Steiner, John Raymond & Anor v Magic Carpet Tours Pty Ltd & Ors [1984] FCA 323

Federal Court of Australia|1984-10-10|Before: Wilcox J

This is a tale of a honeymoon that went awry; unhappily, with persisting consequences. Upon the fact of debacle the parties are agreed: the cause is in hot dispute. In particular, the factual question in the case 1s whether the projected accommodation arrangements fell through because of the failure of the respondents to make bookings on behalf cf the couple or because of the state of sobriety and conduct of the bridegroom,

The applicants. John Raymond Steiner and Lynne Janine Steiner, were married on 20 February 1982. They wished to have an overseas honeymoon but it was not until the following July that they set about active planning. In that month they read a newspaper advertisement offering tours to Bali. It was inserted by the first respondent. Magic Carpet Tours Pty Limited, a package holiday wholesaler of whom the third respondent, Valerie Jean Ireland, 1s a director. Mr Steiner telephoned Magic Carpet and spoke to an employee, identified only as "Sue", who recommended the Mandala Bungalows at Ubud in Bali. During the course of this and a subsequent conversation Sue described the accommodation - in a manner not suggested to have been inaccurate

and stated that a representative of the bungalows would meet the Steiners at Denpasar airport and drive them to Ubud. a journey of about one hour. Mr Steiner indicated interest and was advised to book through a local travel agent. He did so. On 21 July he went to a travel agent at Bondi Junction, Easts Holidays

Pty Limited, the second respondent. He saw Mr KA Trainor, the

manager, and told him that Magic Carpet had recommended Mandala Bungalows, adding that he wanted "a quiet secluded area". Mr Trainor contacted Maqic Carpet, which company wrote to him later that day confirming return air bookings for Mr and Mrs Steiner between Sydney and Denpasar and the reservation of a bungalow at Mandala Bungalows from 12-20 Auqust. The total cost was $1,030; being air fares $780, accommodation $250. After deduction of $25 commission to Easts Holidays the net land content receivable by Magic Carpet was $225. Mr Steiner paid Easts Holidays $1,030 and was given a brochure on Bali published by Magic Carpet and containing a description of Mandala Bungalows. In due course he received from Magic Carpet an itinerary which showed a Qantas flight departing from Sydney at 11 am on 12 August and arriving

"On arrival. our Tour Operator - A.A. Gde. Rai Dalem will provide you with a transfer to your hotel.

During your stay, you will provided with a Kintamani Volcano Tour". With the itinerary was a voucher and confirmation order issued by Magic Carpet to Mandala Bungalows and relating to the

Mr and Mrs Steiner travelled on the arranged flight.

Before they departed Mr Steiner purchased two bottles of whisky

at a duty free shop at the airport. Apparently the flight, with a detour to Melbourne, took a total of eight and one half hours. Shortly after take-off drinks were offered. Mr Steiner accepted. He thought he drank spirits. Mrs Steiner thought he had wine. Whatever 1t was, he conceded in evidence, he "continued to drink for the rest of the flight" apart from breaks for two meals; although when asked to quantify the amount he admitted only to

"approximately about three or four little things of spirits".

Mr and Mrs Steiner say that they went through Customs at Denpasar with the other passengers and emerged into the transport pick-up area. Mrs Steiner held the green identification card with which they had been supplied by Magic Carpet but nobody claimed them. They made enquiries but were unable to locate anyone from Mandala Bungalows. At the security desk in the airport they were told that there was no telephone connection to the bungalows. Taxis were available but at a cost of about $25, which they were unwilling to pay. They waited, for a period of four to five hours. Mr Steiner opened one of his "duty free" bottles of whisky and. during the wait, consumed some of its contents - on his admission about three-quarters of one bottle. Eventually they caught a taxi to the bungalows. They lost a suitcase, either at the airport or in the taxi; they do not know which. They arrived sometime after 10 pm. Mr Steiner said in

evidence that he was then distraught and "very drunk". He claims

not to drink regularly and not usually to excess. Mr Steiner denies that he was angry and claims that he knew what was going

According to Mr and Mrs Steiner, they were informed by the person in charge at the bungalows at the time of their arrival that no accommodation had been booked for them and that their names were not known to the staff. This person they say, told them that the bungalows were full up but that he would

accommodate them for that night and possibly one more night.

