Scenic Tours Pty Ltd v Moore

PAYNE JA: I have had the privilege of reading the decision of Sackville AJA in draft. I agree with his Honour’s reasons and the orders he proposes.

SACKVILLE AJA:

This is an application for leave to appeal from orders made by the primary Judge (Garling J) in representative proceedings brought in the Common Law Division pursuant to ss 157 and 158 of the Civil Procedure Act 2005 (NSW) (Civil Procedure Act). The proceedings were commenced by the respondent (Mr Moore) on behalf of himself and persons who booked and paid for 23 river cruises in Europe scheduled to take place between 10 May 2013 and 14 June 2013 (Group Members). The trial, however, was concerned only with 13 river cruises scheduled to embark between 19 May 2013 and 12 June 2013. The applicant (Scenic) operated the river cruises either by itself or through associated entities. [1]

Mr Moore, who travelled with his wife, booked a tour with Scenic that commenced in Paris on the morning of 31 May 2013. The tour included a “Jewels of Europe River Cruise” departing from Amsterdam on the Scenic Jewel on 3 June 2013 and arriving in Budapest on 17 June 2013 (Cruise 8). The scheduled route took the Scenic Jewel along the Rhine, Main and Danube Rivers. The route is shown on the plan reproduced at Appendix A.

Because of high water levels on the Rhine and Main Rivers, Scenic provided a different vessel for the start of Cruise 8, namely the Scenic Ruby. Passengers were later transferred to the Scenic Jewel but they experienced substantial disruptions to the scheduled itinerary. Passengers were required to spend many hours in buses on a number of days travelling from place to place, rather than cruising along the river system on board “Your luxury Scenic Tours ‘Space-Ship’”. [2]

Of the other 12 cruises, eleven were scheduled either to sail from Amsterdam to Budapest or on the return trip from Budapest to Amsterdam. The remaining cruise (Cruise 1) was a 14 day “South of France River Cruise” scheduled to depart from Chalon-sur-Saône on 20 May 2013 and to arrive at Arles (on the Rhône River) on 1 June 2013. The route for Cruise 1 is shown on the plan reproduced at Appendix B.

The Court was told that there were up to 1,500 passengers on the 13 cruises, all of whom are Group Members. Not all Group Members are residents of New South Wales. Some reside in other Australian States or Territories and some are resident in overseas countries. Seven passengers gave evidence in the proceedings (Mr Moore and six Group Members), of whom three were New South Wales residents and four were residents of Queensland or Victoria. As at November 2017, about 500 Group Members had retained the solicitors acting for Mr Moore. [3]

Mr Moore’s case, in its final form, was pleaded in the Third Further Amended Statement of Claim (3FASC). [4] He alleged that Scenic Tours contravened the statutory guarantees to consumers contained in ss 60 and 61 of the Australian Consumer Law (ACL) [5] both in relation to Cruise 8 and the other 12 cruises. In particular, Mr Moore alleged that Scenic Tours supplied services to Mr Moore and each Group Member:

Broadly speaking, Mr Moore claimed that Scenic breached the Care Guarantee in relation to a number of the cruises by failing to inform passengers in a timely manner of the disruptions it knew or should have known were likely to occur to each scheduled itinerary because of adverse weather and river conditions. Given the information available to Scenic, it should either have cancelled the cruise or given the passengers the opportunity to cancel.

Mr Moore’s claim that Scenic breached the Purpose and Result Guarantees rested on the disparity between the services promoted and offered by Scenic to Group Members and the services actually supplied to them on the cruises. The disruptions to the cruises were so great in each case, so it was argued, that the services supplied were not reasonably fit for the purpose made known to Scenic by the Group Members (s 61(1)) and could not reasonably be expected to achieve the result the Group Members wished to achieve (s 61(2)).

In his own case, Mr Moore sought two heads of damages or compensation by reason of Scenic’s breaches of the Consumer Guarantees, as follows:

As is often the case with representative proceedings, there were disputes between the parties as to the manner in which the proceedings should be conducted. In the course of an interlocutory hearing prior to the trial, Scenic accepted that there were some questions common to all Group Members but contended that different questions arose for each of the 13 cruises and for different categories of Group Members. Scenic sought directions from the Court pursuant to s 168 of the Civil Procedure Act [7] establishing sub-groups to enable questions common to some but not all Group Members to be determined. This application was unsuccessful. [8]

The primary Judge recorded that the hearing was conducted on the basis that his Honour would determine the whole of Mr Moore’s claim and “the common issues insofar as they affected the group members’ claims, and insofar as they were common to the whole or an identifiable part of the group”. [9] What were said to be common issues were identified in a document filed in court on 13 May 2016, the last of the six hearing days (Statement of Issues). That document was subsequently amended.

The primary Judge delivered judgment on 31 August 2017. His Honour made findings as to whether Scenic had breached the statutory guarantees in relation to each of the 13 cruises. Mr Williams SC, who appeared with Mr Weinberger for Scenic, helpfully prepared a chart summarising the findings for each cruise. It is convenient to reproduce a portion of the chart here: [10]

Care needs to be taken in interpreting this summary. For example, as will be seen, some breaches of the Care Guarantee (s 60) are said to have occurred prior to embarkation on the relevant cruise, while others are said to have occurred after embarkation. In two cases (Cruises 10 and 13) the primary Judge found that Scenic breached the Care Guarantee but also found that passengers on those cruises had not suffered any compensable loss or damage.

The chart correctly records that the primary Judge found that Scenic failed to comply with each of the three Consumer Guarantees in relation to Cruise 8, the cruise taken by Mr Moore. His Honour found that Scenic:

In reaching these conclusions the primary Judge rejected Scenic’s contention that the “services” it supplied to Mr Moore and the Group Members were co-extensive with or delimited by the Terms and Conditions contained in the brochure issued by Scenic by which Mr Moore and the Group Members were bound. Mr Moore had pleaded that if Scenic’s contention was accepted, the Terms and Conditions should be held to be unenforceable because they were “unjust” within the meaning of the Contracts Review Act 1980 (NSW) or “unfair” within the meaning of s 24 of the ACL. [14] Since his Honour rejected Scenic’s contention, he did not consider it necessary to deal with Mr Moore’s case founded on unconscionability or unfairness. [15] That case is the subject of a Notice of Contention filed in this Court. [16]

His Honour found that Mr Moore was entitled to compensation and damages by reason of Scenic’s non-compliance with the Consumer Guarantees.

In the Primary Judgment his Honour made an order in the following terms: [17]

The award of $10,990, which represented the full amount paid by Mr Moore for Cruise 8, [18] was made pursuant to s 267(3) of the ACL as compensation for reduction in the value of the services provided by Scenic to Mr Moore. His Honour awarded this sum as compensation for what he found was Scenic’s breach of the Care Guarantee. That breach consisted of Scenic’s:

The award of $2,000 was made pursuant to s 267(4) of the ACL as damages for Scenic’s failure to comply with the Purpose and Result Guarantees. This was the full amount Mr Moore claimed as damages for “disappointment and distress”. His Honour considered the amount to be “modest” and indicated that he would have assessed damages at a higher amount had Mr Moore not limited his claim to $2,000. [20]

The primary Judge rejected Scenic’s argument that the Court was precluded from awarding any damages to Mr Moore. Scenic submitted that s 275 of the ACL [21] required the Court to apply s 16 of the Civil Liability Act 2002 (NSW) (Civil Liability Act) as a surrogate federal law. Section 16 of the Civil Liability Act precludes an award of damages for non-economic loss “unless the severity of non-economic loss is at least 15% of a most extreme case”. The primary Judge accepted that s 16 was to be applied as a surrogate federal law but held that s 16 has no extra-territorial operation and therefore does not apply to non-economic loss sustained outside Australia. [22]

The primary Judge directed the parties to file short minutes of order proposing answers to “the questions agreed by the parties” in the light of the findings made in the Primary Judgment. A further hearing took place on 15 November 2017 at which the parties reached a “large measure” of agreement as to the answers. [23] The Statement of Issues was amended in some respects as the result of the parties’ submissions at the hearing. The primary Judge then delivered an ex tempore judgment in which he “set out [the] questions and answers given by the Court with respect to the identified common issues”. [24]

The Questions and Answers are contained in a lengthy document which is reproduced at Appendix C. The final question and answer are as follows:

The formal orders made by his Honour on 15 November 2017 included the following:

The form of the answers (incorporated by reference into the orders) was evidently intended to comply with s 179 of the Civil Procedure Act, which provides as follows:

Assuming the orders made by the primary Judge stand, including the answers to the “common issues”, the outcome of the proceedings to date is as follows:

The structure of this judgment can be discerned from the index of headings. The conclusions I have reached in relation to Mr Moore’s personal claim and the claims of the Group Members are summarised at [396]-[397] below. The orders I propose are set out at [398]-[404] below.

The claims made by Mr Moore in the representative proceedings were founded on statutory guarantees created by a federal law (the ACL). If a party relies on a right created or derived from a federal law there is a matter arising under a law made by the Parliament within s 76(ii) of the Constitution. [25] To the extent that the Court in this case might otherwise have had power to deal with the matter, that power was removed and then invested (subject to conditions) by s 39(2) of the Judiciary Act 1903 (Cth) (Judiciary Act). From the outset, therefore, the Court was exercising federal jurisdiction and not State jurisdiction. [26]

If follows that State law is displaced except to the extent that the law operates in federal jurisdiction by virtue of a law of the Commonwealth Parliament. [27] The laws that are relevant for this purpose are ss 79 and 80 of the Judiciary Act, which provide as follows:

The reason that the provisions of the Civil Procedure Act relating to representative proceedings apply to this case is that they are picked up and applied to the Court exercising federal jurisdiction by s 79(1) of the Judiciary Act. However State laws may be picked up and applied as surrogate federal laws by more specific provisions such as s 275 of the ACL. It will be necessary to examine the operation of s 275 in some detail when considering the remedies available to Mr Moore for breach of the Consumer Guarantees.

The statutory regime governing the institution and conduct of representative proceedings in New South Wales is in Pt 10 Div 2 of the Civil Procedure Act. For present purposes it is sufficient to extract the following provisions:

Section 131(1) of the Competition and Consumer Act provides that Schedule 2 applies as a law of the Commonwealth to the conduct of corporations. Schedule 2 incorporates the ACL.

Section 5(1) provides that the ACL extends to the engaging in conduct outside Australia by bodies corporate incorporated or carrying on business within Australia.

Section 131C(1) states that Part XI (which includes s 131) is not intended to exclude or limit the concurrent operation of any law, written or unwritten, of any State or Territory.

Sections 60, 61 and 64 of the ACL are in Part 3-2, Div 1. Sections 60 and 61 are in Subdiv B of Div 1. They provide as follows:

The following terms relevant to ss 60 and 61 are defined in s 2 of the ACL:

Section 3 of the ACL defines “consumer”. It is not necessary to reproduce the definition as there is no dispute that Mr Moore and the Group Members satisfied it.

Section 64 of the ACL provides as follows:

Part 5-2 of the ACL deals with “Remedies”. Section 236(1) of the ACL provides as follows:

Part 5-4 of the ACL is headed “Remedies relating to guarantees”. It includes the following provisions:

Scenic says that the law referred to in s 275 of the ACL for the purposes of the present case is the Civil Liability Act.

Section 3A of the Civil Liability Act relevantly provides as follows:

Section 11A of the Civil Liability Act provides as follows:

“Personal injury damages” mean “damages that relate to the death of or injury to a person”. “Injury” means “personal injury”, and includes “impairment of a person’s physical or mental condition”. [28]

Section 16(1) of the Civil Liability Act provides as follows:

The following definitions are relevant to s 16: [29]

The orders made in favour of Mr Moore are final because they determine his claim against Scenic. Nonetheless, Scenic requires leave to appeal against the judgment because the matter in issue does not amount to $100,000 or more. [30]

The orders, insofar as they incorporate the answers to the questions in the Statement of Issues, are interlocutory. This is because the answers do not finally determine the claims of Group Members who booked and paid for Cruises 1-9 and 11. Accordingly, Scenic requires leave to appeal from the orders incorporating the answers. [31]

Mr Moore accepted that the answers relating to Cruises 10, 12 and 13 effectively dispose of the claims brought by Group Members who booked and paid for those Cruises even though no final orders to that effect have yet been made. Mr Moore has not sought leave to cross-appeal from the orders insofar as they incorporate the answers relating to Cruises 10, 12 and 13.

Scenic’s draft amended notice of appeal (Notice of Appeal) contains over 60 grounds of appeal. Only a few were not pressed. As Scenic’s notice of appeal raises some issues of principle and as the issues in dispute have been fully argued, it is appropriate that Scenic be granted leave to appeal.

Mr Moore filed an “Amended Draft Notice of Contention” (Notice of Contention). The grounds identified in the Notice of Contention arise only if this Court accepts Scenic’s contention that the services to be supplied to Mr Moore and Group Members were co-extensive with or delimited by Scenic’s contractual obligations under the Terms and Conditions.

The final version of Mr Moore’s pleaded case was the Third Amended Statement of Claim (3ASC). The 3ASC describes the Group Members as each person who:

The 3ASC alleges that Mr Moore and the Group Members acquired Scenic’s “services” as “consumers” for the purposes of the ACL (para 4). The particulars to this allegation describe the “services” as follows:

Scenic is alleged to have contravened each of the Consumer Guarantees (paras 6, 7, 8). The allegation that Scenic contravened the Purpose Guarantee identifies the “particular purpose” made known by Mr Moore and the Group Members as:

The “result” Mr Moore and Group Members wished to achieve by the services acquired from Scenic is defined in much the same terms as the “particular purpose” and is said to have been made known to Scenic in the same manner as the particular purpose (para 8).

It is alleged that from about April and early May 2013 there was extensive flooding in Europe causing river levels to rise along the paths of the cruises arranged by Scenic (para 10). Scenic should have known from about 3 May 2013 that the rising levels would or were likely to substantially disrupt for a period of about six weeks the enjoyment or passengers scheduled to embark on river cruises (para 11).

Scenic is alleged to have contravened the Care Guarantee by failing to exercise due care in supplying the services (para 12). The alleged contraventions of the Care Guarantee include:

The 3ASC pleads that Mr Moore and the Group Members suffered loss or damage because of Scenic’s contraventions of the Consumer Guarantee in that:

Mr Moore’s claims to have suffered loss and damage comprising:

The balance of the 3ASC pleads a cause of action for money had and received (paras 17AA-17AF), unconscionable conduct by Scenic and unjust provisions in the Terms and Conditions (paras 17A-17I) and unfair provisions in the Terms and Conditions (para 17J).

The 3ASC identified a number of “common questions”, including the following:

As the primary Judge explained, the hearing was conducted on the basis that all issues arising out of Mr Moore’s individual claim concerning Cruise 8 would be determined, while common questions of law and fact affecting the claims of Group Members would also be identified and addressed. The Statement of Issues was intended to identify common questions of law and fact arising in the representative proceedings. However, his Honour expressly contemplated that the parties would have the opportunity to consider and make submissions on findings of fact relevant to the common issues. [32] His Honour considered that identification of the common issues and possible findings could await a further judgment. [33]

The Statement of Issues went through various iterations as the proceedings progressed. The parties filed competing versions of the Statement of Issues in December 2015. Mr Moore’s version included a significantly greater number of questions than the version advanced by Scenic. At a pre-trial hearing held on 12 February 2016, Scenic submitted that some questions proposed by Mr Moore did not raise questions common to the claims of all Group Members. The primary Judge accepted this submission but proposed that a question should be added to the Statement of Issues asking which of the answers to the preceding questions were common to all, some or none of the Group Members. This suggestion was adopted by inserting Question 22 in the Statement of Issues. [34]

The position was complicated when Mr Moore applied during the course of the trial to amend his pleading. The amendments introduced allegations that Scenic breached the Care Guarantee by failing to cancel or to give Group Members the option to cancel cruises prior to embarkation. The amendments also alleged that Scenic breached the Care Guarantee by failing to give Group Members the opportunity to cancel four of the cruises after the date of embarkation. The primary Judge granted Mr Moore leave to amend, [35] although the parties seem to have given little attention to whether a failure by Scenic to give Group Members an opportunity to cancel by reason of circumstances arising after embarkation could have entitled them to compensation or damages.

The amendments expanded the scope of the trial. They also necessitated amending the Statement of Issues to accommodate the new allegations. As already noted, this was done by the parties handing up an amended Statement of Issues on the last day of the trial. [36]

The directions made in the Primary Judgment afforded the parties the opportunity to make submissions on the answers to be given to the questions identified in the Statement of Issues. At the hearing held on 15 November 2017 Mr Abadee, who appeared with Mr Liu for Mr Moore, submitted that the findings made in the Primary Judgment required the Statement of Issues to be further amended. Mr Abadee pointed out that his Honour had rejected Mr Moore’s claim that passengers booked on Cruises 6 and 7 should have been given an opportunity to cancel prior to embarkation. However, his Honour had also found that the passengers on Cruises 6 and 7 should have been given the option to cancel after the date of embarkation.

The primary Judge accommodated the findings concerning Cruises 6 and 7 by adding answers to Question 7A (which asked whether the Consumer Guarantees required Scenic to give passengers the option to cancel certain specific cruises after the date of embarkation). Thus the final form of the Statement of Issues was not settled until his Honour made orders on 15 November 2017.

The High Court has emphasised that the subject matter of representative proceedings of the kind authorised by Part 10 of the Civil Procedure Act is a claim which gives rise to common questions of law and fact. [37] It is, however, not necessary that the representative proceedings resolve or are likely to resolve the claims of all group members. [38] For example, group members may have individual claims that do not form part of the subject matter of the representative proceedings. For this reason the legislation empowers the Court, where the determination of questions common to all group members will not finally resolve all their claims, to give directions in relation to the determination of the remaining questions. [39]

The identification of substantial common questions of law and fact is a critical element in the conduct of representative proceedings. [40] In the present case, the Statement of Issues in both its preliminary and final versions, asked questions that were not common to all Group Members. For example, a number of the so-called “common questions” concerned Scenic’s knowledge of river conditions at different times and in different geographic locations. (The river journey from Amsterdam to Budapest is some 1,700 kilometres in length.) Similarly, the experiences of Group Members once on board the vessels obviously varied considerably, depending on which of the 13 cruises they embarked.

