Baltic Shipping Company v Dillon

[1992] HCATrans 36

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry

Sydney No Sll3 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

Baltic(3) 1 6/2/9l,;

MCHUGH J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON THURSDAY, 6 FEBRUARY 1992, AT 10.16 AM

Copyright in the High Court of Australia

MR G.K. DOWNES, QC: If the Court pleases, in this appeal I

appear with my learned friend, MR A.W. STREET, for

the appellant. (instructed by North Smith & Co)

MR P.E. KING: If the Court pleases, I appear for the

respondent, Joan Norma Dillon. (instructed by

Dunhill Madden Butler)

MASON CJ: Yes. Mr Downes.

MR DOWNES:  Your Honours, in accordance with the directions

of the Registrar, written submissions were filed on

our part a little while ago.

MASON CJ: Yes, we have had the benefit of them, to use a

euphemism.

MR DOWNES:	And, Your Honour, in due course my learned friends filed some submissions in response to
those.  We then, although I do not think strictly
were required to do so by the terms of the
Registrar's direction, nevertheless prepared some further submissions in reply which were delivered
to the Court and to my learned friend last night.
We also received last night some further written submissions from my learned friend. Not
unnaturally, we have not yet had any opportunity to
produce any written submissions in reply to those
and could I suggest to the Court that whether it is
appropriate for us to do so is a matter that can perhaps be considered during the course of the
appeal.
MASON CJ:	No doubt you can direct oral argument to them,

can you not, in the course of presenting your case?

MR DOWNES:	Yes, Your Honour.
MASON CJ:	I have not seen his further submissions anyhow,

so I am blissfully ignorant of them.

MR DOWNES: If Your Honour pleases. Your Honours, may I

open the appeal by taking Your Honours to some of

the critical documents upon which the appeal turns

and, in particular, on which the issue as to
whether there were limitation provisions in the

contract turns. If I could conveniently do it this

way, can I take Your Honours to those documents as

annexures to our original written submissions.

Your Honours, the first of the relevant

documents is the brochure which was handed to the

daughter-in-law of the plaintiff by an employee of

a travel agency, Jayes Travel Service, in Gosford,

Baltic(3) 6/2/92

in October of 1985. That appears from page 257,

line 16, of the appeal book.

The photocopy of the brochure begins at

page 30 of the written submissions which were

prepared by us. Just for Your Honours' perhaps

further slight assistance, can I just show

Your Honours an original of the brochure so
Your Honours can get an idea of what exactly the

brochure looks like. I have no doubt that the

original is with the exhibits that the Court

officer has.

Your Honours, so far as the brochure is

concerned, the only relevant pages that I need to

take Your Honours to are pages 69 and 72. At

page 69, Your Honours will see there is a heading, Cruise Conditions and Information, and if one goes

down to about point 4 of the page, these words

appear:

All bookings are subject to CTC Cruises' terms
and conditions. Payment of your deposit to

CTC Cruises or your travel agent constitutes

your agreement to the terms and conditions.

The terms and conditions are available on

request and are contained in CTC Cruises'

Passenger Tickets.

Then, if Your Honours go over to page 72, we would

draw attention to a further note, almost half-way

down the page:

CTC cruises strongly recommends that

passengers take out a travel insurance policy

to provide cover against medical and additional

expenses overseas, loss or damage to baggage

money and travel documents and protection

against cancellation fees that may be charged.

The significance of that clause,

Your Honours, is, of course, that it draws

attention to somebody considering a cruise that

insurance against the matters that are covered in

the clause is appropriate.

Now, Your Honours, there is a further page

that is relevant but unfortunately is badly

reproduced. That is page 73. The only

significance of page 73 which has a reproduction of

the moon over the ocean is that underneath it in
the original it actually gives the address of the

CTC offices. Now, the page is reproduced in

legible form at page 558 of the supplementary

documents produced by my learned friend. The

significance of that, of course, in turn is that

someone having read that "the terms and conditions

Baltic(3) 6/2/92

are available on request and are contained in CTC

Cruises passenger tickets" would know exactly where

they would need to go to to find the CTC ticket.

Your Honours, that is the first of the

documents, and perhaps in terms of its ultimate

significance the one of least importance. I am
dealing with the documents, if I may, in

chronological order rather than perhaps in order of

significance.

The next document of significance is the

document called STATEMENT OF ACCOUNT. This is a
document which was given to the plaintiff on

30 October 1985. It is in the volume at page 24 on

the bottom left-hand corner. Your Honours will see

that this document is a document issued not by, or

even purporting really to be, at any event,

expressly on behalf of CTC, but a document of Jayes

Travel Service Pty Ltd, in effect an all purpose

document. It is called a STATEMENT OF ACCOUNT. It

is addressed to Mrs Dillon. It then proceeds:

Your perusal of the information set out below and your co-operation will ensure everything

is finalised -

Those are words we would draw attention to -

in good time for your trip.

In the next paragraph:

If you do everything on time, your tickets

should be ready at least a week prior to

departure.

So it draws the attention of the addressee to the

need for a ticket which will in due course be

provided. In the block capitals not underlined

about five lines further down, there is reference

to: 

YOUR CONSULTANT MUST GIVE YOU AN ENVELOPED

MARKED "IMPORTANT TRAVEL INFORMATION".

The final payment date is then noted to be

6 December. The consultant is Kim Moffat. Special

Note 3 is that:

Comprehensive Insurance is available to cover

you and your luggage. Be sure you get the

proposal form with this statement.

There is then, under the heading DETAILS, the following:

Baltic(3) 6/2/92

CTC Cruise 561 Grade 14 Prom deck 2 Bedded

Cabin.

In my learned friend's written submissions, he

seeks to make great play on the fact that there was

at this time an identified cabin. He suggests in

his written submissions that the cabin is

identified in this document. Although, as

Your Honours will see in a moment, none of the

judges who have heard the case so far considered

that there was any arguable basis upon which it
could be said that there was a contract for

carriage as at this point of time, nevertheless my

learned friend's primary proposition, as he says in

his written submissions, is that the contract of carriage came into existence on 30 October 1985. As I said, he seeks, in support of that

proposition, to suggest that there was an agreed

cabin provided at that point of time.

We would simply wish to point out that what

this document does - and I do not really think

there can be any issue about this - is not identify

a cabin at all. It identifies a type of cabin on a

particular deck. The cabin is grade 14 on the

promenade deck and it is a two-bedded cabin, and

there are more than one of those cabins. So it

does not, with respect to my learned friend,

identify what is the precise cabin.

Then, one sees the price. Mrs Dillon and her daughter - I called her her daughter-in-law a

little while ago in error - were the persons who

were going to travel, and Your Honours will see

that above under where it says:

Names of Travellers: Mrs J Dillon and

Mrs G Cottle -

it is, and then, so the two-bedded cabin is $2205

per person, a total of $4410. Departure tax is

added, then there is a reference again to insurance

which is described as:

Advisable for all overseas tours.

The amount is totalled and there is a deposit of

$100 provided for and a balance which appears

underneath, $200 in total.

The note against the single asterisk says:

These amounts can be calculated by your

consultant when finalizing -

another reference to finalization.

Baltic(3) 6/2/92

Now, the document has referred to booking

conditions and they appear on the next page,	~
page 25 in this book.	The heading is:

Booking Acknowledgement -

and we would, respectfully, on the issue of whether

there was a contract at this time or not, draw

attention to the fact that it is a booking which

this document relates to, not to carriage. It

proceeds:

We the undersigned hereby acknowledge

that we understand that Jayes Travel Service

Pty Ltd acts only as agents for the principals

actually providing the relevant services and

that all booking conditions governing our

reservation are indicated on relevant

brochures, receipts and tickets are agreed to,

and acknowledge that we have received a copy

of the brochure -

et cetera. Then there is provision for conditions

of cancellation in point 1, and a reference to

Jayes reservation costs. The document Your Honours

are looking at is not signed nor was the document

ever signed by Mrs Dillon, but there is no issue

but that she received it. So might I just remind

Your Honours that in two documents now that

Mrs Dillon has seen there has been reference to conditions contained in inter alia tickets.

