not guaranteeing that the group members would be "experiencing [the cruise] in accordance with the itinerary and standards in the Brochure" in the event that it was not possible to do so.
2. The group members reasonably ought to have known at the time they booked their cruises of the "inherent risks" of travel and
"the inevitable vicissitudes that can affect even the most meticulous travel and touring arrangements". There was no express assumption of responsibility by Scenic Tours to ensure strict compliance with the "itinerary and standards published in the Brochure".
3. "… [T]he services that Scenic supplies to consumers is the provision of cruise ships and associated facilities for sailing on waterways". Its business was not to supply the waterways or docking stations, which was the responsibility of other authorities.
4. No assurance was given by Scenic Tours, in writing or otherwise, that the group members would experience their tours in accordance with the itinerary and standards published in the Brochure.
It is notable that in the first and third of those claims, Scenic Tours approaches the matter on the basis that the relevant services which are the subject of the inquiry under s 61(3) of the ACL are the provision of the cruises themselves and not a broader concept of "services" which includes, but extends beyond, the cruises. On appeal, Scenic Tours claimed that to include onshore activities (such as the use of coaches or buses, the provision of hotel accommodation and the choice of docking locations) goes beyond "cruising" and is contrary to the pleadings and the way the case was conducted below. For the following reasons, those claims are rejected.
The definition of "services" is explicitly stated to be inclusive. Moreover, it is defined in a way which covers "variations" in the tour itineraries. The itineraries were not confined to cruising per se but included, for example, bus tours, onshore sightseeing and entertainment and staying in what were promised to be "magnificent hotels in perfect locations". Moreover, other parts of the pleading made plain that Mr Moore and the group members' complaints were directed to Scenic Tours' supply of the "said services", necessarily referring back to that definition (see, for example, [5], [6] and [9] of the FFASOC).
In its defence to the FFASOC, while admitting that Mr Moore and the group members had acquired services from it, Scenic Tours repeatedly claimed that the alleged "services" had not been adequately pleaded or particularised.
Subsequently, in their formal reply, Mr Moore and the group members reiterated in [1(b)] that the "defendant's services to the plaintiff and group member (sic) extended beyond merely arranging the respective tours". It included Scenic Tours taking all such reasonable steps that would enable it to make decisions (prior to Mr Moore and the group members departing to take their cruises) "as to whether the tours (as set out in the respective tour itineraries) could proceed, as arranged, or required variation…". It is notable that emphasis was placed on "the tours" as set out in the respective tour itineraries, which, as explained above, were not confined to cruising per se. Moreover, express reference was made again to the possibility of the tours requiring "variation", and not merely delay or cancellation.
The way Mr Moore and the group members pleaded their case is consistent with the Terms and Conditions of the contract between Scenic Tours and those consumers. In cl 1.1, the contract was defined as including the Terms and Conditions and "Your Itinerary". Significantly, cl 2.2 stated that the Tour Price included the following:
Where indicated in Your Itinerary, Your Tour Price includes (a) all coach and cruise travel; (b) services of a Cruise Director (if applicable) and/or Tour Director; (c) airport transfers outside Australia …; (d) specified meals; (e) internal flights (as specified in Your Itinerary); (f) accommodation; (g) sightseeing and admissions where stated; (h) GST (where applicable); (i) port charges; and (j) all gratuities and tipping on land tours and river cruises operated by Us.
"Us" was defined as including Scenic Tours (cl 1.1); "Tour" was defined to mean "the tour You have booked with Us outlined in Your Itinerary, as amended in accordance with these Terms and Conditions" (cl 2.19); "Cruise Director" was defined to mean "Our guide on Your cruise who is Our employee" (cl 2.19); and "Tour Director" was defined to mean "Our guide on Your Tour who may be either Our employee or the employee of a Service Provider" (cl 2.19).
Self-evidently, the contract, and the services provided thereunder, were not confined to the cruises alone.
The agreed Common Questions and Answers also made plain that the subject "services" were not confined to cruising per se. As noted at [79] above, the primary judge proceeded (correctly) on the basis that those services were as described in the answers to Common Questions 1 through 3. Applying that approach, it was also correct for the primary judge to highlight key parts of the Scenic Tours Brochure (which were substantially repeated in the Evergreen Tours Brochure) in describing the services provided by Scenic Tours. I have extracted some parts of his Honour's reasons for judgment on this subject at [80] above. Large parts of the Scenic Tours Brochure were devoted to telling consumers not only of the onboard activities which set the cruises apart, but also a wide range of onshore tourist activities, including visiting wineries, private castles, restaurants, concerts, and being accommodated in "magnificent hotels in perfect locations", not to mention being transported in "[l]uxury 40 seat coach designed for your comfort".
