Baltic Shipping Company v Dillon

[1992] HCATrans 37

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IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sl13 of 1991

B e t w e e n -

BALTIC SHIPPING COMPANY

Appellant

and

JOAN NORMA DILLON

Respondent

MASON CJ
BRENNAN J
DEANE J

DAWSON J

TOOHEY J

GAUDRON J

McHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON FRIDAY, 7 FEBRUARY 1992, AT 9.48 AM

(Continued from 6/2/92)

Copyright in the High Court of Australia

Baltic(3) 85 7/2/92

MASON CJ: Yes, Mr Downes.

MR DOWNES:  Your Honours, I was dealing with the claim for

restitution of the fare. The propositions which we

would seek to rely upon are, firstly, the right to

recover depends upon there being a total failure of
consideration and I took Your Honours yesterday to

the Fibrosa case as authority for that proposition.

Greig and Davis, at page 1281, citing the Fibrosa

case, states the same proposition.

The foundation of the concept of restitution lies in unjust enrichment. Your Honour

Mr Justice Deane said that in Pavey and Matthews v

Paul, 162 CLR 221, and the passages are at 257 and

263.      Your Honour the Chief Justice and

Mr Justice Wilson, at page 227, agreed with

Justice Deane. The House of Lords has recently

analysed the law of restitution in precisely the

same way and that is in Lipkin Gorman v Karpnale

Limited, (1991) 3 WLR 10.

Your Honours, the next proposition that we

rely upon -

MASON CJ:	Mr Downes, we do not seem to have a copy of that.
MR DOWNES:	It is only very recently reported, Your Honour.

It was not on our list, and we found it in the

library this morning, Your Honour. It is page 10,

Your Honour.

McHUGH J:  It has been out for a while. I remember reading

it at least two or three months ago.

MR DOWNES:  I regret that it was only this morning that we -

the proposition there perhaps was not so centrally

relevant to what we were going to put today, that

it did not earlier seem - - -

McHUGH J: This is the Gambling Chip case?

MR DOWNES:  Yes, Your Honour. Your Honours, the second

proposition is that a contract of carriage for

travel, and as such a variety of a contract for

services, ordinarily sounds in damages for breach, not in restitution. Greig and Davis use precisely

those words at page 1282.

Heywood v Wellers, (1976) 1 QB 446, is a good

illustration of the proposition. That was a

decision in which the question of whether a

solicitor had in effect performed his retainer at

all when he incurred a lot of costs on behalf of a

lady seeking non-molestation orders without

Baltic(3) 86 7/2/92

achieving any result at all. Lord Denning, at

page 458C says that:

the contract of the solicitors was an entire

contract which they were bound to carry on to

the end; and, not having done so, they were

not entitled to any costs -

and secondly, that the work that they did was

useless. That appears at line E.

The result is, Your Honours, that ordinarily a

breach of a contract for services sounds in damages

with two exceptions. The first exception is where

there is an entire contract. That is, we would

submit, one in which partial performance still

leaves the position that there is a total failure

of consideration. It is one in which there is no

benefit to the other contracting party unless it is fully performed. The other exception to the entire contract principle is total failure of

consideration, and those are the two matters which

Lord Denning considered in Heywood v Wellers.

Now, Your Honours, it is our submission that

with respect to the present case, firstly, one does

not have an entire contract, and secondly, there

was no total failure of consideration. I will not

repeat them, but just before Your Honours adjourned

yesterday afternoon I gave some illustrations

which, in our respectful submission, lead to those

conclusions.

The very idea of travel, and this was a

contract for carriage on a voyage for travel, the
very idea of travel is continuance from - to use

the illustration I gave yesterday - points A to B,

to C to D. The contract in the present case was

the travel itself. It was the movement around the

Pacific, not the arrival at a destination.

BRENNAN J: Would it have made any difference if the

destination had been, say, Suva?

MR DOWNES:  No, we would respectfully submit not,

Your Honour. If one were dealing with a contract

in which that was the sole purpose, namely, to move

the passenger from Sydney to Suva, and if the

passenger had not got to Suva, that is, that he or

she had been brought back to Sydney, then different

considerations might arise. But if the passenger

was taken to Suva by air from some point such as

happened in this case in terms o·f the return to

Sydney, then there would have been a performance of

the contract in any event.

Baltic(3) 87 7/2/92

Now, Your Honours, the trial judge dealt with

this matter at page 353. At the bottom of

page 353, he says that a claim is made:

upon the basis that a proportionate refund is
not appropriate ..... The defendant challenges

this proposition ..... I am of the view,

however, that the plaintiff is entitled to
recover the balance of the fare as monies paid

on a consideration which wholly failed. The

contract of passage was an entire contract.

We would challenge those findings of His Honour.

Then, at the bottom of the page, line 21 of

page 354, His Honour says:

In reality, the plaintiff got no benefit

from this contract. It is true that she did

have eight days cruising on the vessel and

visited the Bay of Islands, Auckland,

Tauranga, Wellington and Picton, but those

benefits were entirely negated by the

catastrophe which occurred upon departure from

Picton.

Now, with respect, we also would challenge

what His Honour says there. The contract was a

contract to voyage the vessel around the Pacific

with this lady on it. There may be a question,
which will arise when I address in a moment the

Jarvis v Swans Tours point, as to whether there was

an implied term of the contract that in so doing

the carrier would create a pleasurable situation

for the passenger, but this was not a contract to

create pleasure, on any view; it was a contract -

McHUGH J: But does it have to be? Take the Granville train

smash: could the Commissioner fqr Railways resist

a claim for the full fare simply because somebody had travelled from Parramatta to Granville on the train before it crashed, when the journey was

Parramatta to Sydney?

MR DOWNES: But, Your Honour, if you take someone who was

uninjured in the crash, but the train could not go

on, that person's damages would be associated with

the balance of the journey, namely the cost of

getting from Granville to Sydney. But if the train

crash occurred only a few miles out of

Mount Victoria where the passenger came from and he

walked back or was conveyed back to Mount Victoria

and started all over again, then there would have

been the total failure of consideration.

BRENNAN J:  But do you mean to say that if the passengers here had been compulsorily disembarked at the

Baltic(3) 88 7/2/92

Bay of Islands, that the fare could have been

recovered pro tanto?

MR DOWNES:  If they had been compulsorily disembarked - does

Your Honour select that as the first - - -

BRENNAN J:	No, any point along the way.
MR DOWNES:	At any point. Well, in our respectful

submission, there would then have been a

performance of the contract. You could not say

there was a total failure of consideration and the

passengers would then, in those circumstances, be

entitled to damages and the damages would be

calculated by reference, at least in part - or

might be calculated by reference at least in part -

to the balance of the voyage.

DAWSON J:  Do you say they had had the pleasure of crossing the Tasman?

MR DOWNES:  That was part of - that was the bargain. I

mean, if one looks at these - I cannot speak from

personal - - -

DAWSON J: His Honour does not say that that was not so.

What His Honour says is that it was negated by the

horrible event which caused an end to the contract.

MR DOWNES: Well, with respect, it was not negated, Your

Honour. I mean, nothing can take away - - -

DAWSON J: Pleasant memories?

MR DOWNES:	Nothing can take away the fact that that part of the voyage took place and, I suppose - I mean, I do
not know that one needs to examine this, but I
suppose that Mrs Dillon still has memories of the
first part of the voyage and talks about it and so
forth.  She may talk about the second part,
Your Honours, but - - -
DAWSON J: She has probably talked about little else.

MR DOWNES: Well, we hesitate to put a submission that

suggests that that is a positive return from the

event, but - - -

DAWSON J: But does it not come to a question of whether or

not, on its true construction, it is an entire

contract or not?

MR DOWNES:  Yes, Your Honour.

DAWSON J: That is a question of construction.

Baltic(3) 89 7/2/92

MR DOWNES:  We submit, if it is an entire contract or if

there is a total failure of consideration, then the

result is that there is an entitlement to

restitution.

DEANE J:  In one sense it is a matter of classification of

benefits, is it not? If what was involved here was

prepayment for a fortnight's accommodation at the

Ritz Hotel and the hotel was burnt down after the

first week and a half, I would have thought your

argument that restitution would not go beyond the

proportion of a quarter of the whole period when

damages were obtainable for all the other things;

it would be unanswerable. But here you have got

the complication of a cruise which says we, "We

start here and we finish here".

MR DOWNES:  With respect not, Your Honour. We would

respectfully - - -

DEANE J:  What I am putting is not against you, Mr Downes.

MR DOWNES:  No. We would respectfully put that

Your Honour's illustration is exactly this case.

McHUGH J: But it is not. There is a world of difference

between the two things. The passenger may have

gone on and thought "It will take me a couple of

weeks to unwind but the last part will be
wonderful" and so on. Supposing it set them adrift

in a boat in the middle of the Pacific, would you

claim that you are entitled to half the fare?

MR DOWNES:  Your Honour, we would claim that they would not

be entitled to restitution. The common law gives

remedies - there is damages for breach and that

would adequately compensate for those matters.

There might be all sorts of interesting heads of

damages arising out of the fact that we left the

passenger floating in a dinghy - - -

McHUGH J:  But you said you were going to give them a

South Pacific cruise - that was what your brochure

said. You never gave them a South Pacific cruise.

MR DOWNES:  Your Honour, what we did was, contract to

provide for them a floating hotel which would

travel along a designed route in the Pacific, just

as if the El Feyed Brothers accept your booking at

the Ritz Hotel, they are providing you with

something which enables you to walk out the front

door into Place Vendome. If the Ritz Hotel is

burnt - you might go there for a fortnight, you

might find it absolutely wonderful on that part of

the Right Bank; you can get up every morning and

walk out into Place Vendome and look at Napoleon's

Column and suddenly you are deprived of that right

Baltic(3) 90 7/2/92

as a result of it being burnt down, or whatever

happens after a week and a half.

We would respectfully submit that to say that

the difference comes from - and you might find a

great deal of pleasure in being surrounded by the

opulence and luxury of the Ritz Hotel, and the

Plaza Athenee might not live up to those expectations, or even the George V - but the result

is that you would be, we would respectfully submit,

in exactly the same position as in the present

case, the only difference being that one thing

about this hotel is it moved to different places;

it was not providing you with one vision the whole

time. Now, we would respectfully submit - I mean,

saying it more than once does not make it any

better as a point, Your Honour, but - - -

McHUGH J: Well, if I go along to a movie theatre and

two-thirds of the way through the film cuts out so

I cannot see the rest of the film, then I am

entitled to ask to retain two-thirds of my entrance

fare?

MR DOWNES: Well, Your Honour picks an illustration - we

would respectfully submit that first of all that

situation is distinguishable from the present. We

do not stand or fall on that, but in any event yes,

Your Honour, because you could go back the

following day and see the rest of the movie.

But, Your Honours, one of the points I wanted

to make by reference to what appears in the

judgment of the trial judge at page 354 is this:

you cannot describe what this contract was without

describing it as a contract for travel. I mean,

that is what all the relevant documents said, the

booking form, for example, and I think that still

is part of the contract because that is what all

the judges in the Court of Appeal held. What

page 354 seeks to do is to elevate the contract to

a contract about pleasure. It is even a higher

proposition than making it a contract about travel

which has attached to it an implied term.

DAWSON J:  Mr Downes, are you treating this as a case of

frustration, because it is not, is it?

MR DOWNES:	No, Your Honour.
DAWSON J:	Why then is there a total failure of

consideration if you are suing for damages which,

of course - or the plaintiff is suing for damages?

MR DOWNES: There is no total failure of consideration.

Baltic(3) 91 7/2/92

DAWSON J:  I know you say that, but is it a case where you

could claim on the basis of a total failure

consideration if you are claiming for damages for

breach?