Your Honours, the next significant document is

a document called the Booking Form. That appears

at page 26. It has been enlarged to make it easier

to read, but can I show Your Honours what the

actual document, in fact, looks like. Your Honours

then will see the detail by opening out page 26.

Again Your Honours will see that this identifies

Mrs Dillon under the heading "Passenger's surname".

_The document is in fact dated 9 November 1985,

refers to sailing date and indicates accurately

from Sydney to Sydney. The fare appears, the

departure tax, the deposit, the balance. The

document is a document which is produced with the

view, in part, that it will accompany payment, so

one sees:

Payment details:  We hereby enclose cheque in

regard to the above booking -

and at the bottom -

Please mail this copy to CTC Cruises.

Now the most significant matter in this

document which is, we would respectfully submit, of

Baltic(3) 6 6/2/92

all the relevant documents, the one of greatest

significance, is the heading "This is not a travel

document" and what appears underneath it.

TOOHEY J:  Mr Downes, does this document come to the

attention of the passenger in any way?

MR DOWNES:  Yes. That is a matter in particular that I was

going to address in just a moment, Your Honour.

TOOHEY J: Yes, very well.

MR DOWNES:  The fact is that the trial judge found that it

was given to her, based on her evidence at page 100

to that effect. Each of the judges in the

Court of Appeal positively found, upholding, so to speak, the trial judges finding, that she was given

the document. However, my learned friend, in his

written submissions, appears to be seeking to

challenge that finding. We would respectfully

submit that such a challenge is simply not open and

I will, I think, in those circumstances, need to

take Your Honours in a moment, briefly, to the

relevant findings.

TOOHEY J:  On the face of it, it is a document as between

travel agent and shipping company. That is not to

say, of course, that it may not have been given to

the passenger, but that is what it appears to be.

MR DOWNES:  We would respectfully submit it is not,

Your Honour. The provisions relating to, in the

very box that I am referring to, are provisions

relating to the contract between the passenger and

CTC Cruises and in those circumstances, whilst this

document might have been intended to go through, so

to speak, the hands of the agent, and there is a

provision in the box above the provision "This is

not a travel document", which refers to "Agent's

Stamp". But, Your Honours will have seen that - I showed Your Honours an actual specimen example - it

comes in a number of copies and one of them

actually has "Passenger's Copy" on it. It is in

the appeal book at page 232.

I do not think it has previously been suggested that this was not a document between CTC

and the passenger. All my learned friend appears

to say in his written submissions is to suggest,

contrary to the findings, that it may not have been

given to Mrs Dillon. It is not even absolutely

clear that my learned friend is saying that because

what he says is "The original was not given."

MASON CJ:  You need not worry about it at this stage. It is

something that he is raising in response to you.

Baltic(3) 7 6/2/92

You ought to hold your fire until the appropriate

stage is reached.

MR DOWNES:  If Your Honour pleases. So it says:

THIS IS NOT A TRAVEL DOCUMENT -

Your Honours, this reminds me, if I may, to tell
Your Honours that there were one or two typing

errors in our written submissions in reply that we

furnished yesterday and can I just hand those up to

Your Honours. The significance is that one of the

errors in that document is that when the phrase

"This is not a travel document" was set out in our

written submissions it used the word "final" rather

than "travel".

Underneath that, the following appears:

Contract of Carriage for travel as set out herein will be made only at the time of the issuing of tickets and will be subject to the conditions and regulations printed on the

tickets.

Just briefly anticipating submissions I will be

making in due course, the significance of this is,

of course, that in the very same sentence that a

statement is made that contract will be made at the

time of the issuing of tickets, the further
statement is made that the contract will be subject
to the conditions and regulations printed upon the

tickets. What the majority in the Court of Appeal

found was that the words:

Contract for Carriage for travel ..... will be

made only at the time of the issuing of

tickets -

was effective.

So that, proposition 1, no contract for

carriage prior to issue of tickets; but,

proposition 2, immediately upon the issue of the

tickets the contract came into existence. However,

so the argument that found favour with the majority

went, at that time the passenger - that is at the

instant of issue - had not had an opportunity to
consider the conditions on the ticket. Therefore,

the conditions on the ticket were not part of the

contract.

For various reasons, we would respectfully

submit that that analysis of the situation is

wrong. But, in particular, at this point, we would

wish simply to draw attention to the fact that it

is in the very same sentence that makes the

Baltic(3) 6/2/92

provision about the time the contract is made that
there appears a statement that it is subject to

conditions and regulations.

Again then, to go on, the reader is informed

that they are available:

at any CTC Cruises offices.

BRENNAN J:  Do you say there was a contract before the

ticket was issued; a contract of any sort?

MR DOWNES: There may have been, Your Honour, but whether

there was or not, we would respectfully submit,

will not be determinative of this case for the

reason that it was not, if there was any contract,

a contract for carriage, but was some preliminary

contract to to the contract for carriage.

TOOHEY J: But it is odd, is it not? You pay your money

over; you are told according to this booking firm

that:

If advice -

of cancellation -

is received within 60 days of sailing the

Company reserves the right to retain the whole

amount collected -

and the tickets do not arrive, according to your

chronology, until some time late in January. What

is the relationship between the intending passenger
and the shipping company until the ticket is

issued?

MR DOWNES:  Your Honour, the contract for carriage, we would

respectfully submit, does not and cannot come into

existence until the issue of the ticket, so that whatever the relationship is at that time, it is

not a relationship pursuant to which there is a

contract which has, as one of its terms, an
obligation imposed upon the company to carry. That

is what, if I may put it, the document given to •

Mrs Dillon in November provides. It is pursuant to

that document that, if one seeks to analyse the

matter in terms of offer and acceptance, she makes

an offer when she pays the cheque or when she makes

the final payment on or before the December date.

So we would respectfully submit that in terms

of the ultimate analysis the matter is capable of
being viewed on the basis that when the balance is

paid, in accordance with a demand for it pursuant

to the booking form - whether one describes that as

an offer or not, the person paying the balance is

Baltic(3) 9 6/2/92

paying it on the basis of the booking form and on

the basis that the contract for travel will only

come into existence at the time of issuing of the

tickets and, further, that that contract will be

subject to conditions and regulations.

BRENNAN J:  Do we not need to know, Mr Downes, whether you

do or do not contend for an antecedent contract,

and if you do contend for an antecedent contract,

whether you contend for terms of that contract
which relate to the terms which will be contained

in the contract of carriage.

MR DOWNES: Primarily, Your Honour, our submission is that

there was no antecedent contract, but that the

contract came into existence as a contract for
carriage at the time of the issuing of the tickets
or shortly thereafter, the period of time being
such period of time as was necessary for Mrs Dillon

to consider the terms of the conditions on the

ticket that she was given.

BRENNAN J: That was the only contract?

MR DOWNES:	Yes, Your Honour.
McHUGH J:	Does that mean you have no contractual right to

retain the fare if advice of cancellation is

received within 60 days?

MR DOWNES:  It may mean that, Your Honour.

BRENNAN J: Pardon my pressing you, but do you have a

fall-back position?

MR DOWNES:  Yes, Your Honour.

BRENNAN J: What is that?