Scenic Tours' complaints on the appeal are inconsistent with both the 2017 judgment and the 2022 primary judgment. They are also inconsistent with the 2018 CA judgment. If Scenic Tours considered that there was an issue with the conduct of the proceeding which gave rise to the 2017 judgment, it should have raised the matter in the previous appeal. It failed to do so.
In the 2017 judgment, the primary judge found at [447]-[448] that flooding and unseasonable rain were not the only causes of Scenic Tours' failure to comply with the purpose and result guarantees. These findings were made with express reference in [447] to "the way in which Mr Moore (and the group members) articulated their claim …". His Honour then identified at [448] matters which were within Scenic Tours' control and influence which constituted "other causes of the failure to comply with the purpose and result guarantees". Those matters included the quality of motor coaches and docking locations for some of the boats (namely their distance from townships, the surrounding smelly industrial areas and the fact that other ships were docked either between or adjacent to the Scenic Tours ships). The primary judge noted at [448] that Scenic Tours failed to adduce any evidence which explained why, for example, the docking locations were chosen.
Then, significantly, at [449] of that judgment, the primary judge stated:
It is inappropriate to go through and address the various individual failures which contributed, in different ways, to the experiences of passengers on each cruise as Scenic submits. This is because the question of whether the cruises achieved their objective and provided the Services so as to comply with the purpose and result guarantee is an evaluation made on the basis of examining all that was provided, and assessing it against what services ought to have been provided.
Plainly, therefore, the proceeding the subject of the 2017 judgment was conducted on a much broader basis than that which Scenic Tours now claims.
Moreover, Scenic Tours' claim that the subject services should be limited to cruising per se is inconsistent with the 2018 CA judgment at [309]:
The finding that Scenic failed to comply with the Purpose and Result Guarantees was based on the disparity between the nature and quality of the services Scenic was to provide to passengers booked on the various cruises and the nature and quality of the services supplied after the cruises commenced. The finding required a comparison to be made between the totality of post-embarkation services to be supplied by Scenic and the totality of post-embarkation services actually supplied. In each case services did not terminate (or were not to terminate) until the passengers disembarked. Even if, contrary to the primary Judge's findings, Scenic's failure to comply with the Purpose and Result Guarantees was due to causes independent of human control, the failure was not due solely to causes occurring after Scenic supplied the services. The challenge to the primary Judge's rejection of Scenic's defence under s 267(1)(c)(ii) of the ACL must be dismissed.
Turning then to the 2022 primary judgment, answers 5 and 6 to the Common Questions provided the framework within which damages were assessed. Those particular answers make clear that the relevant services the subject of the findings of breach of the statutory guarantees were not as restricted as Scenic Tours now contends:
Q5: What was the 'particular purpose' made known to Scenic by group members?
A5: The group members impliedly made known to Scenic that they wished to enjoy an all-inclusive five-star luxury river cruise experience with the additional services promised by Scenic.
No determination has presently been made as to any additional purpose expressly made known to Scenic by any group members.
Q6: What was the 'result' that group members wished to receive from the services that was made known to Scenic?
A6: The group members impliedly made known that the result which they wished to receive was the services which Scenic assured them that they would receive in the Tour Brochure.
For all these reasons, I reject Scenic Tours' claims that the pleaded case and the case as conducted below was confined to cruising and did not extend to onshore activities, including the use of buses or coaches, hotel accommodation, onshore sightseeing and the choice of docking locations when the boats were unable to cruise.
Scenic Tours relied upon these clauses in support of its contention that consumers who booked cruises either knew, or ought reasonably to have known, at the time of their booking that if events occurred which were beyond Scenic Tours' control (including major flooding), the cruises could be cancelled and consumers would expect that to happen in the interests of safety.
Scenic Tours contended that the effect of these clauses was to intimate to consumers that it could only be relied upon to provide the relevant services in ordinary circumstances and not in circumstances where it was impossible to do so. Scenic Tours drew particular attention to the terms of cl 2.10 and the reference therein to the possibility that the tour itinerary might be changed or varied for reasons outside Scenic Tours' control, including river or weather conditions. Scenic Tours also relied upon the fact that consumers were urged by cl 2.16 of the Terms and Conditions to arrange comprehensive travel insurance to cover any unforeseen circumstances which may occur during a tour.
