Carnival plc v Karpik (The Ruby Princess)

Case [2022] FCAFC 149

FEDERAL COURT OF AUSTRALIA

Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149

Appeal from: Karpik v Carnival plc (The Ruby Princess) (Stay Application) [2021] FCA 1082
File number: NSD 1033 of 2021
Judgment of: ALLSOP CJ, RARES AND DERRINGTON JJ
Date of judgment: 2 September 2022
Catchwords:

CONTRACTS – contract formation – nature of agency relationship – extent of agent’s authority – imputation of agent’s knowledge – incorporation of terms – relevance of so-called ticket cases – offer and acceptance – whether there was reasonable notice of terms of contract of passage including the exclusive jurisdiction clause – whether exclusive jurisdiction clause was onerous or unusual

CONSUMER LAW – whether exclusive jurisdiction clause or class action waiver clause are unfair terms within the meaning of s 23 of the Australian Consumer Law – extraterritorial application of s 23 – whether s 23 is a mandatory law of the forum

REPRESENTATIVE PROCEEDINGS – whether class action waiver clause unenforceable – whether class action waiver clause is contrary to Pt IVA of the Federal Court of Australia Act1976 (Cth)

PRIVATE INTERNATIONAL LAW – enforcement of exclusive jurisdiction clause – whether class action waiver clause is contrary to public policy – whether there are any discretionary reasons to grant a stay of the proceedings

Legislation:

Constitution (Commonwealth of Australia) ss 51(i), 51(xx), 76(iii)

Acts Interpretation Act 1901 (Cth) ss 15A, 15AA, 21(1)(b)

Admiralty Act 1988 (Cth) s 4(3)

Australian Securities and Investments Commission Act 2001 (Cth) s 12BF

Carriage of Goods by Sea Act 1991 (Cth) s 11(1)

Competition and Consumer Act 2010 (Cth) ss 2, 4, 5(1)(g)

Competition and Consumer Act 2010 (Cth) Schedule 2 (Australian Consumer Law) ss 18, 20, 21, 23–25, 29, 30, 32–37, 44, 51–53, 67

Corporations Act 2001 (Cth)

Federal Court of Australia Act 1976 (Cth) Pt IVA, ss 33C, 33E, 33H, 33J, 33K, 33N–33S, 33X, 33Y

Federal Court of Australia Amendment Bill 1991 (Cth)

Federal Court Rules 2011 (Cth) r 30.01

Insurance Contracts Act 1984 (Cth) s 8

Judiciary Act 1903 (Cth) s 78B

Trade Practices Act 1974 (Cth) ss 4, 52

Trade Practices Amendment Bill 1977 (Cth)

Contracts Review Act 1980 (NSW) ss 7(1), 17(3)

Fair Trading Act 1999 (Vic)

Interpretation Act 1987 (NSW) s 12(1)(b)

Business Practices and Consumer Protection Act 2004 (BC)

Class Proceedings Act 1996 (BC) s 4

Constitution (United States of America) Art 3(2)
Cases cited:

A v Hayden (1984) 156 CLR 532

Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470

Akai Pty Ltd v The People’s Insurance Co Ltd (1996) 188 CLR 418

American and Ocean Insurance Co v 356 Bales of Cotton 26 US 511 (1828)

Archer v Carnival Corporation 2020 WL 6260003

AT&T Mobility LLC v Concepcion 563 U.S. 333 (2011); 131 S Ct 1740

Australian Competition and Consumer Commission v CLA Trading Pty Ltd [2016] FCA 377

Australian Competition and Consumer Commission v Facebook Inc [2021] FCA 244

Australian Competition and Consumer Commission v Valve Corp (No 3)

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AGLC
Carnival plc v Karpik (The Ruby Princess) [2022] FCAFC 149
Case
[2022] FCAFC 149
Decision Date

CaseChat Overview and Summary

In Carnival plc v Karpik, also known as The Ruby Princess, the Federal Court of Australia considered the enforceability of various clauses in the terms and conditions of a contract of carriage between a passenger, Mr Patrick Ho, and a cruise company, Carnival plc. The primary issue was whether certain clauses, specifically the exclusive jurisdiction clause and the class action waiver clause, were enforceable under Australian law. The case also involved questions of contract formation, the incorporation of terms, and the extraterritorial application of Australian consumer law.