MR DOWNES: Well, the fall-back position is that there may

have been a contractual arrangement or a contract

in existence prior to the issue of the ticket, but

it was not a contract, whatever its terms were,

obliging my client to carry Mrs Dillon on the ship,

and in those circumstances there is no impediment

in a term of the contract for carriage which came into existence subsequently containing conditions

of the kind here relied upon.

BRENNAN J:	Do you say in your postulated alternative contract that it contained any terms with reference
to the terms to be contained in the contract of
carriage?
MR DOWNES:	We would say yes, Your Honour.

BRENNAN J: What were those terms in the original contract?

Baltic(3) 10 6/2/92

MR DOWNES: Perhaps I should put it this way, Your Honour.

At all material times, Mrs Dillon was treating with
the agent on the basis that the contract for
carriage when issued would contain terms and
conditions which appeared in the tickets. We would

respectfully submit that all contracts prior to the actual contract of carriage had such a provision as

a term.

So there was a limited contract which, in due

course, could be converted into a contract for

carriage by payment of the balance of purchase

money, to be followed by the issue of ticket, at which point of time the contract would come into

existence, or shortly thereafter, and that contract
was anticipated by any prior contract to contain

terms as appeared in the document ultimately

issued.

TOOHEY J:  Mr Downes, when you put it that way, is it a

consequence that the shipping company was free not

to issue a ticket; to simply say, "Well, sorry,

we're full up, or for some reason or other we don't

want you to travel on our ship"?

MR DOWNES:	Yes, Your Honour.
TOOHEY J:	And to hold on to the passenger's money?

MR DOWNES:  It would be difficult to sustain such an argument, Your Honour. So that it may be to the

extent to which there is some material which

suggests that that were to be the position, that

that was not - questions of restitution would

perhaps have to arise in the circumstances, in any

event. Maybe the contract was a contract under

which it could hold on to the money, and if it were

bold enough to seek to do so, there would be a

claim for restitution.

McHUGH J: What about a contract to enter into a contract of

carriage, subject to conditions and regulations

which were defined in advance?

MR DOWNES:	We would respectfully submit that one has perhaps a philosophical difficulty in grappling
with what a contract to enter into a contract is,
but without - - -
McHUGH J:	What about an option?
MR DOWNES:	Yes.

It is a limited contract. fact that a deposit is paid is a factor which one I mean, the

cannot ignore, and it entitles you to activity on

the part of the carrier associated with the booking

and making arrangements for the booking.

..

Baltic(3)	6/2/92
McHUGH J: Also, there seems to be some conditions

associated in relation to the booking as such.

MR DOWNES:	Yes, Your Honour, but the one thing that is not accepted by the carrier is the obligation to carry.
That is an obligation which only arises at the time
that the contract of carriage is finally made, we
would respectfully submit, and once one gets to
that proposition the contract of carriage is made
on the terms of the conditions that are contained
in the ticket.

But just, I think, to answer or seek to go

back to Your Honour Justice Brennan's question, we

would respectfully submit that however one

ultimately characterizes this earlier contract, if

there be such, it is a contract which contains a

proviso that there will be conditions and that

those are the conditions that will in due course

appear in the ticket.

BRENNAN J: It raises interesting problems when we come to

the stage of the ticket issue because if the

original contract is one to enter into a contract
of carriage under which there will be an obligation

to carry and it is said that it will also contain

some conditions, the question of reasonable notice

of those conditions at the time of the making of
the contract of carriage must be considered in the

light of the antecedent contract which in substance

is a contract to carry subject to the entry into

the formal contract of carriage.

MR DOWNES: Well, Your Honour, we would take issue with the

way Your Honour describes the antecedent contract.

BRENNAN J:  I am asking you for a description of the antecedent contract. Does it contain any terms

wfth reference to the terms of a contract of

carriage? If so, do those terms, that is in the

original contract, require the making of a contract of carriage by which the passenger will be carried?

MR DOWNES:  Your Honour, it is not a contract of carriage.

It contemplates a contract of carriage and it

contemplates that when that contract of carriage is

negotiated, if that be a course that is embarked

upon, it will be subject to terms and conditions,

but the very object of passengers being given,
pursuant to the conventional analysis approach, an

opportunity to examine the ticket is to enable them

to say, "No, I'm not going to take that". We do

not suggest that that opportunity was not available

here.

When it comes to the question of whether

reasonable notice has been given though, we seek to

Baltic(3) 12 6/2/92

draw attention to the fact that in every document

this lady was ever given, going right back to

October of 1985, there was reference to the fact

that there would be conditions, so this case is to

be distinguished from cases such as Hood v Anchor Line where the ticket is handed over, and for the

very first time, there is some suggestion that

there are conditions. Mrs Dillon, in the present

case, has had, and been reminded on a number of

occasions by other documents since October 1985, if

she wished to do so to make inquiries to discover

what are the terms that are to be proposed with a

view in those circumstances to either

negotiating - it may be that the negotiations would

not have been successful; it may be that she would

have been told that she either had to take the

ticket in the form it was in or cruise with some

other line, but she had that opportunity.

DEANE J:  Mr Downes, what is the evidence about whether

Mrs Dillon read the small print on page 69 before

buying a ticket?

MR DOWNES:  Can I ask Your Honour to give me a moment to

answer that?

DEANE J:	Do not answer it now, answer it -
MR DOWNES:	Your Honours appreciate that my appearance in

this matter is for the first time here before

Your Honours so I do not have the advantage of

having quite the knowledge of the evidence that I

might otherwise have had.

As I said to Your Honours, the evidence is,

however, that she saw - was given, the booking

form. The particulars on that prominently referred

to the fact that it was not a travel document and

the conditions that we seek to now rely upon would

be incorporated in the contract for carriage. I

will not take Your Honours at the moment in any

event to the relevant passages where those findings

were made, but we would respectfully submit that

any argument to the contrary of the proposition

that Mrs Dillon had the booking form is not open.

BRENNAN J:  What was the date of the delivery of the booking

form to Mrs Dillon?

MR DOWNES:  9 November, 1985, so that it was prior to her

payment on 6 December of the balance. It was

6 December which was the point of time that

His Honour the trial judge found a contract to have

come into existence and His Honour found that the

booking form formed part of the contract. So His

Honour Mr Justice Carruthers, at first instance, actually found that the contract contained the

Baltic(3) 13 6/2/92

booking form but did not, as we would see it,

explain how that could be in the face of a

statement that the contract for carriage did not

come into existence at that time and that when it

did come into existence it would be subject to

terms and conditions on the ticket.

Your Honours, the final document to take

Your Honours to is the ticket itself which is at

page 27 and, again, can I show Your Honours a sample. What one has at pages 27 and 28 is a

reproduction of what, in effect, is a cover

document for the ticket. As Your Honours will see

the cover contains the palm tree and reference to then on the inside of the document are the Terms

and Conditions and the ticket itself was stapled on

the bottom half of the document. The significance

of this is, to the extent to which it is relevant,

that one does not even have to look, so to speak,

at the back of the ticket to see the terms of
conditions. When one opens the folder the first
thing that one sees, the largest typing that meets
one's eyes, is the words "Terms and Conditions".

Now, Your Honours, the terms and conditions are then reproduced in enlarged form on page 28 and

paragraph 2(a) provides that:

The Company shall be liable for loss or

damage suffered as a result of the death of or

personal injury to a Passenger only if the
incident which caused the damage so suffered

occurs in the Course of the Carriage and was

due to the fault or neglect of the Company or

of its servants or agents acting within the

scope of their employment.

So there is an opening qualification or limitation

on liability, and then in (b):

In any circumstances referred to in

sub-clause (a) of this clause the Company's
liability shall in no case exceed 46,666 Units

of Account per carriage.