Properly construed, these clauses do not assist Scenic Tours' s 61(3) defence. On the contrary, they assist the respondent's case. In its terms, cl 2.7 put consumers on notice that, because of the nature of travel, circumstances which are beyond Scenic Tours' control may occur and affect the provision of the tour in strict accordance with the itinerary, but Scenic Tours promised to use "reasonable endeavours to provide or arrange appropriate alternatives". Thus the intimation was that even where events occurred which were beyond Scenic Tours' control, consumers could reasonably rely upon Scenic Tours using its skill or judgment in those circumstances. Clauses 2.10 and 2.12 were to similar effect. (I will address cl 2.16 and travel insurance later in these reasons for judgment).
It is evident that Scenic Tours' fundamental misapprehension regarding the scope of the services it promised to supply, which were not limited to cruising alone, tainted its understanding of cll 2.7, 2.10 and 2.12 in the Terms and Conditions.
Scenic Tours also pointed to what happened with Cruise 2 in support of its criticism of the finding at PJ[784] that Scenic Tours "could have chosen, but did not do so, in the range of circumstances described in [the 2017 judgment], to cancel or defer the tours". It submitted that, given the primary judge's findings in respect of Cruise 2, it could not have chosen to cancel or defer Cruise 2 until one week into that cruise (26 May 2013). Scenic Tours also complained that the primary judge's reference to Scenic Tours having a choice to cancel or defer the tours is inconsistent with the 2018 CA judgment.
There are several answers to these matters. First, I am not persuaded that there is an inconsistency between PJ[784] and the 2018 CA judgment at [301] as claimed by Scenic Tours. The primary judge did not say that, in all the circumstances, Scenic Tours was required to cancel the tours; rather, his Honour stated that Scenic Tours "could have chosen" to do so, but did not. In any event, even if I am wrong, any error in this regard would be immaterial.
Secondly, the primary judge's reference at PJ[784] to the option of Scenic Tours cancelling the cruises is, as the respondent contended, "a non-essential finding".
Thirdly, as the respondent pointed out, Scenic Tours incorrectly claimed that, on the primary judge's findings, Scenic Tours could not have chosen to cancel or defer Cruise 2 until the seventh day merely because it proceeded in accordance with the scheduled itinerary for some days. The primary judge's findings of Scenic Tours' foreknowledge relating to likely problems with rivers in Europe before 20 May 2013 are at [155]-[184] of the 2017 judgment.
As to Scenic Tours' complaint that the primary judge erred in not identifying the skill and judgment which it could have exercised on 29 May 2013 in respect of Cruise 2 in order to satisfy the purpose and result guarantees because that cruise had an "enforced stay" in Bamberg (which was on the itinerary for Cruise 2), this complaint has no substance. In the 2017 judgment at [487] the primary judge found that, on 29 May 2013, the ship was docked "in an unattractive industrial harbour which had a foul smell. It was also docked between other ships, so that it had no outlook from cabin verandas. Equally, guests had little privacy in their cabins". Moreover, his Honour found that the only escape from remaining on the ship in those circumstances was to take a lengthy motor coach tour which fell far short of the promised all-inclusive luxury river cruise experience with appropriate additional services. Thus the conditions provided by Scenic Tours for the enforced stay inherently exposed Scenic Tours' lack of skill and judgment.
As to PJ[772], Scenic Tours complains about the primary judge's statement that, in support of Scenic Tours' claim that reliance by group members was unreasonable because, at the time of booking, both group members and Scenic Tours had equal knowledge with respect to a flooding event. In oral address Scenic Tours' counsel said that there was no evidence that eighteen months prior to a booking Scenic Tours "knew or could have known that these particular events would prevail". He added that the effect of the primary judge's finding was that Scenic Tours was in a better position to foresee that which occurred eighteen months later when, in fact, it was not in a better position.
This criticism is misplaced for at least two reasons. First, PJ[772] must be read in context and in conjunction with the primary judge's findings in the following few paragraphs concerning the deficiencies in Scenic Tours' evidence regarding the alleged 1-in-600 year flooding event. Secondly, the primary judge gave a detailed explanation at PJ[776] why he rejected Scenic Tours' claim that the knowledge of group members should be equated with that of Scenic Tours. In particular, his Honour gave a rational explanation that, because of its vast experience, Scenic Tours' knowledge of how flooding events might affect a cruise was superior to that of any group member, even those group members who had some appreciation that cruises could be affected by flooding events.
As to PJ[776], the criticism that the primary judge erroneously suggested that it was being asked to equate the knowledge of group members with that of Scenic Tours, substantially repeats earlier complaints on this topic. His Honour went to some length to explain why he rejected Scenic Tours' contention that it was unreasonable for group members to rely on it because their knowledge or means of knowledge was the same as that of Scenic Tours.