MR DOWNES: With respect, no, Your Honour, for the reasons

that I have been advancing. Either the fact that

eight days cruising had taken place and a number of

islands had been visited, either that is - - -

DAWSON J:  No, not on a factual basis, but when you claim

damages, you claim on the basis that you have met

your contractual obligation by paying, there has

been a breach, and then you look to see what you

have suffered by reason of that breach. Because of

the nature of your claim, it cannot be a claim for

a total return of the purchase money, unless that

is achieved in another way by assessing damages.

The two things are mutually exclusive, are they

not?

MR DOWNES:  I think, if I understand what Your Honour is

putting, that is precisely what we put.

DAWSON J:	I am not putting it very well, I know.
BRENNAN J:	You concede that there is - - -
MR DOWNES:	Your Honours, it is dealt with as a claim for

restitution of the whole fare separate from a claim

for damages arising o,.,_t of breach.

DAWSON J:	You cannot have a claim for restitution and damages - that is what I am really putting to you -
can you?
MR DOWNES:	We would agree with what Your Honour says.
BRENNAN J:	Do you concede a liability in damages to some

extent?

MR DOWNES:  Yes, Your Honour.

BRENNAN J: And that is for breach of those obligations of

the contract which went unperformed, is that right?

MR DOWNES:  No, Your Honours. The actual - - -

BRENNAN J:	I am sorry, I am taking you out of your course.
MR DOWNES:	I have a sheet of paper which has on it - and it

may be appropriate in due course to hand it up to

Your Honours - which sets out exactly what was the

admission made. The admission made, if

Your Honours would permit me to read it - it is

only about ten lines:

Baltic(3) 92 7/2/92

Baltic Shipping Company admits that the

pilot's decision to navigate the vessel

through the passage between Cape Jackson and

Cape Jackson Lighthouse did not accord with

good seamanship and therefore was negligent,

giving rise to the sinking of the vessel,
which negligence Baltic Shipping Company, for
the purposes of these proceedings only,

accepts vicarious responsibility.

There was then a second admission:

For the purposes of these proceedings only,

the second defendant admits that by reason of
the admission of vicarious liability, it is in
breach of contract as pleaded in paragraphs 8
and 10 of the Particulars of Claim in that the

services of navigation of the vessel were not

rendered with due care and skill, and that the

second defendant thereby failed to take
reasonable care of the plaintiffs and the

personal effects on board the vessel.

So that the admissions that were made were limited

to admissions of that kind associated with the

navigation of the vessel and liability arising

vicariously out of that and in contract.

DAWSON J: That was the cause of all that happened, all the

woes that ensured. Now, how can you have unjust

enrichment where the plaintiff has a full claim for

damages for all the damage she suffered as a result

of the breach?

MR DOWNES:  We would accept what Your Honour says. of what we say is that there was no total failure The crux

of consideration, therefore, no restitution and

what I think Your Honours has, perhaps, observed

that I had not observed so far was that, in any

event, there was here a claim in contract for

breach and there being a claim in contract for

breach, having elected to claim damages for breach

of contract one is in the situation in which one,

so to speak, is accepting that there cannot, at the

same time, be a claim for restitution on the

grounds of unjust enrichment.

DEANE J:  Of course, the answer may well depend on whether

you succeed on the fourth point or not. If you

succeed on the fourth point and there is no damage

for loss of the benefit of the holiday and so on, it is arguable that the whole purpose of the trip

was lost. If you lose on the fourth point and
damages are obtained for loss of benefit and

whatever else is involved, it is very difficult to see the answer to what Justice Dawson puts to you.

Baltic(3) 93 7/2/92

MR DOWNES:  Your Honour appreciates that, in any event, what

this lady was awarded was the balance of the fare

that so far had not been paid. So she got the

whole fare back and then she got $5000 in addition

to that. So that, as a, so to speak, fall-back

position, we would respectfully submit that if the

result Your Honour postulated as a possibility

occurred, she could not retain both the $1400, the

money she had already had of some, whatever it was,

$700 and $5000.

BRENNAN J:  Mr Downes, I am just a little puzzled by the

terms of the second of those admissions that was

made.

MR DOWNES:  Yes, Your Honour.

BRENNAN J: It appears that the trial judge at all events

understood that liability was accepted for the

consequences of the sinking of the ship. Is that

right?

MR DOWNES:	Yes.
BRENNAN J:	And does the second concession extend thus far?

MR DOWNES: Well, the first certainly does, Your Honour.

The first of the - - -

BRENNAN J:  The first accepts that there was negligence for

which the company is liable.

MR DOWNES:	Yes.
BRENNAN J:	The second says that for the purposes of this,

they accept that there is - - -

MR DOWNES:  A breach of contract. What it does not do is -

and this is a matter I was going to mention to

Your Honours later - admit an implied term relating

to enjoyment or breach of that implied term. That,

we would submit, undoubtedly is relevant to the

question of the Jarvis v Swans Tours damages.

BRENNAN J: But it does not seem to me that, in the way in

which the litigation ran, if I understand it

correctly, any point was ever taken once that

admission was made, but that the appellant was

liable in damages, whatever might be the

appropriate measure of damages, flowing from the

sinking of the ship. Now, if that is not right it

seems to me that there are - - -

MR DOWNES: Well, Your Honour, I was not present. My

learned junior, who has been present on all

occasions to date, tells me that Your Honour is

correct; that is, no point has been taken and

Baltic(3) 94 7/2/92

obviously I am not going to, in those

circumstances, ask Your Honours to now take such a

point.

BRENNAN J: It follows then, does it not, that damages were,

for the purposes of the trial, accepted in respect of the loss by the passenger of the benefit of the days of travel following the sinking?

MR DOWNES:  Yes, Your Honour. Your Honour appreciates that

she had immediately, a matter only of days after

the ship had sunk, been repaid the balance of the

fare. It may be that the company thought it was

making that repayment under clause 9 of the terms

and conditions, and it may be that clause 9 of the

terms and conditions are still applicable,

notwithstanding Your Honours's decision yesterday,

because His Honour the Chief Justice in the Supreme

Court of New South Wales specifically said that

there may be terms and conditions of which adequate

notice was given, and that may be one of them.

I only tell Your Honours that because perhaps

Your Honours should have that background

information. We do not seek to place any

particular reliance upon clause 9 in the claim we

make but, at any event, that may be the basis upon

which the repayment was made. But if, again as a

fall-back position, one gets to the point where
there is an entitlement to damages arising out of

the disappointment associated with the truncation

of the voyage, we would respectfully submit that

when one wants to quantify that, the way one

quantifies it is, what one says is, "That is the

price of what was lost; what was lost was the
balance of the enjoyable voyage; so the damages are

what she had already been given".

BRENNAN J:  She cannot have the money and the box.

MR DOWNES: Yes, Your Honour. Your Honours, I am going to

take Your Honours next to the judgment of

Mr Justice Kirby, the President of the Court of

Appeal, at 421. It is very brief and on this

point. Your Honours, at page 421, line 18, he

says:

The respondent had had the benefit of eight of fourteen days of an idyllic cruise. It was

therefore wrong to permit her -

he is here setting out the submission for the

appellant -

It was therefore wrong to permit her to recoup

the whole ..... on this point is is my view that

Carruthers J reached the right conclusion.

Baltic(3) 95 7/2/92

The respondent did not contract with the

appellant for an eight day cruise, still less

for an eight day cruise interrupted by the

disaster which befell the Mikhail Lermontov.

What she contracted for was a relaxing holiday

experience.

Again, we would seek to take issue with that.

We would say what she contracted for was travel. Your Honours may or may not, in due course, say

that there was an implied term of that contract of

travel that this voyage would produce a feeling of

well-being. But she did not contract, we would

respectfully submit, for a holiday experience. It

is this that she failed to secure. The contract of

carriage was properly categorized as an entire
contract. Of course, we take issue with that.

His Honour says "I agree with the judgment", then

he refers to the pair of shoes illustration.	He
says, at line 5:

It is proper, in compensating the respondent,

to take into account the benefits which she

enjoyed under the contract. No ground of

appeal challenged the finding that the

contract of carriage was an entire contract.

I think I should tell Your Honour that we

would take issue with that, lest it is said that

the submissions that I put to Your Honours are not

open. At page 371, ground 75 was:

That His Honour erred in holding that there

was a total failure of consideration.

Ground 76 was:

That His Honour erred in holding that the

respondent was entitled to the balance of the

fare over and above the proportion refunded.

permitted us to challenge the finding relating to We would respectfully submit that that amply

entirety. Then His Honour refers to clause 9. I

will not read that to Your Honours, but I thought
it appropriate to give Your Honours the explanation

of that clause that I did.

Your Honours, the result, we would

respectfully submit, is that at most, by way of

damages in this kind of category, this lady would

be entitled to a refund of the balance of the fare.

She was paid that before action, and so to the

extent to which there is an order for restitution

of the whole of the fare, namely the balance of the

fare, the appeal should be allowed.

Baltic(3) 96 7/2/92

Can I now go, Your Honours, to the matter of

damages for disappointment. Your Honours,

conventionally damages in contract have not

included:

damages for disappointment of mind occasioned

by the breach of the contract.

Those words were adopted by this Court in 1946 in

Fink v Fink, 74 CLR 127 at 143. They are the words

of Chief Baron Pollock in Hamlin v Great Northern

Railway Co, and they appear at the top of page 143,

and it is in the judgment of Sir Owen Dixon and

Mr Justice McTiernan. On the following page, about

point 6 of the page, Their Honours repeat the
proposition. Their Honours words are:

Resentment, disappointment and the loss of esteem of friends are not proper elements.

Your Honours, similar statements are made, for

example, in Addis v Gramophone Co, (1909) AC 488.

No decision of this Court, or of any other

appellate court in Australia, other than in the

present case, has sought to challenge that
proposition or to uphold a particular exception to

it which would embrace the present case.

The judgments of Your Honours recently in The

Commonwealth v Amman, a case which is not, of course, relevant precisely at all to this case but, nevertheless, those judgments proceeded upon the conventional basis.

Your Honours, the relevant judgment below in

terms of analysing the conclusions is the judgment

of the President of the Court of Appeal, with which

the Chief Justice agreed, and relevantly it is at

page 422. ·

DEANE J:  Mr Downes, there is, no doubt, a simple answer to

this, but why are these damages being approached on

the basis they were awarded for breach of contract

rather than for negligence?

MR DOWNES:  I can affirm that that is the way the matter was

approached but I cannot give Your Honour a

particular reason. That is what was claimed, that

is what was sought, that is what His Honour

awarded.

DEANE J:  When you say, "That is what was claimed", the

claim was also in negligence.

MR DOWNES: But, Your Honours, the $25,000 claim in

negligence deals with an award of damages in

negligence contains an award seeking to deal with

Baltic(3) 97 7/2/92

the vexation and so forth associated with the

events of the sinking of the ship, a substantial

part of the sum represents that consideration. It

is for this reason that His Honour, with respect,

indicated that he was attempting to be careful in a

difficult field not to doubly compensate for the

same thing.

TOOHEY J: That is a different question, is it not? The

statement of claim does not, as it were, give

primacy to one cause of action over the other or,

if it does, it is based both in contract and in

tort.

MR DOWNES: Perhaps I can say this, Your Honour, that the

common law undoubtedly recognizes in negligence
cases a head of damage which represents the
vexation, if I can use that word, associated with

the trauma of an injury; that it does not, we would

respectfully submit, recognize the kind of

compensation that represents, so to speak, the

other side of the coin. The one side of the coin

is the vexation, the other side of the coin is the

lost enjoyment.

