BROWN v CRAIG (Civil Dispute)

In the case of Brown v Craig, the respondent, Ms Brown, sought a refund of a deposit she had paid to the applicant, Mr Craig, for services related to a wedding that was cancelled due to the COVID-19 pandemic. The dispute was heard by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). The central issue before the Tribunal was whether the contract between the parties was frustrated due to the pandemic and, if so, whether a refund of the deposit was warranted. A secondary issue was whether the penalty clause in the contract was unfair and, therefore, unenforceable.

The Tribunal found that while the pandemic did create an unforeseen and significant disruption, it did not amount to a frustration of the contract. The Tribunal held that the contract was not frustrated because the parties were still capable of performing their obligations, albeit with some delay or additional costs. The Tribunal also held that the penalty clause in the contract was not unfair as it was a genuine pre-estimate of loss and not a punishment. The Tribunal dismissed the claim for a refund and found that the penalty clause was enforceable.