Scenic Tours Pty Ltd v Moore

[2023] NSWCA 74

Court of Appeal

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Scenic Tours Pty Ltd v Moore [2023] NSWCA 74

Hearing dates:

26–27 October 2022

Date of orders:

20 April 2023

Decision date:

20 April 2023

Before:

Ward P at [1]
Kirk JA at [2]
Griffiths AJA at [48]

Decision:

(1) To the extent necessary the applicant/appellant has leave to appeal.
(2) The parties may file and serve submissions of no more than 5 pages relating to what final orders the Court should make, together with any relevant supporting materials, within 14 days of these orders.
(3) The parties may file and serve submissions in reply of no more than 3 pages within 21 days of these orders.
(4) Final orders will be made on the papers and without a further oral hearing.

Catchwords:

CONSUMER LAW – Enforcement and remedies – Remedies relating to statutory guarantees – Representative proceedings against supplier of services – Breach of statutory guarantees under ss 61(1) and 61(2) of the Australian Consumer Law – Availability of defence s 61(3) of the ACL – Assessment of compensation for reduction in value of services under s 267(3) of the ACL and damages for distress and disappointment under s 267(4) of the ACL – Whether damages recoverable for cost of airfares under s 267(4) of the ACL

Legislation Cited:

Competition and Consumer Act 2010 (Cth) Schedule 2 – Australian Consumer Law ss 61, 64, 64A, 265, 267, 268, 269, 272

Civil Liability Act 2002 (NSW)

Civil Procedure Act 2005 (NSW)

Supreme Court Act 1970 (NSW)

Cases Cited:

123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21

Alameddine v Glenworth Valley Horse Riding Pty Ltd (2015) 324 ALR 355; [2015] NSWCA 219

Baltic ShippingCompany v Dillon (1993) 176 CLR 344; [1993] HCA 4

Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66

Capic v Ford Motor Co of Australia Pty Ltd [2021] FCA 715; (2021) 154 ACSR 235

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64; [1991] HCA 54

Graham Barclay Oysters Pty Ltd v Ryan (2000) 102 FCR 307; [2000] FCA 1099

Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540; [2002] HCA 54

Haines v Bendall (1991) 172 CLR 60

House v The King (1936) 55 CLR 499; [1936] HCA 40

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79

Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234

Milner v Carnival plc (t/as Cunard) [2010] 3 All ER 701; [2010] EWCA Civ 389

Moore v Scenic Tours Pty Ltd (No.2) [2017] NSWSC 733

Moore v Scenic Tours Pty Limited (No 3) [2017] NSWSC 1555

Moore v Scenic Tours Pty Ltd (No.4) [2022] NSWSC 270; (2022) 160 ACSR 232

Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17

Moran v McMahon (1985) 3 NSWLR 700

Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3

Plymouth Brethren (Exclusive Brethren) Christian Church v The Age Company Ltd (2018) 97 NSWLR 739; [2018] NSWCA 95

Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd [2021] NSWCA 206; (2021) 393 ALR 162

Robinson v Harman: see (1848) 1 Exch 850; 154 ER 363

RuarovFerrari [2007] FCA 2022

Valve Corp v Australian Competition and Consumer Commission (2017) 258 FCR 190; [2017] FCAFC 224

Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702

Texts Cited:

N C Seddon and R A Bigwood, Cheshire & Fifoot: Law of Contract (11th Australian edition, LexisNexis, 2017)

Category:

Principal judgment

Parties:

Scenic Tours Pty Ltd (Appellant)
David Moore (Respondent)

Representation:

Counsel:
D Weinberger and A Jordan (Appellant)
J Hogan-Doran SC, N Li and M Thompson (Respondent)

Solicitors:
SWS Lawyers (Appellant)
Somerville Legal (Respondent)

File Number(s):

2022/00136307
2022/00140758

Publication restriction:

Nil

 Decision under appeal 

Court or tribunal:

Supreme Court of NSW

Jurisdiction:

Common Law

Citation:

[2022] NSWSC 270

Date of Decision:

14 April 2022

Before:

Garling J

File Number(s):

2014/00223271

HEADNOTE

[This headnote is not to be read as part of the judgment]

In 2014 the respondent, Mr David Moore, commenced a representative proceeding on behalf of himself and approximately 1500 group members against the appellant, Scenic Tours Pty Ltd (Scenic Tours), in relation to 13 European river cruises conducted by Scenic Tours that were scheduled to depart between 19 May 2013 and 12 June 2013. Instead of the marketed “once in a lifetime cruise along the grand waterways of Europe”, the conduct of those river cruises was substantially disrupted by the decisions and actions taken by Scenic Tours when it was confronted with high water levels on the rivers owing to heavy rainfall and flooding which occurred in Europe from April through June 2013.

In a judgment dated 31 August 2017 (Moore v Scenic Tours Pty Limited (No 2) [2017] NSWSC 733), Garling J relevantly found that Scenic Tours breached the consumer guarantees in ss 61(1) and 61(2) of the Australian Consumer Law (ACL) in respect of 10 of the 13 cruises, which findings were not disturbed by subsequent appellate processes. Section 61(1) provides that, where in relevant consumer transactions for the supply of services a consumer expressly or impliedly makes known to a supplier any particular purpose for which the services are being acquired, there is a guarantee that the services will be reasonably fit for that purpose. Section 61(2) imposes on such transactions a statutory guarantee that, where a consumer expressly or impliedly makes known to a supplier the result which the consumer wishes the services to achieve, the services will be of such a nature and quality, state or condition that they might reasonably be expected to achieve that result. Section 61(3) provides that the section does not apply if the circumstances show that the consumer did not rely on, or it was unreasonable for the consumer to rely on, the skill or judgment of the supplier.

In his 2017 decision Garling J found that the defence under s 61(3) of the ACL did not apply as regards Mr Moore. Whether the defence applied in respect of other group members was left for future determination. His Honour awarded damages to Mr Moore which comprised compensation both for a reduction in the value of services (under s 267(3) of the ACL) and damages for distress and disappointment (under s 267(4) of the ACL). His Honour did not then assess damages in respect of other group members.

The Court of Appeal overturned the award of damages in part, holding that Mr Moore and the other group members were precluded by s 275 of the ACL and s 16 of the Civil Liability Act 2002 (NSW) from claiming damages for distress and disappointment (Scenic Tours Pty v Moore [2018] NSWCA 238; (2018) 361 ALR 456). That decision was overturned by the High Court (Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17), which held that Mr Moore and the other group members were entitled to damages for distress and disappointment pursuant to s 267(4) of the ACL. The Court reinstated the primary judge’s initial award of damages to Mr Moore for distress and disappointment.

The matter returned to Garling J. In the judgment under appeal his Honour considered the availability of the defence in s 61(3) of the ACL as regards group members other than Mr Moore and assessed damages for a sample of group members. His Honour found that the s 61(3) defence did not apply. On appeal, Scenic Tours submitted that this conclusion was erroneous (grounds 1 and 2).

His Honour also awarded damages to various group members comprising one or more of the following three components:

1. an amount representing the reduction in the value of the services arising from Scenic Tours’ breach of the statutory guarantees under s 267(3)(b) of the ACL (Reduction in Value Damages) – these awards were challenged by ground 3 on appeal, with related grounds 4 and 5 not being pressed;

2. an amount for distress and disappointment under s 267(4) of the ACL (Distress Damages) – these awards were challenged by ground 6 and 7 on appeal; and

3. an amount for the refund of airfares to and from Europe under s 267(4) of the ACL (Airfares Damages) – these awards were challenged by grounds 8 and 9 on appeal.

The Court held, unanimously dismissing grounds 1-3 and 6-7 and upholding grounds 8-9 by majority (per Kirk JA, Ward P agreeing, Griffiths AJA dissenting):

As to the application of the defence in s 61(3) of the ACL (grounds 1-2)

1    Contrary to Scenic Tours’ submissions, the relevant services the subject of the findings of breach of the statutory guarantees were not confined to cruising and extended to a broader concept of “services”. This is consistent with the pleadings and the conduct of the case up until this appeal, the terms of the contract between Scenic Tours and the relevant consumers, and the agreed Common Questions and Answers providing the framework within which the primary judgment was decided: at [112]-[129], [138]-[139].

2 Contrary to its submission, Scenic Tours’ statements in its Brochures and Terms and Conditions did not intimate to passengers that it could not guarantee to provide services in accordance with the Brochures if external circumstances beyond its control made it impossible to do so: at [131]-[137]. Further, the mere fact that consumers were urged to take out insurance does not suggest, expressly or by implication, that consumers could not rely on Scenic Tours to use its skill or judgment in providing the services: at [158].

3 The primary judge properly construed and applied s 61(3), taking into account the effect of s 61(3) and issues such as partial and unreasonable reliance. His Honour did not err in not addressing the s 61(3) on a cruise-by-cruise basis: at [140]-[157], [159]-[170].

As to the Reduction in Value Damages (ground 3)

4 The primary judge did not err in preferring the evidence of Mr Moore’s expert, Ms Butler, over that of Scenic Tours’ expert, Mr Hoffmann, on the issue of Reduction in Value Damages. Contrary to Scenic Tours’ submission, the primary judge made an allowance for vicissitudes: at [173]. Ms Butler further correctly focused upon the market value of a cruise by reference to what a reasonable consumer fully informed would have paid for the cruise at the time of booking: at [174]-[176].

5 Scenic Tours did not make good its allegations that Ms Butler assumed the consumers’ sole purpose in travelling to Europe was to take a Scenic Tours cruise (at [177]), nor that she erred by failing to take into account evidence that some consumers wrote to Scenic Tours congratulating it for having handled the difficulties presented by the flooding, a matter which was never put to Ms Butler in cross-examination: at [178].