By way of illustration, Question 6 asks with respect to each cruise whether the content “of all or any of the [C]onsumer [G]uarantees” required Scenic:

The orders made by the primary Judge attempt to deal with this difficulty by giving separate answers to “common questions” for each of the 13 cruises. But this course was adopted at the conclusion of the trial, rather than at its outset. The trial itself was conducted without a clear differentiation between questions common to all Group Members and those common only to particular sub-categories (such as passengers booked on a specific cruise). It is therefore not entirely surprising that the parties disagreed in this Court as to precisely what matters were in issue at the trial.

The form of the questions included in the Statement of Issues has created further difficulties. Question 8 asks with respect to each cruise whether Scenic failed to comply with the Consumer Guarantees by reason of the circumstances pleaded by Mr Moore. Question 8 identifies the circumstances pleaded as “essentially”:

The answers to Question 8 identify which of the three Consumer Guarantees (if any) Scenic failed to comply with in relation to each of the 13 cruises, but the answers do not specify the nature of Scenic’s contraventions. For example, Scenic is said to have contravened all three Consumer Guarantees applying to Cruise 5, but the answers to Question 8 do not specify the manner in which Scenic contravened each of the Consumer Guarantees.

If the answer to Question 8 is read with the answers to Questions 5, 7 and 7A, it can be inferred that his Honour found that Scenic failed to comply with the Care Guarantee by failing to cancel Cruise 5 no later than 3 June 2013 (after the date of embarkation). But, none of the answers to the other questions reveals the basis for a finding that Scenic’s conduct in relation to Cruise 5 failed to comply with the Purpose and Result Guarantees. The answer to Question 4 records that all three Guarantees applied to Cruise 5, but none of the other answers identifies the conduct of Scenic that is said to have contravened the Purpose and Result Guarantees.

The failure to explain the basis for the finding that Scenic contravened the Purpose and Result Guarantees may be due to the incompleteness of the summary of Mr Moore’s pleaded case contained in Question 8. The summary makes no reference to para 13 of the 3FASC (a paragraph was substantially amended during the trial). Paragraph 13 of the 3FASC alleges that:

The incompleteness of the answers to the “common questions” reflects the dangers of leaving the finalisation of common questions of law and fact to the end of the hearing. It also reflects the length and complexity of the “common questions” identified in the present case, some of which conflate a number of distinct concepts. Moreover, the answers to the “common questions” do not accurately record all material findings of fact made by the primary Judge.

During the hearing of the appeal, Mr Williams sought leave to amend Scenic’s Notice of Appeal to challenge answers to a number of questions contained in the Statement of Issues. To a considerable extent the amendment application attempted to revisit issues dealt with in Beech-Jones J’s interlocutory decision [41] , against which Scenic did not seek leave to appeal. Mr Williams frankly acknowledged that he was motivated to seek leave to amend because:

The additional grounds sought to be added to the Notice of Appeal were the following:

The Court refused to grant Scenic leave to amend the Notice of Appeal. It did so primarily because Scenic had not sought leave to appeal from the decision of Beech-Jones J and the application to amend was made too late. The issue had not been identified in the original Notice of Appeal and had not been raised during the case management hearings in this Court. Had the amendment been allowed the scope of the appeal and the issues requiring determination would have been materially altered. Furthermore, the grounds belatedly propounded by Scenic departed markedly from the way in which the parties conducted the trial.

This is not to say that a timely challenge to the interlocutory decision would have lacked merit. The form of the “common questions” has presented significant difficulties, particularly having regard to the very limited evidence given in relation to some of the cruises the subject of the appeal. It would have been preferable for these issues to have been addressed and resolved at an early stage in the proceedings. [42]

As has been noted, the answers to Question 8 record that Scenic contravened the Purpose Guarantee in relation to Cruises 1-9 and 11. The answers make no reference to s 61(3) of the ACL, which provides that the purpose guarantee does not apply:

Scenic pleaded s 61(3) of the ACL as a defence to the claims by Mr Moore and Group Members founded on Scenic’s contravention of the Purpose Guarantee. Scenic submitted in this Court that although the primary Judge addressed the s 61(3) defence when determining Mr Moore’s individual claim, his Honour expressly reserved Scenic’s right to rely on s 61(3) as a defence to the claims made on behalf of Group Members.

Scenic’s submission receives support from the Primary Judgment. After finding that Scenic had not made out the s 61(3) defence to Mr Moore’s claim (a finding that is not challenged), the primary Judge continued as follows: [43]

There may be an issue as to whether Scenic can realistically expect to make out the s 61(3) defence if Group Members otherwise establish the elements of a contravention of the Purpose Guarantee. [44] There may also be a question as to whether, as Scenic suggests, it is entitled to have the Court individually assess whether each Group Member relied on Scenic’s judgment and skill. Nonetheless, the passage quoted above from the Primary Judgment indicates that his Honour recognised that a finding that Scenic contravened the Purpose Guarantee cannot be made in favour of Group Members until the s 61(3) defence is addressed. It therefore seems to follow that the answers to Question 8 must be amended to make it clear that no finding has yet been made that Scenic contravened the Purpose Guarantee in relation to Cruises 1-9 and 11.

Mr Moore responded to Scenic’s submissions by noting that the primary Judge apparently contradicted himself by stating earlier in the Primary Judgment that Scenic had not relied on the exception in s 61(3) of the ACL. [45] Even if his Honour erred in making that statement, so it was argued, Scenic had the opportunity to propose different answers to Question 8 at the hearing on 15 November 2017 in the absence of any protest at that time, Scenic should be regarded as bound by the answers incorporated in his Honour’s orders.

There is little doubt that his Honour was mistaken when he said that Scenic had not relied on s 61(3) of the ACL and that he correctly stated later in the Primary Judgment that Scenic had in fact relied on s 61(3). It is also clear enough that the s 61(3) issue was overlooked by the parties when the primary Judge settled the answers to Questions 8 and 22 (which states that the answers are common to all Group Members). However, the parties’ oversight does not mean that Scenic is precluded from contending in this Court that the answers to Question 8 were based on an erroneous view as to what was in issue at the trial. Nor is it precluded from submitting that the answers to Questions 8 and 22 should be amended to correct the error. Having expressly reserved the s 61(3) defence Scenic did not abandon it by failing to appreciate that the answers to Questions 8 and 22 should be qualified to reflect the reservation of the defence for future consideration.

The authority relied upon by Mr Moore to support his argument [46] involved different issues. In the case cited by him, a complaint of procedural unfairness was dismissed because the party complaining had been given an opportunity to present evidence to the decision-maker but failed to do so. The present case involves a challenge to answers that were given on the basis of a misapprehension as to the issues in dispute at the trial.

The following account is largely taken from the Primary Judgment or from documentary evidence. The account is directed primarily to Mr Moore’s dealings with Scenic or his travel agent prior to embarking on Cruise 8 and the experiences of passengers on Cruise 8.

Of the 13 cruises under consideration in the proceedings, eleven were operated by Scenic and two (Cruises 3 and 9) by Evergreen Pty Ltd (Evergreen). [47] Evergreen operated from the same offices in Newcastle and was part of the Scenic Group.

Scenic Tours Europe AG (Scenic Europe), a Swiss entity based in Zug, Switzerland, was responsible for managing all Scenic’s cruises for Europe. [48] Scenic Europe was also part of the Scenic Group and other companies within the Scenic Group operated jointly and were closely associated. [49]

In October 2011 Mr Moore, who was then teaching science at a senior college on the Central Coast, obtained a brochure which provided information on a wide range of Scenic cruises, including those along the waterways between Amsterdam and Budapest. Mr Moore and his wife later went to Harvey World Travel, where they collected a large brochure promoting Scenic Tours (Brochure). The Brochure was printed by or at the behest of Scenic and was distributed to travel agents throughout Australia. The 225 page Brochure was described by the primary Judge as:

The first 39 pages of the Brochure were devoted to describing the benefits of all-inclusive luxury European river cruising. On pages 40 and following the Brochure provided detailed itineraries for a large number of individual cruises.

The primary Judge quoted extensively from the Brochure and a letter of welcome from the managing director of Scenic. A few extracts convey the general flavour:

The description of the “15 Day Jewels of Europe River Cruise” from Amsterdam to Budapest included the map reproduced in Annexure A. The map bore the notation:

The itinerary for each day of the Jewels of Europe River Cruise identified the places that would be visited and described the “Scenic Free Choice” day tours that were included in the cruise. The itinerary, in brief, was as follows:

The description of each day of the cruise was more detailed. For example, Day 10 was described as follows:

At the bottom of the pages describing each individual cruise itinerary the following words appear:

The primary Judge described the layout and placement of the Terms and Conditions as follows:

The Terms and Conditions referred to in argument are set out below. The formatting is not as appears in the Brochure.

On 15 December 2011, Mr Moore “pre-registered” for a place for himself and his wife on the Jewels of Europe River Cruise departing from Amsterdam on 3 June 2013. He paid a deposit of $500 to Harvey World Travel.

Mr Moore paid a total of $25,210 to Harvey World Travel during the period 21 May 2012 to 14 January 2013. This amount represented the cost to Mr Moore and his wife of:

On 21 May 2012, Mr Moore arranged through Harvey World Travel to take out a travel insurance policy through Cover-More Insurance Services Pty Ltd. The premium, including cancellation cover of $22,000, was $636.

After making his final payment, Mr Moore received a personalised booklet from Scenic which set out the itinerary for the tour and a map showing the route of Cruise 8. The booklet included Scenic’s Terms and Conditions. This was the first occasion on which Mr Moore received a copy of the Terms and Conditions other than as part of the Brochure he had obtained from Harvey World Travel.

Mr Moore subsequently signed a copy of a document including the Terms and Conditions. Mr Moore acknowledged in his evidence that the travel agent took him through the document before he signed it. He also acknowledged that he understood that the document was a legally binding contract with Scenic.

On 1 June 2013, when Mr Moore and his wife were in Paris, Ms Scoular from Scenic’s Tour Operations Department wrote to passengers booked on Cruise 8. The letter, which was presumably sent by email, was received by Mr Moore in Paris. The letter addressed to “Scenic Guests” was as follows:

Although the letter did not refer to the location of Scenic Jewel, according to an internal Scenic email it was in fact “stuck in Bamberg”. Cruise 8 was scheduled to reach Bamberg on Day 7.

Except for the change of vessel, Cruise 8 proceeded as scheduled on 3 and 4 June 2013. On 5 June 2013, the Scenic Ruby arrived in Cologne but could not continue cruising to Marksburg because of high water levels. The ship therefore docked at Linz. Passengers travelled by bus for approximately three hours to Marksburg, where they had the scheduled dinner at Marksburg Castle. They then travelled back to Cologne, boarding the Scenic Ruby at about 12.30 am on 6 June 2013.

On 6 June 2013, the Scenic Ruby cruised towards Rüdesheim but was forced by water levels to turn back and dock in Koblenz. It was moored there between two other ships, preventing passengers enjoying any view.

Later that afternoon the passengers travelled by coach for about one hour to Cochem. This side trip was not on the itinerary, but was provided in place of an excursion to Rüdesheim because the road to Rüdesheim was closed. According to the itinerary, the ship should have docked at Rüdesheim on Day 4.

On 7 June 2013, the passengers travelled by coach for approximately six hours from Koblenz to Marktheidenfeld and return. The Scenic Ruby left Koblenz at 7.00 pm for Wiesbaden. As his Honour found, the altered departure time meant that one advertised highlight of the cruise, namely viewing the Lorelei rock, was not possible because the vessel passed it during the night.

The passengers disembarked from the Scenic Ruby in Wiesbaden at about 8.00 am on 8 June 2013. They travelled by coach to Rothenburg, Würzburg and then to Bamberg, where they boarded the Scenic Jewel. The buses on which passengers travelled to Bamberg did not have a functional bathroom or air conditioning. The coach trip took about three hours and, upon arrival at Bamberg, the passengers discovered that the ship was docked in an abandoned industrial area.

The Scenic Jewel remained docked in Bamberg from 9 to 11 June 2013. During this period, passengers travelled by coach to Nuremburg and Regensburg. The ship finally left Bamberg in the evening of 11 June 2013 bound for Regensburg.

The cruise along the Danube towards Regensburg on 12 June 2013 proceeded very slowly because of difficulties in traversing the locks. The ship docked in Berching in the early hours of 13 June 2013. The delay meant that the passengers did not get the opportunity to visit Salzburg or Český Krumlov in accordance with the itinerary.

On 13 June 2013, the passengers travelled by coach for approximately seven hours from the dock at Berching to Munich and back.

The passengers disembarked from the Scenic Jewel at around 8.00 am on 14 June 2013. Some passengers travelled by coach to Vienna. Mr Moore and other passengers took the train instead. Those who travelled by coach experienced delays because of flooding and did not arrive at the dock at Vienna until about 5.40 pm. They then checked into their cabins on a third vessel, the Scenic Pearl.

The cruise proceeded as scheduled from 15 to 17 June 2013, except that high water in Budapest prevented the usual evening cruise.

The primary Judge summarised the experience as follows: [53]

Given that the Consumer Guarantees are intended to provide protection to consumers in their dealings with service providers, the statutory regime is anything but straightforward. A consumer would need to be particularly well informed (or advised) to understand his or her rights under the regime.

A plaintiff seeking to rely on a failure to comply with the Care Guarantee must establish that the defendant:

A plaintiff relying on a failure to comply with the Purpose Guarantee must establish that the defendant:

A plaintiff relying on a failure to comply with the Result Guarantee must establish that the defendant:

The statutory remedies available to a plaintiff for the defendant’s failure to comply with one or more of the Consumer Guarantees are provided by s 267 of the ACL. For present purposes two remedies are relevant:

Subject to one qualification dealt with below, the same remedies are available for a failure to comply with each of the Consumer Guarantees. However, this does not necessarily mean that each contravention will produce an identical monetary award for a particular plaintiff.

To establish an entitlement to compensation under s 267(3)(b) of the ACL, a plaintiff must establish that the defendant:

To establish an entitlement to damages under s 267(4) of the ACL, a plaintiff must establish the same matters as are required for a claim under s 267(3)(b) (other than the reduction in value of the services supplied) and must also establish that:

The qualification referred to at [124] above is that a plaintiff cannot claim for a failure to comply with the Purpose Guarantee or the Result Guarantee if the failure to comply occurred only because of:

If the plaintiff establishes that the defendant has failed to comply with a Consumer Guarantee and that he or she satisfied the requirements to claim compensation or damages, the claim nonetheless may be defeated by s 275 of the ACL. Section 275 is a difficult provision to construe. It applies if:

If these conditions are satisfied, the proper law applies to limit or preclude liability for the failure and recovery of that liability:

A passenger who suffers loss or damage by reason of a travel operator’s failure to comply with one or more of the Consumer Guarantees may be entitled to claim the amount of loss or damage pursuant to s 236(1) of the ACL. However, Mr Moore has not relied on s 236(1) in these proceedings.

It is a striking feature of these proceedings that Mr Moore placed considerable emphasis on Scenic’s alleged non-compliance with the Care Guarantee. Mr Moore’s pleaded case alleged that Scenic failed to exercise due care and skill because it did not ascertain the extent of flooding and rising river levels prior to the commencement of the various cruises and failed to cancel or offer refunds to passengers when it knew or should have known of the disruptions to cruises that were likely to occur. Even the pleaded claims that Scenic breached the Purpose and Result Guarantees incorporated detailed allegations concerning Scenic’s knowledge or means of knowledge about river conditions prior to the cruises commencing.

The questions in the Statement of Issues reflect the emphasis at the trial on Scenic’s knowledge of river conditions and its failure to warn passengers or cancel cruises prior to embarkation. The parties’ written submissions in this Court adopted a similar approach. Scenic raised a multitude of issues, but devoted much attention to challenging the primary Judge’s findings as to Scenic’s knowledge or means of knowledge of flooding and river conditions prior to embarkation. Mr Moore’s submissions responded in detail to Scenic’s challenges to these findings. The factual disputes involve consideration of a large amount of material relating to ten different cruises.

At the outset of the hearing in this Court, Mr Williams was asked whether the claims for breach of the Care Guarantee added anything of substance to the claims based on breaches of the Purpose and Result Guarantees. The same question was put to Mr Abadee, who appeared for Mr Moore on the appeal.

The questions were prompted, in part, because it was unclear from the parties’ written submissions how Mr Moore and the Group Members could succeed on their claims based on the Care Guarantee if they failed on their claims based on the Purpose and Result Guarantees. Members of the Court observed that it is difficult to see how a case based on a failure to warn passengers or to cancel a cruise prior to embarkation could succeed if Mr Moore and the Group Members could not show that the services actually provided by Scenic were not fit for the purpose for which the passengers acquired them or could not reasonably be expected to achieve the result that the passengers wished to achieve. The questions were also prompted by a concern that success for Mr Moore and Group Members on their Care Guarantee case was unlikely to add anything to their claims based on Purpose and Result Guarantees if the latter were successful. The parties gave two answers to the questions posed by the Court.

First, Mr Williams said that Scenic might succeed in establishing a defence under s 61(3) of the ACL to some of the Group Members’ claims under the Purpose and Result Guarantees. Although Scenic did not challenge the primary Judge’s rejection of the s 61(3) defence in Mr Moore’s case, Mr Williams said that Scenic might be able to show that some Group Members had not relied on its skill and judgment or, alternatively, that it was unreasonable for them to do so, thereby making out the defence provided by s 61(3). The Group Members in this position might nevertheless demonstrate that Scenic had not supplied the services with due care and skill. According to Mr Williams, the result could be that some Group Members would fail in their claims based on Scenic’s non-compliance with the Purpose and Result Guarantees yet succeed in their claims founded on the Care Guarantee.

Secondly, it was said that a breach of the Care Guarantee might support a claim for compensation or damages by Group Members precluded from claiming compensation or damages for a breach of either the Purpose Guarantee or the Result Guarantee. Mr Williams pointed out that s 267(1)(c)(ii) of the ACL permits a consumer to seek damages for non-compliance with the Purpose and Result Guarantees only if the non-compliance:

It is true that Scenic relies on s 267(1)(c)(ii) as a defence to claims for compensation or damages for Scenic’s breach of the Purpose and Result Guarantees. As will be seen, however, the primary Judge correctly rejected that defence to Mr Moore’s claim for compensation or damages. It is difficult to see how that defence could succeed in relation to the claims of Group Members.