The way His Honour approached it and this case

has always approached the matter is that the

vexation aspect of it, the horror of the sinking is

dealt with under one head, under the claim in

negligence, and then there is an extra added claim
for damages for disappointment in contract solely

placed upon the decision in Jarvis v Swans Tours

and the cases that have followed it.

Your Honours, His Honour the President,

at 422, begins to address this matter. He refers

to Jarvis v Swans Tours, he refers to Hamlyn, to

Addis, sets out a passage from Addis on page 424, refers to Fink v Fink, the second of passages I

took Your Honours to, refers to the fact that the

matter has not been considered by an appellate

court and then affirms, for the purpose of

His Honour's own judgment the principle in Fink.

He says, at line 2:

The principle stated in Fink may be taken as a

statement of the general rule applicable by

the common law in Australia. There is a

similar acceptance of -

it.	And then he poses this question -
But is Jarvis an illustration of an exception
to the general rule which should now be
acknowledged -

Baltic(3) 98 7/2/92

So His Honour approaches the matter on the basis

that the principle is good, what he is dealing with

is whether there is an exception. He then refers

to Jarvis and is somewhat critical of Lord Denning

because he says, at line 17:

Lord Denning MR, for example, said that the

limitations on recovery stated in Hamlyn were

"out of date" and that recovery of damages for

mental distress depended on nothing more than

the case being "a proper case". A more

unhelpful criterion it would be difficult to

fashion.

His Honour then engages in, as I think I mentioned

to Your Honours yesterday, an examination of a

number of cases and articles in journals relating

to the matter, many of them very critical of the
decision in Jarvis but I do not think anything is

gained by my taking Your Honours to the detail of

that. If I could go over to page 429, where

His Honour comes to conclusions. At line 26:

Not without some hesitation, I would

regard Jarvis as a now established exception

to the general rule. It is one within a line

of authority of enduring lineage. It is not

an exception that is available in any case

that a judge deems to be "proper". To that

extent I would dissent from Lord Denning's

formulation in Jarvis. Nor would I

necessarily agree with some of the wider

applications to which Jarvis has been pushed.

In my view the scope of the rule is

satisfactorily stated by Professors D.W. Greig

and J.L.R. Davis in their The Law of

Contracts, 1987.

Then he sets out a passage. I will not read it to

Your Honours but the underlying part is the

critical part and there is a typing error in it, if

When the rationale is explained, it is explained	I may say so. Your Honours will see it is obvious.
as:

because he had expressly or impliedly promised

either to prevent -

and the word should be "vexation" -

or to provide enjoyment and pleasure.

Returning to the facts of the present case -

His Honour asks -

Baltic(3) 99 7/2/92

can it be said that the appellant expressly or

impliedly promised the respondent to provide

her with enjoyment and pleasure? In my view

the answer to that question must be in the
affirmative. That was the whole point of the
pleasure cruise. It was the point as they

promised it, leaving aside entirely the

special circumstances that made it important

to the respondent. So confined, I would apply Jarvis and uphold the respondent's entitlement to recover damages for the implied breach of

the promise of enjoyment and pleasure.

It is true that such damages are

difficult to calculate ..... It is equally true that great care must be taken to avoid double

compensation. There is a risk of double

compensation -

His Honour then recognizes in line 9 that there

might have been -

double compensation in the present case.

However, in the end I am not convinced that

this occurred.

DEANE J: Mr Downes, looking at the extract from Greig and

Davis, line 2, there is another - - -

MR DOWNES:  "Belong".

DEANE J: It should be "SO long", two words.

MR DOWNES:  Yes, exactly, Your Honour. Then His Honour

indicates that he thought that the sum was too

high, he would not have ordered more than half, the

5000 should not be a precedent, but ultimately

His Honour concludes that he will not interfere

with it.

Your Honours, the way in which the law then is

stated by the majority in the Court of Appeal is as

follows: there is a proposition of the common law

that damages for disappointment are not available.
However, there is an exception to that proposition.

It is narrower than some cases would suggest and it applies in circumstances in which one can find an

express or implied promise to provide enjoyment or pleasure, to use the alternative which is relevant to the present case.

Your Honours, Jarvis itself is reported in

(1973) 1 QB 233. The facts are no doubt very well

known to Your Honours, as well as Lord Denning's

judgment, and I do not think that anything is

gained by my saying anything more about it than was

said by Mr Justice Kirby. We would obviously adopt

Baltic(3) 100 7/2/92

his criticism of it. Once one does that, the whole

of the reasoning in the Jarvis case really

disappears.

Jarvis was followed by another Court of

Appeal, also led by Lord Denning, in Jackson v

Horizon Holidays. I do not think anything is

really added in terms of reasoning there. Jackson

v Horizon Holidays has in turn been considered by

the House of Lords in Woodar Investment Development

v Wimpey Construction, which is not on our list of

authorities, but I have ten copies and can I hand

them up to Your Honours.

What Jackson v Horizon Holidays purported to

do was extend the claim of damages on the part of a

husband who rented holiday accommodation to cover

also disappointment on the part of his family, in addition to himself. He was of course the only ·

contracting party.

Now, it was on that aspect that the

Woodar
House of Lords in declined to follow otherwise about Jackson and the idea underlining

it. Woodar, as Your Honours will see, is reported

in (1980) 1 WLR 277 and the passages where Jackson

is considered in the speech of Lord Wilberforce are

at page 283, where His Lordship says he is not

prepared to dissent from the actual decision in

that case. Lord Salmon really leaves the matter

open and says that it has not been addressed by the

Lords, that the law as it presently stand, which

one would take it to be in the light of Jarvis and

Jackson, is unsatisfactory and His Lordship

concludes that he only hopes that there will be an
opportunity to consider it. That is at page 291C.

Lord Russell deals with the matter at page 293G

saying that he does not criticize the outcome and

finally Lord Keith at page 297E.

Now, although it can be said that

Their Lordships give some very qualified support to the result in those cases, it is also true to say

that the rationale in the cases was not the

consideration in Woodar's case. Woodar's case was
concerned with third party rights, not with damages
for disappointment. So, although there is some

very qualified support, the House of Lords has not

considered the matter after argument and, as one
can see from the brief passages in which the matter

is considered, have not given the particular issues

that are raised in that case close attention or at

any event the attention of the kind that would be

given if the matter had been argued.

Baltic(3) 101 7/2/92

Now, Your Honours, it is our submission that

for Your Honours, so to speak, to create for

Australia by departing by way of exception from the propositions which one gets from Fink v Fink, would

be for Your Honours to make too radical a departure

from the existing law. We would respectfully

submit that if such a departure is to be made, then

it is a matter for the legislature.

However, that is not the only basis upon which

we would submit that Your Honours should not uphold

either the result or the reasoning in the court

below. We would respectfully submit that there are

good reasons why the rule should remain without the

exception. Now, Your Honours, the first of those

is that it is very easy to draw the line at the

point at which it is presently drawn. The moment

one says, "No damages for disappointment, but",

there becomes a problem as to when one draws the

line. What about a contract, for example, to sell

a holiday house? Why is that not a contract of the

kind in respect of which one would, if one is to

imply the provision of enjoyment into a cruise, why

would one not equally imply it in such a case?

Is there, we would ask rhetorically, a

limitation which was present in, for example,

Jarvis v Swans Tours itself, associated with the

damages arising out of such an applied term, that

the damages will only flow if, so to speak, this is

the holiday of the plaintiff who cannot now take

another holiday. An important consideration in the

judgment of Lord Denning in Jarvis v Swans Tours

was that it was not open to Mr Jarvis to go and

take another holiday in Switzerland. He had had

his two weeks or whatever it was annual holiday,

and he had to wait another year for next year's

holiday before he could do it again. Now, is that

a consideration? What bearing does that have upon

the method of assessment if one is going to find

damages of this kind, because if there is no

holiday, then, we would submit, how could the	impediment on the plaintiff taking a further
damages exceed the cost of the further holiday?
And if that is the result in the present case -
Your Honours appreciate there is no suggestion here
that this lady could not have taken a further holiday - and she got back the money that would have enabled her to have the further holiday.

Now, Your Honours, another real problem, we

would respectfully submit, arises when one tries to
work out what it is that one is going to imply into

the contract. What one has to imply is some kind

of term that one can grapple with. If Your Honours

look at the way in which Mr Justice Kirby and the

trial judge described the relevant term of the

Baltic(3) 102 7/2/92

contract - I think in three places, and I have

taken Your Honours to them all - they do so in
terms of saying, "This was a contract to provide a

pleasurable holiday".

Now, that is describing the contract in terms

of a result, not in terms of an act. We would

respectfully submit that that is really not

appropriate to the circumstances and, if it is, it

creates grave problems.	A very good illustration
we would have is this:	how does one cope with a

first time traveller who does not know, but is in

fact prone to seasickness? That person may have an

absolutely miserable time. Now, it cannot be that

he can sue for damages because of the misery.

So when one is trying to imply this term, one

has to write in some qualifications on the

implication. So it is a promise to provide

enjoyment in the event that the passenger is not

prone to seasickness, nor to fear of the sea - and

one can, no doubt, think of other illustrations

that one would have to put into this implied term

to cover the situation that there is no enjoyment.

TOOHEY J:  But why do you put it that way, Mr Downes? I

mean, you have put it in some sort of subjective

way so that the person who deliberately sets out

not to enjoy himself or herself is somehow outside
the scope of the implied term, but why not describe

it in terms of an obligation to provide a holiday

in circumstances where the ordinary person can

expect to obtain some enjoyment?

DAWSON J: In other words, to provide the facilities for

enjoyment.

MR DOWNES:  With respect, Your Honour, the moment one

describes it that way, as we would respectfully

submit is the proper way, damages sound in an

assessment of the loss associated with the

provision of the facilities, which is the fare, at

most.

TOOHEY J: No it is not. It is the loss of the

circumstances in which enjoyment can be taken.

MR DOWNES:  But Your Honour, if one is looking at the

circumstance, to pick the illustration I have given

a number of times from Jarvis that the biscuits

were not to the right standard, one deals with

that, and this is the way we would respectfully

submit the common law has conventionally dealt with

these sorts of claims and compensated people for

these sorts of things. One deals with it by saying

"What was the loss in terms of the biscuits, what

was the value of the biscuit compared to the lower

Baltic(3) 103 7/2/92

quality biscuit". One does not say "We will brush

the whole of the common law general approach to

damages aside and in this one peculiar case say

that we will give somebody some money, not based on

any particular assessment associated either with

lost income or increased outgoings, and what we

will do is assess some damages at large for

disappointment". We would respectfully submit that

that is not the appropriate way to compensate for a

breach of a contract of this kind.

TOOHEY J:  My point was not quite as sweeping as that. I

was simply taking you up on the idea that the implied term was one to provide a pleasurable holiday, which you are suggesting could not be the

case because for various reasons some persons might

not be able to take pleasure in the holiday. I was
suggesting to you that perhaps the implied term is
one to provide a holiday in circumstances where the
ordinary person could be expected to derive

pleasure from that holiday.

MR DOWNES:  Your Honour, we would respectfully submit that

so stating the implication creates its own problems

that I was seeking to resolve. Is someone prone to

seasickness not an ordinary person? We would

respectfully submit one really has to address the

problem. What happens, might I ask, to take the

matter further, in particularly heavy weather, for

example? Does one have another qualification on

the implied term associated with the seas because

one would assume that if a holiday was not

enjoyable merely because everyone was kept in their

cabins for five days as a result of heavy weather

that that is not something that would sound in

damages.

TOOHEY J: That is putting the cruise operator in the position of an insurer. That is, I think, a

somewhat unreal proposition.