6   The primary judge explained why, despite the criticisms concerning Ms Butler’s experience, his Honour preferred her evidence to that of Mr Hoffman. The matters referred to were all plainly relevant and provided a sound basis for the primary judge’s assessment of the experts’ respective evidence: at [179]-[181].

As to the Distress Damages (grounds 6-7)

7   The assessment of Distress Damages is a very fact-rich and individual assessment and turns on its own particular facts and circumstances rather than the application of a rigid rule: at [188]-[190]. The primary judge gave careful and detailed attention to the individual circumstances of the relevant group members and the Distress Damages awarded were not manifestly excessive in the particular circumstances of this case: at [191]-[192].

Milner v Carnival plc (t/as Cunard) [2010] 3 All ER 701; [2010] EWCA Civ 389 at [36]–[46] and [60]; Baltic Shipping Co v Dillon (1993) 176 CLR 344; [1993] HCA 4, considered

8   Scenic Tours failed to make good its individual complaints under ground 7 regarding the primary judge’s use of Ms Butler’s evidence in assessing Distress Damages (at [193]-[194]); the primary judge’s alleged identification of “a rule of thumb acquired by a form of convention” by reference to earlier authorities (at [195]-[196]); the primary judge’s alleged failure to consider whether the group members’ distress and disappointment was caused not by any breach of the consumer guarantees but rather by matters such as bad weather which were beyond its control (at [197]); and that the award of Distress Damages duplicated the component of Reduction in Value Damages relating to the value of the lost enjoyment benefit (at [198]).

As to the Airfares Damages (grounds 8-9)

Per Kirk JA, Ward P agreeing:

9   The primary judge’s conclusion appears to have depended on a conclusion that the relevant group members would not themselves have acquired the services if they had known how unsatisfactory they would be, but his Honour did not in fact make any such findings: at [37]-[38].

10 The claims on consumer guarantees set out in s 61(1) and s 61(2) are a statutory cause of action conferred by s 267. The close links between these statutory provisions and contractual rights make contractual principles relevant but not determinative in interpreting these statutory causes of action: at [4]-[8]. Wasted expenditure is recoverable in contract claims where it is not possible to predict the plaintiff’s position had the contract been fully performed; it is not awarded in order to put the claimant back in the position as if no transaction occurred: at [11], [13] and [39]. The rights given to the consumer relating to a failure to comply with a consumer guarantee are of a kind with contractual rights in presupposing the transaction has taken effect: at [23]-[29].

McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79; Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85-86; [1991] HCA 54; Baltic ShippingCompany v Dillon (1993) 176 CLR 344 at 372, 387 and 406; [1993] HCA 4, 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]–[73], considered

11 The airfares were a necessary cost of the contract being fulfilled. The claimants here are approbating and reprobating by claiming damages for breach of the consumer guarantees whilst also seeking a refund of an inevitable cost of being in a position where the consumer guarantees were or were not fulfilled. To do so is contrary to the strong principle that a plaintiff cannot recover more than he or she has lost, where there is no reason to consider that s 267 was intended to be inconsistent with that principle: at [1], [39]-[44].

Baltic ShippingCompany v Dillon (1993) 176 CLR 344; [1993] HCA 4; Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 at [57], applied

Per Griffiths AJA dissenting:

12   Damages were properly awarded to Mr Moore and five group members for the loss of the cost of airfares, which was “wasted expenditure” having regard to Scenic Tours’ breach of the relevant statutory guarantees. Scenic Tours’ conduct with respect to the breach of the guarantees was causative of this loss and the loss was clearly foreseeable: at [203] and [209].

Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 81-82 and 126-127; [1991] HCA 54; Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234 at [29]; 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]-[73]; Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702 at [293; Capic v Ford Motor Co of Australia Pty Ltd [2021] FCA 715; (2021) 154 ACSR 235 at [912], considered

13 There is no inconsistency in the fact that the primary judge awarded Reduction in Value Damages under s 267(3) of the ACL, and Distress Damages and Airfares Damages under s 267(4). They represent separate heads of compensation and/or damages (see s 267(5)). The award of Distress Damages is in the nature of damages for non-economic loss, while the Airfares Damages relates to economic loss and is a separate head. It is clear from the primary judge’s reasons regarding the award of Distress Damages that he did not take into account the cost of airfares under that head of damages: at [210].

Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 at [66], considered

Contents

HEADNOTE

JUDGMENT

The nature of the rights

Contractual claims

The statutory rights to compensation or damages

The approach of the primary judge

Determination

Orders

Common Questions and Answers

2022 primary judgment summarised

Some preliminary matters

Scenic Tours’ s 61(3) defence (reliance)

Reduction in Value Damages

Distress Damages

Airfares Damages

Proceedings on appeal

Section 61(3) of the ACL (grounds 1 and 2)

Scenic Tours’ claims regarding the breadth of the relevant services

Scenic Tours’ other submissions on grounds 1 and 2

Statements in the Brochures and the Terms and Conditions

The terms of Scenic Tours’ formal defence

Scenic Tours’ overstatement of the effect of s 61(3)

The proper sequence in applying s 61(3)

Partial reliance

Section 61(3) and individual cruises

Travel insurance

Unreasonable reliance

Scenic Tours’ other criticisms

Conclusion on grounds 1 and 2

Reduction in Value Damages (ground 3)

Distress Damages (grounds 6 and 7)

Airfares Damages (grounds 8 and 9)

Determination of application seeking leave to appeal

Determination of notice of contention

Conclusion

JUDGMENT

1. WARD P: I have had the considerable benefit of reading in draft the judgments of both Griffiths AJA and Kirk JA.  I agree with Griffiths AJA as to the disposition of grounds 1-3 and 6-7 of the grounds of appeal.  I agree with Kirk JA , for the reasons that his Honour gives, that grounds 8-9 of the grounds of appeal are made good and that the orders his Honour proposes should be made.  Awarding some of the group members damages for wasted expenditure by reference to the airfares incurred in travelling to Europe for the river cruises the subject of the claims is inconsistent with the award of damages to compensate for the reduction in value of the services provided by the appellant and would in effect provide double recovery to that extent for their loss.

2. KIRK JA: I have had the advantage of reading the comprehensive judgment of Griffiths AJA. I agree with his Honour’s reasons for granting leave to appeal and for rejecting appeal grounds 1-3 and 6-7, noting that grounds 4-5 were not pressed. As to grounds 8-9, with respect to claiming damages for airfares, I respectfully disagree with his Honour for the reasons set out below. In the result, in my view the appeal should be dismissed save as to grounds 8-9, with respect to which the appeal should be upheld and consequential orders made.

3. The issues raised by grounds 8-9 are not without complexity. They received relatively little attention from the parties. The factual context in which they arise is set out in the judgment of Griffiths AJA and need not be repeated.

The nature of the rights

4. The damages awarded to Mr Moore and the sample 31 group members were awarded under s 267 of the federal version of the Australian Consumer Law (ACL), set out in Sch 2 of the Competition and Consumer Act 2010 (Cth). The damages were for failure to comply with the consumer guarantees in Div 1 of Pt 3-2 of the ACL, specifically those set out in s 61(1), relating to fitness for purpose, and s 61(2), relating to achieving a desired result. That division “adopts the mechanism of providing that certain consumer guarantees apply to certain transactions, in contrast to the mechanism (adopted by the predecessor provisions) of implying terms into a contract”: Valve Corp v Australian Competition and Consumer Commission (2017) 258 FCR 190; [2017] FCAFC 224 at [106] (Full Court). Thus, in contrast to claims made under the predecessor regime in Pt 5 Div 2 of the Trade Practices Act 1974 (Cth), the types of claims at issue here are not for breach of contract. They are claims on a statutory cause of action conferred by s 267.

5. The guarantees are not expressed to depend upon there being a contract between the consumer and the supplier: note Valve Corp at [106]; Alameddine v Glenworth Valley Horse Riding Pty Ltd (2015) 324 ALR 355; [2015] NSWCA 219 at [77]. And the guarantee in s 59 that a manufacturer will comply with any express warranty given by it, for example, clearly does not depend upon there being a contract between the consumer and the manufacturer.

4. Nevertheless, it will commonly be the case that the guarantees arise in transactions governed by a contract. Some of the rights granted by the statute with respect to the consumer guarantees seem to presuppose that there is a contract: ss 265, 267(2)(b)(ii), 267(3) and 269. And to some extent the damages that can be sought under s 267 can be limited by contract. For example, a contract for the supply by a person of services – other than services of a kind ordinarily acquired for personal, domestic or household use or consumption – can limit the supplier’s liability for failure to comply with a guarantee to the supplying of the services again or the payment of the cost of having the services supplied again: ACL, s 64A(2). What is more, the language in s 267 of a “failure to comply” with a “guarantee” is not far removed from a “breach” of a contractual “warranty”. There are thus close links between the statutory provisions at issue here and contractual rights.

5. In the earlier decision in this matter in the High Court, Edelman J noted that the parties assumed that the damages recoverable under s 267(4) were governed by the same principles as common law damages for breach of contract: Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 (2020 HCA judgment) at [67]. There are dangers in assuming that statutory compensation rights are limited by common law analogues or forebears: note Murphy v Overton Investments Pty Ltd (2004) 216 CLR 388; [2004] HCA 3 at [44]. That said, “analogies may be helpful”: ibid. Here, it is useful to refer to relevant contractual principles whilst recognising that they are not determinative.

Contractual claims

8. The basal compensatory principle for claims in contract or tort is well settled (Haines v Bendall (1991) 172 CLR 60 at 63; [1991] HCA 15; citations omitted):

The settled principle governing the assessment of compensatory damages, whether in actions of tort or contract, is that the injured party should receive compensation in a sum which, so far as money can do, will put that party in the same position as he or she would have been in if the contract had been performed or the tort had not been committed.