The parties also pointed out that the primary Judge awarded a higher amount as compensation for reduction in the value of services provided to Mr Moore on his claim for Scenic’s breach of the Care Guarantee than on his claim based on Scenic’s breach of the Purpose Guarantee. But, this disparity came about because Mr Moore claimed a lower sum for the latter claim than for the former claim. Without that concession, the primary Judge would have awarded the same amount for Scenic’s breach of the Purpose Guarantee as his Honour awarded for Scenic’s breach of the Care Guarantee.

Although the parties’ focussed on the Care Guarantee and Scenic’s knowledge and conduct prior to the commencement of the cruises, those issues are of less significance to the outcome of the proceedings than the claims based on breaches of the Purpose and Result Guarantees. For that reason, the judgment directs most attention to the issues relating to those claims, although it is also necessary to address issues bearing primarily on the claims based on breaches of the Care Guarantee.

Despite Scenic’s enthusiasm for challenging the primary Judge’s reasoning and findings, there was some common ground between the parties. Specifically, it was common ground on the appeal that:

The following are the principal issues raised by Scenic’s amended notice of appeal that are or may be common to the claims of Mr Moore and the Group Members:

It is necessary also to consider Scenic’s challenge to the findings made by the primary Judge relating to Mr Moore’s claim and to determine whether the outcome of those challenges applies to the claims made by Group Members.

Mr Abadee accepted that Mr Moore’s pleaded case alleging that the Terms and Conditions were unjust or unfair only arises if his argument on the definition of “services” for the purposes of ss 60 and 61 of the ACL is rejected.

As has been seen, the 3ASC does not identify the proper construction of the definition of “services” in the Act as a common question. However, Question 1 in the final version of the Statement of Issues asks:

With Question 1 in mind, the primary Judge observed that: [61]

Scenic contended before the primary Judge that the Terms and Conditions contained in the Brochure and to which Mr Moore and the Group Members agreed, determined the proper characterisation of the services which Scenic agreed to supply and thus limited the extent to which the Consumer Guarantees applied to the cruises. [63] Having regard to the Terms and Conditions, the services Scenic supplied: [64]

The Terms and Conditions were designed to take account of: [65]

The primary Judge rejected Scenic’s approach to the characterisation of the services it supplied: [66]

For these reasons his Honour accepted Mr Moore’s submission that Scenic should be regarded as: [67]

The primary Judge, however, went further: [68]

His Honour answered Question 1 in the Statement of Issues as follows: [69]

In this Court, Mr Williams repeated and elaborated upon the arguments that Scenic put at trial. He submitted that the services supplied by Scenic for the purposes of ss 60 and 61 of the ACL were those that Scenic agreed to provide and was capable of providing. Mr Williams accepted that the services included facilities over which Scenic had control, such as a functioning ship of appropriate quality and satisfactory standards of accommodation, food and entertainment. But it was necessary to distinguish between such facilities and matters over which Scenic had no control, such as weather conditions and river conditions.

Mr Williams submitted that it was precisely because Scenic could not control weather conditions and river levels that it reserved to itself the contractual right to change or vary a passenger’s itinerary and to substitute another vessel or motorcoach for all or part of the itinerary. [70] Thus a passenger booking a cruise with Scenic did not obtain an unqualified entitlement to enjoy a cruise along the entire scheduled route or to participate in a particular event if Scenic, by reason of circumstances beyond its control, could not provide the scheduled itineraries or activities.

According to Mr Williams, the Consumer Guarantees have inbuilt “control mechanisms”. One control mechanism is provided, so he argued, by understanding a “supply of services” in a case such as the present to mean a supply of the scheduled tour on the Terms and Conditions to which the passenger has agreed. Mr Williams distinguished between contractual limitations which define the nature of the services to be supplied and terms of the contract which limit liability (such as cl 2.10(h) of the Terms and Conditions). Scenic relied only on the former.

The definition of “services” in s 2 of the ACL is in substance identical to the definition in s 4(1) of the Competition and Consumer Act. As the Full Federal Court explained in Obeid v Australian Competition and Consumer Commission, [71] the current definition derives from amendments made by the Trade Practices Amendment Act 1977 (Cth) to the definition of “services” in s 4(1) of the Trade Practices Act 1974 (Cth) (Trade Practices Act) as originally enacted.

The forerunner to the Consumer Guarantees contained in ss 60 and 61 of the ACL was s 74 of the Trade Practices Act. In its original form, s 74 used language similar to that now found in ss 60 and 61 of the ACL, but protected consumers by implying contractual warranties in contracts for the supply of services. Section 74 as first enacted provided as follows:

Section 74(3) of the Trade Practices Act contained a restricted definition of “services” specific to s 74 which limited the circumstances in which the statutory warranty could be implied into a contract between a corporation and a consumer. The restricted definition of “services” meant that the statutory warranties did not apply, for example, to a contract between a tour operator and a consumer for the supply of tourism services, whether the services were to be supplied in Australia or overseas.

Section 74(3) of the Trade Practices Act was repealed (and replaced by different provision) by the Trade Practices Revision Act 1986 (Cth). Thereafter, subject to presently irrelevant exceptions, the broad definition of “services” in s 4(1) of the Trade Practices Act (as amended in 1977) applied to the statutory warranties implied by s 74(1) and (2) [73] of the Trade Practices Act. This expanded the circumstances in which s 74 could apply, although the mechanism for protecting consumers remained statutory warranties implied into contracts between corporations and consumers.

The High Court held in Wallis v Downard-Pickford (North Queensland) Pty Ltd [74] that the statutory imposition of a contractual warranty in contracts for the supply of services was inherently accompanied by a full contractual remedy. The contractual warranty was, however, imposed by a federal statute. If a State law purported to modify or limit the operation of the statutory warranty, there was a direct inconsistency between s 74 of the Trade Practices Act and the State law. The State law was therefore rendered invalid to the extent of the inconsistency by s 109 of the Constitution. [75]

The ACL came into force on 1 January 2011. On that date the name of the Trade Practices Act was changed to the Competition and Consumer Act. [76] Section 74 of the Trade Practices Act was repealed and replaced by Consumer Guarantees contained in ss 60 and 61 of the ACL.

The Consumer Guarantees differ from s 74(1) and (2) of the Trade Practices Act in that they provide protection to consumers by means of statutory guarantees, rather than by implying statutory warranties into contracts between corporations and consumers. The Minister’s second reading speech accompanying the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 [77] indicated that the Consumer Guarantees had been “closely aligned to New Zealand law”, a reference to ss 28 and 29 of the Consumer Guarantees Act 1993 (NZ). [78] The Minister also stated that the reforms were based on a “comprehensive analysis” by the Commonwealth Consumer Affairs Advisory Council (Consumer Council).

The Consumer Council published its Final Report on Consumer Rights in October 2009. [79] It identified a number of problems with the existing law relating to implied terms. The difficulties included the complexity of the law, the lack of awareness by consumers of their statutory rights and the inappropriateness of using a nineteenth century model of implied terms as a basis for a broader consumer protection regime. The Consumer Council noted that: [80]

The Final Report of the Consumer Council analysed the New Zealand legislation in some detail and concluded that it had operated well with high levels of consumer awareness and satisfaction since its introduction in 1993. The chief advantages were said to be that it “achieves greater clarity in consumer rights and greater certainty in available remedies”. [81] The Consumer Council accordingly recommended the introduction of similar statutory guarantees in Australia. The ACL implemented the recommendation. [82]

In Obeid v ACCC the Full Federal Court considered the definition of “services” in s 4(1) of the Competition and Consumer Act, although not for the purposes of construing the predecessors to ss 60 and 61 of the ACL. After referring to the familiar general principles of statutory construction, [83] the Court cited the comments of McHugh J in Kelly v The Queen. [84] In that case his Honour pointed out that: [85]

The Court in Obeid v ACCC considered that the use of the word “includes” in the definition of “services” in s 4(1) of the Competition and Consumer Act indicated that the definition was not intended to be exhaustive. [86] This construction was supported by the distinction in s 4(1) itself between inclusive definitions and definitions using the word “means”. Furthermore, while the historical context could not displace the statutory text, the legislative history supported the Court’s non-exhaustive construction of the definition of “services”.

The Full Court accepted that unless a contrary intention appears in the substantive provisions being applied, the ordinary meaning of “services” should be adopted along with the various kinds of services specified in the definition itself. [87] Their Honours cited with approval a comment in a Federal Court decision that the word “services” has a wide application, although it usually connotes the provision of some form of assistance or accommodation by one person to another. [88]

Although Obeid v ACCC was concerned with provisions of the Competition and Consumer Act the Court’s analysis applies with equal force to the definition of “services” in s 2 of the ACL. But it is necessary to remember that the definition has to be applied to the language used in the Consumer Guarantees. The parties in the present case tended to overlook the latter point. Their submissions concentrated on the definition of “services” in s 2 of the ACL in isolation from the language in the substantive provisions.

The definitions of “services” and “supply” in s 2 of the ACL are relevant not merely to the Consumer Guarantees but to a variety of substantive provisions. For example, s 29(1)(b) of the ACL prohibits a person in trade or commerce making a false or misleading representation that services are of a particular standard or quality; s 40(1) prohibits a person asserting without reasonable cause a right to payment from another person for “unsolicited services” [89] ; and s 278 provides a remedy in certain circumstances to a consumer who is party to a “linked credit contract”, a term defined by reference to the provision of credit in relation to the supply of services to a consumer. [90] The definition of “services” in s 2 of the ACL can therefore be said to have a protean quality in the sense that the language may be understood differently depending on the context in which it has to be applied.

It is nonetheless appropriate to start with the terms of the definition itself. Quite apart from the non-exclusive nature of the definition, nothing in the language requires or even suggests that “services” must be confined to services that are provided pursuant to a contract or that correspond precisely to the terms of a contract between the supplier and the consumer. Paragraph (b) states that the definition includes the rights, benefits, privileges or facilities that are or are to be provided, granted or conferred under a contract for or in relation to the provision of, or the enjoyment of facilities for amusement, entertainment or recreation. But para (b) is expressed not to limit para (a) of the definition.

Paragraph (a) contains no reference to a contract. It states that the word “services” includes any rights, benefits, privileges or facilities that are, or are to be, provided or conferred in trade or commerce. Clearly benefits, privileges and facilities and indeed other services can be provided by one person to another regardless of whether a contract is in place. Even if a contract is in place services can be provided by one party to another independently of the terms of the contract. The fact that services can be provided independently of contractual arrangements was a significant factor in the Consumer Council’s recommendation that consumers should be protected by freestanding statutory guarantees rather than implied contractual terms.

The reference in the definition of “services” to rights, benefits, privileges or facilities that “are to be provided, granted or conferred” indicates that the definition is not merely concerned with services that are in fact provided by a supplier to a consumer. The definition includes rights, benefits, privileges or facilities that are to be provided in the future, whether pursuant to contract or otherwise.

The Care Guarantee in s 60 of the ACL uses the defined terms “supply” and “services”. It is not easy simply to read the definitions into s 60 in the manner suggested by McHugh J in Kelly v The Queen. Some adaptation is a grammatical necessity and, even then, the language does not achieve clarity or avoid awkwardness. Recognising the difficulty, s 60 can be read with the material parts of the definitions as follows:

Despite the awkwardness of the statutory construct, the evident intention to be derived from the text of s 60 is that a person who, in trade or commerce, is to provide rights, benefits, privileges or facilities to a consumer is required to render them with due care and skill. The use of the future tense in the closing words of s 60 reinforces the conclusion that the Care Guarantee applies to services that are to be supplied to the consumer at some time in the future. The Care Guarantee may be enlivened by the supplier and consumer entering into a contract, as where the consumer pays a deposit and signs a standard form contract. But the Care Guarantee may also be enlivened without any enforceable contract coming into existence. For example a consumer may have a contract with one person but the services may be supplied by a third person with whom the consumer has no contractual relationship. [91]

The text of s 60 does not imply and certainly does not compel the conclusion that if there is a contract in place between the supplier and the consumer the obligations imposed on the supplier by the Care Guarantee are co-extensive with the supplier’s contractual obligations. Unless there is some contextual reason to construe the Care Guarantee in s 60 of the ACL as applying only to “services” that are co-extensive with the supplier’s contractual obligations, there is no basis for doing so. The same can be said for the Purpose and Result Guarantees.

In my view there is no contextual reason to construe any of the Consumer Guarantees in this way. To construe the Care Guarantee as applying only to services that are co-extensive with the supplier’s contractual obligations would not achieve the object and purpose of the legislation ascertained from the text and structure of the statute. [92] The Care Guarantee is plainly designed to protect consumers by ensuring that the benefits, facilities or other services with which they are to be provided will be rendered with due care and skill. Parliament has expressly stated that a term of a contract which purports to exclude, restrict or modify the application of any of the Consumer Guarantees or any liability of a person for a failure to comply with any of the Consumer Guarantees, is void. [93] It can hardly be intended that a person who is to provide benefits or facilities to a consumer can avoid the statutory obligation to exercise due care and skill simply by entering into a skilfully worded standard form contract with the consumer which defines the services to be provided in a manner that effectively avoids any obligation to exercise due care and skill.

The threshold inquiry mandated by each of the Consumer Guarantees is to identify (relevantly for present purposes) the benefits and facilities the supplier is to provide to the consumer. This requires an objective assessment of the dealings between the supplier and the consumer to determine the benefits or facilities the consumer can reasonably expect the supplier to provide in return for the consumer’s payment. The assessment is not confined to the terms of any contract between the supplier and the consumer. Nor is it foreclosed or limited by any contractual limitations on the supplier’s ability for failing to provide the services for which the consumer has paid.

Depending on the circumstances, the terms of any contract may be a relevant consideration, particularly if the terms have been freely negotiated between the parties. But the benefits or facilities a consumer can reasonably expect the supplier to provide are not to be delimited by exclusion terms in a contract drafted by a supplier primarily to protect its interests. To adopt this approach would be to render the Consumer Guarantees effectively nugatory. Such an intention cannot be imputed to Parliament.

It is no answer to suggest, as Mr Williams did, that the remedy for a consumer faced with such a contract is to invoke the provisions of the ACL rendering unfair terms of a consumer contract void. [94] This would place the onus on the consumer to establish the invalidity of a contract and undercut the utility of a guarantee intended to be directly enforceable by means of the statutory remedies.

Nor is it to the point that a supplier of services such as Scenic cannot control weather or river conditions. Scenic, like other suppliers of services in trade or commerce, is likely to be in a much better position than individual consumers to make a timely judgment as to whether external circumstances such as river conditions or civil unrest are likely to disrupt the services that are to be provided. A supplier may be able to rely on exclusion clauses in the contract with the consumer to shield itself from any liability under the general law for a failure to provide services that have been promised. But the consumer’s rights under the Consumer Guarantees are separate and distinct from the consumer’s contractual rights (and obligations). Indeed cl 2.15 of the Terms and Conditions expressly states that nothing therein operates to exclude or modify the application of any provision of the Competition and Consumer Act or Scenic’s liability for breach of a guarantee where it would be unlawful to do so. [95]

As it happens, Scenic’s own Terms and Conditions recognise that its primary obligation is to provide passengers with the benefits and facilities associated with the particular cruise they booked and paid for. The Terms and Conditions define the “Tour” to mean “the Tour You have booked with Us outlined in Your Itinerary as amended in accordance with these Terms and Conditions”. The Itinerary means “Your personalised Itinerary for Your Tour as amended from time to time in accordance with the Contract”. The passenger is entitled to request a variation to “Your Booking” (an undefined term) and if Scenic accepts the request the passenger must pay a variation fee (cl 2.6(b)). Scenic undertakes to use reasonable endeavours to provide “the Tour You have booked in accordance with Your Itinerary” (cl 2.7). Scenic is permitted to change or vary “Your Itinerary” in certain circumstances and to substitute “another vessel or motor coach for all or part of the Itinerary and also provide alternative accommodation, if necessary” (cl 2.10(d), (g)). But Scenic is obliged to use reasonable efforts to “operate the Tour as close as possible to Your Itinerary” unless changes or substitutions are necessary for reasons outside Scenic’s control.

The Terms and Conditions reserve the right to Scenic to cancel a scheduled cruise. Clause 2.9(c) provides that if Scenic cancels a tour “for whatever reason before departure” it must use reasonable endeavours to offer passengers “the closest available tour or tour departure”. If the passenger declines the offer, the contract is terminated and Scenic must refund moneys paid “directly” to it, but is under no further liability to the passenger (cl 2(f)). The Terms and Conditions therefore contemplate that Scenic, for reasons beyond its control or otherwise, may decide to cancel a tour. However, the structure of the contract reflects the parties’ expectations at the time the passenger makes the booking and pays for the cruise that Scenic will supply the Services associated with the personalised Itinerary specified in the Brochure and the reservation form.

The Consumer Guarantees are integral components of the statutory scheme designed to afford protection to consumers who do not receive the services they reasonably expect to receive from a supplier. It is hardly surprising that the legislation is drafted on the basis that a supplier of services is ordinarily in a much better position than the consumer to assess in advance the risk that the services cannot be supplied as expected. If the risk materialises, the contract between the supplier and consumer may exempt the supplier from liability in tort or contract for the failure to supply the services. But as I have noted that is quite a separate issue from whether the failure causes the supplier to breach one or more of the Consumer Guarantees thereby entitling the consumer to enforce the statutory remedies for the breach. If the consumer can satisfy the terms of the legislation, the effect of the Consumer Guarantees is to allocate the risk of loss from the failure to supply the expected services to the supplier rather than to the individual consumer.

It is true, as Mr Williams submitted, that a supplier of services such as Scenic cannot always accurately assess in advance the risk that the expected services cannot be provided, in whole or in part, by reason of external circumstances or events. The legislation does not require these difficulties to be completely ignored, nor does it seek to impose impossible burdens on service providers. In some cases where the supplier does not provide the services the consumer expects to receive the supplier will escape liability by reason of what Mr Williams described as the “control mechanisms” built into the Consumer Guarantees. The Care Guarantee requires only that the supplier will provide the services with due care and skill. The Purpose Guarantee requires the supplier to ensure that the services are reasonably fit for the purpose made known by the consumer. Similarly the Result Guarantee requires the services to be of such a nature and quality that they can reasonably be expected to achieve the result the consumer wishes to achieve and has made known to the supplier.