As to PJ[783] and [784], in these paragraphs the primary judge summarised his conclusion that although every group member knew about the possible effect of high water levels this "[did] not mean that there was no reliance on the skill and judgment of Scenic to provide the services" (emphasis added). Yet again, Scenic Tours failed to appreciate that the relevant services extended beyond cruising alone, an error which also underlay its criticism of PJ[782]. Significantly, the primary judge concluded there that it was clear that, at the time of booking, group members were "relying on the skill and judgment of Scenic to provide the Cruise, and the services which it was obliged to" (emphasis added).
Secondly, Scenic Tours criticises Ms Butler (and the primary judge's acceptance of her evidence regarding her alternative methodology) because she allegedly did not take into account the fact that customers on a cruise had an option of "skipping" bus tours. It contends that this omission meant that Ms Butler was not valuing what was actually provided by Scenic Tours.
This criticism misconceives the relevant section of Ms Butler's report dated 3 August 2020. Ms Butler explained at paragraph 3.14 that she had omitted this matter because:
1. while a fully informed consumer may know in advance of the less than enjoyable parts of a cruise, consumers who chose to remain on board and not participate in bus tours experienced all aspects of the cruise package as delivered;
2. a consumer who has experienced the entire cruise package is the most fully informed consumer or is at least as fully informed as the prior informed consumer;
3. the services should be valued from the perspective of a fully informed consumer and not merely in respect of part only of the services provided; and
4. she had considered any negative impact of the "lived experience of unmet expectations" and last minute changes etc.
In adopting this approach Ms Butler correctly focused upon the market value of a cruise by reference to what a reasonable consumer fully informed would have paid for the cruise at the time of booking.
Thirdly, Scenic Tours claims that Ms Butler assumed that consumers travelled to Europe for the sole purpose of taking a Scenic Tours cruise as opposed to doing additional activities. This complaint has no foundation. Ms Butler made no such assumption, as she made clear in her cross-examination below.
Fourthly, Scenic Tours claims that Ms Butler erred by not taking into account the evidence that some Scenic Tours consumers wrote to the company and congratulated it for having handled the difficulties presented by the flooding. As the respondent correctly pointed out, this alleged omission was never put directly to Ms Butler in cross-examination so as to establish that this matter had not been considered by her. Moreover, nor was she asked in cross-examination whether any such omission would have caused her to change her opinion on market value.
Fifthly, Scenic Tours claims that the primary judge erred in not rejecting Ms Butler's evidence in circumstances where she had no experience in marketing cruises of the kind provided by Scenic Tours in 2013; had no experience in pricing such cruises; and she accepted in cross-examination that Mr Hoffmann had significantly more experience in selling European cruises.
I reject these claims. The primary judge explained why, despite the criticisms concerning Ms Butler's experience, he preferred her evidence to that of Mr Hoffmann. His Honour explained at PJ[53] that he was satisfied that Ms Butler had adequate expertise and experience and that her alternative methodology was acceptable. Moreover, it was well open to the primary judge to conclude at PJ[56] that Mr Hoffmann was "a problematic expert". While accepting that Mr Hoffmann was a very well-experienced travel agent, the primary judge identified various matters which affected the weight he gave to Mr Hoffmann's evidence. Those matters are outlined at [90] above. The matters are all plainly relevant and provided a sound basis for the primary judge's assessment.
Other matters were identified by the primary judge at PJ[60]ff as to the difficulties he had with Mr Hoffmann's evidence.
For all these reasons, ground 3 is rejected.
Ward LJ described at [1] the issue in the case as: "[W]hat is the correct measure of damages for a ruined holiday?". At [36], Ward LJ (with whom Richards and Goldring LJJ agreed) acknowledged the difficulty of assessing the quantum of damages for inconvenience and distress where "no yardstick exists for measuring in money the right amount of compensation to be awarded". The need to avoid a duplication of damages in awarding damages first for diminution in value and then for distress and disappointment was emphasised at [42]. Ultimately, the Court of Appeal ordered damages in the amount of £3,500 for diminution in value and damages for inconvenience and distress in the amounts of £4,000 and £4,500 for Mr and Mrs Milner respectively (ie a total amount of £12,000).
There are two additional aspects of Milner which should be noted. First, the trial judge there had awarded £2,000 under the heading of wasted expenditure for half the cost of the formal eveningwear which Mrs Milner said she had lost the opportunity to wear on the cruise. This was set aside on appeal on the basis that, because the Milners had terminated the voyage on the Queen Victoria when they reached Hawaii, the defendant's breach did not cause the loss (see Ward LJ at [56]). Secondly, Ward LJ said at [59] that it was wrong to use the price of the holiday as a benchmark for damages.
