Tour operator in troubled waters – damage assessment for disappointed cruise passengers

The NSW Supreme Court assessed damages for 32 people (class members) whose European river cruises with Scenic Tours Pty Ltd (Scenic) were significantly affected by adverse weather conditions. The decision highlights the broad scope of the legal guarantees provided for by the Australian Consumer Act 2010 (Cth) (ACL), and the courts’ reluctance to allow technical defenses to defeat the intent of safeguards.

In question

  • The proper basis for assessing damages for reduced value cruises under section 267(3)(b) of the ACL.
  • The appropriate award of damages for distress and disappointment under ACL Section 267(4).
  • Whether the class members were entitled to damages for their wasted airline tickets under ACL Section 267(4).
  • Whether the defense of “no reliance” under Section 61(3) of the ACL could be used by Scenic.

The background

The plaintiff and 31 group members purchased European river cruises with Scenic departing between May and June 2013. Due to poor weather conditions, the cruises were severely disrupted and much of the time allotted for the cruise was actually devoted to buses.

Between 2017 and 2020, decisions were made by the Supreme Court of New South Wales, the Court of Appeal and the High Court. The High Court ruling was important in confirming that certain consumer warranties are subject to the 15% non-economic loss cap in section 16 of the Civil Liability Act 2002 (NSW) – provided the underlying loss qualifies as bodily injury. Our case note on this decision can be viewed here.

The case was sent back to the Supreme Court of New South Wales for a decision on damages.

decision

damage

The court’s primary task was to determine each class member’s entitlement to damages under the various heads of loss under the ACL.

The court first found that each class member was entitled to damages for the reduced value of the cruises pursuant to section 267(3)(b) of the ACL. These damages were assessed by deducting the actual cost of each cruise from the actual market value of the service provided (warts and all). Using this approach, the court found that the class members were entitled to damages of between 40% and 90% of the price of their respective cruise.

The court then dealt with appropriate damages for each party member’s distress and disappointment resulting from their cruise experience under section 267(4) of the ACL. The court assessed each class member individually and awarded each class member between $6,000 and $12,000 for this count of loss.

The court also agreed that damages for the cost of wasted plane tickets should be awarded to class members whose sole purpose of traveling to Europe and incurring the plane tickets was to take the cruise.

Defense “without confidence”

Finally, the court dealt with Section 61(3) of the ACL which provides a defense to the consumer’s warranty of “fitness for purpose”, where the particular consumer has not relied (or it was unreasonable for the consumer to rely so) on the skill or judgment of the supplier.

The court found that under all circumstances, the band members relied on Scenic to achieve the intended purpose of the cruise. In particular, the court held that:

  1. Scenic’s terms and conditions (which dealt with the possibility of route disruptions) were “buried in a small font” what was “very difficult to read” and did not clearly disclaim responsibility for the services.
  2. Brochures provided to group members conveyed the idea that cruises were an all-inclusive experience that could be enjoyed without hassle. This language suggested that Scenic was willing to assume its skills and judgment on the services.
  3. The group members were largely unaware of the impact of inclement weather on the cruise experience and would have relied on the experience of Scenic – a sophisticated cruise operator.
  4. A class member’s decision to purchase (or not purchase) travel insurance was irrelevant to whether that class member reasonably relied on Scenic’s judgment as to the purpose and results to be achieved through the provision of services.

Consequences for you

The decision is another example of the courts’ tendency to interpret ACL’s consumer warranties in a way that makes sense, consistent with a consumer’s reasonable expectations. The decision also highlights the difficulty of relying on standard terms, which must be written in plain English and properly brought to the attention of the consumer if they are to be relied upon.

Moore v Scenic Tours Pty Ltd (#4) [2022] NSWSC 270