They were put up in a room - apparently a staff room - which fell well short of the standard of accommodation described by Sue and

During the next morning the manager asked Mr and Mrs Steiner to leave. According to both Mr and Mrs Steiner, the manager slapped Mr Steiner's face and raised a threatening hand to Mrs Steiner. In his evidence. Mr Steiner denied drinking, upon that day, before the conversation with the manager but this is inconsistent with a statement made in a letter of complaint to Magic Carpet written by Mrs Steiner at the dictation of her husband and signed by both Mr and Mrs Steiner on 25 August 1982, shortly after their return to Australia. In that letter he speaks of having consumed "a small quantity of duty free alcohol" before the conversation. Whatever the position, Mr and Mrs Steiner did leave the bungalows. They found other accommodation

at one hotel for one night, at another hotel for three nights and

at a third hotel for the final two nights. They say that the reason for the various moves was that the hotels were heavily

booked and could only take them for limited periods. The cost of

Despite the change of accommodation Mr and Mrs Steiner did take the Kintamani Volcano tour, the cost of which had been included in their payment to Easts Holidays. The cost of that tour was met by Mandala Bungalows. In due course Mandala Bungalows forwarded to Magic carpet a statement of account, expressed in United States dollars, for the month of August. That statement related to a number of clients. In relation to Mr

"12. MR. AND MRS STINER (sic.) (x 2). (BIG COMPLAIN HE DRUNK)

Arr. on the 12th Augst to Mandala Bungalows .. $25.00(refund)

Mandala ltwin (12-13 Augst) inight x $10.00 .. $10.00 13 Augst move to Alita transfer .............. $12.00 Volcano coach tour (2 x $12.00) ..........6.-. $24.00 Departure ex Hyatt on the 20th Augst ......... $11.50 ..

Total $82.50 (because he drunk take taxi in airport.and we refun USS$25.00"

J admitted the statement in evidence as part of the history of the matter and as relevant to the relationship between Magic Carpet and Mandaia Bungalows - although I think that it is equivocal on the question whether any prior reservation had been made. I do not treat the comments made as to Mr Steiner's condition and conduct as evidence on those

Magic Carpet paid the amount claimed. It also, after demand was made by the applicants, refunded to them the whole of the sum of $225 which it had received from Easts Holidays as the net land content of the tour. Mrs Ireland explained that this was done after legal advice "that maybe if I

refunded every cent that I had received from the Steiners that

accommodation on the first night in Bali and the worry and

inconvenience of changing hotels must have been distressing to the applicants. In his affidavit Mr Steiner said that "the chain of events concerning the abortive hotel booking caused my wife and myself great worry, nervous strain and inconvenience, ruined our holiday and honeymoon and put a strain on our marriage". Mrs Steiner said in evidence that during the honeymoon she could not sleep, she had migraine headaches and nightmares and was very nervous and irritable. She says that those problems did not go away on return to Sydney but continue until the present time. In anticipation of this case she consulted a psychiatrist who gave evidence before me. Mrs Steiner had suffered mental illness before the trip to Bali - in 1975 and again in 1978 - but she claimed in her evidence to have been symptom free between 1980 and the honeymoon trip. Whether or not that statement is completely accurate it does appear that the events of the honeymoon have

caused or exacerbated significant continuing mental problems.

The applicants rely upon s.52 of the Trade Practices

Act, to recover the amount of the loss or damage occasioned to

them by reason of that conduct: such damages to include not only their out of pocket expenses but also compensation for the distress occasioned to them and for the mental illness

There is no doubt that the first respondent represented to the applicants that 1t had arranged for their

accommodation and for them to be met. Neither is there doubt

that. 1f those representations were false, the conduct of the first respondent constituted a breach of s.52. The respondents concede that s.82 1s sufficiently wide to include the loss of enjoyment of a holiday and the distress and inconvenience caused by the unavailability of proposed

accommodation. I think that this concession is correctly

Section 82 is unrestricted except by the requirement that the loss or damage suffered by the applicant be the result of the respondent's contravention of the legislation. Damages in respect of such matters have been allowed in relation to breach of a contract to provide accommodation of a

particular standard: see Jarvis v Swans Towns Ltd £19733 1 QB

233 and Jackson v Horizon Holidays Ltd £19751 1 WLR 1468. In

Brown v Jam Factory Pty Limited (1981) 53 FLR 340 at p 351 Fox

J expressed the view that "as an action based on s.52 15 more appropriately classified as one of tort, it is possible that the measure of damages will always, fundamentally, be based on principles affecting torts". (See also per Northrop J in

Mister Faggins Pty Limited v Centrepoint Freeholds Pty Limited

(1981) 36 ALR 23 at p 59 and per Lockhart J in Hubbard Pty

Limited v Simpson (1982) 4 ATPR 40-295 at pp 43,674-43,675).

That statement relates to the measure, that 1s the quantum, of damages. If the tortious approach applies also to recoverability, in the sense of remoteness, of damage,

damage which is of a type foreseeable to occur in the event of a breach of the section - as in this case loss of enjoyment of the holiday, distress and inconvenience ~ would be allowed.