MR DOWNES:	Yes, Your Honour. We would respectfully submit, though, that it is one thing to say, "Well,
obviously, in those circumstances damages wouldn't
flow", but one has to achieve a result which will
leave some certainty in the law for judges of lower courts and, in particular, these kinds of claims
are most likely to be seen in the lowest of courts.
I mean, the sums in moneys in cases such as Jarvis,
and so forth, were relatively small sums of money. We would respectfully submit, and this is really
the crux of the proposition that I first put to
Your Honours that to move the line and say there is
an exception creates more problems than it solves.
And Your Honours, as the final Court in this
country, ought not to create the problems that will
flow by taking a step which we would, with respect,

Baltic(3) 104 7/2/92

in any event suggest is not in accordance with

principle.

BRENNAN J: 

It is not quite as easy as that, is it? I mean,

you would concede that there was a contractual
obligation which would sound in damages for

non-performance to provide three days of good food,
potted palms, and lewd music. Now, that might be

worth precisely what the fare was, or it might be

worth something different.

MR DOWNES: 

In the absence of particular - I mean, one might

have called evidence in a case such as this to say

this was an extraordinarily cheap cruise. Even the

other ships run by this cruise line were for some

reasons associated with it inexplicable. The

quality was the same but the price was twice, and

the P & O Cruises are also, for the same quality,
twice the price. Then a claim in damages, if such

a claim was otherwise available, might sound in a

higher sum of money, but there is no basis for such

a conclusion on the evidence in the present case.

BRENNAN J: That seems to me to be slightly unreal. For

example, if you take the situation of somebody who

has paid the money for a unit at some holiday

resort, and the unit is advertised as having spa

baths and all sorts of other great advantages, and

it turns out to be a very decrepit and dilapidated

hovel, there is nowhere else available because it

is Christmas time, now, is the measure of damages
the difference between what was paid and what was a

fair rack rent for the hovel?

MR DOWNES:  That is the measure if the liability is there,

but I have to say this, Your Honour, that if the

person taking the cottage or whatever it was did so

in terms in which he was bound by what he got - I
mean one has to inject into it a term of the

contract which says, "In this unit there will be" -

to use Your Honour's expression - "potted palms and

a colour television set and a dishwasher, and if

you get there and you find that the dishwasher

doesn't work and the potted palms are dead and so

forth", but if the person, sight unseen, says,

because he is desperate to have something on the
beach at the Gold Coast, "Well, I'll take it for

thousands of dollars a week", or something, and

when he gets there - he finds that he has not even

been told there is a dishwasher in the place, but

it turns out that there is one and it does not

work, then there would not be, we would

respectfully submit, liability.

But the damages are assessed not by saying,

"What was the measure of the level of enjoyment

which this person was supposed to get from the

Baltic(3) 105 7/2/92

potted palms and the level of enjoyment which he

got, having regard to the fact that they were dead,

but associated with", and we would respectfully

submit that this goes right back to the heart of

the nature of damages as awarded for breach of

contract - is associated with financial
considerations of that kind.

Your Honours, can I make this clear, that to

the extent to which I indicate that that is an

appropriate measure, nevertheless the measure only

becomes relevant if the liability is there in the

first place. We would respectfully submit, for

reasons that I have been putting to Your Honours,

that in this particular case one would not, in any

event, imply an implied term to create the

enjoyment, for the reasons I have given.

If that term is not to be implied in the first

place, then it does not come to the question of how

one assesses the damages.	So our proposition
really is twofold.	Our proposition is firstly that

the term is not to be implied in the first place, and secondly, when one comes to the assessment of

damages, even if the term is to be implied, the

damages must be limited in the way in which I have

mentioned.

Your Honours, there are just one or two

further things that I wish to say, one of which I

foreshadowed in answer, I think, to a question from

Justice Deane yesterday. There is one particular

difference between this case and all of the cases

in which Jarvis v Swans Tours damages have ever

been awarded and that is that they are all cases

where the holiday took place. What the problem was

was that the implied term was breached. So the

obligation to provide the room, so to speak, was

not breached; what was breached was the so called

implied term that by occupying this room the

occupant would have a pleasurable experience.

that is not what happened, of course, in this case. Now,

There was no breach of the implied term here; the

findings in the judgments - Your Honour saw

Mr Justice Kirby's words, "idyllic", I think he

used - there was not the slightest suggestion that

this lady did not have a very satisfactory cruise up until the point of the ship striking the reef.

Now, in those circumstances, there is not here

a breach of that term at all; there is a breach

here simply of the term "to provide the voyage" and

that has been dealt with, sounds in damages, and

the damages have been assessed. Those are our

submissions, Your Honour.

Baltic(3) 106 7/2/92

MASON CJ: Yes, thank you, Mr Downes. Mr King, before I

call on you, I should state that overnight the

Court has had the opportunity of considering the

appellant's argument with respect to the operation

of the Contracts Review Act and has been able to

reach a view about those arguments, so I shall

proceed now to state what the view of the Court is.

The jurisdiction conferred by the Contracts

Review Act is extremely wide. Once there is a

finding that a contract was unjust, the Court may refuse to enforce the contract or grant the other relief prescribed by section 7(1). In an

appropriate case it might be a question of some

importance to determine the limits of this

jurisdiction, either by determining that particular

factors are immaterial to a finding that the

subject contract was unjust or by holding that

particular considerations are irrelevant to the

shaping of an order. The limits of the

jurisdiction depend, of course, on a proper

construction of the provisions of the Act.

In this case, the members of the

Court of Appeal took into account, inter alia, the

following matters in deciding that the contract was

unjust: the comparison between the value of the

respondent's cause of action and the amount agreed

to be paid in settlement; an inequality in

bargaining power of the parties; a diminished
capacity of the respondent to protect her interests

and the conduct of the appellant in denying

liability.

Those matters can be said to be "circumstances

relating to the contract", so as to entitle the

Court to consider them in deciding whether the

contract was unjust. The appellant submits that

those circumstances, or some of them, were

immaterial to the finding that the contract was unjust. We do not consider this argument to be

soundly based. In substance, the appellant's

argument is that the facts which establish those

circumstances were wrongly found or that these

circumstances were given too much weight. That

argument raises no issue of principle which

requires consideration by this Court.

The appellant did raise a question of the

construction of section 9(4), contending that the
value of the respondent's cause of action was a

circumstance that was, "not reasonably foreseeable

at the time the contract was made" and, on that

account, was a circumstance to which the Court

would have no regard. It suffices to say that, in

our view, that construction is without merit.

Baltic(3) 107 7/2/92

In part, this ground of appeal was thought to

depend on the first ground, of which we have

already disposed. The first ground having failed,

and no arguable issue of principle on this ground

having been raised, we think that special leave on

the second ground should also be revoked.

Mr King, that leaves you with the last of the

two principal issues raised by Mr Downes, that is

the restitution argument and the disappointment

damages question.

MR KING: If the Court pleases. Your Honours, may I begin

by handing to Your Honours some supplementary

submissions which deal with the question of

restitution of fare in addition to the matters that

I have already put in our submissions.

MASON CJ: Thank you.

MR KING:  The relevant material appears in this document,

Your Honour, under the heading on the sixth page

into the document, it is unnumbered, but it refers

back to our written submissions, page 36. The

heading is Restitution of Fare. Your Honour, would

it be appropriate to permit the Court a short time

to read that before I make my oral submissions.

MASON CJ: Yes, I think so, Mr King. It will not take us

very long to read it, I think. Yes, Mr King.

MR KING: Thank you, Your Honour. At the outset, I would

respectfully submit that there are three findings

by the trial judge which have been undisturbed in

this case which are of critical importance in the

resolution of this issue, and also for the issue

relating to Jarvis v Swans Tours Ltd.

In particular, His Honour found that there was

no benefit at all received by the plaintiff in

relation to the contemplated contract.

Your Honours, secondly, he held that it was an

entire contract; and thirdly, he held in respect

of the damages claims, that there was no overlap.

His Honour carefully considered in relation to each

of the heads of damage whether there was any
overlap. On that point I will only say this: the

President of the Court of Appeal said, and I

respectfully adopt what he said, that where a trial

judge has the advantage of seeing all the facts and

hearing all the witnesses in relation to quantum,

an assessment that there was no overlap ought not

to be one that is lightly disturbed.

DEANE J: If you retain the $5000 for loss of a whole

pleasurable and enjoyable holiday you have,

theoretically, obtained the benefit under the

Baltic(3) 108 7/2/92

contract, because you have been recompensed for its

loss. That being so, if you succeed on the fourth

point there is no basis on which it could be said

there had been a complete failure of consideration.

I follow the strength of your argument, if one were

to assume against you that you fail on the fourth

point.

MR KING:  Can I say in response to that, Your Honour, two

things, and I will take the Court to the

considerations in detail in a moment. Firstly,

they are different forms of action.	The claim for
return .of the fare is a claim in debt;	it is a

restitutionary claim and it arises ex debito

justitiae, as it were. The claim in relation to

damages for breach of contract is an expectational

bargain loss, which is quite separate, we would

respectfully submit.

McHUGH J:  How can you sue for both? You can waive the

breach and sue for restitution, but how can you sue

for both?

MR KING:	We would respectfully submit, Your Honour, that that is neither logically nor practically doubling
up, as His Honour held.  Can I just take
Your Honours - - -
McHUGH J:	But you can only sue for damages if you are given

some consideration.

MR KING:  Yes, Your Honour, but the concept of consideration

differs in both matters. In relation to the

restitutionary claim, the total failure of

consideration is the test or the touchstone by
which the courts are said to operate in granting

return of the prepayment or advance payment, but ~n relation to damages for breach of contract, the ·

consideration that is referred to there is quite

separate. For example - - -

McHUGH J: But my point is you want to recover your

consideration and then you want to sue for breach

of contract which, by hypothesis, you have not

given any consideration.

MR KING:  With respect, no, Your Honour. Can we take, for

example, the case of Fibrosa Spolka which was

referred to and relied upon by my friend.	In that
case, as Lord Porter pointed out, there was

consideration for the contract because a promise

for a promise is good consideration. Moreover, the

seller, who had a c.i.f. sale Gdynia had in fact

built the machine - all he had failed to do was to

ship it - yet notwithstanding that, for the purpose

Baltic(3) 109 7/2/92

of the restitutionary claim, it was held there was

a total failure of consideration.

The reason for that was that the contemplation

of the parties under the contract was delivery of

the machine in Gdynia, not anything else.	So in
this case.	The expected benefit to be received

under this contract was not, as my friend has put,

a removal around the Pacific Ocean, but rather it

was, as the trial judge held, and as

President Kirby held, a round holiday cruise, and

she never received that benefit.

McHUGH J:  I know, but if you get your money back, what

consideration have you given for the contract which

would entitle you to damages?

MR KING: That is a different point but, Your Honours, there

have been a number of cases to which I will take

the Court, if I may, shortly, where the courts have
allowed a claim for both restitution, damages for

breach of contract and tort damages or, to put the

categories of damage into their heads, as sometimes
referred to in the text books, reliance loss,
expectation loss and restitutionary loss. That is
this sort of case. Here, there is the reliance

loss, namely the tort damages; there is the

expectation loss, namely the bargain loss, the restitutionary claims, the return of the fare.

We would respectfully submit that in a proper

case, which we say this is, those heads may be
recovered. For example, in the case that is often
discussed in the law schools, McRae v Commonwealth

Disposals, there, this Court granted to the ·

plaintiff a restitutionary claim, namely the price

paid for the sunken wreck in New Guinea, plus the

reliance loss which were all the expenses that the

salver had committed itself to.

This Court, in that case, did not also give to

the plaintiff the bargain loss because I think the

Court said that was simply unproven. But, in

another case, in this Court, the Court did award

not only the reliance loss but also the bargain

loss.