It may well be that the control mechanisms built into the Consumer Guarantee do not protect a supplier of services from all the consequences of circumstances beyond its control. But that is because Parliament has chosen to allocate to the supplier risks that neither the supplier nor the consumer could have anticipated. Whether or not that is an appropriate policy choice is not for a court to determine.

The rejection of Scenic’s construction of the term “services” does not necessarily determine whether the primary Judge correctly characterised the services Scenic supplied to Mr Moore for the purposes of applying the Consumer Guarantees. It will be recalled that his Honour found that Scenic should be regarded as supplying two categories of services, namely Cruise Services and Information Services. [96]

The inquiry required for the purpose of characterising the services Scenic supplied to Mr Moore, as has been explained, is not confined to construing the limits of Scenic’s obligations under the Terms and Conditions or to ascertaining the services that were actually provided to Mr Moore after the tour commenced. The inquiry is (relevantly) as to the benefits and facilities Scenic was to provide to Mr Moore. This inquiry involves an examination of the dealings between Scenic and Mr Moore to determine what benefits and facilities Mr Moore, as a consumer, could reasonably expect Scenic to provide in return for payment of the charges for a reservation on Cruise 8.

Whatever difficulties may be encountered in other cases, the present case (as his Honour effectively found) is relatively straightforward. The Brochure, which Mr Moore read and understood before paying for Cruise 8, set out in great detail the benefits and facilities Scenic would provide to persons who booked and paid for the cruise. The Brochure, among other things, identified the vessel on which the passengers were to enjoy the luxury cruise and promised the “sanctuary of your own private suite or state room”. The itinerary specified what passengers could expect on each day of the 15 days/14 nights cruise. Passengers were to “enjoy a level of inclusive luxury service that is unsurpassed on the water ways of Europe”, extending to a “private butler ready to assist at any time of the day”. The Brochure outlined the many “Scenic Highlights” passengers would experience while on board the vessel and the “FreeChoice” land tours included in the price.

Mr Moore, having read the Brochure and made his booking and reservation on the faith of it, as Scenic intended, could reasonably expect that Scenic would provide him with the benefits and facilities associated with Cruise 8 as described in the Brochure. Since Mr Moore also read the Terms and Conditions he presumably understood that if the expected benefits and facilities were not supplied Scenic’s contractual liability to him was, or might be severely limited. But as has been noted that issue is distinct from determining the benefits and facilities Mr Moore could reasonably expect Scenic to supply by reason of his booking and payment for Cruise 8.

The primary Judge described the Cruise Services to be supplied to Mr Moore as: [97]

A more precise description of the services to be provided by Scenic to Mr Moore in my opinion is:

The conclusion that Scenic was to provide the Cruise Services (as I have explained the term) to Mr Moore does not mean that Scenic failed to comply with the Consumer Guarantees if it was unable to provide all the benefits and facilities described in the Brochure. Whether in that event Scenic failed to comply with one or more of the Consumer Guarantees is a separate question the answer to which depends on applying the language of each of the Consumer Guarantees to the particular circumstances.

The primary Judge expressed his finding that Scenic was to supply Information Services to Mr Moore in different ways. His Honour referred to Scenic’s “concession” that monitoring and managing the services being provided were “necessary incidents” of its contractual obligations. He then said that what Scenic actually did demonstrated that it accepted such obligations and that: [98]

It is not entirely clear what his Honour meant by the expression “[i]f … the cruise could not go ahead”. The expression seems to refer to a situation where the cruise cannot proceed at all and therefore must be cancelled. In this situation, the primary Judge considered that Scenic was obliged to notify passengers promptly that the cruise had to be cancelled.

It this is what his Honour meant, he immediately expanded the scope of the services Scenic was to supply to Mr Moore and Group Members. His Honour found that: [99]

The primary Judge did not distinguish between the Information Services Scenic supplied or was to supply before and after the commencement of a cruise. However, the position is not necessarily the same in each case.

His Honour applied the broader description of Information Services in finding that Scenic failed to comply with the Care Guarantee by its conduct in advance of the commencement of certain cruises. For example, his Honour found that it was clear to Ms Scoular of Scenic on 16 May 2013, four days before Cruise 1 was to commence from Chalon-sur-Saône, that water levels remained high and that at that stage the cruise sailing north towards Chalon-sur-Saône could not establish a final disembarkation point. On the basis of these findings his Honour considered that: [101]

It is not clear why the primary Judge defined the Information Services so broadly when considering the application of the Care Guarantee to circumstances arising before the commencement of a cruise. His Honour referred to a concession Scenic made at trial, but that concession appears to have been limited to an acknowledgement that the Terms and Conditions required Scenic to provide information to passengers in particular and limited circumstances. In his submissions on the appeal, Mr Williams accepted that it was an incident of the contractual arrangements that Scenic would notify passengers promptly if a cruise had to be cancelled. Mr Williams also accepted that Scenic would have to provide regular information to passengers while on board a vessel about their scheduled daily activities. But he disputed that Scenic had conceded at trial that its services were to include the provision of information to passengers about any risks that a cruise might not be able to “proceed smoothly and without interruption”.

Mr Abadee did not seriously contest Mr Williams’ explanation of the limited nature of Scenic’s concession. Nor did Mr Abadee identify any material in the Brochure that supported the primary Judge’s characterisation of the Information Services as applied to the Services Scenic was to supply before a cruise commenced. Somewhat ironically, given his insistence that the Terms and Conditions did not limit the services Scenic was to supply, Mr Abadee relied principally on the contractual provisions to uphold the primary Judge’s finding.

None of the Terms and Conditions to which Mr Abadee referred supports the primary Judge’s characterisation of the Information Services. Mr Abadee relied, for example, on cl 2.6 of the Terms and Conditions. But that provision merely specifies the charges a passenger incurs in the event that he or she cancels the cruise before the departure date. It is impossible to infer from cl 2.6 that Scenic’s services were to include notifying passengers in advance of embarkation of a risk that a cruise might not proceed smoothly and without interruption, or of a risk that events might occur in the future that could have more than a de minimis impact on the luxury experiences Scenic promised to provide.

On the primary Judge’s formulation of the Information Services, Scenic’s services were to extend to notifying passengers in advance of any event that might “impact in any real way upon the passenger’s ability to travel in accordance with the itinerary”. Scenic would then be obliged by s 60 of the ACL to exercise due care and skill to notify passengers in advance promptly of any event of which Scenic was aware that might have such an impact. As was pointed out in argument, on this approach the Care Guarantee might effectively require Scenic to notify passengers of a variety of events or even possible events that could have an impact on the cruises they had booked. For example, Scenic might be obliged to notify passengers of a strike of uncertain duration in one of the countries included in the cruise itinerary or even of tensions in other parts of the world that might result in intrusive security measures for passengers travelling along the European rivers or require eliminating one port from the itinerary.

It is one thing to infer from the Brochure and the Terms and Conditions that Scenic’s services were to include prompt notification of a decision by it to cancel a cruise or substantially to change an itinerary. It is quite another to infer that Scenic was to supply services that included notification to passengers of any risks to the smooth operation of the cruise. There is no basis for drawing such an inference from the material provided by Scenic to Mr Moore.

It follows that the primary Judge erred in finding that the services to be supplied by Scenic to Mr Moore and other Group Members before the commencement of each cruise included the Information Services as his Honour defined that expression. Mr Moore did not file a notice of contention seeking an alternative, more limited finding as to the additional services Scenic was to supply to Mr Moore and the Group Members.

The services Scenic was to supply after embarkation were not necessarily as limited as those it was to supply before the cruise commenced. Once on board the vessel passengers were entirely in the hands of Scenic and its representatives. They were responsible for providing the services and facilities booked and paid for by the passengers. They had access to information bearing on whether the scheduled itinerary was likely to be disrupted and, if so, to what extent. Scenic must have known that most if not all passengers would expect to be kept reasonably informed of matters known to Scenic, or of which it ought to have known, that were likely to interfere substantially with the services and activities they expected to enjoy.

The Brochure assured passengers that they would not only experience all-inclusive luxury throughout the cruise, but that they would receive “meticulous attention to detail, first class service and intimate personal touches”. Scenic had a contractual entitlement to provide a reasonable alternative to the scheduled itinerary if circumstances beyond its control rendered it impossible to adhere strictly to the schedule. But the assurances in the Brochure conveyed to passengers that Scenic’s services extended to providing reasonably timely information on such matters as unusual weather conditions, river levels or natural disasters likely to disrupt the scheduled itinerary. Passengers could reasonably expect to be informed of matters known to Scenic or which it should have known from sources of information available to it.

Mr Williams did not dispute that the services to be supplied by Scenic after embarkation included providing information to passengers about their daily activities. It is but a small step to conclude, as did the primary Judge, that the services were to extend to the provision of timely information about substantial interruptions to the itinerary known to Scenic or of which it ought to have known. Scenic’s failure to provide timely information of this kind, depending on the circumstances, therefore could constitute a failure to comply with the Care Guarantee. Scenic might have breached the Care Guarantee, for example, if it deliberately delayed informing passengers on board the vessel that it had already decided to make substantial changes to the current cruise because of known rises in river levels. It might also have breached the Care Guarantee if it failed to exercise reasonable care in ascertaining the true river levels and for that reason did not inform passengers that substantial interruptions to the scheduled itinerary would be experienced.

This construction of the Care Guarantee does not mean, however, that a contravention of the Care Guarantee by Scenic after a cruise commenced necessarily leads to the conclusion that it was bound to cancel the cruise or offer passengers a refund. A breach of the Care Guarantee is of a different character than a breach of the Purpose or Result Guarantee. If a failure to provide timely information to passengers constituted a breach of the Care Guarantee that is because the services to be supplied by Scenic included the provision of timely information to passengers once they were on board the vessel. But there was nothing in the material made available to prospective passengers in advance of the cruises which suggested that the “services” to be supplied by Scenic would include cancellation of the cruise or a refund of the full price paid by passengers.

The consequences of a failure to comply with the Care Guarantee are prescribed, for present purposes, by s 267 of the ACL. Thus a passenger’s entitlement pursuant to s 267(3)(a) to terminate the contract for the supply of the services depends on whether the failure to comply cannot be remedied or is a “major failure” within the meaning of s 268 of the ACL. Termination of the contract after a Scenic cruise has commenced might give rise to questions as to the remedies available to a passenger who terminates the contract after receiving part but not all of the services to be provided by Scenic. A passenger’s entitlement to damages under s 267(4) (assuming such an entitlement is not precluded by s 275 of the ACL) depends on proof that the failure to comply with the Care Guarantee caused the passenger loss or damage. Where the failure to comply consists only of a delay in providing information as to likely disruptions to the scheduled itinerary, it may be difficult for the passenger to prove that he or she suffered loss or damage by reason of that delay. It is likely to be even more difficult for a passenger to demonstrate that a failure to provide timely information of itself warrants an award of damages equivalent to the full price paid for the cruise.

A failure by Scenic to comply with the Purpose or Result Guarantees also would not automatically trigger an obligation to cancel the cruise or refund the full purchase price paid by a passenger. The consequences of the breach would depend on the extent to which the services were not fit for the particular purpose made known by the passenger or fall short of achieving the result the passenger wished to achieve. Depending on the circumstances, Scenic (or another tour provider) might in practice be forced to cancel a cruise and make alternative arrangements for passengers to avoid having to compensate passengers to the extent of the full purchase price pursuant to s 267(3)(b) of the ACL. (Scenic might also be obliged in practice to take this course if, contrary to the view expressed later in this judgment, the passenger has an action in damages under s 267(4) of the ACL for distress and disappointment.) But Scenic would not be obliged by the provisions of Part 5-4 of the ACL to cancel the cruise or automatically refund the full purchase price.

The elements of a claim founded on a failure to comply with the Purpose Guarantee have been explained earlier in this judgment. [103] The primary Judge found that Mr Moore had not established that he expressly made known to Scenic any particular purpose for which he acquired the services. [104] In his Honour’s view, however, this did not matter. By publishing and distributing the Brochure and advertising in a variety of forums Scenic was “enticing passengers to book for an all-inclusive five-star luxury cruise”. [105] Moreover Scenic understood that the services they were supplying were all those necessary to provide passengers with a luxury five-star all-inclusive experience of the river cruise it had promoted. [106]

In these circumstances and in the absence of direct evidence of the communication of any other “particular purpose”, his Honour concluded that: [107]

In his Honour’s view the “particular purpose” within the meaning of s 61(1) of the ACL arises and is communicated at the time the services are acquired but before they are supplied. The purpose is “a unilateral one of the consumer” and need not necessarily be agreed with the supplier. Nor does the particular purpose have to be objectively reasonable. [108]

His Honour was satisfied that: [109]

The primary Judge observed that a supply of services would not breach the Purpose Guarantee unless the services were not reasonably fit for the identified purpose. A determination on that question was necessarily fact dependent and required a review of the facts relating to each cruise. [111] In undertaking that task it was appropriate: [112]

Ground 9 of the Notice of Appeal contends that the primary Judge erred in finding that the “particular purpose for which [Mr Moore] acquired Scenic’s services was not subject to the [T]erms and [C]onditions of the contract”. Scenic’s submissions in chief said virtually nothing to develop Ground 9 which, on one view, simply reiterates Scenic’s complaints about the characterisation of the “services” Scenic was to provide.

Scenic returned to Ground 9 in its reply written submissions, apparently in response to Mr Moore pointing out that nothing of substance had been said in Scenic’s submissions in chief. Scenic contended that the primary Judge erred in conflating the “particular purpose” made know by Mr Moore to Scenic with the services supplied or to be supplied by Scenic. It “defied reality”, so Scenic argued, to divorce Mr Moore’s particular purpose (and that of Group Members) from the inherent risks associated with cruising on the waterways of Europe.

Mr Williams put the argument somewhat differently in his oral submissions. He contended that the “particular purpose for which the services are being acquired by a consumer” must be something different from the services themselves. Beyond referring to the decision of the High Court in David Jones Ltd v Willis [113] (David Jones), Mr Williams did not develop the argument.

The Sale of Goods Act 1893 (UK) (1893 Act) and its Australian counterparts provided that where a buyer expressly or impliedly made known to the seller the particular purpose for which the goods were required, so as to show that the buyer relied on the seller’s skill and judgment, there was an implied condition that the goods were fit for that purpose. [114] The test of whether the buyer had relied on the seller’s skill and judgment was whether in all the circumstances a person in the position of the seller would have realised that his or her skill and judgment was being relied on. [115] While the questions of particular purpose and reliance were distinct they were closely related and were often considered together.

Once a finding was made that the buyer had made known a particular purpose so as to rely on the seller’s skill and judgment, it was usually a short step to conclude that goods which failed to satisfy a buyer’s expectations were not reasonably fit for the particular purpose. Hence there were many and varied circumstances in which courts found that goods were not reasonably fit for the particular purpose made known to the seller. [116]

Section 61(1) of the ACL uses language similar to that found in the 1893 Act but the structure of the provision is different. Section 61(1) states that where the consumer, expressly or by implication makes known to the supplier any particular purpose for which the services are being acquired by the consumer, there is a guarantee that the services will be reasonably fit for that purpose. The particular purpose does not have to be made known to the supplier in a manner that shows that the consumer relies on the seller’s skill and judgment. The issue of reliance is dealt with in s 61(3) which, as has been seen, provides that the section does not apply if the circumstances show that the consumer did not rely on the supplier’s skill and judgment. In effect, the consumer’s particular purpose has been uncoupled from the consumer’s reliance on the skill and judgment of the supplier.

David Jones, the decision relied on by Scenic, arose under the Sale of Goods Act 1923 (NSW) (1923 NSW Act). In that case, a purchaser of a pair of shoes sued the retailer which sold the shoes seeking damages by reason of injury suffered when the heel of one shoe became detached. The purchaser succeeded in her claim that the goods were bought by description within the meaning of s 19(2) of the 1923 NSW Act (the equivalent to s 14(2) of the 1893 Act) and that the retailer had breached the implied condition of merchantable quality. Three members of the High Court considered whether the purchaser could also succeed under s 19(1) of the 1923 NSW Act (the equivalent to s 14(1) of the 1893 Act).

Rich, Starke and McTiernan JJ considered that it was open to the jury to find that the buyer had expressly made known to the retailer that she required the shoes for the ordinary purpose of walking outdoors. [117] Starke J explained that: [118]

It is difficult to see how David Jones assists Scenic’s argument. The now discarded linkage in s 19(1) of the Sale of Goods Act 1923 (NSW) between particular purpose and reliance perhaps provided some support for the argument that a particular purpose had to be distinct from a general purpose. Yet a majority of the High Court rejected the argument.

None of the reasoning in David Jones is inconsistent with the reasoning of the primary Judge in the present case. Indeed, if anything, the observations of Starke and McTiernan JJ support the primary Judge’s finding (as I interpret it) that Mr Moore made known to Scenic that his particular purpose was to enjoy the services associated with Cruise 8 conducted in accordance with the itinerary set out in the Brochure.

Mr Williams’ submission also overlooked the decision of the Privy Council in the well known case of Grant v Australian Knitting Mills Ltd [120] (Grant), a case arising under the Sale of Goods Act 1895 (SA) (relevantly identical to the 1893 Act). The appellant in that case purchased woollen underwear from a retailer. The manufacturer, unknown to the retailer, had introduced chemical substances into the manufacturing process. As a consequence, the purchaser developed a significant skin condition after wearing the garments. The Privy Council held that the purchaser made known to the retailer the particular purpose for which the underwear had been acquired so as to show that the purchaser relied on the retailer’s skill or judgment.

Lord Wright made it clear that the “particular purpose” for which goods are acquired might be the only purpose for which someone might want to acquire them: [121]

Grant demonstrates that a purchaser of goods may have the “particular purpose” of acquiring them for the only purpose for which the goods are suitable. [122] That reasoning applies a fortiori to the Purpose Guarantee. Thus a consumer may have the “particular purpose” of acquiring services for the only purpose for which the services are suitable. It was not necessary for Mr Moore to show that he had a more specific purpose than simply wishing to experience the services to be supplied by Scenic in connection with Cruise 8 conducted in accordance with the itinerary published in the Brochure. Accordingly, it was open to the primary Judge to infer from the dealings between Mr Moore and Scenic that he implicitly made known to Scenic that he was acquiring the services supplied by Scenic for the particular purpose of experiencing Cruise 8 in accordance with the services and itinerary published in the Brochure and booked by him. The fact that Mr Moore read and understood the Terms and Conditions did not require a contrary finding. His subjective purpose was not to enjoy services that Scenic might supply in substitution for Cruise 8. It was to enjoy Cruise 8. [123]

It will be recalled that the primary Judge found, in summary, that passengers on Cruise 8 were required to travel on three different vessels and instead of cruising on ten days as scheduled, they cruised on only three. [124] On the basis of the evidence that supported this finding his Honour found that the services supplied to Mr Moore were not reasonably fit for the particular purpose he had made known to Scenic.