9. In contract law that principle is sometimes referred to as the principle in Robinson v Harman: see (1848) 1 Exch 850; 154 ER 363.

10. Claims based upon the tort of deceit – or statutory claims for misleading conduct – relating to the consequences of entering a transaction may be put on a “no transaction” basis. If it is shown that but for the relevant wrongful conduct the claimant would not have entered the transaction, then they may claim compensation on the basis that the effects of the transaction are unwound. Such a claim might also be put on a “different transaction” basis, saying that but for some misrepresentation the transaction still would have been entered but on different terms.

11. In a claim for damages for breach of contract the relevant wrong is the breach of the contract. The necessary premise of the claim is a contract. Neither a no-transaction nor a different-transaction claim is available, of itself, for breach of contract. Such a claim would proceed on the basis that but for the wrong the contract would not have been entered, or a different contract would have been entered, which is inconsistent with then suing on the contract in question. There can be a common law right to rescind a contract for misrepresentation, but that does not involve awarding damages for breach of contract: note Re York Street Mezzanine Pty Ltd (2007) 162 FCR 358; [2007] FCA 922 at [41].

12. In some circumstances, the damages awarded for a breach of contract may be much the same as would have been awarded on a no-transaction basis. Notably, in McRae v Commonwealth Disposals Commission (1951) 84 CLR 377; [1951] HCA 79 damages were awarded for amounts spent by plaintiffs who had contracted with the Commonwealth to salvage a stranded oil tanker and its contents, but where the ship was ultimately nowhere to be found. That was the measure adopted because of “the impossibility of assessing damages on the basis of a comparison between what was promised and what was delivered”, which arose “not because what was promised was valueless but because it is impossible to value a non-existent thing” (at 414).

13. In other words, in giving damages equivalent to the wasted expenditure of the plaintiffs the Court was adopting a convenient and just means of approximating the minimum benefit which plaintiffs would have enjoyed had the contract not been breached. This approach can thus be reconciled with an assumption that the contract would have been performed as promised. It does not involve adopting a premise that the plaintiff is to be put back in the position they would have been in had the relevant transaction not occurred. Mason CJ and Dawson J explained as much in Commonwealth v Amann Aviation Pty Ltd (1991) 174 CLR 64 at 85-86; [1991] HCA 54:

An award of damages for expenditure reasonably incurred under a contract in which no net profit would have been realised, while placing the plaintiff in the position he or she would have been in had the contract been fully performed, also restores the plaintiff to the position he or she would have been in had the contract not been entered into. In this particular situation it will be noted that there is a coincidence, but no more than a coincidence, between the measure of damages recoverable both in contract and in tort.

It should be observed that, in a case where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed, as was the case in both McRae and Anglia Television, it is not possible as a matter of strict logic to assess damages in accordance with the principle in Robinson v Harman. But the law considers the just result in such a case is to allow a plaintiff to recover such expenditure as is reasonably incurred in reliance on the defendant's promise. In this case, the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed.

14. This type of compensation is sometimes labelled “reliance damages” as opposed to “expectation damages”. However, as Mason CJ and Dawson J said at 82, such terms are “simply manifestations of the central principle enunciated in Robinson v Harman rather than discrete and truly alternative measures of damages which a party not in breach may elect to claim”; see further N C Seddon and R A Bigwood, Cheshire & Fifoot: Law of Contract (11^th Australian edition, LexisNexis, 2017) at [23.7].

15. A similar explanation of the ability to recover such wasted expenditure was given by Deane J in Amann at 126-127 (citation omitted):

In a case where a plaintiff has incurred expenditure either in procuring the contract or in its performance but it is impossible or difficult to establish the value of any benefits which the plaintiff would have derived from performance by the defendant, considerations of justice dictate that the plaintiff may rely on a presumption that the value of those benefits would have been at least equal to the total detriment which has been or would have been sustained by the plaintiff in doing whatever was reasonably necessary to procure and perform the contract. …

The presumption will be rebutted if it be self-evident or established that the plaintiff would have derived no financial or other benefit from performance of the contract or that any financial or other benefit which would have been derived from future performance would not have been sufficient in value to counterbalance the past expenditure.

16. The issue is further illuminated by the judgment of Brereton JA in 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]–[73].

17. Damages for breach of contract may not merely be for lost profit, wasted expenditure, or the like, but may extend to consequential losses. For example, where an adviser breaches a contractual duty of providing services with due care the client may be able to claim losses resulting from entering a subsequent transaction which would not have been entered but for the negligent advice: see Amann at 81-82. The no-transaction element of such a claim relates to the subsequent contract, not the contract with the adviser which is the basis of the claim.

18. A case of some potential relevance to this matter is Baltic Shipping Company v Dillon (1993) 176 CLR 344; [1993] HCA 4, involving another unpleasurable pleasure cruise. A cruise ship sank off the South Island of New Zealand on the tenth day of a 14 day cruise. A passenger, Mrs Dillon, sought damages. The amount awarded by the trial judge included $5,000 damages for disappointment and distress and $1,417 as a refund of that part of the purchase price of the cruise which had not already been refunded (the disputed sum related in effect to the 10 days of cruising she had already enjoyed). The High Court upheld the award for disappointment but overturned the refund.

19. Mrs Dillon had sought to justify the refund either on contract or as founded on a restitutionary claim for total failure of consideration. The Court rejected the restitutionary claim on the basis that there had not been a total failure of consideration. But in any event, whether put in terms of restitution or contract, a refund was not payable in circumstances where the contract was being sued upon. Mason CJ said that “full damages and complete restitution will not be given for the same breach of contract” (at 359). Deane and Dawson JJ explained at 379:

[Mrs Dillon] has sought and obtained an order against Baltic for compensatory damages for Baltic's failure to perform its contractual promises to her. In particular, she has received a refund of a proportionate part of the fare and has obtained and will retain … the benefit of an award of damages for the disappointment and distress which she sustained by reason of Baltic's failure to provide her with the full pleasure cruise which it promised to provide. In these circumstances, Mrs Dillon has indirectly enforced, and indirectly obtained the benefit of, Baltic's contractual promises.

20. As Gaudron J put it, pithily, “[i]f Mrs Dillon were to receive damages and a refund of her fare as well, she would, in effect, take the benefit of the contract without an obligation to give consideration for it” (at 387; see also Brennan J at 372, McHugh J at 406). For Mrs Dillon to have sued for both breach of the contract and for return of the price of the contract she would, in effect, have been seeking to claim on a no-transaction basis, where doing so would conflict with the basal premise that there was a contract.

The statutory rights to compensation or damages

21. Section 267 of the ACL provides for the type of statutory claim made here with respect to services (s 259 is in similar terms relating to goods):

267 Action against suppliers of services

(1)   A consumer may take action under this section if:

(a)   a person (the supplier) supplies, in trade or commerce, services to the consumer; and

(b)   a guarantee that applies to the supply under Subdivision B of Division 1 of Part 3-2 is not complied with; and

(c)   unless the guarantee is the guarantee under section 60 – the failure to comply with the guarantee did not occur only because of:

(i)   an act, default or omission of, or a representation made by, any person other than the supplier, or an agent or employee of the supplier; or

(ii)   a cause independent of human control that occurred after the services were supplied.

(2)   If the failure to comply with the guarantee can be remedied and is not a major failure:

(a)   the consumer may require the supplier to remedy the failure within a reasonable time; or

(b)   if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time – the consumer may:

(i)   otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or

(ii)   terminate the contract for the supply of the services.

(3)   If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:

(a)   terminate the contract for the supply of the services; or

(b)   by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.

(4)   The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

(5)   To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).

22. The notion of “major failure” is defined in s 268, and includes that “the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure”.

23. Section 269 applies if the consumer terminates the contract for supply pursuant to the right to do so in s 267(3)(a). It addresses the effect of such a termination, making clear that a termination under s 267(3)(a) is not ab initio. The termination takes effect when made known to the supplier (or, in some circumstances, when reasonable means are used by the consumer to indicate termination). It also provides that the consumer is entitled to recover a refund of any money paid for the services (and an amount equal to any other consideration provided) “to the extent that the consumer has not already consumed the services at the time the termination takes effect”. That qualification indicates that the consumer cannot expect to receive the benefit of any services already used without having to pay for them. Section 270 deals with the situation where the consumer has been supplied with some goods in connection with the supply of services and the consumer terminates the contract. Such a termination is taken to be a rejection of the goods, which are (in general) to be returned, with any money paid for the goods to be refunded.

24. The qualification in s 269 is also consistent with the fact that s 267(3) provides that if the failure is major or cannot be remedied then the consumer may either (a) terminate or (b) take action to recover compensation for any reduction in the value of what is provided. The provision in s 267(3)(b) thus also indicates that the consumer’s claim must give credit for the value of what has been provided.

25. The rights given in s 267(3) are premised on the transaction having taken effect, and do not provide for it to be completely unwound. Thus Edelman J indicated in the 2020 HCA judgment that s 267(3) is equivalent to compensation for the “performance interest” arising from a breach of contract, that is, providing “the promisee with the difference between the value of what was promised and the value of what was received” (at [64], and generally [63]-[66]).

26. As for the separate right to compensation given by s 267(4) for reasonably foreseeable loss or damage suffered by the consumer because of the failure to comply with the guarantee, Edelman J equated that with the recognition in contract law to compensation for consequential losses (at [67]). As noted above at [17], an example of such damage is where loss is suffered by acting on an adviser’s negligent advice. This characterisation is supported by the explanatory memorandum for the bill which introduced the ACL, the Trade Practices Amendment (Australian Consumer Law) Bill 2009 (at [7.114], and see similarly at [7.95] with respect to goods):

If a consumer suffers losses as a result of a failure of a supplier of services to comply with guarantees, the consumer can recover those losses from the supplier. This type of loss is often known as “consequential loss”. The losses that are recoverable are limited to those that are “reasonably foreseeable” to result from the failure. In other words, the consumer can recover those losses that are a probable consequence of the failure. [Schedule 1, item 1: Chapter 5, Part 5-4, Division 1, subsection 268(4)]

Example 7.15

An example of this type of loss is a house fire caused by incorrect installation of electric lighting in the home of a consumer.