McHUGH J:	You use the term "restitution loss", in a loose sense, do you not? I mean, it was money that the defendant had expended, it was not money that had passed to the Commonwealth.
MR KING:	That is so, Your Honour. Can I just mention this

other case to which - - -

Baltic(3) 110 7/2/92

McHUGH J: It is just part of the plaintiff's reliance loss,

is it not?

MR KING: Yes. This is the case Your Honour of

T.C. Industrial Plant Pty Limited v Roberts

(Queensland) Limited, (1964) ALR 1083.

Your Honours, that is not on my list because I only

thought about that case as my friend was making his

submission. I do not think there is any need for

me to take the Court to McRae's case, although

perhaps - I do have copies and I can hand them up

to the Court.

MR KING: This was a case, Your Honours, in which the

Commonwealth:

invited tenders "for the purchase of an oil

tanker lying on Jourmaund Reef, which is

approximately 100 miles north of Samarai.	The
vessel is said to contain oil."

Well, in fact, the salvor went north and nobody could find the vessel and it was determined

that either it had never existed or, alternatively,

it had completely broken up some time before.

MASON CJ:  What are you taking us to this case for, Mr King?

MR KING: Simply, Your Honour, for the proposition that was

put to me a short while ago, that you cannot have a

recovery of both heads of damage.

MASON CJ:  You can have recovery of loss of consideration on

a total failure and reliance damages and McRae

establishes that.

MR KING: That is all that I am citing it for, Your Honour;

for no other purpose. Can I then come back, if one

may, to the facts of this case. If I could take

Your Honours to the appeal book, volume 1,

page 178. Your Honours will see that in the first

letter sent to Mrs Dillon on 28 February,

immediately after or not long after the shipwreck,

she was told this:

As a result of the curtailment -

"of your cruise" - that is referred to in the

previous paragraph; I am now looking at the second

paragraph -

we are making a full refund to you of the

unused portion of your passage money and our

cheque is forwarded herewith.

Your Honours, that, it was said by my friend,

reflected the terms and conditions in the passage

Baltic(3) 111 7/2/92

ticket and, in particular, clause 9, but it really

still reflects the submission that he is making

today because what my friend is saying is that this

was not a contract to provide a holiday or to

provide some pleasurable experience but rather was

merely a contract to carry Mrs Dillon from A back

to A around various spots in the Pacific, and it is

totally irrelevant, according to that analysis, to

determine whether she enjoyed herself or not.

Your Honours, that contrasts markedly with the

brochure that the appellant handed out to the

passengers before the contract was entered into,

and that may be found in the supplementary book of

material which the respondent prepared in this case

at page 516.

TOOHEY J: But it is already in the appellant's submission,

is it not, Mr King?

MR KING:	Yes, Your Honour.
TOOHEY J:	We do not need it twice, do we?
MR KING:	No, Your Honour, I can look at it as easily in my

friend's document. It is at page 31 in the

appellant's written submissions, and at page 1 of

the document above some extremely colourful and

attractive photographs of the magnificent

experiences one can have, it says:

It's relaxation. It's getting away from it

all, new friends, variety. It's new places,

sunshine, sparkling seas, romance.	And, best
of all, it's great value.

The fare you pay covers all your meals, board,

your chosen cabin, movies, top class

entertainment and visits to fabulous ports of

call.

Our ships carry fewer passengers than other

cruise liners the same size so you will soon

get to know your fellow shipmates.

Then there is reference to some wonderful things that happen to support the statement, in the first

page of the brochure, what it is all about, this

cruise, "relaxation"; and then we have "for the

young at heart"; and then we have, "This is the

Life":

blue skies ..... Down to the restaurant ..... into

the sun.

All of the wonderful things that happen on this

cruise and, in truth, the brochure itself

Baltic(3) 112 7/2/92

illustrates the point that not only the trial judge
but Justice Kirby brought out that the benefit
intended to be conferred by this contract in terms
of its consideration, at least, was a relaxing

holiday. But instead, what the passengers got, in

the words of Mr Justice Yeldham, in a judgment

which appears at page 79 of our book:

a traumatic and horrifying ordeal -

a holiday that was aborted.

Your Honours, on the question of total failure

of consideration, we would respectfully submit that

this is not a question as to whether or not there

was any consideration for the contract. Of course,

there was because there was a promise to provide
the cruise. It is not a question as to whether or

not she got any consideration at all. Of course,

she did because she got eight days of a 15 day

cruise.

McHUGH J: But, Mr King, the difficulty I am

having - perhaps I am just ignorant of this area

of the law, but I can understand a claim for the

price as part of the damages, that is common

enough, but in this case you have sued for damages

for breach of contract and you itemize certain

things, and you had an independent claim for

restitution for total failure of consideration.

Now, can you do that?	You run one independently
of the other.	I can understand a claim where you

seek to recover the whole of the fare paid over as part of your damages, but you run it as completely

independent from your claim for damages.

MR KING:  One of the propositions that I am going to put to

the Court, Your Honour, is that whether or not it

is treated as a restitutionary claim by a separate

cause of action, or whether it is treated as a
claim for damages for breach of contract, it is

still recoverable. In other words, to take up

Your Honour's point, we would say in the

alternative to our primary submission that in any

event she was entitled in this case not only to

Jarvis v Swans Tours damages, looking at it from a

point of view of breach of contract, but also to a

return of the fare as damages full breach of

contract, and I will take Your Honour to some

more - - -

McHUGH J: Did you plead that?

MR KING: Sorry, Your Honour?

McHUGH J:  You did not plead the fare as part of the claim for damages. Paragraph 12 of your statement of

Baltic(3) 113 7/2/92

claim is quite independent of the claim for

damages. Paragraph 12 of your statement of claim

is quite independent of the claim for damages.

MR KING:  That is true, Your Honour. We claim the return of

the full fare for a total failure of consideration,

but in addition we do claim in paragraph 2 of the

writ at page 9, damages. There is no difficulty in

terms of pleading for us to put the case in the

alternative in the way that Your Honour has just ·•

outlined because if, in substance, she is entitled

to the return of the fare because she got no

benefit-as well as the bargain loss which she never

received also, then as a matter of substance, looking at the matter simply as a question of

damages for breach of contract, I would

respectfully submit she can claim both, and is not

precluded from doing so in the way the case has

been run.

Your Honour, on this question of consideration

and the difference between the concept - - -

MASON CJ: Mr King, if I could just interrupt you, I may

perhaps have misled you in the comment I made about

McRae. Now, of course, the plaintiff recovered

reliance damages in McRae but, of course, in a

sense the reliance damages included the amount that

the plaintiff had paid. It was not as if you, as

it were, measured reliance damages in tote and

added restitutionary damages to them.

MR KING:  What the plaintiff got in McRae's case was return

of the price plus damages for breach of contract in

truth, although they were really assessed as tort

damages.

McHUGH J:  But the return of the price was part of the

damages.

MR KING: That is so, Your Honour. I appreciate that, and

that was the point Your Honour was putting to me a

short while ago, and I am saying if in this case

the Court does not accept our primary submission

that we are entitled to the return of the fare ex debito justitiae as it were, simply because there

is a debt due and owing, then we would submit that

in any event there is no reason why, as damages for

breach of contract, the passengers cannot get the

return of the fare plus some damages for the

expectation loss.

Your Honours, I would remind the Court, with

respect, that not every passenger suffered personal

injuries like Mrs Dillon. Recently - this is

anecdotal only - there was a cruise from the

Fairstar where the vessel broke down off

Baltic(3) 114 7/2/92

New Guinea. In that case the cruise operator returned not only the fare, but offered to each of the passengers a discount for the rest of their

lives for travel on that cruise liner. I only

mention that simply because it illustrates the way

that the passengers, when their cruise is

curtailed, they not only lose the benefit of the

contract, but they also never get something they

expected to get, which is their bargain loss.

So in this case, to take also the example that

Your Honour Mr Justice McHugh gave relating to the

Granville disaster, true it is most of those

persons on that train were no doubt travelling

simply from A to B, but some of them might have

been tourists who were travelling around the

country on a cruise tour as contemplated by the

SRA. Now, assuming that all the other requirements

for breach of contract and contemplation have been
satisfied by the claimant, why can they not claim

those damages as well? We respectfully submit,

Your Honour, there is no reason in principle why

they cannot.

BRENNAN J: What is the measure of damages for breach of

contract?

MR KING: Well, Your Honour, that is a question that

Lord Denning took up in Jarvis v Swans Tours and in

many other cases since; in that case Lord Denning,

I think, assessed it as approximately twice the value of the price paid, because in - - -

BRENNAN J: That may be so but, in principle, is not the

measure of damages what the contracting party was

entitled to under the contract?

MR KING: Well, Your Honour, can I just point out in

relation to that case as well, and then take up

Your Honour's point a little further, of course, in

the holiday; the holiday did not finish half-way	Jarvis v Swans Tours there was no curtailment of
through. The tourist simply never received all the
benefits that were contemplated by the contract.
Now, I do not know if that answers Your Honour's
question or - - -

BRENNAN J:  No, it does not. My proposition was this: if

the measure of damages for breach of contract is

determined by what the innocent party would have

been entitled to recover had the contract been

performed, then that is the starting point in your

assessment. From that you deduct whatever the

plaintiff did, in fact, receive.

MR KING: Yes.

Baltic(3) 115 7/2/92

BRENNAN J:  Now, if you take your starting point, what would

they have got under the contract, then they would

have got their tour having paid for it; not got

their tour for nothing.

MR KING:	No.
BRENNAN J:	So that the measure of damages must reflect

necessarily the consideration that has paid for it

and you cannot assess your damages until you take

account of the consideration which had to be paid.

MR KING:	Your Honour, with respect, the assessment of those sort of damages for breach of contract are not easy
when a trial judge is looking at it, because in
truth, what he or she has to do is to say, well
what was the expected benefit; what was the
bargain; where did they expect to be when this was
all over and what they did not get and usually the amounts paid, the amounts awarded, are very small,
as my friend has acknowledged.  And no doubt the
trial judge will take into account the
consideration that Your Honour has referred to, but the trial judge will also be looking, I suspect
primarily, at the benefit which the tourist or the contracting party had expected to receive or had
been told that he or she would receive and - - -

DAWSON J: Why should he? Let me expatiate. Tours are a

marketable commodity, they have a price on the

market, and what she lost was a tour of how many days, which is accompanied by the expectation of

enjoyment.	She can purchase another tour for the
same expectation at a particular sum.	Why is that

not the loss of a bargain, as in any other case

where you go out into the market and see what it is

that was lost and what it is worth?

MR KING:  Your Honour, the performance - I am not suggesting that consideration is not relevant

DAWSON J:  I mean, she gets damages for personal injuries

and all sorts of other things, but when you are

looking at the contract - - -

MR KING:  What I respectfully submit, Your Honour, I hope

consistently with the authorities, is that the

court makes a, no doubt speculative, assessment of

the expectation or bargain loss. Who knows, it may

have been a case where the operators were in

extreme competition with each other, and the price

paid for the passage or holiday was extremely low.

DAWSON J: That is all right. That is taken into account.

She would assess what is the market value of a tour

of this kind, and that is what she lost; if it is a

Baltic(3) 116 7/2/92

tour of seven days left, that is what she lost, and

she gets the market value.

MR KING:  What I am putting is that it may be misleading to

assess the value to a tourist, or anybody else for

that matter, who wishes to enter into a holiday

which contemplates within its terms some enjoyment

or peace of mind.

DAWSON J:  Why, because you have to get a comparable tour

and if it is a comparable tour it will contain the

same expectation of enjoyment.