The primary Judge explained this finding as follows: [125]

It is one of the peculiarities of this case that Scenic presented detailed arguments challenging the primary Judge’s finding that it failed to exercise due care in supplying the Information Services, yet said virtually nothing in opposition to the finding that Scenic failed to comply with the Purpose Guarantee in supplying the Cruise Services. The absence of submissions on this point may simply have reflected an assessment that if this Court upheld the primary Judge’s findings on the services to be supplied by Scenic and the particular purpose made known by Mr Moore to Scenic, it was very likely that the Court would also uphold the finding that Scenic breached the Purpose Guarantee.

In any event, the only challenge to the primary Judge’s findings of fact in relation to Cruise 8 was that his Honour should have found that at least some cruising occurred on approximately seven days. The basis for this challenge was not explained, but apparently rested on a rather different concept of “cruising” than his Honour had in mind. But even if the complaint is justified, it does not detract from the primary Judge’s assessment as to the gross disparity between the services Scenic was to provide on Cruise 8 and the services it actually supplied.

As has been noted, the link in the Sale of Goods legislation between a purchaser’s particular purpose and the purchaser’s reliance on the skill and judgment of the seller of goods often assisted the purchaser in establishing that the goods were not reasonably fit for the particular purpose. The severing of the link in s 61(1) of the ACL perhaps may make it more difficult for a consumer who makes known a particular purpose for which services are being acquired to establish that the services supplied are not reasonably fit for that purpose. This question need not be explored in the present case since it is clear that the services provided by Scenic were not fit for the purpose Mr Moore made known to it, namely to experience Cruise 8 in accordance with the itinerary published in the Brochure and booked by Mr Moore.

As the account given earlier indicates, the services Scenic supplied to Mr Moore bore remarkably little resemblance to the itinerary set out in the Brochure and in his personalised booklet, for which he paid a considerable amount of money. In essence, as the primary Judge found, Scenic provided very little cruising but a great deal of lengthy and often uncomfortable coach travel, coupled with a seriously disrupted schedule and curtailed sightseeing. There was clearly a gross disparity between the services Scenic actually supplied to Mr Moore on Cruise 8 and the services that could reasonably satisfy the particular purpose Mr Moore made known to Scenic.

Mr Williams submitted that when considering whether the services actually provided on Cruise 8 were reasonably fit for that particular purpose, it is necessary to consider the totality of the numerous services Scenic was to supply to Mr Moore. A contravention of the Purpose Guarantee is not established, so Mr Williams argued, merely by proving that the service provided failed to supply one component or even several components of a large suite of services the passenger expected to receive. So much may be accepted, at least if the failure relates to services that are not central to the fulfilment of the particular purpose made known to the service provider.

The primary Judge did not base his findings on relatively minor departures from the published itinerary and standards. Nor did he assume that any deviation from a published itinerary or an unavoidable failure to provide services of the expected standard would constitute a contravention of the Purpose Guarantee. It was the great disparity between the services needed to fulfil Mr Moore’s particular purpose and the services actually supplied by Scenic that underpinned his Honour’s finding that Scenic contravened the Purpose Guarantee.

Mr Williams also submitted, without elaboration, that whether services are reasonably fit for a particular purpose can be assessed only by taking into account matters outside the service provider’s control. Thus in this case, so Mr Williams argues, it is necessary to take into account that Scenic cannot control weather, water levels and unexpected transport restrictions. I accept that the concept of reasonableness may allow matters of this kind to be taken into account. A holiday in the sun may be reasonably fit for purpose notwithstanding it rains incessantly (unless, perhaps the service provider knew that the holiday was scheduled for the monsoon season). A cruise is not necessarily rendered unfit for purpose simply because the local authorities require the vessel to dock at a secondary port on one or two days of a ten day cruise or because one or two of the land tours cannot take place as scheduled.

It is, however, one thing for the Court to take into account matters of this kind in determining whether services are reasonably fit for a particular purpose. It is another to conclude that a service provider cannot contravene the Purpose Guarantee if the failure to provide the expected services is due to circumstances beyond the provider’s control. In each case an assessment has to be made of the services actually provided, making due allowance for the inevitable vicissitudes that can affect even the most meticulous travel and touring arrangements.

In the present case, the question is whether the services supplied by Scenic to Mr Moore were reasonably fit for the particular purpose he had made known: that is experiencing Cruise 8 in accordance with the itinerary and standards published in the Brochure. On the primary Judge’s findings the great disparity between the services supplied and those needed to fulfil the particular purpose was such that the services supplied were not fit for that purpose. The primary Judge, made due allowance for the considerations I have referred to. His Honour therefore did not err in finding that the services Scenic supplied to Mr Moore were not reasonably fit for the particular purpose he made known to it.

As has been noted, [126] the primary Judge considered it appropriate to proceed on the basis that the particular purpose impliedly made known to Scenic by Mr Moore and each other booked passenger was to enjoy an all-inclusive five-star luxury river cruise experience with the additional services promised by Scenic. On this basis his Honour found that Scenic contravened the Purpose Guarantee in relation to Cruises 1-9 and 11.

The answers to Question 8 in the Statement of Issues were apparently intended to record this finding but do not explicitly do so. The reason, as I have explained, is that Question 8 does not refer to the critical allegation in the 3FASC, namely that the services provided by Scenic were not reasonably fit for the purpose for which they were acquired by Mr Moore and the Group Members. Nonetheless it is clear that the primary Judge found that Scenic contravened the Purpose Guarantee by failing to provide services reasonably fit for the particular purpose made known by Group Members who booked Cruises 1-9 and 11. The primary Judge left it open to any Group Members who alleged that he or she made known any additional purpose to Scenic to do so. Any such allegation would have to await evidence from particular Group Members as to the additional purpose made known to Scenic. [127]

Mr Williams submitted that the issue of whether Scenic breached the Purpose Guarantee was not before the primary Judge, other than in relation to Mr Moore’s claim. His principal complaint appeared to be directed to Scenic’s reliance on s 61(3) of the ACL, a matter that has already been addressed. [128] But Mr Williams also contended that the primary Judge denied Scenic procedural fairness by applying the finding as to Mr Moore’s particular purpose to all other Group Members. He contended that the “particular purpose”, if any, made known to Scenic by each Group Member was not a common question and required evidence from each Group Member before a finding could be made in relation to that Group Member. It was therefore not open to the primary Judge, independently of the issue concerning s 61(3) of the ACL, to find that Scenic contravened the Purpose Guarantee (except in Mr Moore’s case).

As has been pointed out, one of the difficulties with these proceedings is that some “common questions” identified in the Statement of Issues are not in truth common to Mr Moore and Group Members. Mr Williams was correct to submit that in principle a finding that Mr Moore impliedly made known a particular purpose for which Scenic’s services were being acquired would not necessarily apply to each of the Group Members. Not all Group Members, for example, might have seen the Brochure or paid attention to any of Scenic’s advertising, matters upon which the primary Judge relied in deciding that Mr Moore had made known his particular purpose to Scenic. [129]

The obstacle confronting Mr Williams is that the complaint about a denial of procedural fairness has been made very late in the piece and appears to be inconsistent with the manner in which the proceedings were conducted. Mr Moore pleaded in the first version of the statement of claim filed in July 2014 that he and the Group Members:

The particulars to this allegation stated that the purpose was made known by the nature of the relationship between Mr Moore and Group Members and Scenic, the transactions between Mr Moore and Group Members and Scenic and the conduct of Mr Moore and Group Members in booking and paying for cruise holidays. This allegation remained unaltered in the 3FASC. It is clear enough from the pleading that Mr Moore proposed to prove the allegation by relying on circumstances common to Mr Moore and all Group Members.

Scenic’s defence to all versions of the statement of claim admitted that Mr Moore and the Group Members:

As has been noted, [130] Scenic unsuccessfully applied pursuant to s 168 of the Civil Procedure Act for directions establishing sub-groups and appointing persons to be the sub-group representatives on behalf of the Group Members. The judgment of Beech-Jones J rejecting the application did not identify “particular purpose” as an issue identified by Scenic as requiring the establishment of sub-groups. In any case, as has been pointed out, Scenic did not seek leave to appeal from the interlocutory decision and the attempt to raise the issue of the sub-groups in the appeal came far too late.

At a directions hearing held before the primary Judge on 12 February 2016, counsel appearing for Scenic raised concerns about questions identified in the Statement of Issues that he said were not common to Mr Moore and all Group Members. The transcript indicates that the concerns expressed related to Questions 15-20, which addressed Mr Moore’s contention that certain Terms and Conditions were unconscionable or unfair. No concerns appear to have been raised at the hearing about questions addressing Mr Moore’s claim on behalf of himself and all Group Members that Scenic contravened the Purpose Guarantee.

The primary Judge recorded in the Primary Judgment that the hearing had been conducted on the basis that his Honour would determine not only Mr Moore’s claim “but a number of questions which the parties agree are likely to arise with respect to the claims of [G]roup [M]embers”. [131] Those questions were incorporated in the Statement of Issues in its final form. [132]

Whatever the deficiencies there may have been in the drafting of the Statement of Issues, it is apparent that the hearing was conducted on the basis that it was open to the primary Judge to find that the particular purpose for which the services were being acquired was impliedly made known to Scenic not only by Mr Moore but by all Group Members. In particular, Question 8 asked whether in respect of each of the cruises Scenic contravened the Purpose Guarantee. A substantive answer could not be given to Question 8 without the primary Judge making a finding as to the particular purpose made known to Scenic by each Group Member.

The answers to the questions in the Statement of Issues were settled by the primary Judge at the hearing on 15 November 2013 following delivery of the Primary Judgment. The answers to Question 8 recorded that Scenic did not comply with the Purpose Guarantee in respect to Group Members on each of Cruises 1-9 and 11. Question 22 recorded that the answers to Question 8 were common to all Group Members who resided in Australia and Vanuatu. Scenic made no submissions to the primary Judge at the hearing that the answers were inappropriate on the ground that non-compliance with the Purpose Guarantee was not an issue in contest before his Honour. If Scenic’s representatives considered that the proposed answers travelled beyond the issues litigated at the hearing, they might have been expected to say so.

For these reasons the primary Judge’s finding that each Group Member made known the particular purpose for which he or she was acquiring services from Scenic did not involve any denial of procedural fairness to Scenic.

Scenic challenges the findings made by the primary Judge that the services provided by Scenic on Cruises 1-9 and 11 were not reasonably fit for the particular purpose made known to Scenic by Group Members who were participants in those cruises. Mr Williams stated that Scenic accepted the findings of primary fact made by his Honour but disputed the conclusion.

This is not a case which rests on findings as to the credibility of witnesses. This Court is therefore not constrained by the principles articulated in cases such as Fox v Percy. [133] It is not necessary for Scenic, in order to challenge the primary Judge’s conclusions on fitness for purpose, to demonstrate that they are “glaringly improbable” or “contrary to compelling inferences”. [134]

The determination made by the primary Judge that the services provided by Scenic were not “reasonably fit” for the particular purpose made known by Group Members involved the exercise of an evaluative judgment. Not all judges applying the same criteria and weighing the relevant considerations would necessarily reach the same conclusion as to whether the services provided by Scenic in relation to each of the cruises were reasonably fit for the particular purpose made known by the passengers.

But this does not mean that the primary Judge’s finding is to be characterised as an exercise of discretion reviewable only on the principles stated in House v King. [135] The question as to whether the services provided by Scenic were not “reasonably fit” for the particular purpose made known by Group Members must be answered by applying the express statutory criterion. While this is necessarily the product of an evaluative judgment it admits of only one legally correct answer. [136] The review of the primary Judge’s finding is therefore to be conducted in accordance with the principles stated in Warren v Coombes. [137] Due respect is to be paid to the conclusions reached by the primary Judge, but the appellate court must make its own judgment as to the proper inferences to be drawn from the established facts and give effect to its own conclusions if they differ from those of the primary Judge. [138]

Before an appellate court undertaking an appeal by way of rehearing [139] can interfere with findings made by a trial judge error must be established. [140] In determining whether error has been shown in a case such as the present the approach to be taken is that described by Allsop J in Branir Pty Ltd v Owston Nominees (No 2) Pty Ltd: [141]

In my view this is a case in which the primary Judge did have a marked advantage in making the evaluative judgment as to whether the services provided by Scenic were reasonably fit for the particular purpose. His Honour heard evidence from Mr Moore and a number of Group Members as to their understanding of the purpose made known to Scenic and their expectations founded on their reading of the Brochure and their dealings with Scenic. Evidence of this kind cannot be decisive on the question of whether Scenic’s services were reasonably fit for the purpose. But the evidence could properly inform the primary Judge’s evaluative judgment and justifies this Court in giving his Honour’s assessment a significant degree of respect. [142]

The review by the Court must be undertaken in the light of the submissions made by Scenic. It is striking that although Scenic placed great emphasis on challenging the primary Judge’s findings and conclusions relating to the Care Guarantee, it said very little in support of its challenge to the specific findings that Scenic’s services were not reasonably fit for the purpose. Scenic’s written submissions in relation to Cruise 1, for example, devoted a total of ten pages to its challenge to the finding that Scenic failed to comply with the Care Guarantee because it failed to inform passengers before the cruise commenced that there was a significant chance that the itinerary would be disrupted. Yet Scenic’s written submissions did not specifically address the finding that the services provided in connection with Cruise 1 were not reasonably fit for purpose. It would seem that this course was taken because Scenic chose to rely on its (unsuccessful) contention that contravention of the Purpose Guarantee was not in issue in the proceedings except in relation to Mr Moore’s claim.

Indeed on my reading of Scenic’s written submissions, subject to two exceptions, it advanced no arguments challenging the primary Judge’s findings that the services it actually provided were not reasonably fit for the particular purpose made known by Group Members. Specifically, no such arguments were advanced in relation to Cruises 1, 4-9 and 11, except for the submissions made in Mr Moore’s own case (which have already been considered). The written submissions concerning Cruises 1, 4-9 and 11 addressed only the state of Scenic’s knowledge of adverse conditions threatening each cruise and whether Scenic should have informed passengers about any likely disruptions to scheduled itineraries and given them an opportunity to cancel or take other action. Scenic’s oral submissions did not take the argument on reasonable fitness for purpose any further.

The two exceptions to which I have referred concern Scenic’s challenge in its written submissions to the findings that the services supplied in connection with Cruises 2 and 3 failed to comply with the Purpose Guarantee. The submissions were, however, very brief. They appear to have been made because the primary Judge made no findings that Scenic contravened the Care Guarantee in relation to Cruises 2 and 3 (but did so in relation to Cruises 1, 4-9 and 11).

In the light of the limited scope of Scenic’s submissions I propose to explain the primary Judge’s reasoning in relation to Cruise 1 and to summarise briefly his Honour’s approach to Cruises 4-9 and 11. I then deal separately with the findings concerning Cruises 2 and 3.

The primary Judgment described the itinerary for 14 day South of France river cruise as follows: [143]

His Honour made a series of detailed findings as to the events that occurred, including the following: [144]

The primary Judge summarised his findings as follows: [145]

His Honour concluded that the services provided by Scenic were “wholly unfit” for the particular purpose made known to Scenic: [146]

No basis has been shown for disturbing these findings.

Cruise 4 was scheduled to proceed from Amsterdam to Budapest on the Scenic Ruby, departing on 27 May 2013. The primary Judge found that passengers on this cruise had only three days of cruising, one of which was incomplete. [147] From the fourth day all touring was done by coach. The passengers were accommodated on three different vessels and at a hotel in Budapest. The primary Judge concluded as follows: [148]

Cruise 5 was scheduled to proceed from Budapest to Amsterdam on the Scenic Sapphire, departing from Budapest on 27 May 2013. The primary Judge found that on eight out of ten cruising days there was no cruising at all with the touring being carried out by coach. [149] The passengers were obliged to change ships on two occasions with lengthy coach trips to effect the changes. His Honour concluded that the number of days on which the cruise was interrupted was “very, very substantial”. [150] In view of the description of Cruise 5 in the documentation his Honour was satisfied that the services provided by Scenic to the passengers on this cruise were not reasonably fit for the particular purpose made known by them. [151] No basis has been shown for disturbing this finding.

Cruise 6 was scheduled to proceed from Amsterdam to Budapest on the Scenic Diamond, departing on 29 May 2013. The primary Judge found that cruising occurred on only three days, one of which involved “partial and incomplete” cruising. [152] On ten days passengers stayed on board and took coach tours some of which involved very lengthy road trips. His Honour concluded as follows: [153]

Cruise 7 was to proceed along the Budapest to Amsterdam route on the Scenic Sapphire departing on 29 May 2013. The primary Judge made the following findings: [154]

The findings in relation to Scenic’s contravention of the Purpose Guarantee in relation to Cruise 8 have already been addressed. [155]

Cruise 9 was to travel from Budapest to Amsterdam on the Amadeus Silver, leaving on 8 June 2013. The primary Judge made the following findings: [156]

Cruise 11 was to proceed from Budapest to Amsterdam on the Scenic Sapphire, leaving on 10 June 2013. The primary Judge made the following findings: [157]

Cruise 2 was to proceed from Budapest to Amsterdam on the Scenic Jewel departing on 20 May 2013. The primary Judge found that from 20 to 28 May the cruise proceeded as scheduled. On 28 May the vessel began an “enforced stay” at Bamberg, remaining there until 31 May. The primary Judge inferred from the evidence given in relation to other cruises that the Scenic Jewel was docked in an unattractive industrial area which had a “foul smell”. Since the vessel was docked between other ships passengers had no outlook from their cabins and also had little privacy. On 29 May instead of cruising to Würzberg the passengers travelled there by coach and returned to the vessel. On 31 May, passengers disembarked the Scenic Jewel and travelled four hours by coach to Rüdesheim, where they boarded the Scenic Ruby. They then cruised along the Main and Rhine Rivers to Cologne. Thereafter Cruise 2 proceeded as scheduled until it ended in Amsterdam.