Each case necessarily turns on its own particular facts and circumstances. The primary judge considered several holiday cases, including Milner, in assessing the Distress Damages. His Honour correctly noted at PJ[94] that each group member was entitled to have their damages assessed on an individual basis to reflect their particular experience, distress and disappointment, whilst also having regard to the objectively determined facts regarding the extent to which each cruise failed to achieve the purpose and result guarantees. This approach led his Honour to pay close attention to the services which Scenic Tours said it would provide in its Brochure. The primary judge noted, seemingly with approval, some aspects of Milner (see PJ[112]-[113]), after noting, correctly in my view, at PJ[111] that the assessment of Distress Damages "is a very fact-rich and individual assessment".
The parties also referred to Baltic Shipping Co v Dillon (1993) 176 CLR 344; [1993] HCA 4. In the Court of Appeal below Kirby P had said that, unless there was some "exceptional circumstance increasing the sting of the failure to provide the enjoyment and pleasure promised, [his Honour] would be inclined to suggest that no more than half the sum awarded in this case [ie half of $5,000] should be the norm for the ordinary passenger". Kirby P's views were seemingly approved in the High Court: see at 366 per Mason CJ, at 387 per Gaudron J and at 406 per McHugh J.
It is plain that Kirby P was not intending to enunciate a rigid rule. The cost of the fare in Baltic Shipping Co was a little over $2,000 (see at 348 per Mason CJ). The respondent was awarded a full refund of the fare (noting that less than half of the fare had been already refunded) plus $5,000 for distress and disappointment.
According to counsel for Scenic Tours, the cost of the cruises here ranged from approximately $8,000 to $20,000, depending on the size of cabin and various upgrades or add-ons. It is notable that the primary judge did not use as a benchmark the price paid by any group member for their cruise (consistently with Milner at [59] per Ward LJ). Focusing, however, on the fact that the High Court in Baltic Shipping Co did not disturb the trial judge's award of $5,000 for distress and disappointment, if allowance is made for inflation since 1993 (when Baltic Shipping Co was decided), the range of the Distress Damages awarded by the primary judge here is hardly excessive, let alone manifestly excessive. Within that range the primary judge gave careful and detailed attention to the individual circumstances of the relevant group members.
Scenic Tours has not persuaded me that the Distress Damages were manifestly excessive in the particular circumstances of this case.
Nor am I satisfied that Scenic Tours has made good any of the matters under ground 7. First, no appellable error has been established in respect of the primary judge's reliance on Ms Butler's evidence in assessing the Distress Damages in circumstances where:
1. although it is true that Ms Butler's evidence was primarily directed to Reduction in Value Damages, her reports were admitted into evidence without objection and were relevant for all purposes; and
2. Ms Butler expressly excluded from her assessment of Reduction in Value Damages any actual or potential subjective views of passengers arising from any distress or disappointment occasioned by the failure to achieve the itinerary or quality of travel offered and paid for.
Moreover, as the respondent points out, Ms Butler's evidence was relied upon by the primary judge "by way of context and background", as is made clear at PJ[100].
Secondly, I see no appellable error in the primary judge's reasoning at PJ[117]. His Honour referred there to his finding in the 2017 judgment at [914]-[917], where his Honour said that it did not seem to him to be correct to award only a token or nominal sum for distress and disappointment. That statement was made in the context of the primary judge having considered other cases, including Baltic Shipping.
To the extent that Scenic Tours claims that the primary judge's reference at [917] of the 2017 judgment to those cases being used to identify "a rule of thumb acquired by a form of convention" (as picked up at PJ[117]), this criticism is misconceived. Proper regard should be had to the full terms of [917]. After referring to various cases, including Baltic Shipping and Kirby P's statement in Moran v McMahon (1985) 3 NSWLR 700 at 707ff, the primary judge made it clear at [916] of that judgment that an assessment of the sum of damages for distress and disappointment is to be undertaken in an individual case "by an evaluative process applying a sense of fairness and justice". This provides the context for the primary judge's statement at [917]:
The reference by me to these cases does not constitute any inhibition at all of the evaluative function upon which I am engaged. Nor am I attempting to derive a norm or standard of damages. The use of them rather falls into identifying nothing more than a rule of thumb acquired by a form of convention: see Kirby P in Moran v McMahon at 706D.
