Tour operator in troubled waters – assessing damages for disappointed cruisers
The NSW Supreme Court has assessed damages for 32 individuals (group members) whose European river cruises with Scenic Tours Pty Ltd (Scenic) were drastically impacted by adverse weather conditions. The decision highlights the broad scope of the statutory guarantees under the Australian Consumer Law 2010 (Cth) (ACL), and the courts’ reluctance to allow technical defences to defeat the intention of the guarantees.
- The proper basis for assessing damages for the reduced value of the cruises under section 267(3)(b) of the ACL.
- The appropriate award of damages for distress and disappointment under s 267(4) of the ACL.
- Whether the group members were entitled to damages for their wasted airfares under s 267(4) of the ACL.
- Whether the “no reliance” defence under s 61(3) of the ACL could be utilised by Scenic.
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 a large amount of the time allocated for cruising was in fact spent on buses.
Between 2017 and 2020, decisions were handed down by the NSW Supreme Court, the Court of Appeal and High Court. The High Court’s decision was important in confirming that certain consumer guarantees are subject to the 15% non-economic loss cap in s 16 of the Civil Liability Act 2002 (NSW) – provided that the underlying loss can be characterised as a personal injury. Our case note on this decision can be viewed here.
The case was remitted to the NSW Supreme Court for a determination on damages.
The principal task of the court was to determine each group member’s entitlement to damages under the various heads of loss under the ACL.
The court first found that each group member was entitled to damages for the reduced value of the cruises in accordance with s 267(3)(b) of the ACL. These damages were assessed by deducting the actual cost of each cruise from the true market value of the service provided (warts and all). Using this approach, the court found that the group members were entitled to damages of between 40% and 90% of the price of their respective cruise.
The court then dealt with the appropriate damages for each group member’s distress and disappointment arising out of their cruise experience under s 267(4) of the ACL. The court assessed each group member individually and awarded each group member between $6,000 and $12,000 for this head of loss.
The court also accepted that damages for the cost of wasted airfares should be awarded in relation to those group members whose sole purpose for travelling to Europe and incurring the airfares was to take the cruise.
“No reliance” Defence
Finally, the court dealt with s 61(3) of the ACL which provides a defence to the “fitness for purpose” consumer guarantee, where the particular consumer did not rely (or it was unreasonable for the consumer to so rely) on the skill or judgment of the supplier.
The court held that in all the circumstances, the group members relied on Scenic to achieve the intended purpose of the cruise. In particular, the court held that:
- Scenic’s terms and conditions (which dealt with the possibility of disruptions to the itinerary) were “buried in small font” which was “very hard to read” and did not clearly disclaim responsibility for the services.
- The brochures provided to the group members conveyed the idea that the cruises were an all-inclusive experience which could be enjoyed without hassle. This language suggested that Scenic was prepared to assume skill and judgment over the services.
- The group members were largely ignorant of the consequence of adverse weather conditions on the cruise experience and would have relied on the experience of Scenic - a sophisticated cruise operator.
- A group member’s decision to take out (or not to take out) travel insurance was not relevant to whether that group member reasonably relied on Scenic’s judgment with respect to the purpose and results to be achieved by the provision of the services.
Implications for you
The decision is yet another example of the courts’ tendency to interpret the ACL consumer guarantees in a common-sense manner, consistent with the reasonable expectations of a consumer. The decision also highlights the difficulty in relying on boilerplate terms and conditions, which should be in simple English and properly drawn to the attention of the consumer if they are to be relied on.