And then 3 is in similar terms, but relates to

damage to luggage and the limitation is 833 units

of account.

McHUGH J: Where do you find out what is the meaning of

"Units of Account"?

MR DOWNES:  Units of account is defined in paragraph 26,

Your Honour. It is about 10 to 15 lines from the

end of 26. Your Honours will find at the

Baltic(3) 14 6/2/92

conclusion of the word "Passenger" in the left-hand

column:

"Unit of Account" means the Special Drawing

Right as defined by the International Monetary

Fund For the purpose of converting the amounts

specified in clauses 2 and 3 of this

agreement ..... into the national currency -

et cetera. Your Honours, it goes without saying

that that is not something which your average

passenger would immediately turn into dollars and

cents, but it is readily capable of being turned

into dollars and cents. There is no reason to

doubt that CTC could have turned it into dollars

and cents for anyone who asked that that should be
done.

When one bears in mind that one is really here dealing with - it may be a cruise contract to

islands not far from the coast of Australia, but it

is an international contract. In current times,

with volatile currency exchange rates, to put in

that document a sum of money, as such, would be to

leave the carrier, and for that matter the
passenger, open to risk, depending upon whether the
sum was put in in the currency of Australia or the

currency of some foreign country.

So it is not unreasonable at all, we would

respectfully submit, for a provision such as this

to be made. As Your Honours will see in due

course, it draws upon the precise proposals in the

Athens Convention and Protocol which purports to

deal with this very matter.	The figures at the
relevant time appear to be agreed to be:	for

personal injury, $75,000, and for luggage, $1400.

Your Honours, this is by no means an exclusion clause, viewed in that way, in the sense of, say,

Hood v Anchor Line. It is not a $10 amount or no

liability at all. The amounts are quite

substantial and in keeping with the particular
convention relating to international travel and the
accepted situation that exists nowadays, that for

international travel there will be conventions

governing or arrangements governing liability of

carriers. It is for that reason that, as I pointed

out to Your Honours, the documents preceding the

contract for carriage drew particular attention to

the need for insurance, as the statement of account
says, particularly the need for insurance in

connection with overseas travel.

Your Honours, paragraphs 4 and 5 of the terms

and conditions are of some relevance. I will not

read them to Your Honours, but I give Your Honours

Baltic(3) 15 6/2/92

the references to them. The particular clauses

sought to be invoked in the present case, of

course, are 2 and 3.

Now, once one understands that the limitation

of liability sum is $75,000, Your Honours can see

why it is that in this case unless the release is

effective the limitation of liability provision

does not, in fact, reduce the amount to which the

respondent would be entitled. The ultimate

judgment with interest for both personal injury and

the other claims relating to luggage and the like,

and restitution of the fare and so forth, was still

short of the $75,000.

BRENNAN J: What is the relevance then?

MR DOWNES:  The relevance here, Your Honour, is the $1400

limitation on the luggage liability and the effect

that a determination of the validity of the

limitation clauses has on the question of whether the release should be set aside. Your Honours do appreciate, and I think my learned friend's written

submissions draw attention to this at the opening,

that this is one of potentially a large number of

cases, and whilst a few thousand dollars in terms

of luggage liability might not in a single case be

of significance, when one multiplies out the number

of cases which may in due course be determined upon

considerations falling from Your Honours in this

case, there is substantial significance.

DEANE J:  I do not quite follow that answer. If the terms

and conditions are applicable to this case, what effect does it have on Mrs Dillon's entitlement,

putting aside the release?

MR DOWNES:  Setting aside the release, to the extent to

which her entitlement can be apportioned as falling

within 2(a), that is, damages for personal injury,

then it will stand.	To the extent to which it is
damage to luggage within 3, it will be reduced to

the amount of $1400.

DEANE J: Well, what does that mean in monetary terms?

MR DOWNES: Something over $3000 reduction, Your Honour.

There are 400 passengers though who have

potentially similar claims, Your Honours.

DEANE J: But we are concerned with this case. Now, if,

instead of being entitled to the verdict, her true

entitlement is some $3000 less than the verdict,

that would not have any effect on anything here,

would it?

MR DOWNES: Well, Your Honour, I

Baltic(3) 16 6/2/92

DEANE J: Apart from the $3000.

MR DOWNES:  The amount that she would be ultimately entitled

to would be reduced by $3000, and what Your Honours

have decided in this case would then be a matter

for consideration in a large number of other cases.

DEANE J: I follow. In other words -

MR DOWNES:  I may be wrong, Your Honours, but my

understanding was that it was because of
considerations such as that that Your Honours

granted special leave in this case.

DEANE J:	I was not involved in that.
MASON CJ:	You can exclude me too.

GAUDRON J: There is also a question of the release. It has

been accepted at all stages that if the exclusion

clause operates different considerations apply to

the release.

MR DOWNES: Exactly. That is the - I mentioned that as a

consideration. When one then determines whether

the release is good or bad, one needs to first

determine was was the liability otherwise because,

supporting the case under the Contracts Review Act

for example, the Chief Justice of New South Wales,

that there was a substantial dichotomy or

difference between the amount paid and the amount
of the entitlement, so the lower the amount of the

entitlement is, the -

DEANE J: Well, that is what I was asking about and it did

not occur to me, as I read the Chief Justice's

judgment, that $3000 difference in entitlement

would have made the slightest difference, but it is

argued that it would make a relevant difference, is

it?

MR DOWNES:  Yes, Your Honour. As Your Honour will see in a

moment, for His Honour to say one-tenth is to

slightly over estimate the difference, on any view,

and whether it is a tenth, an eighth, a seventh or

whatever, Your Honour, perhaps will not be greatly

significant in this case but is a factor to take

into account.

Your Honours, those are the documents relating

to the contract and so far as the documents

relating to the release is concerned, the release

itself is in volume I of the appeal book at

page 193 but it may be convenient - Your Honours,

it is actually photocopied into the judgment, I

think, of Mr Justice Mahoney at page 399.

Baltic(3) 17 6/2/92

So Your Honours see that this is the release

which Mrs Dillon executed, the execution of which

is challenged pursuant to the Contract Review Act.

It states that she agrees to accept the $4706 -

in full satisfaction and discharge of all

claims I have or may have for personal injury,

damage or loss -

et cetera, and she further agrees that it may be

pleaded in bar to any action, and so forth. There

are a number of letters which pass between the

parties between the sinking of the ship and the

execution of the release by Mrs Dillon on 19 June

1986.       I will not take Your Honours to them at this

stage, but perhaps I can just take Your Honours to

the ultimate letter enclosing the release, which is

at page 190. It is referred to in the judgment of·

the trial judge at 272 - at 190, volume I.

Your Honours will see that it is obviously a letter

in a standard form that says:

We acknowledge receipt of your Particular of

Losses form recently lodged with us.

We advise that on your signing of the attached

release form, we are prepared to make an

'ex gratia' payment ..... No liability in any

respect is admitted.

The terms and conditions of carriage as

disclosed on your passenger ticket also

restrict luggage liability to 833 units of

account (approximately $1400) per passenger

should negligence be proven.

et cetera. That, I suppose, Your Honours, also

raises a question as to whether the terms were

incorporated in connection with the Contracts

Review Act question.

Now, Your Honours, there are four issues that

were raised in the notice of appeal and which were

the subject of agitation in the special leave

application. There are other issues raised by the

notice of contention, but naturally I will not deal

with those until reply.

