Baltic Shipping Co v Dillon

In *Baltic Shipping Co v Dillon*, the High Court of Australia considered a dispute arising from a pleasure cruise that was terminated prematurely when the vessel sank. The respondent, a passenger, suffered injury and loss as a result of the incident. The core of the dispute concerned the respondent's entitlement to damages for disappointment and distress, notwithstanding the payment of the cruise fare in advance.

The legal issues before the High Court included whether there had been a total failure of consideration for the contract of carriage, and if so, whether damages for disappointment and distress were recoverable in such circumstances. The Court was required to determine the principles governing the award of damages for breach of contract, particularly in cases involving non-pecuniary loss.

The High Court, by majority, held that the sinking of the vessel did not constitute a total failure of consideration. While the passenger did not receive the full benefit of the cruise, the contract was not entirely unperformed. The Court affirmed the general principle that damages for disappointment and distress are not ordinarily recoverable for breach of contract, unless the contract itself has as its object the provision of pleasure, relaxation, or enjoyment, or where such damages are a foreseeable consequence of the breach. In this instance, the Court found that the contract for a pleasure cruise was of the former kind. The Court ultimately allowed the appeal in part, setting aside the original award of damages and directing a reconsideration of the sum payable to the respondent.