Thirdly, there is no basis for Scenic Tours' complaint that the primary judge failed to consider whether the group members' distress and disappointment was caused not by any breach of the consumer guarantees but rather by matters such as bad weather which were beyond its control. The 2022 primary judgment is replete with references to the significance of the bad weather affecting the enjoyment of many of the individual group members (as set out in the respondent's written submissions in the appeal at [100]).
Finally, as to Scenic Tours' complaint that the Distress Damages duplicated the component under the Reduction in Value Damages relating to lost enjoyment benefit, it is clear from Ms Butler's report dated 3 August 2020 that her assessment of damages under her alternative methodology excluded any such subjective feelings (see at 3.12 of that report).
For all these reasons, grounds 6 and 7 are rejected.
Relevantly, the definition of "major failure" in s 268(1) includes where "the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure" (para (a)).
As noted above, in awarding Airfares Damages, the primary judge regarded the cost of airfares as "wasted expenditure" consistently with the remarks of Mason CJ and Dawson J in Amann Aviation (see PJ[806]). The passage from the joint judgment in Amann Aviation which the primary judge particularly had in mind is that at 81-82 (footnotes omitted, and to similar effect see Deane J at 126-127):
A further example of the application of Robinson v Harman which will result in a plaintiff being entitled to claim damages for wasted expenditure is in a contract for services such as that between a solicitor and a client. Where a solicitor has breached his or her contractual duty of care, the measure of damages to which a client will be entitled will be such an amount as will put the client in the position he or she would have been in had the contract of retainer been performed without negligence. In cases where, had non-negligent advice been given, the client would not have entered into a subsequent transaction, for example a purchase of real property, then, in conformity with Robinson v Harman, the client will be entitled to recover as damages expenditure wasted on account of the negligent advice, less anything subsequently recovered and given reasonable acts of mitigation. The amount of wasted expenditure will be the appropriate measure of damages in such a situation because, it having been established that the client would not have entered into the subsequent contract if proper advice had been given, it is not sensible to speak of loss of profits. … The expressions 'expectation damages, 'damages for loss of profits', 'reliance damages' and 'damages for wasted expenditure' are simply manifestations of the central principal enunciated in Robinson v Harman rather than discrete and truly alternative measures of damages which a party not in breach may elect to claim.
In Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234 at [29], Macfarlan JA (with whom Bell P and Meagher JA agreed) said that Amann Aviation stood for the following proposition concerning claims for damages for wasted expenditure or reliance damages:
The decision in Amann Aviation established that, in respect of such a claim, "the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed", with the consequence that the onus of proof rests on the party breaching the contract to establish "that the reliance expenditure would have been wasted even if the contract had been performed" (at 86-90 per Mason CJ and Dawson J).
There is also a comprehensive and helpful discussion of the topic of damages for wasted expenditure in the context of breach of contract in the recent judgment of Brereton JA in 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]-[73] (Macfarlan and Mitchelmore JJA agreeing).
The parties did not identify any authorities on the issue whether damages under s 267(4) of the ACL could include wasted expenditure. My research did not reveal any such authority. Apart from the cases referred to above, which address the issue in the context of damages for breach of contract, two first instance decisions of the Federal Court of Australia provide some limited and indirect support for the primary judge's approach, albeit by reference to other provisions in the ACL providing for the recovery of damages for breach of other consumer guarantees.
The first of those cases is Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702. The provision there was s 259(4) of the ACL. It is in the same terms of s 267(4) of the ACL, save that it applies to remedies for breach of consumer guarantees by suppliers relating to the supply of goods. In Vautin at [293], Derrington J stated (emphasis added):
In addition to the right to return the goods or to damages representing the diminution in value [under s 259(3) of the ACL, which is in similar terms to s 267(3)], the consumer is entitled to recover loss or damage suffered "because of" the failure to comply with the guarantee if that loss was reasonably foreseeable (see s 259(4)). This second limb of damages appears to cover those losses which are sustained consequent upon the acquisition of the defective goods. The scope of that "head of damage" would include property loss which has occurred as a result of the defective goods (such as where a faulty electrical appliance causes a house to burn down); the cost of attempting to ascertain the defects in the goods; or, the cost of preserving the goods. It would appear that this sub-section is concerned with the recovery of "reliance losses" as the inclusion of the limitation of "reasonable foreseeability" pertains to such losses rather than expectation losses. Section 259(6) makes it clear the remedy for recovery of damages caused by the non-compliance with the guarantee is in addition to the alternative remedies of returning the goods or recovering an amount that represents the diminution in value of the goods.