It is a more difficult question whether damages for a persisting psychological condition, even if caused by a breach of s.52, are recoverable. Upon the assumption mentioned, the answer would depend upon whether or not this is a kind of

damage reasonably foreseeable in respect of such a breach: cf

Overseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd

(Wagon Mound No 1) £1961] AC 388 at p 425-426, Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383. Upon the other hand, a requirement that the kind of damage be foreseeable may be

thought to impose upon the section a limitation which Parliament has not seen fit to impose and therefore not to be

The issue between Magic Carpet Tours and the applicants 1s whether the representation that Magic Carpet had made the reservations on their behalf was in fact false. Mr Rai Dalem, the proprietor of Mandala Bungalows has, over a number of years, acted as agent for Magic Carpet in arranging accommodation at various hotels in Bali. Upon this basis, the applicants argue that, even if the position was that Magic Carpet had notified Mr Ral Dalem and Mr Rai Dalem had failed to make an appropriate notation in the books of the Mandala Bungalows, there was an omission by the agent of Magic Carpet with the result that there was not a reservation made by Magic Carpet. I reject that submission. Whatever his capacity in relation to other establishments, Mr Rai Dalem was the principal of Mandala Bungalows. Firm arrangements between Magic Carpet and him, in relation to accommodation at the bungalows, amounted to a reservation of that accommodation, That situation could not be affected by some event internal to

Mandala Bungalows and not known to Magic Carpet. The issue as

to the truth of the representation that accommodation had been reserved depends upon whether Magic Carpet had made the

One of the difficulties about the case is that no evidence has been placed before the Court. on the respondents' side, as to events in Bali. There was some attempt to do so. At the hearing an affidavit of Mr Rai Dalem was produced by counsel for the first and third respondent and leave was sought to file it 1n Court. It was some months overdue; according to directions made by Lockhart J on 4 May 1984 the affidavits of the respondents were supposed to be filed on or before 25 May 1984. More importantly, I was informed by counsel for the applicants that his instructing solicitor had only become aware of the existence of the affidavit a few days before the hearing, that he had immediately asked that Mr Rai Dalem be available for cross-examination but that it was believed that he was not in attendance. Upon this being confirmed by counsel for the first and third respondents, and no explanation for the non-attendance of Mr Rai Dalem being given, I permitted the affidavit to be filed in Court for record purposes but I declined to exercise my discretion under 0.14 ¥.9(3) so as to allow the affidavit to be used in evidence. Later. after comment from counsel for the applicant in his closing address as to the fact that there was no evidence from Mr Rai Dalem, I permitted counsel for the first

respondent to re-open her case and to recall Mrs Ireland to

say that Mr Rai Dalem did not enjoy good health, that he

refused to travel by aeroplane and that she had made the decision that 1t would be an unreasonable burden upon him to

ask him to travel by ship from Bali to Sydney for the hearing.

I accept this explanation. The explanation denies to the

applicants the suggestion that the evidence of Mr Rai Dalem would not have thrown doubt upon the correctness of whatever inference was available in favour of the applicants upon the

evidence actually before the Court: see Jones v Dunkel (1959)

101 CLR 298. But it leaves open the question of what

The applicants argue that the Court should infer that no accommodation was reserved for them from the fact that nobody came to the airport to meet them, that they were told that no reservation had been made, that they were put up in makeshift accommodation upon the night of their arrival and that they were turned away on the following day. This is said to be consistent, at least prima facie, with a failure of Magic Carpet to make the reservations. Even upon the applicants' argument the matters relied upon are inconclusive. Those matters are not inconsistent with the booking having been made but some error or omission having %ccured at the Mandala Bungalows. However, if no other explanation presented itself these matters, supported by an absence of evidence that a booking was in fact made, might support an inference adverse

to the first respondent. Unfortunately for the applicants'

case, there is here both another explanation and positive

I have already referred to the admissions made by Mr Steiner as to his consumption of alcohol on the journey. I do not accept that he consumed only four small bottles of spirits in the eight and one half hours which elapsed between the departure of the aeroplane from Sydney and its arrival at Denpasar. This hardly meets the description, to which he assented, of his having "continued to drink for the rest of the flight" except during the two meals. I was not impressed with the reliability of either Mr or Mrs Steiner as witnesses. In relation to each of two separate matters - the question as to who bore the cost of the taxi from the airport to Mandala Bungalows and as to whether Mr Steiner had been drinking prior to the incident with the hotel manager on the second day - both Mr and Mrs Steiner insisted upon a version of the facts that differed from their own written accounts of relevant events made shortly after their return tc Australia. In each case the version given in evidence was one which might he thought to tend towards a better result for them in this litigation. The inconsistencies were drawn to their attention but no explanation was offered. I think that it is probable that Mr Steiner availed himself of the free liquor supplied on the aeroplane to a much greater degree than he was prepared to admit and that, upon arrival at Denpasar, he was affected by

alcohol to an appreciable extent. Such an affectation

provides a ready explanation of their not meeting up with a

Mr Steiner concedes that, whatever his condition when he arrived at the airport, he was very drunk by the time he arrived at Mandala Bungalows. He was also several hours late. If the driver had missed him at the airport and returned empty handed it would not be surprising if the bungalow had been let to someone else. It is common ground that accommodation was 1n strong demand at the time. Alternatively, the receptionist may have taken such a view of Mr Steiner's condition as to be unwilling to allow him to use accommodation proximate to other quests. In the absence of evidence these possibilities rest in speculation but they are real alternatives to the explanation of the sub-standard room pressed upon me. namely that no bungalow had been reserved. The decision of the manager to request Mr and Mrs Steiner to leave on the

following day 1s readily explicable upon similar bases.