27. The premise of this type of right to compensation is, again, that the services have been supplied pursuant to the transaction but the supplier did not comply with a relevant consumer guarantee.

28. That same premise applies with respect to the other rights granted in s 267, namely those in subsection (2). If the failure to comply with the guarantee can be remedied and is not major then the consumer may require the supplier to remedy the failure. If the supplier does not do so within a reasonable time then the consumer may either claim the costs of having the failure remedied themselves or they may terminate the contract.

29. The rights given to the consumer relating to a failure to comply with a consumer guarantee are thus of a kind with contractual rights in presupposing the transaction has taken effect. They do not, of themselves, provide a means of obtaining compensation on a no-transaction basis. Of course, analogously with the discussion by Mason CJ and Dawson J in Amann, in some situations it is possible that the damages or compensation may coincide with what would have been awarded on such a basis.

30. The approach of Perram J in Capic v Ford Motor Co of Australia Pty Ltd (2021) 154 ACSR 235; [2021] FCA 715 appears consistent with this view. His Honour suggested at [891] that the point of an award under s 272 of the ACL was to put the claimant “in the position she would have been in if the [thing acquired] had been of acceptable quality”. Section 272 is another remedial provision, dealing with damages claims against manufacturers for breach of consumer guarantees.

The approach of the primary judge

31. The primary judge awarded damages for three types of claims: first, the reduced value of the services actually provided compared to what the consumers paid; secondly, distress and disappointment damages; thirdly, the “wasted airfares”. The former was claimed and awarded under s 267(3). The latter two categories were claimed and awarded under s 267(4). As his Honour noted, s 267(5) provides that claims can be made under both: Moore v Scenic Tours Pty Ltd (No 4) [2022] NSWSC 270 at [788].

32. His Honour said that “consistently with the remarks of Edelman J in the High Court’s judgment in this matter, there is no reason to assess damages according to any different principle than that applicable for breach of contract or tort”: at [795]. In fact, Edelman J had referred to the parties’ assumption that “the damages recoverable under s 267(4) for non-economic loss are governed by the same principles as common law damages for breach of contract” (at [67]). He had not suggested that tortious principles were an appropriate guide. This point has possible significance given that no-transaction claims can be made in tort but not in contract.

33. After reciting the parties’ arguments, the primary judge said the following:

[805] It seems to me that the starting point of the analysis on this question is to identify the nature of the breach of the consumer guarantees. As earlier indicated, the breach of the consumer guarantees was found to be a major failure because I was satisfied that the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure. This finding is undisturbed and applies to all the group members and in respect of each of the 10 Cruises.

[806] If the consumer would not have acquired the services, then they would not have flown to Europe for the purpose of taking the Cruise. Accordingly, consistently with the remarks of Mason CJ and Dawson J in Amann Aviation, the consumers would not have purchased the airfares and would not have expended the cost of the airfares. In those circumstances, I am satisfied that the cost of airfares can be regarded as falling within the description of wasted expenditure. …

[808] There are those for whom the sole purpose of travelling to Europe and incurring the airfares was to take the Cruise. In respect of group members falling into that category, I am satisfied that the airfares were wasted, and that they are entitled to damages by way of the cost of the airfares and taxes actually paid by them.

34. His Honour declined to award damages in this regard to those for whom there was more than one purpose of flying to Europe, on the basis that to then seek to apportion some part of the airfare to going on the cruise and another portion to pursuing other ends “is not consistent with wasted expenditure” (at [817]).

Determination

35. There is an elision in the primary judge’s analysis at [805]-[806], which was repeated by the respondent in submissions to this Court. His Honour had earlier reiterated (at [789]) his finding in his earlier decision in Moore v Scenic Tours Pty Ltd (No 2) [2017] NSWSC 733 that Scenic Tour’s failure to comply with the purpose and result guarantees was a “major failure” within s 268(1)(a) of the ACL. But as his Honour had said in his earlier judgment (at [774]):

However, s 268(1)(a) focusses not on a particular individual but on whether a ‘reasonable consumer fully acquainted with the nature and extent of the failure’ would not have acquired the services. This is an objective test. … I am satisfied that no reasonable consumer would have gone ahead and acquired the services at the price which was being charged.

36. His Honour’s finding about not acquiring the services was thus about the nominal reasonable consumer. He had not made any finding that Mr Moore or any of the other relevant group members would not themselves have acquired the services if they had known how unsatisfactory they would be. Yet to conclude that “the cost of airfares can be regarded as falling within the description of wasted expenditure” (at [806]), at least insofar as it was meant to be applicable to this group of claimants, was seemingly premised on that being so. So much is manifest in the sentence that “[i]f the consumer would not have acquired the services, then they would not have flown to Europe for the purpose of taking the Cruise”.

37. His Honour did say at [805] that his earlier finding about being a major failure “is undisturbed and applies to all the group members and in respect of each of the 10 Cruises”. That is a generic statement about all group members and can only sensibly be understood to mean that they all had the benefit of the objective “major failure” finding. It cannot be understood to mean that he was persuaded that all group members in fact, subjectively, would not have gone on the tour if they had known that the consumer guarantees would be breached in the manner that occurred. Such a finding would require reasoning by reference to evidence. A factual premise of the analysis was thus not addressed by his Honour and not found to be made out.

38. The expenditure would not be regarded as wasted if the particular group members would have gone on the tour anyway, even knowing how unsatisfactory it would be. He identified which group members should receive a refund of their airfares not based upon whether they would have gone on the trip if they had known how it would turn out, but rather upon whether or not the sole purpose of their flight to Europe was to join the trip.

39. There are more fundamental difficulties with his Honour’s approach. The reliance on the notion of wasted expenditure, as discussed by Mason CJ and Dawson J in Amann, is inapposite. As addressed above at [12]-[14], the law may allow recovery of wasted expenditure in contract cases “where it is not possible to predict what position a plaintiff would have been in had the contract been fully performed” (quoting Mason CJ and Dawson J in Amann at 86). But this is not such a case. Such a prediction is not only possible but has been made.

40. If Scenic Tours had complied with the consumer guarantees then Mr Moore and the relevant group members would have received the tour that they had paid for, and the implicit promise of enjoyment would have been fulfilled. Scenic Tours did not comply. The claimants have thus been awarded a sum to compensate for the lesser value tour that they received, and a further sum for distress and disappointment to compensate for their lack of enjoyment. In these ways the Court has sought to put them in the same position, as best as money is able, as if the consumer guarantees had been fulfilled.

41. Another way of expressing the problem with the award for airfares is to note the analogy with Baltic Shipping. The wasted airfares at issue here were not part of the consideration paid by the claimants to Scenic Tours. However, they were an inevitable and necessary cost of being able to undertake the river cruises. The premise of the claim for the airfares is that the claimants in question should be returned to the position which they would have been in if they had not cruised at all. That is inconsistent with the other two heads of damage, which presuppose that they did go on the cruises. Mrs Dillon was approbating and reprobating by claiming damages for breach of contract whilst also seeking a refund of the contract price. The claimants here are approbating and reprobating by claiming damages for breach of the consumer guarantees whilst also seeking a refund of an inevitable cost of being in a position where the consumer guarantees were or were not fulfilled.

42. It is not necessary to consider here whether there are some circumstances in which a separate cost incurred by the consumer, not being part of the consideration payable for the transaction, could be recovered pursuant to s 267(4) of the ACL on the basis, for example, that what was obtained was of no value at all. Here, the breach of the consumer guarantees was not suggested to be so substantial as to render the services provided worthless. The primary judge effectively noted as much at [39]-[40].

43. As Mason CJ and Dawson J said in Amann at 82, the “corollary of the principle in Robinson v Harman is that a plaintiff is not entitled, by the award of damages upon breach, to be placed in a superior position to that which he or she would have been in had the contract been performed”. In this case, by obtaining compensation for a necessary cost of the contract being fulfilled, whilst also obtaining compensation to put them in a position as if the consumer guarantees had been fulfilled, the relevant claimants are placed in a superior position to what they would have been in had the consumer guarantees been fulfilled by Scenic Tours. That is a form of double recovery, to which the law has an abhorrence, reflecting in turn “the ‘universal’ rule that a plaintiff cannot recover more than he or she has lost”: Baxter v Obacelo Pty Ltd (2001) 205 CLR 635; [2001] HCA 66 at [57]. There is no reason to consider that s 267 was intended to be inconsistent with that strong principle.

44. A further, related way of expressing the difficulty with the approach of the primary judge to the wasted airfares claim is to note that in substance it involves a no-transaction premise because it seeks to compensate the relevant claimants as if the transaction involving the consumer guarantees had not occurred. As explained above, such an approach is not consistent with s 267 of the ACL.

45. For these reasons, the primary judge erred in concluding that it was open in this case to award damages under s 267(4) of the ACL with respect to the “wasted airfares”.

Orders

46. The conclusion that appeal grounds 8-9 should be upheld means that some variation to the orders made below is required. It is not clear exactly what orders should be made in that regard, taking account of the fact that orders were made below dealing with Mr Moore and the 31 sample group members and with some provision for other members of the class. An issue also arises as to costs in the Court below and on appeal. The parties should be given the opportunity to make further brief written submissions on the precise orders that should be made in light of the Court’s judgment, and on costs, with a view to the Court resolving what orders should be made on the papers (assuming that the parties cannot reach an agreed position on the orders).