MR KING: That is if one is available.

DAWSON J: Well, there is no evidence that there was or was

not, in this case, or that Mrs Dillon was or was

not able to take it if it was, but - - -

MR KING:  Your Honour, I think the evidence is that the

last thing that Mrs Dillon would have done was to

go on another cruise. Certainly within the period

of time that she - - -

DAWSON J: That is another thing, the mental trauma. That is

compensated for elsewhere, but you are down to hard

commercial facts now. This was a commercial

transaction and there are other commercial

transactions of the same sort.

MR KING:  All I can submit on that point, Your Honour, is

that when faced with this factor the trial judge

has to assess what in his view an appropriate

amount is for the loss of bargain or expectation.

DAWSON J: But he has to do it on a proper basis, and the

proper basis, the conventional basis, is the loss

of the bargain and that involves looking at the

market place. ·

MR KING: If I can comment on that, Your Honour, if that

were held to be the rule, then Jarvis v Swans Tours

damages would effectively be, in almost all cases

that I can presently think of, be abrogated,

because my friend put, towards the end of his

submissions, I think, in response to a question

from Your Honour, that she was probably entitled to

one of the heads.

There is a concession that one or other of the

heads, restitution of fare or Jarvis v Swans Tours

damages, are available, but we would respectfully

submit that if in substance, on looking at the

matters before the Court and on the facts before

the Court, there is a justification for awarding

both heads of damage - - -

Baltic(3) 117 7/2/92

DAWSON J: But you see, there had to be something to take

Jarvis' case outside the ordinary rules which were

relied upon.

MR KING:  Yes, that is a separate matter, Your Honour, and I

have not come to that yet.

DAWSON J: But that is all important. It may have been that

Mr Jarvis could not go out into the market and buy another holiday, because he only had two weeks'

holiday available to him in any one year. If that

is the crucial difference, is it present in this

case?

MR KING: With respect, Your Honour, in this case it would

have been completely impractical for Mrs Dillon, at

least within the time that she was affected

personally by the cruise, and one would have to say

that looking at the medical reports and the

clinical notes in this case, that certainly went

well past July 1986, probably up until the end of

that year.

DAWSON J: But she was compensated for a medical condition,

you see.

MR KING: Yes, but I am answering Your Honour's point that

could Mrs Dillon have gone out there and then and

gone on another cruise? With respect, Your Honour,

like Mr Jarvis in Jarvis v Swans Tours, it was

practically not open to her.

DAWSON J: Yes, but he had not been compensated in relation

to that. She had been compensated in relation to

any medical condition which amounted to a

disability.

MR KING:  No, Your Honour, the damages for personal injuries

that Mrs Dillon received were in respect of the

soft tissue injuries to her neck and back and als.o

the nervous shock, but that did not contemplate ~ny

element of bargain loss.

McHUGH J: But that is one of the problems in this case.

Your claim is really a claim for bargain damages.
You can recover prices, either in a restitutionary

claim or as part of reliance damages, but you can
never get a credit for the price as such in bargain

damages. On the contrary, that has got to be taken

into consideration against you, has it not? It is

not something you get back.	It is something that
you pay.

MR KING: Well, no Your Honour. Can I hand up to

Your Honour where that recently happened. A case

of Sampson v Floyd, (1989) EGLR 49. It is a

decision of the English Court of Appeal. Now, in

Baltic(3) 118 7/2/92

this case, Your Honours, the plaintiffs had

purchased a ten-year lease for 10,000 pounds and

they entered into possession of the premises and

shortly thereafter, about six months later, after

having obtained the benefit of some part of the ten

years, they were forced to leave by reason of the

conduct of the landlord, who had breached his
covenant in relation to quiet possession, basically by interfering in the contract. Now, in that case,

the court awarded as damages for breach of

contract, Her Honour Judge Bracewell, QC, at the

Barnstaple County Court, not just return of the ten years rent, the 1000 pounds, but also the reliance

loss, the conveyancing costs in relation to it and

the Jarvis v Swans Tours element by reason of the·

manner of the breach of contract.

Now, Your Honours, I would respectfully submit

that the principles discussed in that case are very

similar to here and answers, with respect,

Your Honour's question. So here, in this case, if

I can convince the Court that here, Mrs Dillon, not
only did not receive the benefit contemplated by
the contract, but in fact she never received the
expectation, the bargain loss, then she is entitled
to both heads of damage, in substance, if not as a

matter of form.

And Your Honours, can I just point out that

the English Court of Appeal has examined this

question on a number of occasions. I have not

given Your Honour reference to it, but I should do

so, because it may be of some importance and it

leads on to a question that Your Honour

Mr Justice Deane asked about whether these damages

may be recovered in tort as well as contract.

McHUGH J:	Is this case of Sampson v Floyd only in the Estates Gazette Reports?
MR KING:	Yes, it is, Your Honour. Your Honour, the recent

cases that I wish to refer to are threefold and I

should just read them onto the transcript if I may:

firstly, Bliss v South East Thames Regional

Authority,

(1987) ICR 700; the second is is Hayes v James and Charles Dodd, (1988) BTLC 380.

BRENNAN J: What are these being quoted for?

MR KING:	Your Honour, I am citing these to illustrate that this whole question of the overlap, referred to by
His Honour Mr Justice McHugh, has been considered
by the Court of Appeal in those cases not so long
ago. Therefore, in deciding, as it did in
Sampson v Floyd, to award the damages under the heads that it did, it can be assumed that the court

Baltic(3) 119 7/2/92

took into account the considerations that it did in

those cases to which I have just cited.

BRENNAN J:  Now do you have copies of these cases?

MR KING:  I am sorry I do not, Your Honour. I only informed

the Court of them in case they may be of interest
to the Court; I do not propose to rely on them,

Your Honour, I just merely raise them as a matter

of information and interest.

McHUGH J:  We have got Bliss v South East Thames Regional

Authority.

MR KING: Yes, Your Honours have Bliss. Can I examine

Bliss, Your Honour, when I come to examine, as it

were, directly, the issue of Jarvis v Swans Tours

damages. Can I just say something further about

the question of the restitution of the fare.

In Fibrosa Spolka v Fairbairn Lawson,

(1943) AC 32, the judges all considered the

difference between the form of action, the

restitutionary form of action which permitted the

plaintiff there to recover the price prepaid or the

portion of the price prepaid and consideration

under the rules for formation of contracts.

In particular, at pages 42 to 43,

Viscount Simon considered and discussed the

difference between the two and what His Lordship in

effect was saying is that the court should look at

the issue as to what was the consideration that led the party into the contract; not the consideration for the contract but the consideration that led the

party into the contract or the expected benefit.

And if that benefit had not been received then

there was a total failure of consideration in the

eyes of the law, notwithstanding that there was

consideration for the contract itself.

Your Honours, it may well be that it is not

inconsistent, even as a matter of pleading, to

claim a restitution of the full payment for failu~e

of consideration as well as damages for breach of·

contract. The two are quite discrete.

McHUGH J:	I must say that at the moment both the way you are approaching this case and what happened in a
case like Sampson v Floyd seems to me to approach
the case as though you were assessing damages in
tort rather than in contract.
MR KING:	I would also ask the Court to look at the other

citations from Fibrosa Spolka to which I have

referred in the supplementary submissions at

pages 6 and following. All of the cases that I

Baltic(3) 120 7/2/92

have set out in those submissions, all of the

hire-purchase cases where, notwithstanding the fact

that the hire-purchaser got up to a year's benefit

under the contract, yet he got back all the
payments under it for a total failure of
consideration; notwithstanding that in Harling v

Eddy, the buyer of a cow got a diseased cow and

took some milk from it, yet he got back the price

because the cow was totally useless; and

notwithstanding the other cases to which I have

referred, such as Mason v Burningham, paragraph 8,

where the price was returned for goods that were

stolen.

I would respectfully submit those cases are

analogous to the present case because what the

court asks itself, in truth, "Was there an

unrestorable real benefit to the plaintiff who

claims back the advance payment or contract

price?", and, of course, in those cases, where

there was an unrestorable real benefit because, for

example, an invalid issue of shares had been
on-sold so they could not be returned or because

such as Hunt v Silk, which is the usual authority quoted on this point, the apprentice had received
one year out of 15 years, notwithstanding that, if

there is an unrestorable real benefit, then the

plaintiff cannot recover.

But in this case we have the benefit of a

finding by the trial judge that Mrs Dillon received

no benefit, no benefit under this contract at all,

and to take up the point of my friend about what

Your Honour Justice Deane said in Pavey v Matthews,

in the eyes of the law, looking at the contract

consideration that was contemplated when this
contract was entered into as stated in the

brochure, as discussed by Kim Moffat with

Mrs Dillon when she went and told her why she

wanted to go on this cruise, the agent of the

carrier, that there was no benefit either in the

sense discussed by Your Honour in Pavey v Matthews,

or indeed, at all, as His Honour held.

Your Honours, if the Court does not accept, on

our first proposition, that there was no benefit,

then our second proposition is that this was an

entire contract which failed, and there was before

the Court of Appeal no appeal against the finding

of the trial judge that this was an entire

contract; nor, looking at the grounds of appeal in

this case before this Court, is there any appeal

against that finding. I would respectfully submit

that the Court should approach the matter on the

basis that those findings are invulnerable from

review.

Baltic(3) 121 7/2/92

The question then is, having made a finding

that this was an entire contract, can the carrier

keep the consideration, the whole of it or part of
it? The attitude taken by the carrier in the
letter of 28 February to the passengers was, "Yes,

we can keep what we assess to be the unused portion

of the fare", and it made its assessment as to what

that was, and on one view of it, that included the

day of the shipwreck. We would respectfully submit

that that narrow view of the nature of the contract

and of the contemplation of the passengers with

respect to it cannot be accepted. This was, in

truth, an entire contract. Mrs Dillon quite

rightfully could have said, if she had been left at

Tauranga - the port, I think, referred to by

Your Honour Justice Brennan - or been cast adrift

in the middle of the ocean, as suggested by

Your Honour Justice McHugh, that she could have

quite rightfully said, "That's not what I

contemplated. This was a contract, a round cruise,

from A to B, and that consideration has totally

failed".

The third basis on which we put the claim for

restitution of fare is damages for b~each of

contract and -

McHUGH J: But that is what, I must say, bewilders me. I

mean, where a party sustains a loss by reason of

breach of contract, that party is entitled to be

placed in the same position with respect to

damages as if the contract had been performed, and

if the contract had been performed you would have

paid the fare. So what you are entitled to get is

the difference between what you paid and what you

should have got, or what you would have got under

the contract, but you want your fare back.

MR KING: That is so, Your Honour, because we say we simply

got no benefit for this contract.

McHUGH J: Well, let us take one of your other heads of

damages. You want to get your fare back and you

do not want to pay anything on your side.

MR KING: That is so, Your Honour.

McHUGH J:  You want damages because the defendant has failed

to perform its obligations, but you want to take

back what you were supposed to pay in respect of

your obligation. Your obligation was to pay the

fare.

MR KING: That is so, Your Honour, but we take into account,

in seeking the return of the fare as damages for

breach of contract - and I am not putting it in the

alternative to the other positions that I have put

"

Baltic(3) 122 7/2/92

- as damages because, in truth, no benefit was ever

received. Now, it is pointed out by my friend to

the Court, "Well, you got 8 days out of 15", but in
the judgment of the trial judge, which was

undisturbed by the Court of Appeal, that submission

was just simply rejected because, on the facts,

looking at the whole of the evidence before

His Honour, any benefit was aborted, to use the word of Justice Yeldham or, to use the terminology

of the trial judge, "nugatory".