The primary Judge found that Scenic contravened the Purpose Guarantee for the following reasons: [158]

Scenic submitted that the evidence indicated that for the period the Scenic Jewel was docked in Bamberg some of its scheduled cruising was to take place at night. This is the only point made in Scenic’s written submissions, except for the argument that the passengers on Cruise 2 were bound by the Terms and Conditions and thus must be taken to have accepted the prospect of adverse weather conditions.

Contrary to Scenic’s submissions, the published itinerary for Cruise 2 did not indicate that part of the cruising between 28 and 31 May would take place at night. On the primary Judge’s findings, the passengers were deprived of cruising on four days out of a scheduled 12 day cruise. During that period the passengers were subjected to an unpleasant enforced stay in Bamberg and deprived of the opportunity for leisurely and comfortable sightseeing.

The services provided by Scenic in connection with Cruise 2 came closer to being reasonably fit for the particular purpose than the services provided in connection with Cruises 1, 4-9 and 11. Nonetheless, having regard to the significant disruptions to the scheduled itinerary and the unpleasantness of the enforced stay in Bamberg, I am not prepared to conclude that the primary Judge erred in finding that Scenic contravened the Purpose Guarantee.

Cruise 3 was to proceed from Amsterdam to Budapest on the Amadeus Silver, departing on 25 May 2013. The primary Judge made the following findings: [159]

Scenic’s written submissions merely said that it relied on the same arguments as it advanced in relation to Cruise 2. In my view the primary Judge’s finding concerning Cruise was amply justified.

The elements of a claim founded on a failure to comply with the Result Guarantee have been explained earlier in this judgment. [160] The primary Judge dealt briefly with Mr Moore’s case on the Result Guarantee on the basis that the same conclusion would be reached for each cruise as with Mr Moore’s case on the Purpose Guarantee. [161]

The primary Judge noted that Scenic made no specific submission that Mr Moore and Group Members did not wish to achieve the result promised by Scenic in its Brochure. [162] His Honour found that Mr Moore: [163]

His Honour concluded that for the same reasons he gave in relation to the Purpose Guarantee Scenic breached the Result Guarantee by failing to provide services of a nature and quality that might reasonably be expected to achieve the result Mr Moore and the Group Members wished to achieve. [166]

Scenic made no submission that the primary Judge’s findings that Scenic failed to comply with the Result Guarantee should be set aside if its challenge to the findings in relation to the Purpose Guarantee failed. In taking this course Scenic may simply have recognised that its failure to comply with the Result Guarantee adds nothing material to a finding that it failed to comply with the Purpose Guarantee. In any event, no basis has been established for overturning his Honour’s findings that Scenic contravened the Result Guarantee.

The elements of a claim founded on a failure to comply with the Care Guarantee have been set out earlier. [167] The primary Judge summarised Mr Moore’s argument that Scenic failed to comply with the Care Guarantee prior to commencement of the cruises as follows: [168]

His Honour found that Scenic failed to comply with the Care Guarantee prior to embarkation on Cruises 1, 8 (Mr Moore’s cruise), 9 and 11. I shall briefly address each of these findings, starting with Cruise 8.

The primary Judge recounted the contents of a number of internal emails sent by Mr Brown, Scenic’s General Manager, Operations and Administration, on Sunday 2 June 2013, the day before Cruise 8 was scheduled to depart. One of the emails was as follows: [169]

On the basis of the email exchanges the primary Judge found that:

In addressing Mr Moore’s personal claim based on Scenic’s alleged contravention of the Care Guarantee, the primary Judge found that there was “simply no reason in the evidence advanced, which was an adequate justification of the decision of Scenic not to cancel [Cruise 8]”. [170] Its failure to do so was a clear demonstration of the provision of the services without due care and skill: [171]

It is important to appreciate the issue his Honour was required to determine. It was not whether Scenic owed Mr Moore a duty to exercise reasonable care when making decisions to proceed with a cruise or cancel it. Nor was the issue whether Scenic’s decision to proceed with Cruise 8 in the face of information available to it on 2 June 2013 breached any such duty. This was not the case pleaded or conducted by Mr Moore. The issue was whether the services supplied or to be supplied by Scenic to Mr Moore in advance of the commencement of Cruise 8 were supplied with due care and skill. The threshold question is therefore what services were supplied or were to be supplied by Scenic to passengers in advance of embarkation.

The primary Judge’s finding appears to depend on his view that the services to be supplied by Scenic to passengers on Cruise 8 prior to embarkation included providing information on an ongoing basis as to circumstances that would reasonably be thought likely to cause disruptions to their scheduled itinerary. The services to be supplied by Scenic extended to prompt notification to passengers of a decision to cancel the cruise because of circumstances beyond Scenic’s control. For the reasons I have given the services Scenic was to supply to passengers booked on Cruise 8 did not include providing information prior to embarkation from time to time of likely disruptions to the scheduled itinerary.

If Scenic knew or should have known prior to embarkation of likely disruptions to the schedule itinerary but did not cancel Cruise 8, it ran a significant risk of failing to comply with the Purpose and Result Guarantees. That risk materialised. But the failure to keep passengers informed of likely disruptions and the decision not to cancel the cruise did not constitute a failure to comply with the Care Guarantee.

The primary Judge found that shortly before Cruise 1 was scheduled to commence on 19 May 2013, Scenic knew or ought to have known that there was a “significant chance of a substantial disruption” to Cruise 1. [173] Thus Scenic, had it acted with due care and skill, should have contacted passengers no later than 16 May 2013. Scenic should have informed the passengers: [174]

In my view, the services Scenic supplied or was to supply to the passengers on Cruise 1 for the purposes of the Care Guarantee did not include providing the information identified by the primary Judge. The finding that Scenic failed to comply with the Care Guarantee in relation to Cruise 1 therefore should be set aside.

Cruise 9 departed Amsterdam on 8 June 2013. The primary Judge found that no later than 7 June 2013, one day before the cruise commenced, the passengers should have been provided with information indicating that there was “a real prospect of the cruise being significantly interrupted”. That information should have been accompanied, so his Honour found, by an option to cancel. [175] In the absence of adequate information being provided, Scenic failed to comply with the Care Guarantee. For the reasons given in relation to Cruise 8, these findings do not justify concluding that Scenic breached the Care Guarantee.

Cruise 11 departed from Budapest on 10 June 2013. On 7 June 2013, Scenic wrote to passengers informing them that the Scenic Sapphire would not be able to cruise into Budapest as scheduled and that they would travel by coach to Vienna to board the Scenic Sapphire there. The primary Judge found that by 8 June 2013, the passengers “ought to have been able to cancel their tour had proper information been provided”. [176] Scenic was:

For the reasons given in relation to Cruise 8, the findings of fact made by the primary Judge do not justify concluding that Scenic breached the Care Guarantee by its pre-embarkation acts or omissions.

The primary Judge concluded that Scenic failed to comply with the Care Guarantee in relation to Cruise 4 because of its post-embarkation conduct. His Honour found that Cruise 4, which commenced on 27 May 2013 from Amsterdam, was unable to continue beyond Mainz on and after 30 May 2013, the third day of the scheduled cruise. Had Scenic’s operations staff taken steps to inform themselves at that time as to river conditions and weather forecasts, it would have been apparent that the passengers on Cruise 4 would experience significant interruptions to their schedule itinerary (as indeed turned out to be the case). [179] In his Honour’s view: [180]

Having regard to the primary Judge’s finding that Scenic did not advise passengers of likely serious disruptions to the scheduled itinerary of which it should have been aware, his Honour was justified in concluding that Scenic failed to comply with the Care Guarantee. As I have explained, this conclusion does not necessarily mean that the passengers on Cruise 4 were entitled to cancel the cruise or to claim damages by reason of Scenic’s failure to comply with the Care Guarantee. It is difficult to see how any relief available for a post-embarkation failure to comply with the Care Guarantee could be more valuable than the relief available for a failure to comply with the Purpose and Result Guarantees. As will be seen, in the present case that relief is confined to compensation pursuant to s 267(3)(b) of the ACL for reduction in the value of the services supplied below the price paid by the passengers.

Cruise 5 was scheduled to depart from Budapest on 27 May 2013. The primary Judge found that by 2 June 2013, Scenic was aware that navigation on the Danube River and the Rhine River was likely to be significantly disrupted and that the Scenic Sapphire was unlikely to be able to move from its berth in Krems. [181] His Honour also found that the only information provided to passengers was in a letter of 1 June 2013 which “did not convey an accurate picture about Scenic’s ships or the state of the waterways. [182]

On the basis of these findings his Honour concluded that there was no reasonable prospect by 2 June 2013 that the Cruise Services could be provided. Thus, so his Honour found, the cruise should have been cancelled and Scenic’s failure to do so constituted a contravention of the Care Guarantee. [183]

For the reasons given in relation to Cruise 4, I consider that there was no error in the primary Judge concluding that Scenic’s failure to provide timely information as to known likely substantial disruptions to the schedule itinerary contravened the Care Guarantee. But I do not think it follows that the contravention consisted of Scenic’s failure to cancel the cruise. Quite apart from the matters to which I have already referred, in the absence of danger to the passengers’ safety or physical well-being, it is difficult to see why a failure to provide timely information as to likely disruptions to the services to be supplied by Scenic should require Scenic to cancel the cruise. Such a decision would involve a multitude of considerations, not least the welfare of passengers who, depending on what is meant by cancellation of the cruise, might find themselves deposited in a destination not of their choice without any arrangements in place for accommodation or onward travel.

Scenic’s post-embarkation failure to comply with the Care Guarantee in the case of Cruise 5 consisted of its failure to provide passengers with timely information as to likely disruptions to the scheduled itinerary of which Scenic knew or ought to have known. As with Cruise 4, the entitlement of passengers to relief depends on factual matters in respect of which no findings have yet been made. In any event, it is highly unlikely that any available remedies could be more valuable or extensive than those flowing from Scenic’s contraventions of the Purpose and Result Guarantees.

Cruise 6 departed from Amsterdam on 29 May 2013. The primary Judge found that by 31 May 2013, the exercise of due care and skill required Scenic to inform its passengers that there was a “significant prospect” that Cruise 6 would be unable to proceed in accordance with the scheduled itinerary. [184] His Honour also found that Scenic did not provide information “in any way which approached a description of the reality of the circumstances”. [185] On the basis of these findings, the position is the same as Scenic’s contravention of the Care Guarantee in relation to Cruises 4 and 5.

Cruise 7 departed from Budapest on 29 May 2013. The primary Judge found that by 31 May 2013, Scenic should have informed passengers of likely disruptions to the scheduled itinerary but did not do so. On the basis of these findings, the position is the same in relation to Cruises 4 and 5.

The conclusions I have reached as to the services supplied or to be supplied to the passengers makes it unnecessary to consider Mr Moore’s Notice of Contention.

As the primary Judge observed, the syntax of s 267(1)(c)(ii) of the ACL is not easy to understand. In substance, however, it relevantly provides that a consumer cannot rely on the Purpose or Result Guarantee if the failure to comply occurred only by reason of a cause independent of human control that occurred after the services were supplied. The primary Judge found that the services supplied to Mr Moore commenced when he made the booking in Cruise 8 and continued until his disembarkation from the cruise. [186] Mr Moore, so the primary Judge held, did not rely on Scenic’s failure to comply with the Purpose and Result Guarantees after disembarkation. His case was based on Scenic’s failure to supply the services of the requisite standard during the cruise. It followed that Scenic could not rely on a defence under s 267(1)(c)(ii) of the ACL. [187]

Although it was unnecessary to make a finding as to whether Scenic’s failure to comply with the Purpose and Result Guarantees was due solely to a cause independent of human control, the primary Judge found that flooding and unseasonal rains were not the only causes of Scenic’s failure to comply with the Purpose and Result Guarantees. Other causes were entirely within Scenic’s control. These included its failure to cancel Cruise 8 prior to departure, the decision to use inadequate motor coaches to transfer passengers and the selection of unsuitable docking locations. [188]

Scenic’s notice of appeal contains a ground (Ground 8B) alleging that the primary Judge erred in failing to uphold Scenic’s defence under s 267(1)(c)(ii) of the ACL in relation to Mr Moore’s claims based on contraventions of the Purpose and Result Guarantees. Scenic’s written submissions briefly addressed Ground 8B. The argument seems to be that if Scenic did not contravene the Purpose and Result Guarantees by acts or omissions prior to embarkation, the contraventions could only have been due to causes independent of human control (flooding and abnormal weather conditions) which occurred after the services were supplied. The contention was mentioned by Mr Williams in oral argument but was not developed.

The finding that Scenic failed to comply with the Purpose and Result Guarantees was based on the disparity between the nature and quality of the services Scenic was to provide to passengers booked on the various cruises and the nature and quality of the services supplied after the cruises commenced. The finding required a comparison to be made between the totality of post-embarkation services to be supplied by Scenic and the totality of post-embarkation services actually supplied. In each case services did not terminate (or were not to terminate) until the passengers disembarked. Even if, contrary to the primary Judge’s findings, Scenic’s failure to comply with the Purpose and Result Guarantees was due to causes independent of human control, the failure was not due solely to causes occurring after Scenic supplied the services. The challenge to the primary Judge’s rejection of Scenic’s defence under s 267(1)(c)(ii) of the ACL must be dismissed.

The primary Judge addressed Mr Moore’s own claim for compensation (pursuant to s 267(3) of the ACL) and damages (pursuant to s 267(4)) on the basis that Scenic failed to comply with each of the three Consumer Guarantees in relation to the services supplied in connection with Cruise 8. I have upheld the primary Judge’s finding that Scenic failed to comply with the Purpose and Result Guarantees but I have concluded that his Honour’s finding that Scenic did not comply with the Care Guarantee must be set aside.

Having regard to these conclusions and concessions made by one or both parties in the course of the appeal, it is not necessary to address all the issues on compensation and damages raised by the notice of appeal or the parties’ written submissions. Nonetheless, it is convenient to explain his Honour’s reasoning on the issues debated before him.

A claim for compensation under s 267(3)(b) of the ACL based on a failure to comply will the Consumer Guarantees can only be made if the failure to comply cannot be remedied or is a “major failure” within the meaning of s 268 of the ACL. The primary Judge found that Mr Moore and his fellow passengers on Cruise 8 satisfied s 268(a) of the ACL in that “the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure”. [189] In his Honour’s view, the contrast between the description of the services provided by Scenic and the services which were in fact supplied was such that no reasonable consumer would have gone ahead and acquired the services at the price charged by Scenic. [190] The primary Judge therefore concluded that Scenic’s failure to comply with the Consumer Guarantees was a “major failure”. [191]

Mr Moore submitted to the primary Judge that compensation for reduction in the value of services pursuant to s 267(3) of the ACL should be assessed objectively. He contended that this could be done by calculating the number of days on which he lost the value of the services for which he had paid, and to attribute a portion of the cost of the cruise to each of those days. Mr Moore attributed a rate of $732.66 for each day of the fifteen day cruise, being one fifteenth of the total cost for the cruise of $10,990. Since he claimed to have effectively lost ten days of the cruising experience he claimed $7,326.60 as compensation for reduction in value of the services supplied. [192]

Scenic argued that it was necessary to analyse the activities Mr Moore actually undertook on each day of the cruise and to determine which of those activities he enjoyed. Scenic pointed out that Mr Moore had been warned of possible disruptions prior to embarkation but had elected not to cancel the cruise. Scenic submitted that the best objective assessment of loss was $1,293, the sum calculated by Mr Moore’s insurer. [193]

The primary Judge considered that the price paid by Mr Moore was a “single one” that included all the services on Cruise 8. None of those services was charged for or valued separately. Furthermore, Cruise 8 was the one and only cruise experience that Mr Moore had ever had and he had taken long service leave to join the cruise. [194] In his Honour’s view, Scenic’s failure to provide the services could not “be measured in a piecemeal way”. In order to assess compensation it was necessary to ask: [195]

The primary Judge considered that it was open to conclude that Mr Moore had received no value at all from the recreational services supplied by Scenic: [196]

For these reasons his Honour would have been minded to find that Mr Moore received no value at all within the meaning of s 267(3)(b) of the ACL and that he should be awarded compensation equivalent to the whole of the price he paid for Cruise 8. [197] However, it was appropriate that the award of compensation for Scenic’s contravention of the Purpose and Result Guarantees should be limited to the amount claimed by Mr Moore ($7,326.60). [198] The primary Judge expressed no view as to whether the methodology underlying Mr Moore’s claim for $7,326.60 was sound.

The primary Judge dealt separately with Mr Moore’s claim for compensation based on Scenic’s failure to comply with the Care Guarantee. His Honour considered that if Scenic had provided timely information prior to embarkation about likely interruptions to Cruise 8, Mr Moore would have cancelled the bookings made for his wife and himself. On that basis, his Honour awarded compensation pursuant to s 267(3)(b) of the ACL equivalent to the full amount Mr Moore paid for Cruise 8 ($10,990), plus interest. [199]

The primary Judge recorded that Scenic had submitted that any compensation awarded to Mr Moore should be reduced by the amount paid to him by his insurer ($1,293) but noted that the parties’ submissions paid little attention to the question. Nonetheless his Honour analysed [200] the principal authorities [201] and the terms of Mr Moore’s insurance policy in some detail. His Honour found that the insurer had initially rejected Mr Moore’s claim “for loss of enjoyment”. [202] However, the insurer subsequently reversed its position and paid Mr Moore the sum of $1,293 pursuant to the “Amendment and cancellation expenses” section of the policy, being the “difference between cruise and bus tour”. The insurer’s covering letter stated as follows: [203]

The primary Judge concluded that there was no reason why Scenic should obtain the benefit of an entirely separate contract of insurance taken out by Mr Moore. In his Honour’s view, there was no difference between the position of a plaintiff claiming personal injury damages, whose insurance entitlements are not deducted from any damages award, and Mr Moore’s entitlement to compensation. [204]

Mr Moore submitted to the primary Judge that he was entitled to claim damages for disappointment and distress caused by Scenic’s failure to comply with the Purpose and Result Guarantees pursuant to s 267(4) of the ACL. Scenic’s principal defence was that s 275 of the ACL picked up s 16 of the Civil Liability Act which precludes a claim for damages for non-economic loss unless the claimant’s loss exceeds the threshold of 15 per cent of the most extreme case. Scenic submitted that since Mr Moore’s claim was for “non-economic loss” as defined in the Civil Liability Act and since it was common ground that his loss did not exceed the threshold of 15 per cent of the most serious case, Mr Moore was precluded from claiming damages for disappointment and distress.