The other Federal Court authority is that of Perram J in Capic v Ford Motor Co of Australia Pty Ltd [2021] FCA 715; (2021) 154 ACSR 235, which concerned s 272(1)(b) of the ACL. It is in substantially the same terms as s 267(4) of the ACL, save that it applies to remedies for breach of consumer guarantees by manufacturers relating to the manufacture of goods. Perram J adopted a similar approach to that of Derrington J in Vautin and ultimately held at [912] that the buyer of a defective car, who was entitled to recover 30% of the cost of the car for compensation for reduction in the value of the car, was also entitled to recover under s 272(1)(b) excess amounts of tax and finance.
In my respectful view, the primary judge did not err in taking the approach which he did in assessing damages under s 267(4) of the ACL. Having regard to Amann Aviation (including what Gaudron J said at 155-156 on the matter), damages were properly awarded to Mr Moore and five group members for the loss of the cost of the airfares, which was wasted expenditure having regard to Scenic Tours' breach of the relevant statutory guarantees. Unlike the position in Milner, Scenic Tours' conduct with respect to the breach of the guarantees was causative of this loss, at least where the five relevant group members travelled to Europe solely for the purpose of taking a Scenic Tours cruise (see PJ[810]) and, furthermore, in respect of Mr Moore, whose dominant purpose in travelling to Europe was to take a Scenic Tours cruise (see PJ[812]-[813] and [818]). Scenic Tours did not contend that this aspect of Amann Aviation had no application because of the terms of s 267(4) of the ACL. Nor did it claim that the loss of the cost of the airfares was unforeseeable. In the case of Mr Moore and the five group members whose sole purpose for flying to Europe was to take a Scenic Tours cruise, the loss was clearly foreseeable. Nor did it contend that the primary judge erred in applying a categories-based approach in awarding Airfares Damages to only some of the claimants.
I do not see any inconsistency in the fact that the primary judge awarded Reduction in Value Damages under s 267(3) whilst also awarding Distress Damages and Airfares Damages under s 267(4). They represent separate heads of compensation and/or damages (see s 267(5), which makes that plain). The award of Distress Damages is in the nature of damages for non-economic loss, while the Airfares Damages relates to economic loss and is a separate head (see 2020 HCA judgment at [66] per Edelman J). It is clear from the primary judge's detailed reasons regarding the award of Distress Damages that he did not take into account the cost of airfares under that head of damages. There is no inconsistency in awarding both Distress Damages and Airfares Damages.
For completeness, it might also be noted that the orders below dated 24 June 2022 awarded Airfares Damages not only in respect of the six persons identified above but also any group members who had (a) stayed in Europe for no more than one night before and/or after the scheduled commencement or conclusion of their cruise; (b) stayed in Europe to undertake a cruise extension offered by Scenic Tours of no more than three nights before and/or after the scheduled commencement or conclusion of their cruise, plus one night before and/or after; or (c) were the travelling companions of the "Identified Airfare Members" (ie the six persons identified above) and travelled to Europe under the same arrangements.
For these reasons, I would reject grounds 8 and 9.
Neither party sought to develop their submissions on the issue of leave any further in the oral hearing on the appeal.
It appears that Scenic Tours sought leave to appeal in respect of issue (1) because of this Court's earlier decision in Rodriguez. Presumably, the summons seeking leave to appeal was then subsequently amended to add issue (2) out of an abundance of caution and to cover the contingency that the Court took the view that leave to appeal was required in respect of orders concerning group members who are the subject of final orders arising from the 2022 primary judgment.
Rodriguez was another class action. As explained by this Court at [15] of Rodriguez, s 103 of the Supreme Court Act requires leave for an appeal from a decision of any question or issue decided separately from any other question or issue. Where, however, the answers to the separate questions result in the proceedings being finally determined, there is some authority which indicates (by majority) that an appeal lies of right (see Plymouth Brethren (Exclusive Brethren) Christian Church v The Age Company Ltd (2018) 97 NSWLR 739; [2018] NSWCA 95).
In Rodriguez, the Court noted at [17] that the issue whether leave to appeal was required in that case was complicated by the fact that the proceeding involved a class action. Although a final order had been made as between the plaintiff and one of the defendants in that matter, which entitled that defendant to an appeal as of right, the Court noted that the answers to the common questions had not given rise to final orders involving members of the class, other than three members, who were not parties to the appeal.
In Rodriguez at [20], the Court (Basten, Meagher and Leeming JJA) concluded:
The correct view may be that to the extent that the appeal seeks relief with respect to the plaintiff's judgment against Seqwater, which is in an amount in excess of the threshold in s 101(2)(r) of the Supreme Court Act, it is an appeal against a final order and may be brought as of right. However, to the extent the relief sought challenges answers to common questions affecting the basis on which the claims of class members are determined, Seqwater requires leave, pursuant to s 103. Because the issues form a common substratum for the individual and representative claims, and because the representative claims collectively involve a sum many times greater than the threshold, there should be a grant of leave to address the answers to the common questions.
