Damages for Disappointing Holiday

Can you sue if a package holiday does not go as planned? In some circumstances, you can. Read on…

Scenic Tours v Moore [2018] NSWCA 238 was a class action in which various people sued the tour company because they had not received what they had bargained for, i.e. “a luxury 5 star experience of a (European) river cruise in accordance with the itinerary which would include highlighted events and destinations”.

Mr and Mrs Moore had booked a European river cruise with Scenic from Amsterdam to Budapest. In the months leading up to the cruise, Europe’s rivers were affected by high water levels on account of extensive rainfall and melting snow. This resulted in the flooding of waterways and the damaging of locks on the river, rendering them inoperative. Consequently, the cruise was not as advertised and Mr and Mrs Moore travelled around Europe mostly by coach and changed ships on two occasions.

A class action was commenced against Scenic in 2014 with Mr Moore the representative for a group of passengers from 13 different Scenic cruises who claimed compensation and damages arising from an alleged breach of the consumer guarantees for services under the Australian Consumer Law (“ACL“) found in Schedule 2 of the Competition & Consumer Act 2010 (Cth) (formerly the Trade Practices Act).

Under the ACL there is a distinction between a “major failure” and a “minor failure” of the service guarantees. Minor failures are those that can be rectified within a reasonable time.

There will be a major failure of services where:

  • the customer would not have engaged the service if s/he had known the nature and extent of the problem;
  • the service does not meet the reasonable expectations a customer would have had (i.e. a failure to meet the due care and skill guarantee) and the problem cannot be rectified within a reasonable time;
  • the services do not meet the “purpose” and “result” guarantees and the problem cannot be rectified within a reasonable time; or
  • the supply of services creates an unsafe situation.

Where there is a major failure of the service, the customer can choose to cancel the contract and seek a full refund, pay a reasonable sum for the work already done, or keep the contract and negotiate a price for reduction in value of the services as a result of the failure.

Mr Moore argued Scenic’s breaches were a major failure to comply with the consumer guarantees and sought compensatory damages under the ACL.

Scenic argued that the poor weather and flooding which caused the problems with the cruises were circumstances entirely beyond its control. Scenic also said that such occurrences of the weather were an ordinary incident of river cruising and should have been anticipated by passengers.

Not surprisingly perhaps, the plaintiffs and Scenic had differing views as as to what the “services” actually comprised. The Court disagreed with Scenic’s position and accepted that the advertising brochure would be the appropriate starting point as this constituted the “offer” of services (which were described in detail) which the customers accepted by paying their deposit.

The Court said if Scenic’s view had been accepted, that would have allowed it to take its guests from Amsterdam to Budapest by coach, staying at hotels along the way without there being any breach of contract or failure to fulfil the consumer guarantee. However, that said, the Court acknowledged that there must be some latitude as to things occurring outside Scenic’s control and which the terms and conditions provided for which might cause some short term changes to the itinerary. However, Scenic’s approach, i.e. that it should be allowed to provide something entirely different from what was offered, which could not be accepted.

There was a substantial amount of evidence submitted to establish Scenic’s level of awareness of the river conditions leading up to the departure date including internal emails, weather reports, comments made by the Cruise Directors to passengers or reports compiled by the Cruise Directors as to what was happening on individual cruises as they unfolded. It was clear that the itineraries would be substantially interrupted and Scenic would not be able to provide the services promised.

The New South Wales Court of Appeal found that:

  • Scenic Tours has breached its consumer guarantees in that it had failed to exercise due care and skill in the provision of the services;
  • Section 275 of the ACL operated to pick up the Civil Liability Act 2002 (NSW) as a surrogate federal law;
  • damages for disappointment and distress constituted personal injury; and
  • Section 16 of the Civil Liability Act 2002 (NSW) applied so that Mr Moore was unable to recover damages for disappointment and distress as he did not meet the minimum 15 per cent threshold.

This decision makes it clear that where a business is unable to provide the services in substantially the same form as that which has been promised or advertised, it has an obligation to make its customers aware of this as early as possible and offer remedies as provided for under the ACL, such as alternative services, a refund, or negotiate a reduced price for the drop in value.

Both parties in Scenic Tours v Moore have made application for special leave to appeal to the High Court.

This recent decision is not new law as such, however.

More than 25 years ago in Baltic Shipping v Dillon (1993) 176 CLR 344, the High Court found that damages for disappointment and distress are recoverable for breach of contract if the object of the contract is to provide enjoyment, relaxation or freedom from molestation. Ms Dillon had suffered physical injuries and emotional trauma, as well as disappointment and distress because she had not received her planned happy holiday experience.

There was a clear distinction drawn between emotional trauma and damages for disappointment and distress. Emotional trauma was treated as personal injury whereas disappointment and distress were not, constituting a separate head of damage to damages for personal injury.

For more information, please contact:
Debra Lane

Debra Lane
p.  +61 8 8124 1806
e.  Email me

This communication provides general information which is current as at the time of production. The information contained in this communication does not constitute advice and should not be relied upon as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Should you wish to discuss any matter raised in this report, or what it means for you, your business or your clients' businesses, please feel free to contact us.

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