ASSESSING DAMAGES FOR A DISAPPOINTING HOLIDAY - SUPREME COURT ASSESSES DAMAGES FOR DISTRESS, DISAPPOINTMENT AND REDUCTION IN VALUE OF DISRUPTED TOURS
Thirty two Plaintiffs brought claims for disappointment pursuant to s 267(4) of the Australian Consumer Law (ACL) against Scenic Tours Pty Ltd (Scenic) for breach of consumer guarantees under the ACL after their river cruise was disrupted due to weather, meaning that sections of the tour had to be completed by bus.
Following the decision of the High Court in Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326 which held that damages for disappointment and distress were recoverable by the Plaintiffs and those damages were not restricted by the limitation on damages for non-economic loss prescribed by section 16 of the Civil Liability Act 2002 (NSW), the matter was remitted to the Supreme Court for the determination of the quantum of the damages recoverable.
The Court used the following principles to quantify the damages payable to each of the Plaintiffs:
Reduction in the Value of the Services: The Court had regard to the evidence tendered by the Plaintiffs from an expert in tourism management and marketing regarding the price that a consumer, who was fully informed that their cruise would be substantially disrupted by weather and that portions of the tour would be undertaken by coach as a result of weather disruptions, would be prepared to pay for the holiday package. The Court calculated the reduction in value of the services by applying a percentage to the actual cost of each cruise which represented the market value of the services actually received (based on the expert opinions) as a proportion of the base cabin rate for each cruise.
Damages for Distress and Disappointment: The damages for distress and disappointment involved a comparison between the individual traveller’s expectations and the reality of what the traveller was provided. Accordingly, the Court assessed each Plaintiff’s damages in this regard individually, based upon the evidence of each traveller’s expectations and experiences, with damages ranging from $6,000 to $12,000 per passenger. The damages were assessed on common law principles, unrestrained by the scale prescribed by s 16 of the Civil Liability Act 2002, plus interest accruing from the last date of the cruise until judgment.
Damages for Consequential Economic Loss of Airfares : The Court held that any Plaintiffs who purchased airfares solely for the purpose of embarking on the cruises (including short stays in the point of embarkation or disembarkation) were entitled to refunds of those airfares. Scenic’s failure to comply with the consumer guarantees was found to be a major failure within the provisions of s 268(1) of the ACL because the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure, and accordingly those Plaintiffs who purchased airfares solely for the purpose of joining the cruises would not have otherwise incurred that expense and were entitled to reimbursement.
The Court rejected Scenic’s defence that damages could not be awarded for the breach of guarantees under the ACL on the basis that the Plaintiffs did not rely on, or that it was unreasonable for them to rely on, the skill or judgment of Scenic. In doing so, the Court rejected the submission that Scenic was in no better position than the Plaintiffs at the time of booking regarding how inclement weather might affect a cruise. The Court also noted that Scenic was entitled, under the terms and conditions of the tickets, to exercise its skill and judgment to cancel or defer the cruises, but it chose not to do so. Finally, Scenic could not exclude the consumer guarantees under its terms and conditions.
Conclusion
The effect of the decision is that tour operators can be liable to pay damages to travellers whose holidays do not turn out in the way that the travellers had hoped or expected provided they can establish a breach of the consumer guarantees, and that damages for disappointment and distress can in fact exceed the price paid for the ticket.
It is important for tour operators to carefully review their terms and conditions to ensure the terms adequately deal with risks associated with changed itineraries or disruption whilst also complying with the requirements of the ACL.