The applicants called evidence from Mr MJ Pearson, a man who has worked in the travel industry for the last 22 years and who has been closely associated with low cost package tours to South East Asia for the last three years. He said that the incidence of alcohol consumption by Australians en route to holidays in Asia is now such that the international hotel industry in South East Asia has to expect

Australian tourists arriving at their hotels after air flights

to be intoxicated. Indeed, he claims that international hotels in South East Asia "accepting Australian on low cost package tours would not operate profitably if Australian tourists were not accepted intoxicated". If that statement is correct it raises questions about the wisdom, in terms of Australia's reputation with its neighbours, of government and airline policies - duty free alcohol in airport shops and unlimited free alcohol in flight - which tend to encourage excessive drinking. However, the evidence does not meet the relevant point. There is not here a question whether or not the management of Mandala Bungalows was justified in refusing accommodation to Mr Steiner but rather a question whether Mr Steiner's condition might have afforded an explanation, consistent with accomodation having been reserved on his behalf by Magic Carpet, for his non-reception into a bungalow. I think that it does. The Mandala Bungalows were not a major international hotel but low key, quiet accommodation ina secluded area. As the brochure supplied to Mr Steiner pointed out, the Balinese people put value upon gentleness and

The remaining matter relied upon by their counsel is the evidence of the applicants that they were told at Mandala Bungalows that no booking had been made. The person alieged to have made that statement has not been identafied. The fact of the statement depends entirely upon the evidence of Mr and

Mrs Steiner. Having regard to his admitted condition at the

dishonest evidence but I cannot put weight upon her evidence. Mr Steiner appeared to me to be a forceful and dominant

person. I think that, even unconsciously, Mrs Steiner would

Mrs Ireland gave evidence that the practice in Magic Carpet was to handle transport and accommodation bookings simultaneously so as to ensure that neither was completed until the other was checked to be available. She produced a file card which appeared to accord with that practice. She also produced a document. part of a running letter with a series of disparate entries addressed to Mr Rai Dalem, which purported to make a reservation on behalf of Mr and Mrs Steiner at Mandala Bungalows. She said that this was the original letter returned at her request by Mr Rai Dalem and bearing his handwritten notes. The relevant section was prepared by Sue, who has left Magic Carpet and 1s apparently now overseas. The entry relating to the Steiners corresponded with a carbon copy attached to their file. Mrs Ireland also produced a photocopy of a letter from Mr Rai Dalem confirming various bookings including that of Mr and Mrs Steiner. The original, she said, would have been cut up and

relevant sections attached to the files of the clients

involved. The cut out section - which must have been tiny - was not in fact with the Stezners' file but it is not hard to accept Mrs Ireland's suggestion that it may have come adrift

If those documents are genuine they establish without question that a booking was transmitted to, and confirmed by, Mandala Bungalows, Counsel for the applicants submitted that [I should reject them as being documents manufactured for the purpose of the case. I see no justification for that course. There 1s nothing about the documents themselves to occasion suspicion. It is conceded that the theory that the documents are spurious necessarily requires collusion at least between Mr Rai Dalem and Mrs Ireland. I have not had the benefit of seeing Mr Rai Dalem but I have heard Mrs Ireland cross-examined. She impressed me as a straight forward and honest woman. I do not think that she would be likely to bea

In my view the proper conclusion is that a reservation was in fact made by Magic Carpet on behalf of Mr and Mrs Steiner. It follows that no false representation was

In relation to the other respondents little need be said. Mrs Ireland was apparently joined in the action on the

basis that she was a person involved in the contravention,

within the meaning of s.75B of the Act. There was, however, no evidence that she had anything to do with the making of the arrangements for, or the representations to, Mr and Mrs Steiner. So far as the evidence goes, Sue handled everything. Even if I had reached a different conclusion in relation to the first respondent I would have dismissed the proceedings

The joinder of Easts Holidays was equally misconceived. It is true that this company actually took unstructions for the booking from Mr Steiner and collected his money but it is not shown to have made any representations to the applicants that a reservation had been made. Careful analysis of the basis of a claim of misleading conduct is essential if applicants are to avoid the joinder of

unnecessary parties with consequential unnecessary costs.

In my opinion the claim made by the applicants must fail as against all three respondents. Under those circumstances it 1s not necessary to refer further te the unteresting and important questions relating to damages which

would arise if the applicants were entitled to succeed or to

consider the Cross-claim for indemnity made by Easts Holidays against the other two respondents. That Cross-claim will be

preceding pages are a true copy of the Reasons for Judgement herein of

TRADE PRACTICES - Alleged misleading conduct - Representation that reservation for accommodation made ~ Whether representation false - Inferences to be drawn from refusal of accommodation - Evidence as to the making of reservations - Nature of damages

recoverable under s.82. TRADE PRACTICES ACT 1974 ss. 52, 82

JOHN RAYMOND STEINER AND LYNNE JANINE STEINER V MAGIC CARPET TOURS PTY LIMITED. EASTS HOLIDAYS PTY LIMITED AND VALERIE JEAN IRELAND.