Now, the point I am putting about that,

Your Honour, is that in the cases under this head

courts do and have granted damages for breach of

contract on that basis and the case from the an illustration, because there the court awarded

not only the return of the rent but also damages

for breach of contract, or breach of covenant,

namely the reliance loss suffered by the lessees.

McHUGH J:  They seem to have awarded reliance loss and

bargain damages. That is the only case I know of

where that has happened. Usually reliance loss is

part of your bargain damages.

MR KING:  I did cite to the court in McRae v Commonwealth

Disposals Commission where the plaintiff recovered

reliance loss plus the restitutionary basis as

damages for breach of contract.

McHUGH J:  It was all part of the reliance loss. The

plaintiff had paid money to the Commonwealth for the ship that did not exist, the tanker that did not exist, and had expended money on the faith of

the promise. All the money was spent in reliance

on the promise.

MR KING: So here, Mrs Dillon spent money on the promise that

she would get a relaxing holiday cruise and she

never got it. Not only did she not get that -

McHUGH J:  I know, but your claim goes beyond reliance

damages in this case.

MR KING: Yes, I concede that, Your Honour.

BRENNAN J:  Mr King, if you contract to sell a tonne of

grain for $100 to a buyer in order that he can on sell it for $150, and the grain is not delivered,

what is the buyer's measure of damages?

MR KING:  Would Your Honour just repeat the example, I beg

your pardon?

BRENNAN J:  $100 purchase price for a tonne of grain, to be

on sold for $150. You can get your $100 back if

Baltic(3) 123 7/2/92

you have paid it, because you have not had the

grain delivered, but you do not get $150 damages on

top of that, you only get $50.

MR KING:  In the market-place it would be the difference

between the two or, if there is no market, then the

return of the price. But that is not this case,

with respect, Your Honour, because here Mrs Dillon

never received any benefit as contemplated by the

contract; that is, never received any of the

consideration for it, and that was money paid over

for a benefit never received. But in addition she·

was promised something else, she was promised and

expected to be in a position at the end of the

cruise, which she never was. There was a bargain

loss, and my respectful submission is that if on

analysis of the facts both heads of damage may be

found on the facts, then they can both be

compensated.

BRENNAN J:  I understand the argument, I understand what

you put.

DEANE J:  Mr King, if you go away from this "money and the

box" argument, and it seems to me you have said

what can be said about that, is there not another

aspect of this you should be addressing, and that

is, if you look at page 355 in the judgment of the

learned trial judge in the last paragraph, and if

you go from there to page 431 in the judgment of

Justice Kirby, whose judgment is the critical one,

and read at line 18, it is apparent that both the

trial judge and Justice Kirby made allowance for

the refund of the ticket money in assessing damages

for distress and the like, which means that

regardless of whether it was right to make an award

for full restitution, the allowance made in the

distress money obviously has prevented doubling up.

Well now, should you not be putting that forward as an alternative basis to answering the matters that

have been addressed to you?

MR KING: Yes, Your Honour. It is quite true, with respect,

as Your Honour points out, that at page 431

Justice Kirby comments upon the fact that the trial

judge was careful to ensure that there was no

overlapping, and I would respectfully adopt what
His Honour said there, and I am grateful to the

Court for pointing that out. It really comes back perhaps to whether the Court says these sums that

are awarded by the judge were in respect of

separate causes of action, that is, a

restitutionary claim; or whether you can say that

they are simply damages for breach of contract, but

different aspects of the award. I would

respectfully submit that, following the latter

argument as outlined by the President at page 431,

Baltic(3) 124 7/2/92

both may be recovered because at the end of the day

it is a question of substance: was there in truth

an overlapping or not, and was there in truth an

award for losses which occurred? I would

respectfully submit that, however you want to

categorize the claim, however you want to apportion

to the various heads the awards made, that there

was no overlapping.

Your Honours, I do not think there is anything else I can add on the question of whether my client

was entitled to return of the balance of the fare

or not, save and except, can I simply refer

Your Honours to the discussion in Treitel's Law of

Contract, 8th Edition at page 832, where Dr Treitel considers the relationship between loss of bargain,

reliance loss and restitutionary loss, and I hope

the matters that I have put to Your Honour are

consistent with what Dr Treitel writes in his

textbook on that point.

Your Honours, the next head of damage which

was addressed by my friend was damages under Jarvis

v Swans Tours. I would ask Your Honours to refer

to the written submissions that have been prepared

by the respondent on this point, and I did

hopefully take into account Your Honour the

Chief Justice's direction in this that they be

comprehensive. I do not wish to take the Court to

any additional matters in relation to those written

submissions as to why this Court should follow

Jarvis v Swans Tours, but I do wish to take up some

of the additional points raised by my friend if I

may.

MASON CJ: Yes.

MR KING:  I should just point out that in our written

submissions we have referred extensively to a

number of American articles and also noted that in

a recent High Court decision in New Zealand, the

High Court of New Zealand has refused to follow

Addis, and we would ask this Court to do the same

thing, that Addis is really outdated. In truth, it

is a ridiculous distinction to draw, as the

Lord Chancellor did in Addis, between refusing

damages for disappointment where a bank manager

fails to honour a cheque in respect of funds which

are in hand - in such cases damages for

disappointment are awarded - and a case where an

employee is wrongfully dismissed, and the manner of

that breach of contract in relation to the employee

causes, on the proven facts, disappointment and

distress. I simply ask Your Honours to take into

account what the High Court of New Zealand said in

that case.

Baltic(3) 125 7/2/92

MASON CJ:  Do you know whether that case has gone on appeal

to the Court of Appeal in New Zealand?

MR KING:  I am afraid I do not, Your Honour. Can I check

that and come back to Your Honour on that point?

MASON CJ: Yes.

MR KING:  Thank you. My friend referred to Fink v Fink in

this Court at 74 CLR at 142. With respect, Fink v

Fink is distinguishable from this case. That was a

case of a dispute between a husband and wife on a
deed of interim settlement, where what was

contemplated was that the wife should have an

opportunity for 12 months to resolve her dispute

with her husband by living in the house for

12 months and on certain terms and conditions.

In truth, what happened after six months, she breached the deed in accordance with what the

husband thought, and he refused to allow her to

remain in the house. The question was whether the

Court should award damages for the loss of the
opportunity, and two of the judges held that those

damages were assessable because, even though they

were speculative, none the less that was a head

that could be awarded. The fact that it was

difficult to work out what :hose damages should be,

none the less they should De awarded.

The majority of the Court said no, they should

not. It was in examining that that the citation

from Baron Pollock referred to at page 142 was

made. All I would say further, Your Honours, aL0ut

that is that there does not appear to be any

examination by this Court in that judgment at

page 142 of the basis for what Baron Pollock said,

and hence I would respectfully submit there is no

authority which Your Honours would find at all

persuasive to follow in relation to that point.

The question, I would respectfully submit, is not
foreclosed.	Of course, if it is, then I would ask

the Court, on behalf of Mrs Dillon and the

passengers, to reconsider it.

Then my friend referred to Woodar v Wimpey.

Your Honours, Woodar v Wimpey was a case which

questioned Jackson v Horizon Holidays. The

citations have been given to the Court by my

learned friend. But in this Court, in McNiece v

Trident, this Court approved Jackson v Horizon

Holidays on the question raised in Woodar v Wimpey.

That appears from our written submissions. It

was a joint judgment of Your Honour the

Chief Justice and Justice Wilson in Trident General

Insurance v McNiece Bros, 165 CLR 107 at page 119,

Baltic(3) 126 7/2/92

which Your Honours should have on our list. The

only point that I wish to draw out about this is as

follows, Your Honours, that the real question
before the Court in Trident General Insurance v
McNiece was the privity of contract question.

That was the basis of the adverse comment in Woodar v Wimpey about Jackson v Horizon Holidays.

We would respectfully submit that nothing can be drawn from the adverse comments made in the House of Lords, if they were adverse - and I would

respectfully submit they were not, on true

analysis - about Jackson v Horizon Holidays and the

specific principle here being discussed, namely

whether there can be damages for disappointment and

distress.

So, I would respectfully submit that this

Court has already looked at Jackson v Horizon

Holidays Limited in that judgment and given general

approbation to the manner in which the court

approached the award in that case.

Then my friend referred to the fact that

Jarvis v Swans Tours should not be followed because

it created an exception to the general rule as to

recoverability of damages of this type. I would

respectfully submit that, firstly, there is no

basis for the general rule for the reasons

discussed by Greig and Davis in the extract to

which my friend referred, and I would ask

Your Honours to adopt consideration of the comments

of the two authors at that paragraph at page 1282.

Alternatively, I would submit that the Court should

accept the proposition that there is an exception

to the general rule and that Jarvis v Swans Tours

is such a valid exception.

Alternatively, I would ask the Court to

consider what the industrial court said in Bliss'

case, to which reference has already been made, and
adopt that approach.	Now, in Bliss' case, the

Court of Appeal in an industrial matter cut down

Jarvis v Swans Tours and Lord Justice Dillon there said that the damages could only be awarded if the

contract contemplated mental peace or satisfaction,

and he cited specifically the Holiday cases as such

an example of a contract and approved those cases
and, we would respectfully submit, that that third

approach ought to be adopted if the other two

approaches I have put are not acceptable to the

Court.

Finally, in response to some questions from Your Honour Justice Dawson and Justice Toohey, to

my friend regarding the question of providing the

opportunity or facilities for a holiday, as

Baltic(3) 127 7/2/92

contemplated by a contract, I respectfully adopt the assumption behind those questions and submit

that this was such a contract, as is amply shown by

the terms of the brochure and the discussions, in

the evidence between Kim Moffatt and Mrs Dillon,

which appears in the transcript and the appeal book

at page 46 through to 49. Your Honours, unless

there are any additional matters to which the Court

would like me to address, same and accept before I

just receive instructions on one matter, those

would be our submissions.

Your Honours, I would seek to raise one

question in the notice of contention and that is

paragraph 6 of the notice which appears at page 487

of the appeal book and the relevant paragraph is

paragraph 6, and this concerned the decision of the

trial judge in relation to the effect on the

subrogated interest, the claim by the insurers in

respect of their interest in the baggage element of the claim. Now, as Your Honours will be aware, the

insurers had an interest in the claims of the
passengers in so far as it affected that portion of

the claim relating to the baggage loss and what the

appellant did in this case and indeed, His Honour

Justice Carruthers held it was part of the

deceptive conduct, was to get the passengers to

sign up the releases, after deducting the insurance

payouts to the passengers. They specifically asked

in the forms which they sent off to the passengers,

are you insured? If so, how much and what are you

entitled to get? And then in paying out, they

deducted those amounts thereby, of course,

defeating the subrogated interest of the insurers

and there is grave concern, Your Honour, that if

subrogated claims such as that can be defeated by a
passenger who has effectively mislead into signing

releases, then it may have a very disadvantageous

effect.

McHUGH J: Is this a claim under section 52 of the

Trade Practices Act?

MR KING: Yes, it affected the

McHUGH J: Well that is not a matter for a notice of

contention, is it? That would be a cross-appeal;

it is a different cause of action. You would need

special leave to appeal on that point, would you

not?

MR KING:  I think it is fair to say, Your Honour, that the

context in which we wish to raise this question was
the Contracts Review Act point, because one of the
considerations and part of the misleading and

deceptive conduct was, as I say, to lead the

Baltic(3) 128 7/2/92

passengers into breach of their insurance contracts

with the insurers.

DEANE J: But the point does not arise once the release is

gone, does it, which means the only basis on which you could raise it would be that the people behind

your client would like us to express a view about

the law?

MR KING: Yes. Well, the truth is exactly as Your Honour

has put it.

