The luxury cruise industry is one of the industries that has been hit hardest by COVID-19, with cruise companies in damage control after vessels became hotbeds for coronavirus cases. Many experts are predicting that the reputational, financial and other damages that cruise companies will incur may ultimately mean the end of the industry altogether.
Cruise companies now have another problem to contend with – potential class actions by disgruntled passengers who can seek damages, wait for it, for distress and disappointment!
In the recent High Court case Moore v Scenic Tours Pty Ltd  HCA 17, the High Court unanimously allowed an appeal from the NSW Court of Appeal and awarded damages to the appellant for loss, including disappointment and distress as a result of a breach of s 267(4) of the Competition and Consumer Act 2010 (Cth) (ACL).
The appellant (Mr Moore) booked a holiday tour for himself and his wife with the respondent Scenic Tours Pty Ltd (Scenic) in 2012. Mr Moore made a claim pursuant to the ACL for losses consisting of disappointment and distress for breach of a contractual obligation to provide a pleasant and relaxed vacation.
Scenic promoted a river cruise as “a once in a lifetime cruise along the grand waterways of Europe”, with guests on the Scenic vessel treated to “all inclusive luxury”. Mr Moore and his wife paid for this river cruise 12 months in advance with Mr Moore’s “life savings”. The cruise was scheduled for 10 days, but after 3 days, the cruise was severely disrupted by adverse weather conditions. The holiday tour fell short of the luxury promised to Mr Moore by Scenic. Mr Moore initiated representative proceedings on his behalf and that of 1500 other passengers.
The key issue in the case was whether Mr Moore was entitled to obtain relief under 267(4) of the ACL for distress and disappointment.
Relevantly, the section provides that a consumer may, by action against the supplier, recover damages for loss or damage suffered by the consumer because of the failure to comply with a guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.
Mr Moore argued that section 267(4) of the ACL permits a court to award damages for disappointment and distress because the contract with Scenic was one aimed at providing enjoyment, relaxation, pleasure and entertainment and that 16(1) of the Civil Liability Act 2002 (NSW)(CLA), discussed below, did not apply .
Scenic’s argument was that section 16(1) of the CLA which in this case operated as a surrogate law of the Commonwealth, precluded Mr Moore’s claim for damages for disappointment and distress in circumstances where such they constituted non-economic loss, and under 16(1) no damages may be awarded for non-economic loss unless the severity of the non-economic loss is at least 15% of a most extreme case. It was common ground in this appeal that the minimum threshold set out in section 16(1) was not reached.
Ultimately, the High Court found that the CLA only limits damages for personal injury, and that disappointment or distress resulting from breach of a contract to provide recreation and relaxation is not a personal injury.
This decision will no doubt have significance in light of actions that will inevitably be brought against cruise ship operators by passengers, either individually or through threatened class actions, by reason of the present COVID-19 pandemic. More generally, the decision will likely increase the number of class actions based on disrupted holiday and recreational activities. Will this be the final nail in the coffin for the cruise industry?