47. The orders of the Court should be as follows:

1. To the extent necessary the applicant/appellant has leave to appeal.

2. The parties may file and serve submissions of no more than 5 pages relating to what final orders the Court should make, together with any relevant supporting materials, within 14 days of these orders.

3. The parties may file and serve submissions in reply of no more than 3 pages within 21 days of these orders.

4. Final orders will be made on the papers and without a further oral hearing.

48. GRIFFITHS AJA: This appeal, which arises in the context of a representative proceeding (commonly known as a class action), concerns the proper application of the defence in s 61(3), and the proper assessment of damages under s 267(3)(b) and (4), of the Australian Consumer Law (ACL). There is also an application for leave to appeal by which Scenic Tours Pty Ltd (Scenic Tours) seeks to challenge orders relating to group members not the subject of final orders and, to the extent necessary, in relation to orders relating to group members who were the subject of final order. Mr Moore filed a notice of contention on 12 July 2022 seeking to uphold on additional or alternative grounds the primary judge’s rejection of Scenic Tours’ defence based on s 61(3) of the ACL.

49. The proceedings have a regrettably protracted and complicated procedural history. In brief, as long ago as 2014 the respondent, Mr David Moore, commenced representative proceedings on behalf of himself and approximately 1500 group members against the now appellant, Scenic Tours. The proceedings as initially pleaded related to 13 European river cruises conducted by Scenic Tours (or its related trading entity, Evergreen Tours, which conducted Cruises 3 and 9 ) that were scheduled to depart between 19 May 2013 and 12 June 2013. These cruises had been marketed by Scenic Tours as a “once in a lifetime cruise along the grand waterways of Europe”. Instead, the conduct of those river cruises was substantially disrupted by the decisions and actions taken by Scenic Tours when it was confronted with high water levels on the rivers owing to heavy rainfall and flooding which occurred in Europe from April through June 2013. Many towns and cities in Europe, including those along the planned cruise routes, were flooded. Locks along the rivers were either damaged or inoperative. Ships were unable to pass under bridges crossing the rivers and some docking facilities could not be used and had been washed away. Consequently, Mr Moore and the other group members were shuffled between coaches and different cruise ships and had to change hotels multiple times rather than being accommodated and conveyed on the cruise ships in the grand style they had expected.

50. Mr Moore claimed that Scenic Tours failed to provide the luxurious European river cruise experience which it had promised and, consequently, breached consumer guarantees in ss 60 and 61 of the ACL. In brief, s 60 provides that, “[i]f a person supplies, in trade or commerce, services to a consumer, there is a guarantee that the services will be rendered with due care and skill” (due care and skill guarantee). Under sub-s 61(1) where a person (supplier) supplies, in trade or commerce, services to a consumer, and the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired, there is a statutory guarantee that the services (and any product resulting from the services) will be reasonably fit for that purpose (purpose guarantee). Sub-section 61(2) imposes a separate statutory guarantee on such a supplier where the consumer makes known, expressly or by implication, to inter alia the supplier the result that the consumer wishes the services to achieve. The statutory guarantee is that the services (and any product resulting from the services) will be of such a nature and quality, state or condition that they might reasonably be expected to achieve that result (result guarantee).

51. In a judgment dated 31 August 2017 (Moore v Scenic Tours Pty Limited (No 2) [2017] NSWSC 733) (2017 judgment), Garling J found that Scenic Tours was in breach of the purpose and result guarantees in respect of 10 of the 13 cruises, which findings were not disturbed by subsequent appellate processes. His Honour also found that Scenic Tours breached the due care and skill guarantee in respect of Cruises 1, 4, 5, 6, 7, 8, 9, 10, 11 and 13 (some of these findings were set aside on appeal). In this judgment the primary judge also ruled that the defence under s 61(3) of the ACL did not apply to Mr Moore. The issue whether or not the defence applied to other group members was left for future determination. The primary judge made an award of damages to Mr Moore which comprised compensation both for a reduction in the value of services (under s 267(3) of the ACL) and damages for distress and disappointment (under s 267(4) of the ACL). The primary judge did not assess damages in respect of other group members.

52. On 24 October 2018, the Court of Appeal overturned the 2017 judgment in part in Scenic Tours Pty Ltd v Moore [2018] NSWCA 238; (2018) 361 ALR 456 (2018 CA judgment). The Court held that Mr Moore and the other group members were precluded by s 275 of the ACL and s 16 of the Civil Liability Act 2002 (NSW) (CLA) from claiming damages for distress and disappointment under s 267(4) of the ACL. The Court also held that in assessing compensation for the reduction in the value of the services provided to Mr Moore caused by Scenic Tours’ failure to comply with the consumer guarantees, the assessment was required to take place by reference to objective, rather than subjective, considerations. Accordingly, the Court directed that on further hearing of the matter before the primary judge, Mr Moore’s claim for compensation for reduction in value of the services pursuant to s 267(3)(b) of the ACL be assessed in conformity with its reasons.

53. As noted, the Court of Appeal did not disturb Garling J’s findings in the 2017 judgment that Scenic Tours had breached the purpose and result guarantees. The Court of Appeal also upheld Garling J’s findings that Scenic Tours had breached the due care and skill guarantee in respect of Cruises 4, 5, 6 and 7. But it set aside his Honour’s findings of breach of s 60 in respect of Cruises 1, 8, 9 and 11. No issue was taken on appeal regarding Garling J’s findings as to breach of the due care and skill guarantee in respect of Cruises 10 and 13, which breaches were found by Garling J not to have resulted in compensable loss. (It may be interpolated here that the defence relating to reliance under s 61(3) of the ACL has no application to the due care and skill guarantee and only applies to the purpose and result guarantees).

54. The High Court then granted special leave to appeal. Mr Moore’s appeal was successful: Moore v Scenic Tours Pty Ltd (2020) 268 CLR 326; [2020] HCA 17 (2020 HCA judgment). The High Court held that Mr Moore and the other group members were entitled to damages for distress and disappointment pursuant to s 267(4) of the ACL and that s 16 of the CLA did not affect Scenic Tours’ liability in this respect. The assessment of damages insofar as it related to the question whether group members may recover damages for distress and disappointment was remitted to Garling J. The Court also reinstated the primary judge’s initial award of damages for distress and disappointment relating to Mr Moore.

55. By a fourth further amended statement of claim (FFASOC) filed on 6 March 2020 in the Supreme Court, Mr Moore sought “relief on his behalf and on behalf of other group members” inter alia under ss 267(3) and (4) of the ACL. On 31 July 2020, Mr Moore filed a notice of motion in that proceeding seeking orders pursuant to sub-ss 177(1)(e) and (f) of the Civil Procedure Act 2005 (NSW) (CPA) for an award of damages (with interest) for Mr Moore and a sample of group members. The claim for damages had the following three components:

1. the reduction in the value of the services arising from Scenic Tours’ breach of the statutory guarantees under s 267(3)(b) of the ACL (Reduction in Value Damages);

2. distress and disappointment under s 267(4) of the ACL (Distress Damages); and

3. refund of airfares to and from Europe under s 267(4) of the ACL (Airfares Damages).

56. Against this background, the primary judge came to determine Moore v Scenic Tours Pty Ltd (No 4) [2022] NSWSC 270; (2022) 160 ACSR 232 (2022 primary judgment or PJ), which is the judgment the subject of the present appellate proceeding.

Common Questions and Answers

57. Before turning briefly to summarise Garling J’s reasons in the 2022 primary judgment, reference should be made to what are known as the Common Questions and Answers. It is desirable briefly to explain the genesis and evolution of this document (a more detailed history is at [225]–[231] below). In the 2017 judgment, the Court was asked to, and answered, various questions which were common between Mr Moore’s claim and the claims of other group members. After the 2018 CA judgment, the parties agreed to a revised version of the Common Questions and Answers. After the 2020 HCA judgment, the Common Questions and Answers were further amended. The Common Questions and Answers all relate to Scenic Tours’ breach of the statutory guarantees. The agreed Common Questions and Answers which provided the framework for the primary judge’s assessment of damages in the 2022 primary judgment are set out in full in an annexure to these reasons for judgment (Annexure A).

58. It should be noted that, for the purposes of the hearing which resulted in the 2022 primary judgment, the answers to Common Questions 7, 8 and 15 each had a preliminary qualification or rider in the terms of: “Subject to any s 61(3) defence made out …”. Significantly, with the consent of the parties, this qualification was deleted following the determination of the 2022 primary judgment. As an aside, it appears that the omission of the qualification or rider following the 2022 primary judgment may initially have been overlooked by counsel for Scenic Tours in this appeal. Early in his oral address (but not in the lengthy pre-hearing written submissions filed on behalf of Scenic Tours), counsel repeatedly claimed that Scenic Tours’ s 61(3) defence was still “live”, at least in respect of the balance of the group members. Considerable time was spent by Scenic Tours’ counsel in seeking to justify that position, which position drew strong protests from the respondent.

59. What shaped to be a major point of dispute between the parties which would require resolution by this Court then evaporated. The Court was informed by senior counsel for the respondent at the start of the second day of the hearing that the question of the applicability of the primary judge’s determination of the s 61(3) defence to the whole of the class of group members had “gone away”. The Court was informed that Scenic Tours intended to raise the matter with the primary judge when the proceeding below resumed and further witnesses were called. Accordingly, the Court does not need to resolve the matter now.