DEANE J: Well, -I think it having emerged that that is what

is involved, the less you say about it the better,

really.

MR KING: Very well. If Your Honours please.

MASON CJ:  Do you wish to say anything about costs?

MR KING: Yes, we do, with respect, Your Honour. Might I

just seek some instructions about that?

Your Honours, in relation to the two matters in which leave to appeal has been rescinded, I would

respectfully ask the Court for an order for

solicitor/client costs because they were matters

which were the bulk of the appeal in relation to

preparation.

MASON CJ:  But you would not have got solicitor and client

costs if the matter had gone on on a more

substantial basis and you had succeeded.	How can
you get them now?

MR KING:  In relation to the other matters, I would simply

ask the Court to award costs in accordance with the

event.

MASON CJ:  I thought perhaps that you might be minded,

having regard to the fact that this is a test case,

to ask for costs in any event, even if you lost on

the two issues that remain extant.

MR KING: Yes, Your Honour, I am grateful to the Court for

reminding me of that possibility and I do, in fact,

seek costs on that basis because, in truth, any

decision by the Court in this case on what should happen to those two elements of damage which have

been discussed would, no doubt, and will, of

course, be followed in relation to other claims and

that is a real and substantial benefit to the

appellant in any event. So, I would respectfully

ask the Court to award the costs of the two
remaining points on the quantum issues in any

event.

Baltic(3) 129 7/12/92

BRENNAN J:  If you fail on those issues and the Court does

not accede to your proposition that they should be

awarded to you in any event, then what order do you

suggest should be made with respect to the overall

costs of the proceedings, that is on the assumption

that you have succeeded on the first two issues and

you have failed on one or both of the last two

issues?

MR KING:  Your Honour, I would certainly ask that there be

no disturbance of the orders made below. The fact

is that they did not take up a lot of court time.

The matters which involved the careful examination
of all the facts were really the Contracts Review

Act point, and the Trade Practices Act points, and

certainly in the overall context to the litigation

as a whole, I would respectfully submit there ought

to be no variation of any costs order made below.

TOOHEY J:  You do not appear, Mr King, to be drawing any

distinction between an order for costs in your

favour in respect of the remaining issues and the

absence of an order for costs against you if you

were to fail in respect of those issues.

MR KING: Yes, thank you, Your Honour.

TOOHEY J:	You are putting it in terms of entitlement to costs in respect of all issues even if you are to
fail in respect of the third and fourth, but there
may be a different way of looking at it, namely,
whether the appellant, if successful on either the
third or fourth issue, should have an order for costs against you in respect of those issues.

MR KING: Well, I would respectfully submit there should be

no order for costs against us in any event, (a)

because of the substantial benefit that might be

obtained by the appellant in obtaining an award in

its favour and (b) because to try to distil from

the other substantial arguments in the case that

were discussed in the courts below would be an

almost impossible task. Also, because the issues

really fell within a pretty small compass in the overall litigation, Your Honour. In truth, very

little time was spent on those two issues in terms

of court time.

It is not a situation of de minimis, but as a

matter of discretion I would respectfully submit

the Court would simply not disturb the orders made

below or, perhaps, vary them and make no order as

to costs in respect of them.	If Your Honours
please.

MASON CJ: Thank you, Mr King.

Baltic(3) 130 7/12/92

GAUDRON J:  Mr King, before you resume your seat, I am

sorry. Let it be assumed for the moment that you

lose your claim for restitution but that you

succeed on the Jarvis v Swans Tours head. The

damages awarded on the Jarvis v Swans Tours head

would seem to have been deflated to some extent by

reason of the restitution. Is there something in

your notice of contention or something to allow the

appropriate orders to be made in that event, or

what should happen?

MR KING:  Your Honour, I did submit, in the course of my

submissions, that in the alternative to our

arguments about the form of action and whether it

is an entire contract or not, that in any event

those damages for restitution, as awarded by

His Honour, could be taken up under the head of

damages for breach of contract.

It is probably correct, as Your Honour points

out, that there is no notice of contention
suggesting that that might be another way of
looking at the case. It is contained in our

submissions, Your Honour, the point, and for more

abundant caution I would seek the leave of the

Court to file instanter a notice of contention to

ensure that the issue is squarely before the Court.

MASON CJ:  I think we would be minded to grant leave but,

what is the contention? What is it you want to

file?

MR KING:  The contention is, Your Honour, that - as

Justice Gaudron pointed out and as raised by

His Honour Justice Deane perhaps in a slightly

different way earlier - these damages that

His Honour awarded may fall not under two heads but

under one, that is, to be more precise, they may be

awarded as damages for breach of contract or

perhaps even tort.

McHUGH J: That is not the point, is it? The point is that

you got less for your disappointment than you would have got if you did not have the claim for recovery of the fare.

MR KING: Yes.

McHUGH J: Theoretically you may lose on the restitution

case, but win on the disappointment issue. One

view is that you got less on disappointment than

you should otherwise have got.

MR KING: Yes, that is certainly so, Your Honour.

McHUGH J: Should you not be addressing that issue?

Baltic(3) 131 7/2/92

MR KING: Yes, Your Honour. Certainly. My imprecise

submissions have not communicated the effect of

what I am trying to put. That is the issue that we
would seek to have raised in a notice of

contention.

McHUGH J:  What do we do, add the price to the

disappointment damages or send it back to be

reassessed or assess it ourselves, or what? What

order do you seek?

MR KING:  We would simply say, Your Honour, that the two

should be added together. What the trial judge did

was to carefully try and apportion the two and

ensure there was no overlap. Mr Justice Kirby said

he had the opportunity to see all the witnesses,
including not just Mrs Dillon but some other
passengers who were called as well - Mrs Maguire,
for example. Her case was particularly, if I may

say so, pathetic in all the circumstances.

DEANE J:  Is not what you really want to say that we should

not interfere with the verdict for the reason that

so much of the damages as were identified as

restitution damages should properly have been

identified under a different head, but that does

not affect the propriety of the overall verdict?

MR KING: Yes.

MASON CJ:  You have leave to raise that contention.

MR KING:  Thank you, Your Honour. There is just one thing

that I have forgotten, which Your Honour

Justice Deane raised, and it was a question that I had intended to go back to. May I just raise this

before I sit down. It was a question His Honour

Justice Deane asked: whether these damages for

disappointment might also be awarded in tort as

well as contract.

Indeed, there is a recent case in the ACT

Supreme Court where His Honour Judge Kelly did

exactly that. That is the case that is cited in

our submissions, Your Honour, of Graham v Voigt,

(1989) ACTR 11. On that same point, one of the

decisions to which I referred earlier in the Court

of Appeal in the United Kingdom,

Lord Justice Purchas, said the same thing.

Your Honour, I just cannot put my hands on the

authority at the moment but, if Your Honour

pleases, I could have it delivered to Your Honour's

chambers. Those are our submissions, if the Court

pleases.

MASON CJ: Thank you, Mr King. Yes, Mr Downes?

Baltic(3) 132 7/2/92

MR DOWNES: 

Your Honours, my learned friend said that the

inference really was that Mrs Dillon would not have
gone on another cruise as a result of her

experience.  The fact is, as appears at pages 81

and 82, that she subsequently went to the

United Kingdom and crossed the channel in a ferry,

but that is all irrelevant, we would respectfully

submit.  The ultimate question is, when

Your Honours look at the damages for breach of

contract, what is the value, if there is some claim

for disappointment, to be put upon that
disappointment. In the absence of some evidence

that suggests that undertaking another cruise at

another time is going to cost vastly more than the

cost of the instant cruise, we would respectfully

submit that those damages could never exceed the totality of the fare. They could not even equal the totality of the fare, because the pleasure that

is to be given by the consideration return for the

value of the ticket is not the only thing that is

given in return for the value of the ticket, and we

would respectfully submit that one could never

value the disappointment aspect at higher than a
portion of the whole ticket and even then, only if
damages of that kind are available. So, it is not

to the point to say she did not want to go on

another cruise; the fact is, one looks at the value
of the loss by reference to the cost of a cruise.

Your Honours, so far as the matter that has

just been raised by leave of Your Honours pursuant

to an oral, so to speak, notice of contention, we

would ask Your Honours to briefly reconsider that

matter and to do so on the following basis: not

only was the matter not raised by contention but,

Your Honour, it was not raised by the pleadings.

Your Honours will also appreciate that

His Honour Mr Justice Kirby, with whom the

Chief Justice agreed, considered that the amount of

the quantum of the damages for disappointment was

excessive by a factor of 100 per cent in any event.

In those circumstances, we would respectfully

submit that it would not be appropriate for this

Court to interfere with the judgment below by way

of, so to speak, giving in the light of the way the

notice of contention has now, as I understand it,

ultimately been framed, the lady the benefit of the

restitution by leaving the order in place on the

basis that it could have been added into the $5000

when two of the judges in the Court of Appeal have

already expressed the view that it was excessive by

100 per cent and we would respectfully submit that

Your Honours would accord with that view.

We did not, of course, challenge before

Your Honours because it was not, we considered, a

Baltic(3) 133 7/2/92

matter appropriate to challenge as a matter of
importance before Your Honours, the excessiveness
of that $5000, and we do not ask Your Honours to

reduce it, but by the same token, we would

respectfully submit that Your Honours ought not to
be positively coming to the aid of the appellant by

taking the step that Your Honours have sought to

take pursuant to the notice of contention.

Your Honour, another matter which my learned friend raised right at the end of his submissions

is this claim in tort. As to that we say (1) it

was never raised;	(2) and it is too late to raise
it now.	It would have been addressed by us both in

submissions below and here if it had been raised.

But more particularly, Your Honours, there is a

very simple answer to it if I could just put it.

The action in tort arises out of a duty of care and

the consequences of the failure to honour that

duty. It does not arise out of a duty to create

enjoyment, so the only damages that can sound in

tort for breach of the duty of care are the damages

which the lady received, namely, the vexation, the

concern, the worry that was associated with the

sinking of the ship, not anything which represents

a loss of enjoyment.

The last matter for me to address,

Your Honours, is the question of costs. We would

respectfully submit that Your Honours will, in the

ordinary way, deal with the costs of this case in

accordance with the outcome, and we would ask

Your Honours to bear in mind that if the two

matters that are not now outstanding in the appeal

resolved the issue, there would have been no

hearing before Your Honours today. So the result

is that the parties have been before the Court for

one of the two days on the issues which are now

still before the Court.

Your Honour, as to whether it is appropriate ordinary case by giving it the label "test case",

to treat this case in some way as different to an

we would just say this: as my learned friend

really, in effect, was forced to concede in answer
to a question raised by Your Honour Justice Deane

immediately before he made the submission relating

to costs, it is not correct to regard the persons

who are ultimately to wear the costs of this

litigation as one lady in her fifties who was on

the voyage. In truth there are, to use the

concession he made, people behind him.

Your Honours, I just add to that page 253 of

the appeal book, which is the original letter from
Withnell & Co, not then the solicitors for
Mrs Dillon, informing her that they are a firm of

Baltic(3) 134 7/2/92

Sydney solicitors specializing in maritime and

marine insurance law, informing her of their

instructions from all the insurers, informing her

that they are going to run this case and, so to

speak, inviting her to be involved.

When Your Honours take that into account, we

would respectfully submit Your Honours will

conclude that there is no basis why the costs in

this case should be dealt with in a way differently

from the costs in which the basis for the order is

the result in the proceedings. Those are our

submissions in reply.

MASON CJ: Thank you, Mr Downes. The Court will consider

its decision in this matter and we will adjourn

until 10.15 am on Tuesday next.

AT 12.35 PM THE MATTER WAS ADJOURNED SINE DIE

Baltic(3) 135 7/2/92