The four issues raised by the notice of

appeal are: what are the terms of the contract of

carriage and, in particular, whether the limitation

provisions are incorporated; secondly, whether the

release I have just taken Your Honours to should be

set aside under the Contracts Review Act; thirdly,

whether the respondent was entitled to the

restitution of the whole of the fare she paid for

the cruise or only by way of damages to such

proportion of it as represented the period of time

Baltic(3) 18 6/2/92

after the vessel sank; and fourthly, whether the

respondent was entitled to damages for

disappointment, the head of damages which was first

recognized by the Court of Appeal in the United

Kingdom, particularly the judgment of Lord Denning

in Jarvis v Swan Tours Ltd.

As the President of the Court of Appeal says,

this Court and no appellate court in Australia has

ever, until this case, addressed the question of

principle which arises out of that case, namely,

whether the old rule that damages for

disappointment are not available in a contract

action is no longer the law, or alternatively

whether there is some qualification on that rule

which applies in special cases such as holiday

cases and the like. So that whilst the general

rule obtains, the qualification that in a case such

as a holiday case there can be damages for

disappointment is made.

The President of the Court of Appeal,

Mr Justice Kirby, wrote the pertinent judgment in

this case on that issue, in which the Chief Justice

agreed and which upholds the basis as a

qualification of the rule which arises in

circumstances in which it can be said, so kind of implied promise to reduce vexation or to positively produce enjoyment. So, if one has a

contract with someone relating to a holiday, you

imply that you are supposed to feel better after

the holiday than before, and if the holiday is a

misery - Jarvis v Swan Tours, Mr Jarvis did not

get the cup cakes, amongst other things, that he

anticipated, having regard to the brochure he was

going to get in his holiday - if you are not, so to

speak, made happier by the holiday, then you are

entitled to damages.

Now, our respectful submission will be that

this Court, coming to this question for the first

time, ought to reject the suggestion; ought to

reject it because firstly it is not sound in law

and secondly, if one does try to create some kind

of qualification of this kind, it becomes

extraordinarily difficult to work out where one

draws the line. For example, what it -

MASON CJ: This point is at the end of the road, is it not?

MR DOWNES: Yes, Your Honour.

MASON CJ: Would it not be better to deal with the first

point?

Baltic(3) 19 6/2/92

MR DOWNES: 

If Your Honour pleases. Your Honours, the

findings below on the contract question are as
follows: Mr Justice Carruthers found that there was

a contract made when the balance of passage money
was paid on 7 December. That is at page 291
line 29; page 293 line 4 and at 293 line 10 he

refers to the fact that the booking form is part of

the contract.  The Chief Justice found that the

contract was made at the time of the issue of the

ticket to the respondent. That is at page 382

line 20; page 383 line 4.  Mr Justice Kirby found

that the contract was made at the time of the issue

of the ticket. That is at page 417 line 11 and 418

line 22.  Mr Justice Mahoney found that some

contract might have come into existence in

December, that is at page 455 line 1, but that he

did not need to determine exactly what that was,

because no contract of carriage came into existence

until the issue of the ticket and he found that at

page 459 line 10. And he further found that the

real question was not when the contract came into

existence, but whether there were conditions
incorporated in it in accordance with the ticket.

Can I take Your Honours briefly to the

Chief Justice's judgment at 382. Between lines 5

and 19 on page 382, His Honour encapsulates the

chronology between October 1985 and the

commencement of the cruise. Then His Honour goes

on:

I see no justification for disregarding

the stipulation in the Booking Form that the
contract of carriage would be made only at the
time of the issue of ticket to the respondent.

Now, we would, of course, respectfully, adopt that

observation of His Honour's, but then he goes on: That has two consequences. First, it renders

inapplicable what has been called the

"conventional analysis" exemplified by Hood v

Anchor Line ..... Upon that analysis the issue

of the ticket is only an offer, and the

contract is formed when the passenger, having

had an opportunity to consider the terms of
the offer, accepts it. That analysis would be

contrary to the terms of the appellant's own

document. Equally, however, the stipulation

removes the possibility of a conclusion,

similar to that arrived at in Fay ..... that the contract of carriage was made when the Booking

Form issued or the balance of fare was paid.

Now, Your Honours, our observation relating to

those statements of His Honour are that, firstly,

we adopt the first sentence in the passage and the

Baltic(3) 20 6/2/92

last sentence in the passage. We take issue with

the middle part of the passage beginning:

First, it renders inapplicable ..... the

"conventional analysis" -

and, perhaps, if I might do it this way, adopting

His Honour's own words, we submit that there is no

justification:

for disregarding the stipulation in the

Booking Form -

those are His Honour's words in line 20, that the

contract of carriage is on the terms and conditions

in the ticket.

When it comes to the ultimate way in which we

seek to challenge what His Honour has said, it is

by reference to that matter that we ultimately

found the submission that His Honour erred.

Your Honours, all of the judges below found

that the booking f9rm was critical. It is only the

way in which they dealt with the booking form that

they differ. Our submission is that this case is

either to be regarded as a conventional analysis··

case or a kind of variation of it which leads to no

different result. And can I seek to make out the

submissions on this aspect: by first of all taking

Your Honours to what is one of the leading cases upon which the conventional analysis is based and one which is referred to in all the subsequent

discussions, and that is Hood v Anchor Line,

(1918) AC 837.

Your Honours, there was no prior notification

of conditions in that case. The ordinary rules of

contract, however, might, on the facts of that

case, have led to the conclusion that when the

money was handed over at the ticket office and a

ticket was handed back to the clerk, that a
contract had then come into existence.	We would

respectfully submit that the underlying reasoning

behind the approach taken in the case and in
subsequent cases is that you cannot, in those
circumstances, fairly ignore the fact that as part

of the acts associated with the making of the

contract, the carrier handed to the passenger or

the passenger's representative a ticket containing

conditions.

So the way in which one copes with how that •

can be brought into the ultimate contractual

arrangements is what is now known as the

conventional analysis. One way of looking at it,

although it is not put this way - indeed, when one

Baltic(3) 21 6/2/92

looks at Hood's case, there is not really a

suggestion that the contract was made at any time

other than - perhaps there is a suggestion, but it

is not clearly stated that the contract was

ultimately made after the ticket was handed over;

just that there was an opportunity on the part of

the passenger to look at the ticket.

But what one might say is that what one really

has is a counter-offer. The passenger goes to the

ticket office and says, "I wish to take a passage

on a particular ship, the fare for which I

understand is X dollars. Here is my money". In

return, a ticket which simply does nothing more

than state an obligation to carry is handed back.

There would be an offer and an acceptance, there

would be a contract obliging the carrier to carry,

and such terms not specifically referred to in the

ticket as existed would be such terms as would

ordinarily be implied.

I think it has been said that in a carriage of

a passenger by ship, one would imply a right on the part of the master of the ship to impose reasonable conditions upon a passenger relating to the safety

of the ship and the general well-being of persons

on board, and so forth and so on.

What really happens in this situation is that

rather than the, so to speak, offer of an open

contract being accepted by a ticket with no
conditions, something that you might describe as a

counter-offer is made, because the document that is

handed back is not just a simple acceptance of the

offer to carry free of conditions but is an offer

to carry on conditions, and the ultimate result in

Hood v Anchor Line is that the passenger then gets

an opportunity to consider whether he wants to

accept or reject those conditions - one might say,

accept or reject the counter-offer.

The analysis that we would respectfully submit

properly arises in the circumstances is that either

one has a conditional contract subject to a

condition enabling the passenger to avoid the
contract when he sees the condition and decides

that he does not want to accept a passage on that

basis and either by lapse of time or by presenting

the ticket or by boarding the ship or other conduct

that acceptance is communicated or, alternatively,

one has a counter-offer which is not ultimately

accepted until conduct of that kind takes place.