2022 primary judgment summarised

Some preliminary matters

60. In its outline of written submissions filed in this appeal, Scenic Tours provided the following description of where matters stood at the outset of the hearing below and following the 2017 judgment, the 2018 CA judgment and 2020 HCA judgment:

7. Following appeals to the Court of Appeal and High Court, the outcome of the proceedings immediately prior to the hearing at first instance was as follows:

(a) as to the “services” to be provided by Scenic to Group Members, for the purposes of the ACL claims (the Services):

(i) the Services were “the benefits and facilities of each cruise tour they booked and paid for (or had booked and paid for on their behalf), as described in Scenic’s Tour Brochure”;

(ii) the Services did not extend to the supply of information to Group Members before the embarkation of their respective cruises;

(b) as to Cruises 10, 12 and 13, Scenic has either not been found to have breached any of the Consumer Guarantees in relation to those cruises or, alternatively, the Group Members who were passengers on those cruises have been found not to have sustained any compensable loss or damage;

(c) as to Cruises 4, 5, 6 & 7:

(i) the Care Guarantee was breached in respect to those cruises; and

(ii) Group Members on those cruises are entitled to receive compensation under s.267(3)(b) for any reduction in the value of services received below the price they paid, arising from Scenic’s non-compliance with the Care Guarantee;

(d) as to Cruises 1-9 and 11:

(i) subject to any s.61(3) defence made out, the Purpose Guarantee and Result Guarantee were breached in respect to those cruises;

(ii) subject to (i), Group Members on those cruises are entitled to receive compensation under s.267(3)(b) for any reduction in the value of services received below the price they paid, arising from Scenic’s non-compliance with the Purpose Guarantee and Result Guarantee;

(e) Group Members on Cruises 1-9 and 11 are also entitled to damages under s.267(4) for any loss or damage suffered because of a failure to comply with the Consumer Guarantees if such loss or damage was reasonably foreseeable as a result of such failure, which damages may include disappointment and distress suffered by reason of Scenic’s failure to comply with the Consumer Guarantees.

61. Scenic Tours identified the following issues as remaining to be determined by Garling J:

8. The following issues remained to be determined by the Court:

(a) Scenic’s pleaded defence under s.61(3) of the ACL;

(b) the Group Members’ claims for compensation for reduction in value pursuant to s.267(3)(b) of the ACL by reason of Scenic’s breach of the Care Guarantee in relation to Cruises 4, 5, 6 and 7;

(c) the Group Members’ claims for compensation for reduction in value pursuant to s.267(3)(b) of the ACL by reason of Scenic’s breach of the Purpose and Result Guarantees in relation to Cruises 1-9 and 11;

(d) the Group Members’ claims for damages for disappointment and distress pursuant to s.267(4) of the ACL; and

(e) the Group Members’ claims for damages for the cost of their airfares pursuant to s.267(4) of the ACL.

62. The primary judge rejected Scenic Tours’ s 61(3) defence and awarded Reduction in Value Damages in respect of Mr Moore and 33 group members, Distress Damages in respect of 32 class members, and Airfares Damages in respect of Mr Moore, 5 other named group members and an unnamed class of group members who otherwise fit at least one of three specified criteria (see further at [211] below). These figures are based on the terms of the final orders dated 24 June 2022 arising from the 2022 primary judgment, even though the primary judge referred in the body of those reasons at [15] to the judgment dealing with the assessment of damages for 31 group members in addition to Mr Moore. The primary judge ordered that the claims of other group members not affected by those orders be stood over for directions in mid-2022.

63. To provide background to the 2022 primary judgment, the primary judge summarised some of his key factual findings in the 2017 judgment as to what occurred on each of the relevant 10 cruises at PJ[16]–[36]. I do not understand any of these findings to be challenged on the appeal but they provide necessary context.

64. As to Cruise 1, it cruised on only 1 of the 12 planned cruising days. Passengers were instead offered coach trips, which took “many, many hours”. Passengers travelled to various locations and then returned to the docked ship by coach. For three nights the passengers were accommodated in hotels. They had to pack and unpack their suitcases several times.

65. As to Cruise 2, cruising proceeded as scheduled from 20 to 28 May 2013. But there was no cruising at all from 28 to 30 May 2013, when the ship was docked and the passengers unable to leave. The passengers were then transferred by coach to another ship on 31 May 2013, when the cruising resumed overnight. From 1 June to 3 June 2013 it proceeded as scheduled.

66. As to Cruise 3, it proceeded as scheduled from 25 to 28 May 2013. But the balance of the tour consisted of coach travel over long distances and for many hours. Only 2 of the 10 scheduled days for cruising occurred. The passengers were accommodated on two different ships and in two different hotels.

67. As to Cruise 4, there were only three days of cruising (one of which was incomplete). From the fourth day onwards, all touring was done by coach. The passengers stayed on three separate ships and in a hotel in Budapest.

68. As to Cruise 5, there was no cruising at all on 8 of the 10 days, with all touring being by coach. The passengers were obliged to change ships twice and to undergo lengthy coach trips in changing ships.

69. As to Cruise 6, there were only two full days of cruising. There were 10 days during which the passengers stayed on the ship and/or took bus trips. They stayed on two separate ships and in a hotel and experienced “very lengthy motor coach trips”.

70. As to Cruise 7, the passengers experienced only 3 out of 10 days of scheduled cruising.

71. As to Cruise 8, passengers travelled on three different ships. They cruised for only 3 of the 10 scheduled cruising days.

72. As to Cruise 9, the passengers were “significantly disrupted”. They only experienced four days of cruising. They were accommodated in a hotel in Budapest, not a ship. Between Budapest and Nuremberg, they travelled by motor coach. They were accommodated on two ships and there was no cruising until the eighth day of the scheduled cruise.

73. As to Cruise 11, four days of cruising were entirely lost and one day of cruising was partially disrupted. Passengers were unable to enjoy Budapest nor the vast majority of the Danube River.

74. I will now briefly summarise the primary judge’s reasons for rejecting Scenic Tours’ s 61(3) defence, as well as his Honour’s reasons for awarding damages (noting that the reasons for judgment are comprehensive and total 831 paragraphs).

Scenic Tours’ s 61(3) defence (reliance)

75. Section 61(3) of the ACL provides:

…

(3) This section does not apply if the circumstances show that the consumer did not rely on, or that it was unreasonable for the consumer to rely on, the skill or judgment of the supplier.

76. This defence to the purpose and result guarantees has two limbs. The first is where the circumstances show that the consumer did not rely upon the skill or judgment of the supplier. The second and alternative limb is that it was unreasonable in the circumstances for the consumer to rely on the skill or judgment of the supplier.

77. The primary judge’s reasons for dismissing both limbs may be summarised as follows.

78. First, the primary judge acknowledged that the purpose and result guarantees were separate from the contract under which a consumer is to be provided services (PJ[737]).

79. Secondly, the primary judge well understood the need to identify with some precision what “services” Scenic Tours was providing (see PJ[723]). His Honour proceeded on the basis that those services were as described in the answers to Common Questions 1 to 3 which, for convenience, are set out in full:

Q1: How are the ‘services’ supplied, or to be supplied, by Scenic to group members to be characterised, for the purposes of their claims under the Australian Consumer Law?

A1: The services to be provided by Scenic to group members were the benefits and facilities of each cruise tour they booked and paid for (or had booked and paid for on their behalf), as described in Scenic’s Tour Brochure.

Q2: Were the said services merely co-extensive with or limited by the Terms and Conditions by which group members were contractually bound?

A2: No.

Q3: Did the ‘services’ extend to the supply of information to group members:

(a) before the embarkation of their respective cruises; and/or

(b) after the embarkation of their respective cruises?

A3: (a) No.

(b) Yes. The services extended to the provision of timely information about substantial disruptions to the respective itineraries known to Scenic or of which it ought to have known.

80. Because of the importance of defining the relevant services in determining grounds 1 and 2 of the appeal, it is desirable to set out PJ[97]–[99], where the primary judge highlighted key parts of the Brochure which his Honour found at PJ[96] “was the only document which comprehensively described the services which Scenic was promoting and which it ‘enticingly’ was to provide” (emphasis in original):

97   I set out, and adopt without repetition, from [312]-[342] the relevant passages from the Brochure which cast light on the expectations from Mr Moore and, in the absence of any specific evidence to the contrary, each of the group members. Mr Moore and the group members were entitled to expect that the particular river cruise which they chose would be: a “once in a lifetime cruise along the grand waterways of Europe”; one where the passengers would be “immersed in all-inclusive luxury”; “a truly unforgettable” journey; and one where the passengers would be provided with “meticulous attention to detail, first-class service and intimate personal touches”.

98   Passengers were led to expect that they would experience the “ultimate river cruise experience” during which they would enjoy a level of inclusive “luxury and service which is unsurpassed on the waterways of Europe”.

99   Other features were also emphasised: the number of different cafes and restaurants available on board where passengers could choose to eat; the range of indoor and outdoor viewing locations; and the availability at all times of the “sanctuary of your own private suite or stateroom”, which, in some cases, included an exclusive private balcony which was “perfect” for viewing in “all kinds of weather”.

81. Thirdly, relying upon the answers to Common Questions 5 and 6, the primary judge found that Mr Moore and the group members had proved that they had made known to Scenic Tours that they were acquiring the services for the purpose described therein and, in addition, the result which they wished to achieve (PJ[739]). Thus the purpose for which the services were acquired was “to enjoy an all-inclusive five-star luxury river cruise experience with the additional services promised” and the result sought was “to receive the services that Scenic had assured them they would receive in the Brochure” (PJ[740]).

82. Fourthly, the primary judge concluded that, having regard to the contents of both the Scenic Tours Brochure and the Evergreen Tours Brochure, and in circumstances where, when the cruises were booked, group members could not exercise any control over the provision of a cruise and the level of services that were to be provided, each group member was entitled to, and did, rely on the skill and judgment of Scenic Tours to provide the services sufficient to achieve the purpose and result guarantees (PJ[751]).