The primary Judge noted that Scenic did not dispute that the Consumer Guarantees applied to the supply of services outside Australia. Thus it was not in issue that the Consumer Guarantee applied to services supplied to a consumer outside Australia and that the consequences of a failure to supply services outside Australia were prescribed by the ACL. [205]

The primary Judge considered himself bound by authority to hold that a claim for damages for distress and disappointment not consequent upon physical injury or a psychiatric condition was a claim for “personal injury damages” for the purposes of the Civil Liability Act. [206] Such a claim was therefore within Part 2 of the Civil Liability Act. His Honour also considered himself bound by authority to hold that a claim for damages for disappointment and distress is a claim for “non-economic loss” for the purposes of s 16 of the Civil Liability Act. The primary Judge therefore concluded that: [207]

The primary Judge accepted that a State has power to enact legislation operating extra-territorially. But in his Honour’s view there was nothing in Part 2 of the Civil Liability Act to suggest that it was intended to have that effect. [208] His Honour noted that the context in which the Civil Liability Bill was introduced into Parliament was a perceived crisis in the cost of liability insurance in New South Wales. [209] His Honour considered that the context did not support the contention that s 16 is intended to have an extra-territorial operation. [210] His Honour considered that this conclusion was supported by the reasoning in Insight Vacations (H Ct). [211]

Accordingly, where the events giving rise to an entitlement to damages occurred outside New South Wales, as with Mr Moore’s claim for damages for distress and disappointment, Part 2 of the Civil Liability Act (including s 16) did not apply to the claim. There was therefore no barrier to an award of damages to Mr Moore for disappointment and distress as a result of Scenic’s failure to comply with the Purpose and Result Guarantees.

The primary Judge noted that Mr Moore’s final submissions sought the sum of $2,000 as damages for distress and disappointment. His Honour regarded this as a modest claim and indicated that he would have been disposed to award a larger sum as damages. He therefore assessed damages at the amount claimed by Mr Moore ($2,000). [212]

The primary Judge’s award of $10,990 as compensation pursuant to s 267(3)(b) of the ACL to Mr Moore for reduction in the value of services supplied by Scenic was based on Scenic’s failure to comply with the Care Guarantee in relation to Cruise 8 prior to embarkation. Since I have concluded that Scenic did not contravene the Care Guarantee that award cannot stand.

The primary Judge’s award of $7,326.60 as compensation for Scenic’s failure to comply with the Purpose and Result Guarantees was subsumed by the larger award of compensation based on Scenic’s failure to comply with the Care Guarantee. As I understood Mr Moore’s position, if the award of compensation of $10,990 for Scenic’s contravention of the Care Guarantee cannot stand he seeks in the alternative compensation of $7,326.60 for Scenic’s contravention of the Purpose and Result Guarantees.

Scenic did not dispute that its contravention of the Purpose and Result Guarantees (assuming that finding was upheld) was a “major failure” for the purposes of s 267(3) of the ACL. However, Scenic submitted that the primary Judge erred in his assessment of compensation by failing to assess objectively the reduction in the value of the services supplied by Scenic. Mr Williams pointed out that at the trial Mr Moore accepted and indeed had submitted that compensation for any reduction in the value of services supplied should be assessed objectively. However, Mr Moore’s written submissions at the trial calculated the loss of value simply by allocating a portion of the price to each day of the 15 day cruise and attributing a nil value to each day on which cruising did not take place.

The primary Judge assessed compensation for the contraventions of all three Consumer Guarantees on a similar basis. He took the view that any value to Mr Moore of the uninterrupted cruise for the first few days was “overwhelmed by the unfortunate experiences which followed”. [213] On this basis he would have concluded that Mr Moore received no value at all for Cruise 8 and would have been disposed to award Mr Moore the full amount he paid for his booking on Cruise 8 ($10,990). The only reason the primary Judge gave for awarding a lower sum as compensation for Scenic’s contravention of the Purpose and Result Guarantees was that Mr Moore’s claim was limited to the lower amount.

Mr Abadee accepted during oral argument that the primary Judge assessed the reduction in value of the services supplied by Scenic on the basis of subjective considerations. Mr Abadee also accepted that this approach was erroneous. He acknowledged that the value of the services actually supplied by Scenic (as distinct from those that Scenic was to supply) should have been determined by reference to market considerations. He did not dispute the most obvious means of assessing market value of the services actually provided would be to estimate the amount a fully informed consumer would have been prepared to pay for those services.

Mr Williams submitted that the primary Judge took the approach he did because Mr Moore did not adduce at trial any objective evidence as to the reduction in the value of services supplied by Scenic. The methodology advanced on behalf of Mr Moore to assess compensation was purely arbitrary and did not reflect the market value of the services actually supplied by Scenic. In these circumstances, so Mr Williams argued, this Court should allow the appeal and dismiss Mr Moore’s claim for compensation for loss of value.

Mr Abadee argued against this Court dismissing Mr Moore’s claim for compensation. He submitted that the proceedings should be remitted to enable the primary Judge to reassess compensation for Scenic’s failure to comply with the Purpose and Result Guarantees. Mr Abadee pointed out that the primary Judge had been invited by Mr Moore to apply objective criteria in assessing compensation. He also pointed out that there was some evidence, albeit slight, that would have enabled the primary Judge to assess compensation by reference to market criteria (such as the insurance payout to Mr Moore).

The primary Judge was placed in a difficult position when it came to assessing compensation for Scenic’s contraventions of the Purpose and Result Guarantees. There was little evidence adduced that could have provided a foundation for a market based assessment of the value of services actually supplied by Scenic to Mr Moore. Even so, it is not clear that the primary Judge would have dismissed Mr Moore’s claim for compensation had his Honour applied objective criteria to determine the market value of the services actually supplied by Scenic.

The better course in the interests of justice is to remit to the primary Judge Mr Moore’s claim for compensation under s 267(3)(b) of the ACL for reassessment of the quantum of compensation by reason of Scenic’s contravention of the Purpose and Result Guarantees. It will be a matter for the primary Judge to determine whether Mr Moore should be permitted to adduce further evidence on this issue. As has been noted, [214] no issue arises as to the application of s 16 of the Civil Liability Act because Mr Williams accepted that Mr Moore’s claim for compensation under s 267(3)(b) of the ACL is a claim for economic loss, not for non-economic loss within the meaning of s 16.

As has been seen, [215] the primary Judge rejected Scenic’s argument that the compensation awarded to Mr Moore pursuant to s 267(3)(b) of the ACL should be reduced by the payment he received from his travel insurer. The primary Judge’s final award of compensation was based on Scenic’s breach of the Care Guarantee, although his Honour indicated that he would have awarded a lesser sum as compensation for Scenic’s breach of the Purpose and Result Guarantees. It is not entirely clear whether his Honour’s ruling was intended to apply only to compensation he awarded to Mr Moore for Scenic’s breach of the Care Guarantee, or whether it was intended to apply also to compensation he notionally assessed for Scenic’s breach of the Purpose and Result Guarantees. The better reading of the Primary Judgement is that the ruling was intended to apply to any compensation assessed to Mr Moore under s 267(3)(b) of the ACL, regardless of which breach of the Consumer Guarantees may have entitled him to an award of compensation.

The primary Judge’s assessment of the compensation awarded to Mr Moore pursuant to s 267(3)(b) of the ACL was affected by an error of law. Accordingly the matter is to be remitted to the primary Judge to reassess the quantum of compensation for loss of value. As the primary Judge held that the insurance payment to Mr Moore should be ignored when assessing compensation for loss of value, it is appropriate to deal with Scenic’s challenge to that holding.

Scenic’s written submissions on the appeal only briefly adverted to the question of whether the insurance payout to Mr Moore should be deducted from the award of compensation. Scenic’s submissions acknowledged that insurance payouts are “typically … treated as collateral and irrelevant” but nonetheless contended that the insurance payout to Mr Moore should be offset against any compensation award. Mr Williams at one point in the oral argument in this Court indicated that he intended to address this issue but he did not return to it. The argument was therefore not developed beyond the brief mention in the written submission.

There are two reasons why the insurance payment to Mr Moore should not be deducted from the compensation awarded pursuant to s 267(3)(b) of the ACL. The first is the general principle referred to by the primary Judge that payments under an insurance policy taken out by a plaintiff for his or her own benefit is regarded as independent of and cumulative upon the plaintiff’s right of redress against others. [216] Mr Moore took out and paid for the travel insurance policy prior to embarkation and independently of his arrangements with Scenic. The policy was clearly intended for his own benefit and was not intended to benefit Scenic.

Scenic’s written submissions relied on a single paragraph in the judgment of Meagher JA in Ku-ring-gai Council v Chan [217] to support its argument that the general principle should not be applied in the present case. The principal issue in that case was whether the council, as principal certifying authority, owed the purchasers of residential property a duty of care when issuing an occupation certificate to avoid the purchasers suffering economic loss because of defective building work.

Having concluded that the Council did not owe the purchasers a duty of care, Meagher JA observed that if the Council had been liable for breach of duty:

The second reason is that the payment by the insurer to Mr Moore appears to have been in respect of a different type of loss than the loss for which the primary Judge awarded compensation pursuant to s 267(3)(b) of the ACL. As the primary Judge’s reasons imply, it is not clear why the insurer reversed its original decision to decline Mr Moore’s claim for loss of enjoyment and agreed to pay $1,293 under the policy. His Honour thought that the only section of the policy that was relevant to Mr Moore’s claim was that dealing with “Amendment or Cancellation Costs”. [218] Since this section of the policy entitled Mr Moore to the reasonable costs of having to rearrange a journey or to the unused position of prepaid travel costs in the event of cancellation it is by no means clear that it entitled him to compensation for his experiences on Cruise 8.

Whatever Mr Moore’s strict entitlements under the policy may have been, the insurer’s covering letter to him stated that it paid his claim for “the missed attractions and daylight cruising experiences”. Compensation awarded under s 267(3)(b) of the ACL is for “any reduction in the value of services below the price paid by [Mr Moore]”. The insurance payout was not expressed to be calculated by reference to any reduction in the value of services provided by Scenic. Nor was the Court taken to any evidence suggesting that the payment was intended to compensate for loss of value of the services provided as distinct from Mr Moore’s loss of enjoyment of Cruise 8 by reason of rearrangement or cancellation of the scheduled services and activities. In these circumstances it cannot be said that the insurance payout was for the same loss in respect of which Mr Moore has a right under statute to be compensated by Scenic.

The primary Judge awarded Mr Moore the sum of $2,000 as damages for distress and disappointment caused by Scenic’s failure to comply with the Purpose and Result Guarantees. [219] Scenic did not dispute the quantum of damages but contended that s 275 of the ACL, read with s 16 of the Civil Liability Act, precluded an award of damages for distress and disappointment to Mr Moore.

On the assumption that Scenic failed to comply with the Purpose and Result Guarantees, Scenic’s argument on s 275 of the ACL proceeded by the following steps:

In the alternative to (vi) Scenic submitted that since s 16 of the Civil Liability Act operates as a surrogate federal law, it is not subject to the same extra-territorial requirements or considerations as would apply if the section operated purely as a law of the State. Since the ACL operates extra-territorially, [221] so Mr Williams argued, s 16 of the Civil Liability Act also operates extra-territorially as a surrogate federal law.

Mr Abadee did not dispute that:

Mr Abadee submitted, however, that the primary Judge correctly held that s 275 of the ACL, insofar as it picked up the Civil Liability Act as a surrogate federal law, does so subject to any limitation inherent in the State law. One such limitation, illustrated by Insight Vacations (H Ct), is that s 16 of the Civil Liability Act does not operate extra-territorially. Since both Scenic’s contravention of the Purpose and Result Guarantees and Mr Moore’s loss in the form of disappointment and distress occurred outside Australia, so it was argued, s 16 has no application to his claims for damages for distress and disappointment.

Mr Abadee contended that by picking up s 16 of the Civil Liability Act as a surrogate federal law, s 275 of the ACL does not give s 16 any greater territorial operation than it would otherwise have as a State law. Mr Abadee invoked the general principle that State legislation is presumed not to have extra-territorial operation. There is no reason, so he argued, to read Part 2 of the Civil Liability Act as concerned with personal injuries sustained outside New South Wales. The context in which the legislation was introduced in New South Wales, as the primary Judge observed, was a perceived crisis in the affordability of insurance premiums. It is not necessary to construe s 16 as having extra-territorial operation in order to achieve the desired objective of reducing insurance premiums.

Mr Abadee submitted that another reason for not applying s 16 of the Civil Liability Act to Mr Moore’s damages claim is that his entitlement to claim damages for distress and disappointment is not governed by New South Wales law, but by the lex loci delicti. He submitted that a statutory cause of action created by federal statute is analogous to an action in tort and the plaintiff’s entitlement to damages is therefore governed by the lex loci delicti.

Section 275 of the ACL is curiously worded. [223] It appears to assume that there is or was a contract in existence between the supplier of services and the consumer seeking to enforce the Consumer Guarantees. Yet under the current statutory regime, unlike its predecessor, a consumer may be entitled to claim compensation and damages for a supplier’s failure to comply with one or more of the Consumer Guarantees regardless of whether there is or was a contractual relationship between the supplier and the consumer. [224] The legislative history does not explain this apparent anomaly, but it sheds light on the reasons for introducing the predecessor to what is now s 275 of the ACL. [225]

The predecessor to s 275 of the ACL was s 74(2A) of the Trade Practices Act, which was enacted in 2004. [226] Section 74(2A), which retained its original form until the repeal of the Trade Practices Act, provided as follows:

The Revised Explanatory Memorandum to the Bill introducing s 74(2A) into the Trade Practices Act [227] stated that:

The Revised EM pointed out that the prohibition on misleading or deceptive conduct in s 52 of the Trade Practices Act had the potential to be used as an alternative to an action in negligence. Other provisions which were “similarly capable of being used as an alternative to negligence in a wide range of circumstances” included those in the Trade Practices Act which implied into contracts an obligation to provide services with “due care and skill”. [228] The Revised EM explained that:

The Second Reading Speech for the Bill included the following: [231]

The professional standards law in force in New South Wales in 2004 was the Professional Standards Act 1994 (NSW). A professional against whom a claim was made in contract or tort in relation to services provided to a client could rely on the limitation of liability afforded by the statutory scheme. Prior to the insertion of s 74(2A) into the Trade Practices Act, a professional sued for breach of the implied warranty contained in s 74 was unable to rely on the limitation of liability afforded by the State legislation. Section 74(2A) was clearly intended to enable professionals to invoke the State legislation as a surrogate federal law in order to limit their liability to clients.

The Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No 2) 2010 (Cth) does not explain why s 275 of the ACL follows closely the language of s 74(2A) of the Trade Practices Act notwithstanding the substitution in the ACL of the Consumer Guarantees for the contractual warranties implied by s 74 of the Trade Practices Act. Nor does the Explanatory Memorandum refer to the professional standards legislation. Instead it refers to legislation limiting the liability of providers of recreational services, as follows:

Section 275 of the ACL applies only if there is a failure to comply with one or more of the Consumer Guarantees. In the absence of s 275, the Consumer Guarantees apply to conduct engaged in outside Australia by bodies incorporated or carrying on business in Australia. [232] “Engaging in conduct” includes doing or refusing to do an act and also includes refraining (otherwise than inadvertently) from doing an act. [233] I did not understand Mr Williams to dispute that in the absence of s 275, Scenic would have failed to comply with the Purpose and Result Guarantees if the failure related to services to be supplied outside Australia.

In the absence of s 275 of the ACL, s 16 of the Civil Liability Act would not apply to limit or preclude a supplier’s liability under s 267(4) of the ACL to pay damages to a consumer sustaining loss by reason of the supplier’s failure to comply with the Purpose and Result Guarantees. Since a court hearing such a claim for damages would be exercising federal jurisdiction, s 79 of the Judiciary Act would apply to the proceedings. [234] But s 79 of the Judiciary Act would not require the court to apply s 16 of the Civil Liability Act so as to preclude or limit the supplier’s liability for its failure to comply with the Consumer Guarantees. That is because the consumer’s entitlement to recover damages for any loss or damage caused by the supplier’s failure to comply with a Consumer Guarantees is created by s 267(4) of the ACL. A State law purporting to limit or preclude the consumer’s entitlement would be “irreconcilable” with the Commonwealth law. [235] Thus s 267(4) of the ACL would provide otherwise for the purposes of s 79 of the Judiciary Act and displace the State law.

Similarly, s 131C of the Competition and Consumer Act would not have the effect (in the absence of s 275) of applying s 16 of the Civil Liability Act to preclude a consumer from claiming damages under s 267(4) of the ACL for distress and disappointment. Section 131C evinces an intention that the Competition and Consumer Act (including the ACL) is not intended to cover the field of consumer protection. But s 131C does not avoid the consequences of a direct inconsistency between the Competition and Consumer Act (including the ACL) and a State law. [236] In the absence of s 275 of the ACL, s 16 of the Civil Liability Act (assuming it to be otherwise applicable) would be directly inconsistent with s 267(4) of the ACL.

Section 275(b) appears to be drafted on the assumption that there is or was a contract in existence between the supplier of services and the consumer. As has been pointed out this will not always be the case. In the present case, however, the Terms and Conditions created a contractual relationship between Scenic and Mr Moore. Both parties were content to proceed on the basis that s 275(b) was satisfied because the relevant contract was that constituted by the Terms and Conditions. Both parties also accepted that the proper law of the contract was New South Wales law. Whatever difficulties s 275 might present in a case where there was no contractual relationship between the supplier of services and the consumer therefore do not arise here.