It is this part of Rodriguez which Scenic Tours presumably had in mind when it filed its summary of argument, which uses very similar language.
Assuming (without deciding) that leave is required, it is apt to revisit and elaborate upon the history of the Answers to Common Questions in the present proceeding. As Garling J said in the 2017 judgment at [10], that judgment dealt with the whole of Mr Moore's claim, and the determination of a number of questions which the parties agreed were likely to arise regarding the claims of the group members. His Honour then added that whether in fact those questions did arise, and if so in respect of which group members, would form part of the ultimate determination. Ultimately, the Court made final orders arising from the 2017 judgment, which included judgment for Mr Moore for some heads of damage, plus interest. His Honour noted at [945] of the 2017 judgment that it was appropriate for the parties to have an opportunity to make submissions on the way the Common Questions should be answered, and the form which they should take, including on the issue whether the questions were no longer to be regarded as common.
This led to Garling J publishing on 15 November 2017 further reasons for judgment in Moore v Scenic Tours Pty Limited (No 3) [2017] NSWSC 1555. His Honour noted at [3] of those reasons that the parties had been directed to bring in short minutes of order setting out the answers to questions contained in an amended statement of issues which had been filed in Court on 13 May 2016. The statement of issues was intended to identify common questions of law and fact identified in the representative proceedings. It went through various iterations as the proceedings progressed (see 2018 CA judgment at [63]). Garling J accepted Scenic Tours' submission that some of the questions proposed by Mr Moore did not raise questions which were common to the claims of all group members. His Honour then proposed that this issue itself be added to the statement of issues, which asked which of the answers to the preceding questions were common to all, some or none of the group members (this became Question 22 in the statement of issues).
The Court of Appeal noted in the 2018 CA judgment at [68] that the final form of the statement of issues was not settled until Garling J made orders on 15 November 2017 (see Moore v Scenic Tours Pty Ltd (No 3)). Those were the issues which the parties thought were likely to be common. His Honour noted at [4] of Moore v Scenic Tours Pty Ltd (No 3) that, during the course of the hearing on 15 November 2017, and in large measure with the agreement of the parties, the terms in which those answers were to be given were determined. His Honour then proceeded in that judgment to set out the questions and answers given by the Court with respect to the identified issues.
After noting at [70] in the 2018 CA judgment that the identification of substantial common questions of law and fact "is a critical element in the conduct of representative proceedings", the Court of Appeal identified some problems with the statement of issues which had been ultimately finalised in the proceeding before Garling J. This resulted in the Court of Appeal making the following observations at [77]:
The incompleteness of the answers to the "common questions" reflects the dangers of leaving the finalisation of common questions of law and fact to the end of the hearing. It also reflects the length and complexity of the "common questions" identified in the present case, some of which conflate a number of distinct concepts. Moreover, the answers to the "common questions" do not accurately record all material findings of fact made by the primary Judge.
The 2018 CA judgment was published on 24 October 2018. The Court made certain orders at that time, including a direction that the parties file agreed Common Questions and Answers that gave effect to the 2018 CA judgment insofar as they addressed the entitlement of group members to compensation and damage by reason of Scenic Tours' breaches of consumer guarantees. Subsequently, the parties agreed on reformulated "agreed Common Questions and Answers", a copy of which became Annexure A to a second set of reasons for judgment which were published by the Court of Appeal on 7 December 2018 (see Scenic Tours Pty Ltd v Moore (No 2) [2018] NSWCA 300).
As noted above, this was followed by the decision of the High Court in the 2020 HCA judgment, where Scenic Tours' appeal was successful in part. Following the 2020 HCA judgment, the agreed Common Questions and Answers were further amended by order of that Court. The terms of the amended Answers to Common Questions are set out in the 2022 primary judgment at [11] (and are Annexure A to these reasons for judgment).
Finally, as noted at [58] above, the Answers to Common Questions were subsequently amended by the agreement of the parties after publication of the 2022 primary judgment (with particular reference to the deletion of the qualification or rider to the Questions 7, 8 and 15).
Accordingly, with this rather complicated procedural history in mind, and with a view to facilitating a degree of finality in these otherwise protracted proceedings, if leave be required, Scenic Tours should have leave to appeal as sought by it with respect to both limbs of its amended summons. For the reasons given above, however, the appeal should be dismissed.