JOHN RAYMOND STEINER First Applicant LYNNE JANINE STEINER Second Applicant

First Respondent EASTS HOLIDAYS PTY LIMITED Second Respondent

VALERIE JEAN IRELAND Third Respondent EASTS HOLIDAYS PTY LIMITED Cross Claimant

Order that the applicants pay the costs of each of the respondents of the Application. No order for costs in relation to the Cross-clainm.

Direct that the exhibits be handed out at the expiration

of 21 days unless in the meantime a Notice of Appeal has heen

First Applicant LYNNE JANINE STEINER Second Applicant

This is a tale of a honeymoon that went awry; unhappily, with persisting consequences. Upon the fact of debacle the parties are agreed: the cause 1s in hot dispute. In particular, the factual question in the case is whether the projected accommodation arrandements fell through because of the failure of the respondents to make bookings on behalf of the couple or because of'the state of sobriety and conduct of the bridegroom,

The applicants. John Raymond Steiner and Lynne Janine Steiner. were married on 20 February 1982. They wished to have an overseas honeymoon but it was not until the following July that they set about active plianning. In that month they read a newspaper advertisement offering tours to Bali. It was inserted by the first respondent. Magic Carpet Tours Pty Limited. a package holiday wholesaler of whom the third respondent, Valerie Jean Ireland. 1s a director. Mr Steiner telephoned Magic Carpet and spoke to an emplovee, identified only as "Sue". who recommended the Mandala Bundalows at Ubud in Bali. During the course of this and a subsequent conversation Sue described the accommodation - 1n a manner not suggested to have been inaccurate

and stated that a representative of the bungalows would meet the Steiners at Denpasar airport and drive them to Ubud. a journey of about one hour. Mr Steiner indicated interest and was advised to book through a local travel agent. He did so. On 21 July he went to a travel agent at Bondi Junction, Easts Holidays

Pty Limited, the second respondent. He saw Mr KA Trainor, the

manager, and told him that Magic Carpet had recommended Mandala

. Bungalows, adding that he wanted "a quiet secluded area". Mr Trainor contacted Maqic Carpet, which company wrote to him later that day confirming return air bookings for Mr and Mrs Steiner between Sydney and Denpasar and the reservation of a bungalow at Mandala Bungalows from 12~20 August. The total cost was $1,030; being air fares $780, accommodation $250. After deduction of $25 commission to Easts Holidays the net land content receivable by

iner paid Easts Holidays $1,930 and was given a brochure on Bali published by Maqic Carpet and containing a description of Mandala Bungalows. In due course he received from Magic Carpet an itinerary which showed a Qantas

flight departing from Sydney at 11 am on 12 Auqust and arriving

"On arrival, our Tour Operator - A.A. Gde. Rai Dalem will provide you with a transfer to your hotel.

With the itinerary was a voucher and confirmation order issued by Magic Carpet to Mandala Bungalows and relating to the

Mr and Mrs Steiner travelled on the arranged flight.

Before they departed Mr Steiner purchased two bottles of whisky

at a duty free shop at the airport. Apparently the flight, with a detour to Melbourne, took a total of eight and one half hours. Shortly after take-off drinks were offered. Mr Steiner accepted. He thought he drank spirits. Mrs Steiner thought he had wine. Whatever it was, he conceded in evidence, he "continued to drink for the rest of the flight" apart from breaks for two meals; although when asked to quantify the amount he admitted only to

"approximately about three or four little things of spirits".

Mr and Mrs Steiner say that they went through Customs at Denpasar with the other passengers and emerged into the transport pick-up area. Mrs Steiner held the green identification card with which they had been supplied by Magic Carpet but nobody claimed them. They made enquiries but were unable to locate anyone from Mandala Bungalows. At the security desk in the airport they were told that there was no telephone connection to the bunqgalows. Taxis were available but at a cost of about $25, which they were unwilling to pay. They waited, for a period of four to five hours. Mr Steiner opened one or his "duty free" bottles of whisky and, during the wait, consumed some of its contents - on his admission about three-quarters of one bottle. Eventually they caught a taxi to the bungalows. They lost a suitcase, either at the airport or in the taxi; they do not know which. They arrived sometime after 10 pm. Mr Steiner said in

evidence that he was then distraught and "very drunk". He claims

not to drink regularly and not usually to excess. Mr Steiner denies that he was angry and claims that he knew what was going

According to Mr and Mrs Steiner. they were informed by the person in charge at the bungalows at the time of their arrival that no accommodation had been booked for them and that their names were not known to the staff. This person they say, told them that the bungalows were ruil up but that he would accommodate them for that night and possibly one more night.