83. Fifthly, after considering relevant clauses in the Terms and Conditions set out in the Brochures, the primary judge concluded that those Terms and Conditions did “not suggest that Scenic is abrogating the exercise of its skill and judgment for the provision of cruise services as Scenic now submits” (PJ[769]). Nor was the primary judge persuaded that the combined effect of various clauses in the Terms and Conditions (as distinguished from a reading of cl 2.7 in isolation, as advanced by Scenic Tours below) was to intimate to a reasonable consumer or any of the group members that they could not rely on Scenic Tours’ skill and judgment or, alternatively, that it would be unreasonable to so rely (PJ[758]–[769]). As will shortly emerge, Scenic Tours relies heavily on the wording of cll 2.7, 2.10 and 2.12 in particular as being inconsistent with this finding.

84. Sixthly, the primary judge rejected Scenic Tours’ submission that its knowledge or means of knowledge with respect to weather conditions as at the time of booking was no greater than those of group members (at PJ[772]–[777]).

85. Seventhly, the primary judge rejected Scenic Tours’ submission that, in circumstances where customers were urged by the Terms and Conditions to arrange comprehensive travel insurance to cover any unforeseen circumstances it was unreasonable for the consumer to rely on Scenic Tours’ skill and judgment to deliver the purpose or result guarantees in the event of any unforeseen future circumstances making it impossible to deliver the notified purpose or result (PJ[778]–[780]).

86. Eighthly, the primary judge concluded that all the circumstances showed that, as at the time of booking, group members relied upon Scenic Tours to provide the services in a way that would achieve both the notified purpose and result (PJ[782]) and that Scenic Tours could have chosen (but did not) to cancel or defer the tours (PJ[784]). As will emerge, Scenic Tours challenges this finding on the basis that all but 2 of the cruises were interrupted mid-tour with the consequence that the time for cancellation had passed when it became apparent that the cruises would be interrupted. Moreover, Scenic Tours complains that the primary judge’s finding is inconsistent with the 2018 CA judgment at [301] which, it submitted, held that “the Services did not extend to cancelling a tour once embarked”.

Reduction in Value Damages

87. As noted above, Mr Moore and the group members claimed, pursuant to s 267(3)(b) of the ACL, compensation for the reduction in value of the services below the price paid. The primary judge observed at PJ[37] that such damages were available because of his Honour’s finding in his 2017 judgment that Scenic Tours’ breaches of the relevant consumer guarantees constituted a “major failure” within the meaning of s 268 of the ACL (relevantly, that the service “would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure”).

88. The primary judge considered that he was bound to assess such damages in the following way, having regard to the 2018 CA judgment (see PJ[42]):

1. Any assessment was to be made by having regard to objective considerations and circumstances, and not to any subjective matters.

2. The value of the services actually supplied by Scenic Tours should be determined by reference to “market considerations”.

3. A means of assessing the “market value” of the services provided would be to estimate the amount “a fully informed customer would have been prepared to pay for those services”.

4. A market-based assessment of the value of the services actually provided, applying objective criteria, is a matter which required, or else ought to have as its foundation, evidence led in the proceedings.

89. In support of his case, Mr Moore called Ms Diane Butler to give expert evidence on this aspect of the damages claim. Ms Butler described herself as a “tourism management and marketing expert”. The primary judge noted at PJ[49] Ms Butler’s initial opinion that none of the cruises, as they actually took place, would be a marketable tour package. That is, a fully informed, reasonable consumer would not purchase any of the cruises as a tour package and the cruises would have no, or nominal, market value. Ms Butler also conducted an assessment based on an alternative methodology, which assumed that a hypothetical consumer was “willing to accept a tour that was not marketed as a luxury cruise package, or a luxury coach holiday, but, rather, was marketed having regard to price and was targeted at the consumer who would accept the package for what it was” (PJ[51]). The primary judge accepted at PJ[53] that the alternative methodology reflected “one reasonable way of attempting to ascertain a market value of the services in fact provided” by Scenic Tours.

90. Scenic Tours called Mr Phillip Hoffmann as an expert witness on this aspect of the damages claim. Mr Hoffmann had decades of experience in the travel agency business. The primary judge considered, however, that Mr Hoffmann was a “problematic expert” (PJ[56]) for reasons which include the following (PJ[57]–[63]):

1. While Mr Hoffmann had personally travelled on a river cruise with Scenic Tours, he did not advise the Court that he had travelled for free as a guest of Scenic Tours for a fraction (about one third) of that cruise. His Honour was not persuaded that the circumstances of this river cruise could be compared to those of a consumer who had booked a holiday package, nor that Mr Hoffmann would have the same view of the passenger experience as a passenger paying for an entire package.

2. Mr Hoffmann’s report did not identify that his business had an ongoing commercial relationship with Scenic Tours, namely the receipt of various forms of commission for the sale of Scenic Tours’ holiday packages.

3. Mr Hoffmann did not reveal, until being cross-examined, that he had had considerable assistance from a manager of one of his travel agencies in preparing his report. There was no evidence as to that manager’s qualifications, training or experience in the travel industry. Nor did the fact of joint authorship of the report give the Court much confidence in assessing which opinions expressed in it were Mr Hoffmann’s.

4. Mr Hoffmann did not make detailed reference to the way in which he went about assessing the price at which each cruise in the circumstances which occurred could be priced for sale.

5. Contrary to Ms Butler’s approach, Mr Hoffmann did not take account of where the ship was in fact moored and treated each day of a cruise as being equally valuable.

91. Ultimately, the parties’ joint experts reached agreement on the damages to be paid in respect of Cruises 1, 2, 5 and 9. The primary judge accepted those valuations at PJ[73]. In respect of Cruises 3, 4, 6, 7, 8, and 11, the primary judge noted at PJ[74] his preference for Ms Butler’s evidence to the effect that there was no real market value for these cruises and accepted the lower of her valuations for these cruises.

92. The primary judge’s individual conclusions are recorded in a table at PJ[75], which is reproduced below:

Cruise No.	Base Cabin Price	Expert Opinion – Market Value	Court Finding	% Value Received	Damages
1	$7645	$2905	$2905	38%	62% of price paid
2	$7195	$4290	$4290	60%	40% of price paid
3	$6495	$1299 - $1599	$1299	20%	80% of price paid
4	$7195	$719.50 - $1999	$720	10%	90% of price paid
5	$7195	$2439	$2439	34%	66% of price paid
6	$7195	$2249 - $3580	$2249	31%	69% of price paid
7	$7195	$2878 - $4199	$2878	40%	60% of price paid
8	$7195	$719.50 - $1599	$720	10%	90% of price paid
9	$6495	$2999	$2999	46%	54% of price paid
11	$7195	$1654.85 - $1999	$1655	23%	77% of price paid

93. The primary judge accepted the experts’ view that the percentage difference between the base cabin price and the value of the services provided could be applied to all cabin grades to ascertain the value of the services provided to occupants of other cabin grades (PJ[77]–[79]). His Honour noted that, as this part of the assessment of damages was referable only to objective considerations, the determination of the value of the services which were provided, expressed as a percentage, could be applied to each passenger on the same cruise (PJ[80]–[81]). His Honour held that interest on Reduction in Value Damages should be calculated from the time that the major failure occurred and the loss of value was capable of being ascertained (PJ[82]).

Distress Damages

94. In respect of Distress Damages, which were sought under s 267(4) of the ACL, the primary judge noted at PJ[84]–[85] that in “holiday cases” such as the case here, an assessment of damages proceeds in accordance with the principles developed for breach of contract cases: “[w]hat is involved is a comparison between the expectations of the individual traveller and the reality of what that traveller was provided”. His Honour considered that the authorities required that an assessment of damages under this head “ranges across all kinds of mental distress, inconvenience, anxiety, disappointment, frustration or vexation arising because the services to be provided were not, or else as here, the purpose of the acquisition of the services failed” (PJ [93]).

(c) failing to consider whether the group members’ distress and disappointment was caused by the defendant’s breach of the consumer guarantees or, instead, caused by matters outside of the control of the defendant (such as bad weather in general);

(d) failing to consider the duplication of damages where compensation for the value of the lost enjoyment benefit has been provided in the compensation awarded under s.267(3) of the ACL.

184. As noted above, the range of the Distress Damages awarded was between $6,000 and $12,000. Scenic Tours claims that these amounts were manifestly excessive, relying upon the residual kind of error in House v The King (1936) 55 CLR 499; [1936] HCA 40. Ground 7 also claims that the primary judge erred in his assessment of Distress Damages in the four ways particularised there.

185. In support of the claim that these damages were excessive, Scenic Tours relied primarily on the decision in Milner v Carnival plc (t/as Cunard) [2010] 3 All ER 701; [2010] EWCA Civ 389 at [36]–[46] and [60]. That case related to a 15-week cruise on the maiden world cruise of the Queen Victoria. The cost of the cruise for both Mr and Mrs Milner was almost £60,000. The constant noise and vibrations in the Milners’ allocated cabin caused them sleeplessness and other health conditions. After four weeks they disembarked the Queen Victoria in Hawaii, spent six weeks there at their own expense and then joined (also at their own expense) a different cruise ship to return to England.

186. Ward LJ described at [1] the issue in the case as: “[W]hat is the correct measure of damages for a ruined holiday?”. At [36], Ward LJ (with whom Richards and Goldring LJJ agreed) acknowledged the difficulty of assessing the quantum of damages for inconvenience and distress where “no yardstick exists for measuring in money the right amount of compensation to be awarded”. The need to avoid a duplication of damages in awarding damages first for diminution in value and then for distress and disappointment was emphasised at [42]. Ultimately, the Court of Appeal ordered damages in the amount of £3,500 for diminution in value and damages for inconvenience and distress in the amounts of £4,000 and £4,500 for Mr and Mrs Milner respectively (ie a total amount of £12,000).