Your Honours will recollect that

Mr Justice Gleeson, the Chief Justice, has said

that once you accept - if you do accept that a

contract was made at the moment of the issue of the

Baltic(3) 22 6/2/92

ticket, then there is no room, because of the so to

speak fact that the making of the contract is an

instant event at the time the ticket is issued,

there is not even a moment for the person to, so to speak, open the cover, I suppose, if you look at it

in this kind of analysis, to see the terms and

conditions inside. And His Honour came to that

conclusion by reference exclusively, as

Your Honours have seen, to the words of the booking

form.

What the booking form says is:

THIS IS NOT A TRAVEL DOCUMENT -

and it says:

Contract of Carriage for travel as set out herein will be made only at the time of the issuing of tickets.

Now, with respect, that wording will contemplate, will permit, a construction which allows conventional analysis to operate. In effect, if

one looks at my illustration of the order, Hood v

Anchor Line, the clerk handing the money across the counter is given in return a ticket, in a sense, they are treating, at the moment that this

transaction begins, on the basis that the contract

of carriage will come into effect at the time of

the issuing of the tickets and, in a very -

grammatically, that is not an unreasonable way to

describe what happens, even if the fact is that

there is either a further delay of some short

period of time to enable examination of the ticket

or, certainly, if what one has is a conditional

contract, it is absolutely correct to say that the

contract comes into effect on that time.

So we would respectfully submit that on one

aspect of this case the Chief Justice of New South

Wales has really read too much, in terms of a split

second timing approach, into those words in the

booking form.

TOOHEY J:  Mr Downes, how do you apply that analysis to the

facts in the present case? According to the

chronology you have provided us the respondent paid

the balance on 6 December 1985, and the

respondent's ticket arrived, which I take to mean

was posted on 24 January 1986.

MR DOWNES:  Yes, the ticket was issued upon its receipt on

24 January 1986. That is the - - -

TOOHEY J: Did it arrive at Jayes, because she rang

Miss Moffat, did she not, to find out? She was

Baltic(3) 23 6/2/92

concerned about the fact that a ticket had not

arrived.

MR DOWNES: According to His Honour's finding, she rang on

the very day that it arrived.	She rang on the 24th
and it arrived on the 24th.

TOOHEY J: It arrived where? At Jayes, or at her place?

MR DOWNES:  My understanding was she received it, that is,

Mrs Dillon received it, and His Honour -

TOOHEY J: But on your submission, Mrs Dillon then had

what - some time in which to consider whether she

was prepared to accept the appellant's offer to

carry her in accordance with the terms of the

ticket.

MR DOWNES:  We seek to approach the matter in some

alternative ways, Your Honour. That is one of the

alternatives upon which we seek to approach it.	In
due course I propose to put a submission that, in
effect, the way you analyse what happened was that
Mrs Dillon made an offer at the time she paid the balance of purchase money on the terms of the
booking form, and that offer was an offer to be ·
carried subject to the conditions in the ticket.
Now, when the ticket was issued, the terms of the
ticket became binding immediately and without the
need for her to have any opportunity to look
further at it, for the simple reason that she,
having the opportunity to check what the ticket
said if she wanted to, made an offer. She is the offeror, and she offers to be carried on those
conditions.

Now, to go back to my illustration of the

ticket office, this case is a case not in which the

clerk pays over the money on the basis that what he

wants is a passage free of any conditions.

Mrs Dillon makes an offer to be carried on the

conditions, whatever they may be, which will be

found in the document and, in those circumstances,

we would respectfully submit this is not a case in
which one needs to ask the question, "Did she have

a reasonable opportunity?" That question just does

not arise. Now, that is our first proposition.

Our second proposition is one which is, so to

speak, an alternative to that primary proposition.

BRENNAN J:  Mr Downes, you cite Hood v Anchor Line as being

a case, I take it, which raises a principle which

is applicable here?

MR DOWNES:  Yes, Your Honour.

Baltic(3) 24 6/2/92

BRENNAN J: Well now, in Hood v Anchor Line, given the

analysis there, the passenger who repudiates the
contract before the time the boarding arrives and

requires the money back again, does not really

repudiate the contract; there is no contract.	He
is not guilty of any breach. Is that the
situation?

MR DOWNES:  Yes, Your Honour. I mean, either there is a

conditional contract and the condition is satisfied
or not satisfied, depending on whether its

conditional, precedent or subsequent or

alternatively it is simply a counter-offer which is

not accepted.

BRENNAN J: Well now, here, if one looks at the booking

form, is it not fairly open to conclude that there

is a contract made then which requires payment of

the fare, because a cheque is enclosed and which
entitles the purchaser to the issue of a ticket of

carriage?

MR DOWNES:  We would respectively submit, no, Your Honour;

the fact that the document says, "This is not a

Travel Document", it is not a contract of carriage.

BRENNAN J: I am not asking you that, I am asking you whether

it is not a contract which requires the company to
issue a ticket which contains a contract of

carriage?

MR DOWNES:  No, Your Honour, we would respectively submit

not, the reason being that the one thing the

parties have left outside their contract and
propose only to include in their contract - that is

if there is a contract at this earlier point of

time - is the obligation to carry.

BRENNAN J: Well, that is like saying that there is no such

thing as an option for the purchase of land,

because it is not a contract for the sale of it.

MR DOWNES:  Well, the way we would seek to answer that is to

say that the booking form and the contractual

relations between the parties as at the time the

booking form is issued are not analogous to the

entering into of an option for the purchase of

land. I mean, I accept what Your Honour says, but

the conclusion is only good if one can say that th~

booking form is an option and we would respectfully

submit it is not or, in any event, it is not in the
sense that it imposes an obligation to carry or an

obligation to issue a ticket which in turn contains

an obligation to carry.

Your Honours, what one has in this kind of

situation is - and this case is no doubt like many

Baltic(3) 25 6/2/92

other cases - a number of, so to speak, visits.

First of all a very small deposit is paid to show that you are serious; then on the face of that the carrier is prepared to take steps to treat with you

further about cabins and things of that sort. By

6 December a document is produced which says, "You

can now make", so to speak, "the formal offer to us

to be carried, accompanied with a cheque for the

amount of the fare. When you do that you should

make that offer to us on terms that the ticket will

contain conditions; the conditions that are printed in our ticket form and when", as happened here, the passenger then pays over the money - what then

happens is that the offer is made to be carried on

those terms and it is accepted by the ticket being

issued.

Now, if that is not the analysis, because the conditions are not in some way there to be

incorporated, you cannot ignore the fact that

firstly the carrier has said since 9 November,

"When this ticket issues it is going to be on the

terms and conditions in the ticket". And secondly,

when it accepts the offer by issuing the ticket, it issues a ticket with all of these conditions in it.

If one concludes, in those circumstances, that

those conditions are not binding, well then one can

hardly conclude that the carrier has accepted the

offer because what the carrier has said is, "Thank

you for producing the funds and seeking from me the

issue of a ticket. Although we thought you were

offering to be carried on the terms in our ticket,

apparently-you are not, so what we tell you now is

that we do not accept your offer; we make a

counter-offer and the counter-offer which you can

take or leave", so to speak, "is that we will carry

you, but only on the terms of the ticket". When

the passenger thereafter does nothing; presents the

ticket; goes on the voyage; there is, at that

point, an acceptance of the contract subject to

those terms.

Your Honours, Hood v Anchor Line, as I said to

Your Honours, is in (1918) AC. The facts are set

out in the judgment of the Lord Chancellor at

page 840, half-way down the page:

The appellant had reserved accommodation

for the voyage from New York on the

California.

So there had been the same kind of

pre-negotiations, the details of which I do not

think appear.