The court had to determine whether the exclusive jurisdiction clause, which mandated that any disputes be resolved in the United States, and the class action waiver clause, which prohibited group legal action, were onerous or unusual, and thus, unenforceable. Furthermore, the court examined if these clauses were unfair terms under section 23 of the Australian Consumer Law and whether they contravened public policy or any discretionary reasons to grant a stay of the proceedings.

The court found that the contract of carriage was not formed until Mr Ho had a reasonable opportunity to examine the terms, which included the US Terms and Conditions. The court held that the exclusive jurisdiction clause was enforceable because it was not unusual and Mr Ho had reasonable notice of it. The court also determined that the class action waiver clause was unenforceable because it contravened section 33J(2) and 33K(4) of the Federal Court of Australia Act 1976, which mandate that group members must be informed of their right to opt out of a representative proceeding before making an informed decision. As Mr Ho had not been given such a notice, the clause was not binding on him.

The appeal was allowed, and the proceedings concerning Mr Ho's claims were stayed. The matter was remitted to the primary judge to determine the impact of the court's decision on the claims of other class members. Additionally, the court ordered the applicant to pay the respondents' costs of the application and the respondents to pay the appellants' costs of the appeal.

Orders

Orders of the court

1. The appeal is allowed.

2. Order 1 of the orders of the Federal Court of Australia made on 20 September 2021 in this matter be set aside and, in lieu thereof, it is ordered that:

(a) It is declared that the passage contract as between Mr Patrick Ho and the respondents pursuant to which Mr Ho undertook a voyage on the vessel, Ruby Princess, departing Sydney on 8 March 2020, was subject to the terms of the US Terms and Conditions as that expression is used in the reasons for judgment of this Court.

(b) The proceedings in respect of the claims of Mr Patrick Ho as against the respondents be stayed.

(c) The matter be remitted to the primary judge for determination of the extent to which the reasons for decision of this Court affect the claims of other members of the class action.

3. Order 7 of the orders of the Federal Court of Australia made on 21 October 2021 in this matter be set aside and, in lieu thereof, it is ordered that the applicant pay the respondents costs of the application.

4. The respondent pay the appellants’ costs of the appeal.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

In King v GIO Australia Holdings Ltd [2001] FCA 270 at [15], Sackville, Hely and Stone JJ explained the importance of an opt out notice as: This misleading impression might well affect the decision of a group member whether or not to opt out of the proceedings. The principal purpose of the notice given under ss 33X(1)(a) and 33Y(2) is to ensure that group members can make an informed decision concerning their rights: see Law Reform Commission, Grouped Proceedings in the Federal Court (Report No 46, 1988), pars 188, 190; Femcare Ltd v Bright (2000) 100 FCR 331, at 336–337, 349. We do not think it is an answer, as Mr Burnside QC (who appeared with Ms Hanscombe for the applicant) suggested it was, that a group member who is misled by the form of notice approved by the Court could apply for and expect to receive an extension of the period during which he or she can opt out of the representative proceeding: s 33J(3). The represented group is large and group members are likely to have widely varying degrees of understanding of the claims made on their behalf and the possible outcomes of representative proceedings. It is important that any decision they make concerning opting out of the proceedings not be based on a notice that is apt to mislead them. (emphasis added) Usually, an opt out notice will inform group members that they have the choice to remain passive, and that they will not be exposed to any possible liability for costs or other obligations until the common issues are decided by the Court or settled by agreement, or they can opt out. Common sense and long experience of representative proceedings in this Court suggest that few group members opt out as opposed to enjoying the benefit of a free carried interest in what is usually the riskiest part of the litigation. However, most persons who become group members when a representative proceeding is filed in the Court would have no idea about the rights that any uninformed pre-proceeding agreement to a class action waiver clause would deny them. Because the Court must approve the form and content of an opt out notice, a person cannot make a fully informed decision whether or not to exercise his, her or its right to opt out of a representative proceeding under Pt IVA in which he, she or it has been included before receiving the notice under ss 33X and 33Y and has the opportunity to consider and obtain legal advice on whether or not it is in the person’s interests to opt out. If the person could make a legally binding decision to opt out before receiving a notice under ss 33X and 33Y informing him or her of the existence of the right to remain in or opt out of a representative proceeding under ss 33J(2) or 33K(4) and the matters that the Court has determined should be in an opt out notice, the person would not be fully informed of the matters that the Parliament intended that the Court ensure would be communicated in the notice before the person opted out. When he entered into the contract of carriage with Princess, Mr Ho did not have any information that ss 33J, 33X and 33Y of the Federal Court Act contemplate a group member must be given in a notice that the Court has approved, in order to decide, on a proper understanding of his, her or its rights, whether to opt out of this representative proceeding, which, of course, was not then in contemplation.