They were put up in a room - apparently a staff room - which fell well short of the standard of accommodation described by Sue and

upon that day, before the conversation with the manager but this

zs inconsistent with a statement made in a letter of complaint to Magic Carpet written by Mrs Steiner at the dictation of her husband and signed by both Mr and Mrs Steiner on 25 August 1982, shortly after their return to Australia. In that letter he speaks of having consumed "a small quantity of duty free alcohol" before the conversation. Whatever the position, Mr and Mrs Steiner did leave the bungalows. They found other accommodation

at one hotel for one night. at another hotel for three nights and

at a third hotel for the final two nights. They say that the reason for the various moves was that the hotels were heavily

booked and could only take them for limited periods. The cost of

Despite the change of accommodation Mr and Mrs Steiner did take the Kintamani Volcano tour, the cost of which had been included in their payment to Easts Holidays. The cost of that tour Was MEt DY Mangala Bungalows. In due course Mandala Bungalows forwarded to Magic carpet a statement of account, expressed in United States dollars, for the month of August. That statement related to a number of clients. In relation to Mr

"12. MR. AND MRS STINER (sic.) (x 2). (BIG COMPLAIN HE DRUNK)

Arr. on the 12th Augst to Mandala Bungalows .. $25.00(refund) Mandala ltwin (12-13 Auqst) Inight x $10.00 .. $10.00

13 Augst move to Alita transfer .............. $12.00

Volcano coach tour (2 x $12.00) .............- $24.00

Departure ex Hyatt on the 20th Augst ......... $11.50 .. Total $82.50

(because he drunk take tax1 in alrport.and we refund US$25.00"

I admitted the statement in evidence as part of the history of the matter and as relevant to the relationship between Magic Carpet and Mandala Bungalows - although I think that it is equivocal on the question whether any prior reservation had been made. I do not treat the comments made as to Mr Steiner's condition and conduct as evidence on those

Whatever the cause of the problem the poor accommodation on the first nidght in Bali and the worry and inconvenience of changing hotels must have been distressing to the applicants. In his affidavit Mr Steiner said that "the chain of events concerning the abortive hotel booking caused my wife and myself great worry, nervous strain and inconvenience, ruined our holiday and honeymoon and put a strain on our marriage". Mrs Steiner said 1n evidence that during the honeymoon she could not sleep. she had miqraine headaches and nightmares and was very nervous and irritable. She says that those problems did not go away on return to Sydney but continue until the present time. In anticipation of this case she consulted a psychiatrist who gave evidence before me. Mrs Steiner had suffered mental illness before the trip to Bali - in 1975 and again in 1978 - but she claimed in her evidence to have been symptom free between 1980 and the honeymoon trip. Whether or not that statement is completely accurate it does appear that the events of the honeymoon have

caused or exacerbated significant continuing mental problems.

The applicants rely upon s.52 of the Trade Practices

Act. They say that the respondents represented to them that arrangements had been made for their accommodation at Mandala Bungalows and for them to be met at the airport, that these representations were false as no such arrangements had in fact been made and that the respondents in trade or commerce thereby engaged in conduct that was misleading or deceptive. They arque that they are entitled, pursuant to s.82 of the Act, to recover the amount of the loss or damaqe occasioned to them by reason of that conduct: such damages to include not only their out of pocket expenses but also compensation for

the distress occasioned to them and for the mental illness

There 1s no doubt that the first respondent represented to the applicants that 1t had arrarged for their

accommodation and for them to be met. Neither 15 there doubt

that, 1£ those representations were false. the conduct of the first respondent constituted a breach of s.52. The respondents concede that s.82 is sufficiently wide to include the loss of enjoyment of a holiday and the distress and inconvenience caused by the unavailability of proposed

accommodation. I think that this concession is correctly

particular standard: see Jarvis v Swans Towns Ltd £19731 1 QB

233 and Jacxson v Horizon Holidays Ltd C1975J3 1 WLR 1468. In Brown v Jam Factory Pty Limited (1981) 53 FLR 340 at p 351 Fox

J expressed the view that "as an action based on s.52 is more appropriately classified as one of tort, it is possible that the measure of damages will always, fundamentally, be based on principles affecting torts". (See also per Northrop J in

Mister Figgins Pty Limited v Centrepoint Freeholds Pty Limited

(1981) 36 ALR 23 at p 59 and per Lockhart J in Hubbard Pty

Limited v Simpson (1982) 4 ATPR 40-295 at pp 43,674-43,675).

That statement relates to the measure, that 1s the quantum, of damages. If the tortious approach applies also to recoverability, in the sense of remoteness, of damage,

damage which is of a type foreseeable to occur in the event of a breach of the section - as in this case loss of enjoyment of the holiday, distress and inconvenience - would be allowed.