The judgment of the High Court in Insight Vacations (H Ct) is of central importance to the issues arising in relation to Mr Moore’s claim for damages for disappointment and distress. In that case, Mrs Young bought a European tour package from Insight Vacations. While travelling by coach from Prague to Budapest she was injured when the driver braked suddenly. Mrs Young sued Insight Vacations on the grounds that s 74(1) of the Trade Practices Act implied a term in the contract between them that the services supplied by Insight Vacations would be rendered with due care and skill and that implied term had been breached. Mrs Young succeeded in the District Court and Insight Vacation’s appeal to the Court of Appeal was dismissed. [237] Insight Vacations was granted special leave to appeal to the High Court.

In the High Court Insight Vacations relied on an exemption clause in its contract with Mrs Young. It submitted that since the proper law of the contract was the law of New South Wales (as was common ground), s 74(2A) of the Trade Practices Act picked up and applied s 5N of the Civil Liability Act as a surrogate federal law. Section 5N provided as follows:

The High Court explained that s 74(2A) of the Trade Practices Act picked up and applied, as a surrogate federal law, a relevant law of New South Wales. The law that was applied was a law of New South Wales that applied to limit or preclude liability for a breach of a term of the contract other than the term implied by s 74(1). The State law that applied to limit or preclude liability for that breach was then applied, by force of s 74(2A), to limit or preclude liability for breach of the term implied by s 74(1) in the same was as that State law applied to limit or preclude liability for breach of another term of the contract. [238]

The High Court held that s 5N of the Civil Liability Act was not a law that was picked up and applied by s 74(2A) of the Trade Practices Act. The reason was that s 5N did not itself provide exclusion, construction, restriction or modification of liability, but merely permitted the parties to a contract to exclude or restrict certain liabilities. [239] As the High Court noted, this conclusion was enough of itself to resolve the appeal. [240] Nonetheless, the Court went on to consider whether there were other reasons why Insight Vacation’s appeal had to fail.

The High Court held that even if s 74(2A) of the Trade Practices Act picked up and applied s 5N of the Civil Liability Act as a surrogate federal law, s 5N should be construed as applying only to contracts for the supply of recreation services in New South Wales. [241] Although this holding is arguably not part of the ratio decidendi of Insight Vacations (H Ct), the High Court has said that lower courts should follow “seriously considered dicta” of a majority of the Court. [242] The observations in Insight Vacations (H Ct) were clearly seriously considered and were made by a unanimous Court.

Insight Vacations (H Ct) pointed out that, in contrast to the Trade Practices Act, [243] the Civil Liability Act made no express provision for any extra-territorial operation of its provisions. Their Honours considered that in determining any limitation on the operation of s 5N of the Civil Liability Act it was necessary to take into account s 12(1)(b) of the Interpretation Act 1987 (NSW) (Interpretation Act), which provides as follows:

The Court considered that s 12(1)(b) “may be reason enough to read s 5N as subject to a geographic limitation”. However, the Court observed that s 12(1)(b) did not identify which of the several possible elements of s 5N was to be read as a “matter or thing in New South Wales”. The possibilities included the proper law of the contract, the place where the contract was made and the place where the services were to be supplied. [244] The Court stated that it was necessary to reconcile the generality of the language of s 5N with the geographical limitation to which the legislative power of a State Parliament is subject. That reconciliation required a consideration of the text and subject matter of the Civil Liability Act. [245]

The Court addressed the possibility that the reconciliation could be achieved by limiting the operation of the relevant provision to a contract the proper law of which is that of the enacting State. The Court said that this approach is appropriate in some cases, as where legislation modifies or invalidates contractual rights “as an end in itself”, [246] but is not appropriate in others. It is not appropriate, for example, where legislation avoids agreements for non-compliance with statutory requirements. To limit legislation of this kind to contracts the proper law of which is that of the enacting State would permit “easy evasion of the reach of the avoiding provision”. [247]

The Court continued as follows: [248]

In the Court’s view, Div 5 of Part 1A of the Civil Liability Act and s 5N in particular were directed to limiting liability for negligence in relation to recreational activities by permitting the parties to a contract stipulate for the exclusion or modification of any liability resulting from an express or implied warranty that services will be rendered with reasonable care. The definition of “recreational activity” referred to pursuits or activities engaged in at a place, such as a park or public open space. These references pointed decisively to reading s 5N: [249]

The following propositions can be drawn from Insight Vacations (H Ct) in relation to the operation of s 74(2A) of the Trade Practices Act:

Once the conditions for the application of s 275 of the ACL are satisfied (as they are in this case) s 275 provides that the proper law applies to limit or preclude liability for the supplier’s failure to comply with the Consumer Guarantees:

It may not be an entirely straightforward matter to apply the reasoning in Insight Vacations (H Ct) to s 275 of the ACL. Section 74(2A) of the Trade Practices Act, which was in issue in Insight Vacations (H Ct), picked up and applied as a surrogate federal law a State law which applied to limit or preclude liability for a breach of another term of the contract for the supply of services. Since s 74(1) of the Trade Practices Act implied a warranty into the contract for the supply of services to the consumer, it was clear which contract s 74(2A) was referring to. [250]

Section 275 of the ACL may be difficult to apply in a case where a supplier of services contravenes the Consumer Guarantees without having previously had a contractual relationship with the consumer. In that case, one possibility is that s 275 does not pick up any State law as a surrogate federal law because there is no contract for the supply of services and therefore no means of applying the comparison required by the last part of s 275. Another possibility is that the matter is to be approached by assuming, contrary to the fact, that a contract was in existence between the parties and asking whether the relevant State law would apply to limit or preclude liability for a breach of that hypothetical contract. The problem does not arise in the present case because the parties accepted that the question posed by s 275 is whether s 16 of the Civil Liability Act would apply to limit or preclude Scenic’s liability for a breach of a term of the contract between it and Mr Moore. That contract comprised the Terms and Conditions.

Section 275 of the ACL requires the Court to consider the way in which the relevant State law applies to preclude or limit the supplier’s liability for “a breach of a term of the contract for the supply of services”. The Court must perform this task even though there is no claim made by the consumer for breach of contract. In order to apply s 275, it is therefore necessary for the Court to address a hypothetical situation. The most natural reading of the statutory language is that the Court is required to consider how, if at all, the relevant State law would apply to limit or preclude the supplier’s liability if it breached a term of the contract and the consumer sought the same relief in a contract claim as he or she seeks for breach of the Consumer Guarantees. To put the matter another way, s 275 of the ACL requires the Court to consider how (if at all) the relevant State law would limit or preclude the supplier’s liability if the consumer had made a claim in contract for the same relief as he or she seeks in the claim for breach of the Consumer Guarantees.

The relevant State law in the present case is s 16(1) of the Civil Liability Act. In some circumstances s 16(1) would not apply to limit or preclude Scenic’s liability to Mr Moore for breach of contract. For example, if Scenic’s breach of contract caused Mr Moore to sustain loss of or damage to property his claim would be for economic loss. Since s 16(1) applies only to an award of damages for non-economic loss, it would not limit or preclude Scenic’s contractual liability to Mr Moore in respect of property damage.

Mr Moore’s claim pursuant to s 267(4) of the ACL seeks damages for disappointment and distress occasioned by Scenic’s breach of the Purpose and Result Guarantees. That claim, as the parties accept, is a claim for “personal injury damages” as defined in s 11 of the Civil Liability Act. It is also common ground that Mr Moore’s claim for damages for disappointment and distress is a claim for non-economic loss for the purposes of s 16(1) of the Civil Liability Act.

In the present case Scenic’s breach of the Purpose Guarantee consisted of its failure to provide services that were reasonably fit for the purpose for which Mr Moore acquired the services. Scenic’s breach of the Result Guarantee consisted of its failure to provide services that could reasonably be expected to achieve the result Mr Moore wished to achieve. In each case the breach consisted of conduct that took place outside Australia.

On one view, it is not possible to determine whether s 16(1) of the Civil Liability Act would limit or preclude Scenic’s contractual liability for conduct outside Australia until the geographical limitations (if any) on the operation of s 16(1) are ascertained. However, Insight Vacations (H Ct) suggests that the question of whether s 16(1) would limit or preclude Scenic’s contractual liability for a breach occurring outside Australia is to be addressed in the first instance without reference to any geographical limitation on the operation of s 16(1). If the Court holds that as a matter of construction s 16(1) limits or precludes Scenic’s liability for the contractual breach, it must then consider any geographical limitation on the operation of the provision.

Section 16(1) of the Civil Liability Act is a law which would limit or preclude Scenic’s liability to Mr Moore for breach of the Terms and Conditions. Unlike s 5N of the Civil Liability Act considered in Insight Vacations (H Ct), s 16(1) does not merely authorise the parties to a contract to include an exemption clause in the contract. Section 16 prohibits an award of damages for non-economic loss unless the threshold requirement of 15 per cent of a “most extreme case” is met. It follows, subject to any geographical limitation, that s 16(1) applies to limit or preclude Scenic’s liability for its failure to comply with the Purpose and Result Guarantees in the same way as s 16(1) would apply to limit or preclude liability for a breach of the contract between Scenic and Mr Moore.

The next question is whether s 16(1) of the Civil Liability Act is subject to any geographical limitation and, if so, what. As has been noted, Insight Vacations (H Ct) requires this task be approached independently of the terms of the Competition and Consumer Act which give the ACL extra-territorial operation. That is, the Civil Liability Act is to be construed as a State statute uninfluenced by the extra-territorial operation of the ACL under Commonwealth law.

The general principle is that in an action for breach of contract brought in a New South Wales Court, the proper law of the contract determines the relief to which the plaintiff is entitled. [251] Thus if the defendant’s breach of contract occurs outside Australia, a New South Wales court determines whether the plaintiff is entitled to damages by reference to the proper law of the contract. While quantification of contractual damages was once considered to be procedural and therefore governed by the law of forum, the High Court has held that all questions relating to the kinds of damages or the quantum of damages that may be recovered should be regarded as substantive matters. [252]

Choice of law principles suggest that since New South Wales was the proper law of the contract between Scenic and Mr Moore, s 16(1) of the Civil Liability Act as the relevant law of New South Wales would limit or preclude a claim by Mr Moore for non-economic loss founded on Scenic’s breach of the contract by reason of conduct occurring outside Australia. But this was not the approach taken by the High Court in Insight Vacations (H Ct). In that case New South Wales law was the proper law of the contract but that finding did not determine whether s 5N of the Civil Liability Act applied to limit or preclude the supplier’s liability for breach of the contract with the consumer. The answer to that question, so the High Court held, depended on the proper construction of s 5N. It follows that the question here is whether s 16(1) of the Civil Liability Act, on its proper construction, applies to limit or preclude Scenic’s contractual liability for non-economic loss arising from a breach of contract which occurred outside Australia.

The High Court’s construction of s 5N of the Civil Liability Act in Insight Vacations (H Ct) was very heavily influenced by the definition of “recreational activity”. The definition was construed to refer to activities conducted in New South Wales. It followed that the statutory concept of “recreational services” directed attention to the place of performance of the contract, namely New South Wales. Since s 5N was concerned with contracts for the supply of recreational services, it was to be read as “hinging on the place of performance”. [253]

Section 12(1)(b) of the Interpretation Act states that in any Act a reference to any “other matter or thing is a reference to such … other matter or thing in and of New South Wales”. As was pointed out in Insight Vacations (H Ct), s 12(1)(b) does not identify a specific “matter or thing that is to provide the connection with New South Wales. As has been noted, [254] the High Court considered that s 5N of the Civil Liability Act incorporated a number of possible elements that could be understood as a “matter or thing in New South Wales”.

Section 16(1) of the Civil Liability Act states that no damages may be awarded for non-economic loss unless the claimant satisfies the statutory threshold. The reference to the “damages that may be awarded” implies that the command in s 16(1) is directed to a court. This is confirmed by s 11A which provides that:

The judgment in Insight Vacations (H Ct) expressly recognises that the relevant “matter or thing in and of New South Wales” for the purposes of s 12(1)(b) of the Interpretation Act may be a claim in a New South Wales court. [255] When s 16(1) of the Civil Liability Act is read with s 11A and the definition of “court” in s 3, [256] the relevant matter or thing in and of New South Wales is seen to be the awarding of damages in New South Wales by a court or tribunal. [257] In my opinion, there is no contextual reason for reading s 16(1) as subject to any other geographical limitation.

It follows that s 16(1) of the Civil Liability Act would apply to limit or preclude Scenic’s liability to Mr Moore for a breach of the contract between them giving rise to a claim for non-economic loss notwithstanding that the breach occurred outside Australia. Accordingly, s 275 of the ACL applies s 16(1) as a surrogate federal law to limit or preclude Scenic’s liability to Mr Moore for damages for non-economic loss caused by Scenic’s breach of the Purpose and Result Guarantees notwithstanding that the breach occurred outside Australia.

There is no dispute that Mr Moore cannot satisfy the threshold requirement specified in s 16(1). Accordingly s 16(1) precludes the Court hearing Mr Moore’s claim from awarding damages for the distress and disappointment occasioned by Scenic’s breach of the Purpose and Result Guarantees.

Section 275 of the ACL picks up and applies s 16(1) of the Civil Liability Act as a surrogate federal law. Section 16(1), on its proper construction, precludes Mr Moore claiming damages for distress and disappointment by reason of Scenic’s breaches of the Purpose and Result Guarantees. This is so notwithstanding that Scenic’s breaches occurred outside Australia. It follows that the award of damages under s 267(4) in Mr Moore’s favour must be set aside.

The primary Judge was not asked to assess and did not award compensation or damages to Group Members for Scenic’s breach of the Consumer Guarantees. I have concluded that his Honour’s findings that Scenic breached the Care Guarantee by reason of pre-embarkation conduct cannot stand. I have also concluded that his Honour’s findings that:

I can see no reason why the conclusion that Mr Moore is precluded by s 275 of the ACL and s 16(1) of the Civil Liability Act from claiming damages for distress and disappointment pursuant to s 267(4) of the ACL does not apply to the claims of the Group Members. Their claims for damages under s 267(4) of the ACL for Scenic’s breach of the Consumer Guarantees must therefore be dismissed.

Group Members who booked to travel on Cruises 4, 5, 6 and 7 may have a claim pursuant to s 267(3)(b) of the ACL for reduction in the value of the services provided by reason of Scenic’s post-embarkation breach of the Care Guarantee. As I have noted, there is an unresolved question as to whether Scenic can make out its defence under s 61(3) of the ACL to Group Members’ claims for compensation founded on Scenic’s breach of the Purpose and Result Guarantees. Assuming (as I think likely) that Scenic cannot establish this defence, it is difficult to see how the Group Members’ claim for reduced value compensation for Scenic’s breach of the Care Guarantee can yield a larger award than their claims for reduced value compensation for Scenic’s breach of the Purpose and Result Guarantees.

Group Members who booked on Cruises 1, 2, 3, 4, 5, 6, 7, 8, 9 and 11 have claims for reduced value compensation by reason of Scenic’s breach of the Purpose and Result Guarantees. Subject to Scenic’s defence under s 61(3) of the ACL, these claims will need to be determined by the primary Judge in accordance with the objective criteria the parties agree must be applied.

In Mr Moore’s own case against Scenic I have concluded that:

In the case brought on behalf of Group Members I have concluded that:

The following orders should be made in the proceedings:

In relation to Mr Moore’s claim for compensation and damages the following additional orders should be made:

Order 2 made by the primary Judge on 15 November 2017 provided that the common issues stated for determination be answered in the form of the Answers in the document described as “Answers to Common Issues Stated for Determination”. Because of the conclusions I have reached many of the Answers cannot remain in place. More importantly, because of the difficulties with the form of this document, it would be neither appropriate nor helpful to attempt to reformulate the “Answers to the Common Issues” to give effect to these reasons for judgment. Instead the parties should be directed to agree on reformulated questions and answers that give effect to these reasons for judgment.

The following orders should therefore be made:

The primary Judge made an order in the Primary Judgment that Scenic pay Mr Moore’s costs of “the claim” on a party and party basis. My present view as to costs is as follows:

On this basis, the following orders as to costs should be made:

If the parties wish to argue for different costs orders they should have that opportunity. In this respect the following directions should be made:

These are not the only legal proceedings relating to European river cruises conducted by Scenic in May and June 2013. In a decision handed down on 30 January 2014, the New South Wales Civil and Administrative Tribunal (NCAT) ordered Scenic to pay $11,826 to two passengers on Cruise 8. [258] NCAT’s judgment is five pages in length and was delivered just over seven months after Cruise 8 was completed. [259] By contrast, these proceedings have still not been finalised more than five years after the various cruises concluded their ill-starred journeys.

The first legislation in Australia providing expressly for representative proceedings was enacted by the Commonwealth Parliament in 1991. [260] The Second Reading Speech identified the basic objectives of the new statutory regime as follows: [261]

Representative proceedings present procedural complexities and potential pitfalls that unless appreciated and properly addressed create a serious risk that the objectives of the statutory regime will not be realised. The Supreme Court’s Practice Note relating to representative proceedings [262] expressly acknowledges the complexities and establishes procedures designed to facilitate the “prompt and efficient resolution” of such proceedings. These include procedures designed to ensure the early identification of the common questions of law or fact which are said to arise in the proceedings and the early resolution of any issues concerning the identification of the common questions. [263]

In the present case the parties never satisfactorily identified common questions of law or fact suitable for resolution in the representative proceedings. The Statement of Issues, which was said to identify the common questions, was not finalised until the last day of the hearing and even then was subsequently amended. In part the delay was a consequence of the late amendments to Mr Moore’s pleadings which, in the event, seem to have added little of value to the Group Members’ case. More significantly, as the parties accepted in this Court, most of the questions identified in the Statement of Issues are not in truth common questions of law or fact. It is therefore not surprising that there was disagreement between the parties and a good deal of confusion as to what matters had been in issue during the six day hearing before the primary Judge. Nor is it surprising that numerous issues remain to be determined.

If representative proceedings are to be an efficient and prompt means of resolving multiple claims, it is essential that common questions of law or fact be identified early in the proceedings and that the substantive hearing be directed to resolving these questions. This is particularly important in proceedings where each group member has only a modest claim for damages or compensation, as is typically the case in representative proceedings brought on behalf of consumers. As the present case demonstrates, a failure to be rigorous in identifying common questions of law or fact often leads to inordinate delay, disproportionate expense and frustration for all parties to the litigation.

BARRETT AJA: I have had the advantage of reading in draft the comprehensive judgment prepared by Sackville AJA. Orders and directions should be made as his Honour proposes for the reasons he gives.