Cruisin’ for a Bruisin’: whether damages provisions of state Civil Liability Acts apply to claims for disappointment and distress under the Australian Consumer Law
On 24 April 2020, the High Court of Australia handed down its decision in Moore v Scenic Tours Pty Ltd  HCA 17, clarifying whether the non-economic loss provisions of the New South Wales Civil Liability Act 2002 (CLA) could be applied to claims for breaches of statutory guarantees under the Australian Consumer Law (ACL), when the services are wholly provided overseas.
Mr Moore booked a two-week luxury European cruise between Amsterdam and Budapest with the company Scenic Tours. Unfortunately, unexpected heavy rainfall and flooding prior to the cruise caused the cruise rivers to rise to dangerous levels, with the result that Mr Moore’s itinerary was significantly curtailed.
Mr Moore commenced representative proceedings against Scenic tour, on behalf of himself and a large a number of other people who had paid for river cruises. Mr Moore claimed compensation and damages arising from breach of the consumer guarantees for services under the ACL. He claimed damages pursuant to section 267(4) of the ACL for disappointment and distress due to the disruption of his holiday.
The trial judge relevantly found in Mr Moore’s favour and awarded him, amongst other things, $2,000 for disappointment and distress. The trial judge also gave answers to a series of common questions.
Scenic Tours appealed this decision to the New South Wales Court of Appeal.
The key issue on appeal was whether Mr Moore’s claim for disappointment and distress was governed by section 16 of the CLA, which precludes an award of damages for non-economic loss unless the severity of the loss is at least 15% of a most extreme case. If the CLA applied, Mr Moore would not be entitled to recover any damages for his disappointment and distress.
Scenic Tours argued that the CLA should apply as the cruise contract was expressed to be governed exclusively by the law of New South Wales.
The Court of Appeal agreed with Scenic Tours. Mr Moore then appealed to the High Court.
Section 275 of the ACL provides that, where the law of a state is the proper law of a contract, that law will apply to limit or preclude liability for the breach of a statutory guarantee under the ACL.
Mr Moore argued that the word “liability” in section 275 should be interpreted narrowly as meaning “legal responsibility for a wrong” and that this did not extend to include the quantification of damages. He also argued that damages for expectation loss are different to damages for personal injury under the CLA. Finally, he argued that the operation of the CLA was limited geographically, and that it did not apply to breaches that occurred outside of the NSW jurisdiction.
Scenic Tours argued that the legislative history, context and objectives of both the ACL and CLA did not support a distinction between issues as to liability and the assessment of damages. It also contended that damages for distress and disappointment could be characterised both personal injury and non-economic in nature.
The High Court rejected Mr Moore’s argument that the word “liability” did not include the quantification of damages. The Court also held that section 16 of the CLA would apply by virtue of section 275 of the ACL in circumstances where the law of New South Wales was the law of the contract.
The High Court, however, did not agree that loss of expectation and disappointment amounted to “personal injury” within the meaning of the CLA. As a result, section 16 of the CLA did not apply to Mr Moore’s claim, as he did not also claim to have suffered physical or mental harm.
The High Court did not proceed to determine the issue as to the geographical application of the CLA.
The High Court decision in this case clarifies two issues with respect to claims under the ACL for breaches of statutory guarantees.
Firstly, where a plaintiff has suffered personal injury and brings a claim under the ACL, section 16 of the CLA will apply by virtue of section 275 of the ACL, if the law of NSW is the law of the contract. This may be significant, as the maximum award for non-economic loss under the CLA is currently $658,000, compared with a maximum of $251,306.62 under the ACL; and, unlike the ACL, the CLA provides for a 15% minimum threshold for non-economic loss.
Secondly, damages for loss of enjoyment or disappointment do not equate to personal injury damages, so the 15% threshold under the CLA does not apply to these types of awards.
Practically speaking, this may encourage more class-action claims from passengers who experience disappointment as a result of disruption or changes to their holiday itineraries. As the threshold of the CLA does not need to be met, many more people will be entitled to bring claims of this nature if the guarantees for their holiday experience are not met. Holiday providers and tour companies should therefore be cautious in the drafting of their promotional and contractual material to ensure that any representations or promises made to consumers can be upheld.