It 1s a more difficult question whether damages for a persisting psychological condition, even if caused by a breach of s.52, are recoverable. Upon the assumption mentioned, the answer would depend upon whether or not this is a kind of damage reasonably foreseeable in respect of such a breach: cf

Qverseas Tankship (UK) Ltd v Morts Dock and Engineering Co Ltd

(Wagon Mound No 1) £1961] AC 388 at p 425-426, Mount Isa Mines Ltd v Pusey (1970) 125 CLR 383. Upon the other hand, a requirement that the kind of damage be foreseeable may be thought to impose upon the section a limitation which

Parliament has not seen fit to impose and therefore not to be

The issue between Magic Carpet Tours and the applicants is whether the representation that Maqic Carpet had made the reservations on their behalf was in fact false. Mr Rai Dalem, the proprietor of Mandala Bungalows has, over a number of years, acted as agent for Magic Carpet in arranging accommodation at various hotels in Bali. Upon this basis, the applicants arque that, even 1f the position was that Magic Carpet had notified Mr Rai Dalem and Mr Rai Dalem had failed to make an appropriate notation in the books of the Mandala Bungalows, there was an omission by the agent of Magic Carpet with the result that there was not a reservation made by Magic Carpet. I reject that submission. Whatever his capacity in relation to other establishments, Mr Rai Dalem was the principal of Mandala Bungalows. Firm arrangements between Magic Carpet and him. in relation to accommodation at the bungalows, amounted to a reservation of that accommodation. That situation could not be affected by some event internal to

Mandala Bungalows and not known to Magic Carpet. The issue as

to the truth of the representation that accommodation had been reserved depends upon whether Magic Carpet had made the

sought to file it in Court. It was some months overdue;

according to directions made by Lockhart J on 4 May 1984 the affidavits of the respondents were supposed to be filed on or before 25 May 1984. More importantly, I was informed by counsel for the applicants that his instructina solicitor had only become aware of the existence of the affidavit a few days before the hearing, that he had immediately asked that Mr Rai Dalem be available for cross-examination but that 1t was believed that he was not in attendance. Upon this being confirmed by counsel for the first and third respondents. and no explanation for the non-attendance of Mr Rai Dalem being aqiven, I permitted the affidavit to be filed in Court for record purposes but I declined to exercise my discretion under 0.14 r.9(3) so as to allow the affidavit to be used in evidence. Later. after comment from counsel for the applicant in his closing address as to the fact that there was no evidence from Mr Rai Dalem, I permitted counsel for the first

respondent to re-open her case and to recall Mrs Ireland to

say that Mr Rai Dalem did not enjoy good health, that he refused to travel by aeroplane and that she had made the decision that it would be an unreasonable burden upon him to ask him to travel by ship from Bali to Sydney for the hearing. I accept this explanation. The explanation denies to the applicants the suggestion that the evidence of Mr Rai Dalem would not have thrown doubt upon the correctness of whatever inference was available in favour of the applicants upon the evidence actually before the Court: see Jones v Dunkel (1959) 101 CLR 298. But it leaves open the question of what

The applicants argue that the Court should infer that no accommodation was reserved for them from the fact that nobody came to the airport to meet them, that they were told that no reservation had been made, that they were put up in makeshift accommodation upon the night of their arrival and that they were turned away on the following day. This is said to be consistent, at least prima facie, with a failure of Magic Carpet to make the reservations. Even upon the applicants' argument the matters relied upon are inconclusive, Those matters are not inconsistent with the booking havind been made but some error or omission having occured at the Mandala Bungalows. However, 1f no other explanation presented itself these matters, supported by an absence of evidence that a booking was in fact made, might support an inference adverse

to the first respondent. Unfortunately for the applicants'

case, there is here both another explanation and positive

I have already referred to the admissions made by Mr Steiner as to his consumption of alcohol on the journey. I do not accept that he consumed only four small bottles of spirits in the eight and one half hours which elapsed between the departure of the aeroplane from Sydney and its arrival at Denpasar. This hardly meets the description, to which he assented, of his having "continued to drink for the rest of the flight" except during the two meals. I was not impressed with the reliability of either Mr or Mrs Steiner as witnesses. In relation to each of two separate matters - the question as to who bore the cost of the taxi from the airport to Mandala Bungalows and as to whether Mr Steiner had been drinking prior to the incident with the hotel manager on the second day - both Mr and Mrs Steiner insisted upon a version of the facts that differed from their own written accounts of relevant events made shortly after their return to Australia. In each case the version given 1n evidence was one which might be thought to tend towards a better result for them in this litigation. The inconsistencies were drawn to their attention but no explanation was offered. I think that it 1s probable that Mr Steiner availed himself of the free liquor supplied on the aeroplane to a much greater degree than he was prepared to admit and that. upon arrival at Denpasar, he was affected by

alcohol to an appreciable extent. Such an affectation

provides a ready explanation of their not meeting up with a

Mr Steiner concedes that, whatever his condition when he arrived at the airport, he was very drunk by the time he arrived at Mandala Bungalows. He was also several hours late. If the driver had missed him at the airport and returned empty handed it would not be surprising 1f the bungalow had been let to someone else. It 1S common ground that accommodation was 1n strong demand at the time. Alternatively. the receptionist may have taken such a view of Mr Steiner's condition as to be unwilling to allow him to use accommodation proximate to other quests. In the absence of evidence these possibilities rest in speculation but they are real alternatives to the explanation of the sub-standard room pressed upon me. namely that no bunaalow had been reserved. The decision of the Manager to request Mr and Mrs Steiner to leave on the

following day 1s readily explicable upon similar bases.