Ratio Decidendi

Legal Principle Established

I have had the advantage of reading the reasons of Allsop CJ and Derrington J. I am unable to agree with the orders that Derrington J proposes for the following reasons. I have used the defined terms that Derrington J used in his reasons in what follows. Subject to the following, I agree with much, but not all, of what Allsop CJ has written on matters other than the enforceability of the class action and exclusive jurisdiction clauses. Incorporation of the US Terms and Conditions I am of opinion that it is not necessary to decide whether Rosanna was Mr Ho’s or Princess’ agent or was, as the primary judge found, an intermediary. As Derrington J explains, the contract between Rosanna’s employer, CruiseShipCenters, and Princess provided that, despite Princess being bound to pay CruiseShipCenters a commission on its sales of Princess’ tickets, CruiseShipCenters was not Princess’ agent but was, instead, independent of it. However, Mr Ho knew nothing of that contract. Indeed, Princess sought and obtained suppression and non-publication orders about the contents, or on appeal some of the contents, of its contract with CruiseShipCenters on the basis that many of its terms were commercially confidential. That means that the relationship of Rosanna and CruiseShipCenters to each of Mr Ho and Princess, being the parties to the contract of carriage on Ruby Princess, must be ascertained by what a reasonable person in the position of Mr Ho and Princess would infer based on the mutually known facts, the surrounding circumstances and the genesis of their dealings, including what CruiseShipCenters printed at the foot of its emails to Mr Ho about it being the carrier’s agent: cf Oceanic Sun Line Special Shipping Company Inc v Fay (1988) 165 CLR 197 at 223 per Brennan J with whom Gaudron J agreed, at 261, on the contractual formation issue. I agree with Derrington J’s conclusion that the contract for carriage on the voyage was not made on 25 September 2018 when Mr Ho paid the deposit or on 30 October 2018 when Rosanna sent him either or both the CruiseShipCenters’ booking confirmation at 8:16 pm or Princess’ at 8:18 pm. However, in my opinion, this case is an instance calling for what Gleeson CJ described in Baltic Shipping Company v Dillon(Mikhail Lermontov) (1991) 22 NSWLR 1 at 7F–8E as the “conventional analysis” of when and how a contract is made between an ocean carrier and a passenger, exemplified in Hood v Anchor Line (Henderson Bros) Ltd [1918] AC 837. The “conventional analysis” for long distance rail or passenger liner travel is that if the passenger purchases a ticket some time in advance of the commencement of the journey, the ticket is treated as an offer by the carrier to carry on the terms in, or expressly incorporated by, the ticket which is open to the passenger for acceptance: MacRobertson Miller Airline Services v Commissioner of State Taxation (Western Australia) (1975) 133 CLR 125 at 137–139 per Stephen J, 142–144 per Jacobs J and see too at 133–135 per Barwick CJ. In this scenario, in the “conventional analysis”, the passenger must have a reasonable opportunity to examine the ticket and to ascertain the terms which the carrier wishes to impose for the proposed journey. If the passenger bothers to read the terms of the ticket, he or she can decline the offer or refuse to travel if those terms are unacceptable. Ordinarily, it can be expected that he or she will not read, but simply accept, the terms, and so enter into the contract of carriage for the journey, because, realistically, there is no choice for a passenger to avoid imposed terms of that kind on offer either from the carrier proffering the ticket or its competitors. The imposed terms reflect the reality that contracts for air or sea carriage are usually contracts of adhesion to whatever the carrier stipulates.