Baltic Shipping Co v Dillon

Baltic Shipping Co and Dillon were the parties in this matter before the Court of Appeal of New South Wales. The dispute concerned a claim for damages for breach of contract and for loss of enjoyment of a cruise holiday. The plaintiff, Ms Dillon, had booked a cruise on the vessel *Mikhail Lermontov*, operated by the defendant, Baltic Shipping Co. During the voyage, the vessel sank, and Ms Dillon suffered personal injury and loss of her belongings. She also claimed damages for the loss of the enjoyment of the holiday she had paid for.

The central legal issue before the Court of Appeal was whether damages for loss of enjoyment of a holiday, in circumstances where the holiday was not completed due to a breach of contract, were recoverable. This required the court to consider the principles governing the award of damages for breach of contract, particularly in relation to non-pecuniary losses. The court also had to determine whether the contract for the cruise was one where the enjoyment of the holiday was a primary object, thus justifying the recovery of such damages.

The Court of Appeal, by majority, held that damages for loss of enjoyment of a holiday were recoverable in contract where the breach of contract caused the loss of that enjoyment. Gleeson CJ and Mahoney JA found that the contract for the cruise was one where the enjoyment of the holiday was a primary object, and therefore, damages for the loss of that enjoyment were a foreseeable consequence of the breach. Kirby P, dissenting, held that such damages were not recoverable in contract law, distinguishing them from damages for physical injury or loss of property. The court applied the principles of contractual damages, focusing on the intention of the parties and the nature of the contract.

The Court of Appeal ordered that the appeal be allowed in part, with judgment entered for the plaintiff for damages to be assessed, including damages for loss of enjoyment of the cruise.