A day or two before the steamship was to sail

Mr Newson, one of the respondents' clerks at

Baltic(3) 26 6/2/92

New York, inquired of the appellant by

telephone whether he was going by the vessel

on that voyage, and on hearing that he was,

requested that the passage money ($150) should

be sent. The appellant sent one of his

clerks, Mr Paul May, with a cheque to take the ticket. Mr May handed the cheque to Mr Newson

and got from him in return the ticket enclosed

in an envelope. Mr May did not take the

ticket out of the envelope, but kept it at the

appellant's office. Neither the appellant nor

Mr May read the ticket, and neither had any

actual knowledge of its contents. Mr May

brought Mrs Hood to the California on the day

of sailing and on board met the appellant, who

put into his pocket, without reading it, the

ticket which Mr May had brought down from the

office.

Then, the ticket contains a number of conditions

limiting liability.

In the present case, one has an analogy with

this case. One has the treating in advance of the

issue of the ticket described here as reserving

accommodation, but one difference, of course, is

that it would seem in Hood v Anchor Line that the

first time the conditions were proposed was at the

time the ticket was handed over.

Your Honours, not a lot turns on this, but can

I just ask Your Honours to note - - -

MASON CJ: But the very terms and conditions were brought to

the attention of the passenger at the time the

ticket issued - - -

MR DOWNES:	Yes, Your Honour.
MASON CJ:	- - - either at the time the contract was made or

very shortly before the contract was made so that

the passenger had an opportunity to consider the

very terms and conditions.

MR DOWNES:	So they were here in the sense that the ticket that was issued contained in the most prominent way
the terms and conditions, including 2, and 3,
and 26, for that matter.

Your Honour was going to say that an affirmative

answer is fatal.

BRENNAN J: Well, that is putting it too high, but it does

seem to me that that is the nature of the problem. fact there are factors here which were wrongly

taken into account, or that section 9(4) is wrongly

construed in order to raise a question of

principle.

MR DOWNES:  As I would understand it, what Your Honour is

doing is directing my attention to special leave questions, not whether this Court has power to	entertain an appeal raising those three grounds,
because undoubtedly - - -

BRENNAN J:  No, once that first question has passed, once we

have dealt with that first question which you

argued this morning which bears upon this question,

it seems to me that what you are left with in this

question are only questions of fact unless you seek

to challenge the relevance of the factors to which

Their Honours respectively referred, or the construction of section 9(4) in some material way.

MR DOWNES:  We certainly do put forward the construction of

section 9(4) that I have referred to earlier, and

we submit that that has two consequences: firstly,

Baltic(3) 77 6/2/92

it means that we are challenging a view which is at

the background of the findings in this case and

expressed in West's case. The second conclusion

that one draws from that is that the court erred· in

dealing with at least the disproportion matter,

also the vulnerability matter, inequality in

bargaining power too, we would submit.

Your Honours, otherwise - - -

BRENNAN J:	You cannot say that the inequality of
MR DOWNES:	If I can say this, Your Honour. The question of

whether a matter has the importance which justifies

this Court considering it appropriate for the grant

of its special leave, or reconsidering a grant

already made, is one that is sometimes a little

difficult to grapple with, at any event from this

side of the bar table. We would respectfully

submit that another matter that the Court should

take into consideration is that this case does
involve issues relating to the Contracts Review

Act. This Court has not said anything about the

Contracts Review Act.

This Court has, by some of its members,

granted special leave to hear this appeal, and we

would respectfully submit that in those

circumstances, because general matters associated
with the Contracts Review Act are raised, it is

appropriate for the Court to address the issues

which arise on the appeal, because in so doing the

Court will inevitably lay down guidelines which

will assist practitioners as to the application of

the Contracts Review Act even, if I might say so,

if the result is that Your Honour in Your Honour's

judgment says something about the matter that Your

Honour raised with me a little while ago relating

to the way section 9(1) and (2) fits together with

section 7.

Your Honours, I have not concluded putting the

precise submissions that I wanted to put relating

to the Contracts Review Act although I think I can

tell Your Honours I have got close to it. But I

really think, unless my learned junior wishes to

say something to me, that I have put all that I

would wish to put about the importance of the

question, so I am not sure whether Your Honours

want me to go on to conclude the submissions, or

what view Your Honours take.

MASON CJ:	Mr Downes, the Court is of opinion you should conclude your submission on the Contracts Review
Act question. In other words, we do not want to stop you in your response on the special leave aspects of that question. But I take it from what

Baltic(3) 78 6/2/92

you say that you will not have much more to put to

the Court.

MR DOWNES:  No, there is not a lot,· Your Honours.

Unfortunately in the way it has arisen I have been

going from place to place, but if you will just

give me a moment.

MASON CJ: Yes, I realize that.

MR DOWNES:  The matters that we would ask the Court to take

into account are, first of all, that there is a

public interest in persons adhering to contracts -

I have referred to that. Secondly, that there is a

public interest in. resolution of litigation by
settlement. Both of those are referred to at

page 385 of the Chief Justice's judgment. Thirdly,

we would ask Your Honours to take into account the

matters which appear at pages 18 to 20 of our

submissions in-chief, and pages 12 to 22 of our

submissions in reply.

Your Honours, the four matters that one needs

specifically to address are the disproportion

matter and we would respectfully draw attention to

the fact - it is our submission that the

submissions that we put based on section 9(4) have

the consequence that that basis falls to the

ground. Can I show Your Honours briefly why it is

that we seek to make an adjustment to the amounts?

If one goes to page 359, one sees the

judgment.	The amounts are $1417, restitution of
the fare.	Now, the fare, as Your Honours have

seen, was a little over $2000 and $700 of it had

already been sent back, so this was the balance.

Loss of money, jewellery and baggage, etc

$4265.

Compensation for disappointment -

that is the Jarvis v Swan Tours amount -

Damages for personal injuries ..... $25,000.

Making a total of $35,682.

Less paid ..... $4786 -

and that leaves $30,896. It is then only when one

takes those figures and adds the $10,000 interest

to them that one gets the $56,182 which is the

figure, at about line 29, which the Chief Justice

relied upon.

Baltic(3) 79 6/2/92

So we would simply draw attention to the fact

that, when one takes that figure off, one gets a

substantially lower figure. When one takes into ··

account the fact that there were, at any event at
the time the release was negotiated, other matters

that could be taken into account, even by a

knowledgeable carrier - namely, assume he knew that

there was a potential claim of up to the $35,000.

Nevertheless, he was entitled to say, "We are

denying liability. We say, on top of that, that

there is no damages under Jarvis v Swan Tours. We

say that there is no entitlement for restitution".

We would respectfully submit that when one

takes those factors into account and does not use

hindsight to assume the larger figure, that when

one then compares the two, the disproportion is not

large at all, but when one adds to that the lack of

any knowledge associated with a potential $25,000

personal injury claim, we would respectfully submit

the disproportion disappears altogether.

So we would respectfully submit that, both as

a matter of looking at the issues at the time or as a matter of section 9(4), because the claim was not
one that could even really be taken into

consideration because it was not known by the

appellant, the conclusion that one draws is that

this simply is not a factor that could be taken

into account.

We have dealt - I have given Your Honours the reference to where we have dealt with particular

matters. So that is what we would say about the

first matter. The next matter is vulnerability

and, of course, so far as the vulnerability is

concerned, it is also something that was not

foreseeable, was not known or knowable to the

appellant; there cannot be any doubt about that. If Your Honour Mr Justice McHugh's approach in

simply cannot be any procedural injustice, because	West's case is right, in those circumstances there
procedural injustice depends ~pon there being
unfair, unjust conduct on the part of the party having the benefit of the contract. A party that
takes advantage of known vulnerability is a party
that might be subject to relief potentially under
the Act, but a party that does not know of the
vulnerability and therefore cannot be making any
use of it, cannot, we would respectfully submit, be
guilty of any relevant injustice and, as I said to
Your Honours before, one cannot, when one is
looking at vulnerability, be concerned with the terms of the release, one can only be concerned
with the conduct.