The applicants called evidence from Mr MJ Pearson, a man who has worked in the travel industry for the last 22 years and who has been closely associated with low cost package tours to South East Asia for the last three years. He said that the incidence of alcohol consumption by Australians en route to holidays in Asia 1s now such that the international hotel industry in South East Asia has to expect

Australian tourists arriving at their hotels after air flights

to be intoxicated. Indeed, he claims that international hotels in South East Asia "accepting Australian on low cost package tours would not operate profitably if Australian tourists were not accepted intoxicated". If that statement 1s correct it raises questions about the wisdom, in terms of Australia's reputation with its neighbours, of government and airline policies - duty free alcohol in airport shops and unlimited free alcohol in flight - which tend to encourage excessive drinking. However, the evidence does not meet the relevant point. There 1s not here a question whether or not the management of Mandala Bungalows was justified in refusing accommodation to Mr Steiner but rather a question whether Mr Steiner's condition might have afforded an explanation, consistent with accomodation havindg been reserved on his behalf by Magic Carpet, for his non-reception into a bungalow. I think that it does. The Mandala Bungalows were not a major international hotel but low key, quiet accommodation ina secluded area. As the brochure supplied to Mr Steiner pointed out. the Balinese people put value upon gentleness and

The remaining matter relied upon by their counsel is the evidence of the applicants that they were told at Mandala Bungaiows that no booking had been made. The person alleged to have made that statement has not been identified. The fact of the statement depends entirely upon the evidence of Mr and

Mrs Steiner. Having regard to his admitted condition at the

time of the alleged statement, it is not possible to place any reliance upon Mr Steiner's account of the conversation. It is not suggested that Mrs Steiner was affected by liquor and I do not think that she 1s a person who would deliberately give dishonest evidence but I cannot put weight upon her evidence. Mr Steiner appeared to me to be a forceful and dominant

person. I think that. even unconsciously, Mrs Steiner would

Mrs Ireland gave evidence that the practice in Magic Carpet was to handle transport and accommodation bookings Simultaneously so as to ensure that neither was completed until the other was checked to be available. She produced a file card which appeared to accord with that practice. She also produced a document. part of a running letter witha series of disparate entries addressed to Mr Rai Dalem, which purported to make a reservation on behalf of Mr and Mrs Steiner at Mandala Bungalows. She said that this was the original letter returned at her request by Mr Rai Dalem and bearing his handwritten notes. The relevant section was prepared by Sue, who has left Magic Carpet and 1s apparently now overseas. The entry relating to the Steiners corresponded with a carbon copy attached to their file. Mrs Ireland also produced a photocopy of a letter from Mr Rai Dalem confirming various bookings including that of Mr and Mrs Steiner. The original, she said, would have been cut up and

relevant sections attached to the files of the clients

involved. The cut out section - which must have been tiny - was not in fact with the Steiners' file but it is not hard to " accept Mrs Ireland's suggestion that it may have come adrift

If those documents are genuine they establish without question that a booking was transmitted to, and confirmed by, Mandala Bungalows, Counsel for the applicants submitted that I should reject them as being documents manufactured for the purpose of the case. I see no justification for that course. There is nothing about the documents themselves to occasion suspicion. It is conceded that the theory that the documents are spurious necessarily requires collusion at least between Mr Rai Dalem and Mrs Ireland. I have not had the benefit of seeing Mr Rai Dalem but I have heard Mrs Ireland cross-examined. She impressed me as a straight forward and honest woman. I do not think that she would be likely to be a

In my view the proper conclusion is that a reservation was in fact made by Magic Carpet on behalf of Mr and Mrs Steiner. It follows that no false representation was

In relation to the other respondents little need be said. Mrs Ireland was apparently joined in the action on the

basis that she was a person involved in the contravention,

The joinder of Easts Holidays was equally misconceived. It 1S true that this company actually took instructions ror the booking from Mr Steiner and collected his money but 1t is not shown to have made anv representations to the applicants that a reservation had been made. Careful analysis of the basis of a claim of misleading conduct is essential if applicants are to avoid the joinder of

unnecessary parties with consequential unnecessary costs.

In my opinion the claim made by the applicants must faii as against all three respondents. Under those circumstances it is not necessary to refer further to the interesting and important questions relating to damages which

would arise if the applicants were entitled to succeed or to

consider the Cross-claim for indemnity made by Easts Holidays

against the other two respondents. That Cross-claim will be

preceding pages are a true copy of the Reasons for Judgement herein of his Honour Mr Justice Wilcox.

At a glance

Court

Decision date

Before

Source

Judgment (199 paragraphs)

Cases Cited (5)

Cited By (1)