Baltic(3) 80 6/2/92

I think that is all I need to say in addition

on the second matter of vulnerability. The third

matter is inequality in bargaining power, and I think I have put what I would wish to say about

that, namely, solicitor's advice not to sign,

failure to even attempt to negotiate. And

fourthly, the conduct, including denying liability,

relied upon by the Chief Justice.

Now, Your Honours, there is only one further

matter that I would wish to raise relating to the

Contracts Review Act, and that is this: we would

submit that if we fail in all other respects

associated with the Contracts Review Act, the

relevant conduct cannot justify doing more than

setting aside that part of the release that related

to personal liability, and we would submit that any

order would be limited to that. Your Honours,

those are our submissions then on the Contracts

Review Act.

That leaves the other matters which I think,

at any event at the moment, still are there, and I believe as I indicated to Your Honours just before the luncheon adjournment that I could deal with

those two matters - namely, restitution of the fare

and damages for disappointment - fairly briefly,

and I am in Your Honours' hands as to whether

Your Honours wish me to begin with the submissions

on those matters now.

MASON CJ:  You may as well take advantage, Mr Downes, of the

available time before we adjourn, and proceed with

the third question.

MR DOWNES:  If Your Honour pleases. The next matter is the

question of restitution. What one is dealing with

here is either restitution on the one hand or,

alternatively, damages for breach of contract. The

right to restitution, the right to recover moneys

properly paid, depends upon, we would respectfully

submit, a total failure of consideration.

If one needs authority for that, it can be

found in the Fibrosa case. If I can just take

Your Honours to that, it is in (1943) Ac 32. The

relevant passage is in the speech of Lord Atkin at

page 55, at the very end of his judgment, starting

six lines down from the top of the page:

What is being now decided is that the

application of an old-established principle of

the common law does enable a man who has paid

money and received nothing for it to recover

the money so expended. At any rate, it can be

said it leaves the man who has received the

money and given nothing for it in no worse

Baltic(3) 81 6/2/92

position than if he had received none.	Many
commercial contracts provide for various

risks. It is always possible to provide for

the risk of frustration, but what provision
the parties may agree will probably
take ..... Meanwhile, by the application of a

general doctrine which is independent of the

special contract and only comes into play when

further performance of the latter is

precluded, the man who pays money in advance

on a contract which is frustrated and receives

nothing for his payment is entitled to recover

it back.

Lord Wright is to similar effect at page 64, 10

lines up from the bottom of the page:

The defendant has the plaintiff's money.

There was no intention to enrich him in the

events which happened. No doubt, when money

is paid under a contract it can only be
claimed back as for failure of consideration
where the contract is terminated as to the

future. Characteristic instances are where it

is dissolved by frustration or impossibility

or by the contract becoming abortive for any

reason not involving fault on the part of the

plaintiff where the consideration, if entire,

has entirely failed or where, if it is

severable, it has entirely failed as to the

severable residue, as in Rugg v Minett.	The
claim for repayment is not based on the

contract which is dissolved on the frustration

but on the fact that the defendant has

received the money and has on the events which
have supervened no right to keep it. The same

event which automatically renders

performance - - - Your Honours, I think I am really, perhaps, taking

more time than I need by reading further this

passage but the principles, we would respectfully

submit, appear on the balance of that page which I

will not waste Your Honours' time by reading.

DEANE J: Your third and fourth points are to some extent related, are they not, in that if the respondent

can recover money or damages for disappointment, it

is somewhat difficult to say that you write off the

first half or whatever it was because the whole

thing was a disaster. On the other hand, if she

cannot recover any compensation for the

disappointment of the holiday and so on, there

would be something in favour of saying, "Well, when

you look at this as a whole, she ended up paying

this for what turned out to be an unmitigated

disaster from which she got no subsequent benefit."

Baltic(3) 82 6/2/92

I am not saying it is right but it did seem to me

to be - - -

MR DOWNES:  I see. I mean, certainly what Your Honour

says - there is that association between the two

and, of course, when I come to Jarvis v Swan Tours,

this case is not like any case in which that kind

of damages for disappointment approach has been
applied. They have all been unmitigated disasters

in the sense that the full holiday was taken

and - I know I am making light of it - but the

biscuits were not up to standard or the yodellers

who came on in the evening were not up to standard.

The holiday was there, it just was not up to

standard. That is not this case. The judge found
that the cruise up until the point of time of the

foundering was a very successful cruise providing

everything that had been promised. What happened

was that the cruise came to an end. There was not,

when I come to it, a failure to provide enjoyment,

there was just a failure to provide the balance of
the holiday and that is one of a number of reasons

why we would respectfully submit that the Swan v

Jarvis kind of damages is not appropriate in the present case.

Your Honours, in about one minute, can I just

put the crux of what we want to say about

restitution. The first proposition is that there

has to be a total failure of consideration. For

there to be a total failure of consideration there

has to be either nothing at all or an entire

contract.

It is suggested here that there is an entire

contract, but we would respectfully submit that

there is not. This is not, and was not, a contract

for the carriage of goods by sea. In a contract

for the carriage of goods by sea it is obvious that

they are then destroyed by the sinking of the ship	if you carry the goods nine-tenths of the way and
that nothing has been provided. But this was not
such a contract. I mean, if you try to look at it
as such a contract it becomes absurd because this
was a contract for the carriage from A to A. For
what it is worth, Mrs Dillon was carried from A to
A because she was brought back to Sydney at the
expense of the appellant after the sinking of the
ship. But to say that, therefore, this contract
had been performed is an absolute nonsense because
what this contract was was not anything that could
be compared to a contract for the carriage of goods
by sea, it was a contract to transport this lady
around the South Pacific in a particular ship by a
particular defined route, not to go from A to A,

Baltic(3) 83 6/2/92

but to go from A to B, to C to D, and to ultimately

end back at A.

Now, once one looks at it that way, this lady got however many of the points A, B, C and D had

been reached before the ship went down. So there was no failure of consideration, in just the same way as if some personal matter, associated with her

family or something, caused her to return from the

ship when it was in New Zealand at the same place

as it was when in fact it sank, it would not be

possible to say that she had not had any benefit

from the holiday; she had had the enjoyment of the

eight days. So, for that reason, we respectfully

submit, that this is not a case in which you can

sav there is a total failure of consideration. She

is· ·,ot therefore entitled to a return of the whole

of ·:he moneys. She would have been entitled to

return probably, as a head of damages, of that part
representing the balance of the trip, but that she

was voluntarily paid only a matter of weeks after

the sinking.	I am sorry I have gone past 4.15 pm,
but I -

MASON CJ: Well, if it is convenient you can continue.

MR DOWNES:  No, that is convenient, Your Honour. I want to

take Your Honours to Hayward v Wellers, but I think

really that is about all I need to say or wish to

say, at any event, about the restitution point, so

I would think, Your Honours, I would conclude the

balance of my argument within not much more than,

say, perhaps half an hour or a little longer

tomorrow morning, in this event, Your Honour.

MASON CJ:  Very well, Mr Downes. We will adjourn now and we

will resume at 9.45 am tomorrow.

AT 4.19 PM THE MATTER WAS ADJOURNED

UNTIL FRIDAY, 7 FEBRUARY 1992

Baltic(3) 6/2/92