187. There are two additional aspects of Milner which should be noted. First, the trial judge there had awarded £2,000 under the heading of wasted expenditure for half the cost of the formal eveningwear which Mrs Milner said she had lost the opportunity to wear on the cruise. This was set aside on appeal on the basis that, because the Milners had terminated the voyage on the Queen Victoria when they reached Hawaii, the defendant’s breach did not cause the loss (see Ward LJ at [56]). Secondly, Ward LJ said at [59] that it was wrong to use the price of the holiday as a benchmark for damages.

188. Each case necessarily turns on its own particular facts and circumstances. The primary judge considered several holiday cases, including Milner, in assessing the Distress Damages. His Honour correctly noted at PJ[94] that each group member was entitled to have their damages assessed on an individual basis to reflect their particular experience, distress and disappointment, whilst also having regard to the objectively determined facts regarding the extent to which each cruise failed to achieve the purpose and result guarantees. This approach led his Honour to pay close attention to the services which Scenic Tours said it would provide in its Brochure. The primary judge noted, seemingly with approval, some aspects of Milner (see PJ[112]–[113]), after noting, correctly in my view, at PJ[111] that the assessment of Distress Damages “is a very fact-rich and individual assessment”.

189. The parties also referred to Baltic Shipping Co v Dillon (1993) 176 CLR 344; [1993] HCA 4. In the Court of Appeal below Kirby P had said that, unless there was some “exceptional circumstance increasing the sting of the failure to provide the enjoyment and pleasure promised, [his Honour] would be inclined to suggest that no more than half the sum awarded in this case [ie half of $5,000] should be the norm for the ordinary passenger”. Kirby P’s views were seemingly approved in the High Court: see at 366 per Mason CJ, at 387 per Gaudron J and at 406 per McHugh J.

190. It is plain that Kirby P was not intending to enunciate a rigid rule. The cost of the fare in Baltic Shipping Co was a little over $2,000 (see at 348 per Mason CJ). The respondent was awarded a full refund of the fare (noting that less than half of the fare had been already refunded) plus $5,000 for distress and disappointment.

191. According to counsel for Scenic Tours, the cost of the cruises here ranged from approximately $8,000 to $20,000, depending on the size of cabin and various upgrades or add-ons. It is notable that the primary judge did not use as a benchmark the price paid by any group member for their cruise (consistently with Milner at [59] per Ward LJ). Focusing, however, on the fact that the High Court in Baltic Shipping Co did not disturb the trial judge’s award of $5,000 for distress and disappointment, if allowance is made for inflation since 1993 (when Baltic Shipping Co was decided), the range of the Distress Damages awarded by the primary judge here is hardly excessive, let alone manifestly excessive. Within that range the primary judge gave careful and detailed attention to the individual circumstances of the relevant group members.

192. Scenic Tours has not persuaded me that the Distress Damages were manifestly excessive in the particular circumstances of this case.

193. Nor am I satisfied that Scenic Tours has made good any of the matters under ground 7. First, no appellable error has been established in respect of the primary judge’s reliance on Ms Butler’s evidence in assessing the Distress Damages in circumstances where:

1. although it is true that Ms Butler’s evidence was primarily directed to Reduction in Value Damages, her reports were admitted into evidence without objection and were relevant for all purposes; and

2. Ms Butler expressly excluded from her assessment of Reduction in Value Damages any actual or potential subjective views of passengers arising from any distress or disappointment occasioned by the failure to achieve the itinerary or quality of travel offered and paid for.

194. Moreover, as the respondent points out, Ms Butler’s evidence was relied upon by the primary judge “by way of context and background”, as is made clear at PJ[100].

195. Secondly, I see no appellable error in the primary judge’s reasoning at PJ[117]. His Honour referred there to his finding in the 2017 judgment at [914]–[917], where his Honour said that it did not seem to him to be correct to award only a token or nominal sum for distress and disappointment. That statement was made in the context of the primary judge having considered other cases, including Baltic Shipping.

196. To the extent that Scenic Tours claims that the primary judge’s reference at [917] of the 2017 judgment to those cases being used to identify “a rule of thumb acquired by a form of convention” (as picked up at PJ[117]), this criticism is misconceived. Proper regard should be had to the full terms of [917]. After referring to various cases, including Baltic Shipping and Kirby P’s statement in Moran v McMahon (1985) 3 NSWLR 700 at 707ff, the primary judge made it clear at [916] of that judgment that an assessment of the sum of damages for distress and disappointment is to be undertaken in an individual case “by an evaluative process applying a sense of fairness and justice”. This provides the context for the primary judge’s statement at [917]:

The reference by me to these cases does not constitute any inhibition at all of the evaluative function upon which I am engaged. Nor am I attempting to derive a norm or standard of damages. The use of them rather falls into identifying nothing more than a rule of thumb acquired by a form of convention: see Kirby P in Moran v McMahon at 706D.

197. Thirdly, there is no basis for Scenic Tours’ complaint that the primary judge failed to consider whether the group members’ distress and disappointment was caused not by any breach of the consumer guarantees but rather by matters such as bad weather which were beyond its control. The 2022 primary judgment is replete with references to the significance of the bad weather affecting the enjoyment of many of the individual group members (as set out in the respondent’s written submissions in the appeal at [100]).

198. Finally, as to Scenic Tours’ complaint that the Distress Damages duplicated the component under the Reduction in Value Damages relating to lost enjoyment benefit, it is clear from Ms Butler’s report dated 3 August 2020 that her assessment of damages under her alternative methodology excluded any such subjective feelings (see at 3.12 of that report).

199. For all these reasons, grounds 6 and 7 are rejected.

Airfares Damages (grounds 8 and 9)

200. Grounds 8 and 9 of the amended notice of appeal are as follows:

Damages for the cost of airfares (s.267(4) of the ACL)

8   His Honour erred in awarding damages for the cost of airfares to those group members for whom the sole purpose of incurring the airfares was to take the Cruise.

9 His Honour should have found that damages for the cost of airfares are not recoverable under s.267(4) of the ACL.

201. Reference should be made at the outset to the relevant provisions in the ACL concerning compensation and damages for breach of the statutory guarantees. Sub-section 267(1) empowers a consumer to take action under that section if the supplier (as defined) fails to comply with a relevant statutory guarantee in the supply, in trade or commerce, of services. The compensation or damages which may be recovered by the consumer in such a case are set out in sub-ss 267(2, (3) and (4)(it is important also to note that sub – s 267(5) confirms that the right to consequential loss damages under sub – 2 267(4) is in addition to the relief available under sub – ss 267(2) and (3):

267 Action against supplier of services

…

(2) If the failure to comply with the guarantee can be remedied and is not a major failure:

(a) the consumer may require the supplier to remedy the failure within a reasonable time; or

(b) if such a requirement is made of the supplier but the supplier refuses or fails to comply with the requirement, or fails to comply with the requirement within a reasonable time--the consumer may:

(i) otherwise have the failure remedied and, by action against the supplier, recover all reasonable costs incurred by the consumer in having the failure so remedied; or

(ii) terminate the contract for the supply of the services.

(3) If the failure to comply with the guarantee cannot be remedied or is a major failure, the consumer may:

(a)  terminate the contract for the supply of the services; or

(b)  by action against the supplier, recover compensation for any reduction in the value of the services below the price paid or payable by the consumer for the services.

(4)  The consumer may, by action against the supplier, recover damages for any loss or damage suffered by the consumer because of the failure to comply with the guarantee if it was reasonably foreseeable that the consumer would suffer such loss or damage as a result of such a failure.

(5) To avoid doubt, subsection (4) applies in addition to subsections (2) and (3).

202. Relevantly, the definition of “major failure” in s 268(1) includes where “the services would not have been acquired by a reasonable consumer fully acquainted with the nature and extent of the failure” (para (a)).

203. As noted above, in awarding Airfares Damages, the primary judge regarded the cost of airfares as “wasted expenditure” consistently with the remarks of Mason CJ and Dawson J in Amann Aviation (see PJ[806]). The passage from the joint judgment in Amann Aviation which the primary judge particularly had in mind is that at 81–82 (footnotes omitted, and to similar effect see Deane J at 126–127):

A further example of the application of Robinson v Harman which will result in a plaintiff being entitled to claim damages for wasted expenditure is in a contract for services such as that between a solicitor and a client. Where a solicitor has breached his or her contractual duty of care, the measure of damages to which a client will be entitled will be such an amount as will put the client in the position he or she would have been in had the contract of retainer been performed without negligence. In cases where, had non-negligent advice been given, the client would not have entered into a subsequent transaction, for example a purchase of real property, then, in conformity with Robinson v Harman, the client will be entitled to recover as damages expenditure wasted on account of the negligent advice, less anything subsequently recovered and given reasonable acts of mitigation. The amount of wasted expenditure will be the appropriate measure of damages in such a situation because, it having been established that the client would not have entered into the subsequent contract if proper advice had been given, it is not sensible to speak of loss of profits. … The expressions ’expectation damages, ‘damages for loss of profits’, ‘reliance damages’ and ‘damages for wasted expenditure’ are simply manifestations of the central principal enunciated in Robinson v Harman rather than discrete and truly alternative measures of damages which a party not in breach may elect to claim.

204. In Meetfresh Franchising Pty Ltd v Ivanman Pty Ltd [2020] NSWCA 234 at [29], Macfarlan JA (with whom Bell P and Meagher JA agreed) said that Amann Aviation stood for the following proposition concerning claims for damages for wasted expenditure or reliance damages:

The decision in Amann Aviation established that, in respect of such a claim, “the law assumes that a plaintiff would at least have recovered his or her expenditure had the contract been fully performed”, with the consequence that the onus of proof rests on the party breaching the contract to establish “that the reliance expenditure would have been wasted even if the contract had been performed” (at 86-90 per Mason CJ and Dawson J).

205. There is also a comprehensive and helpful discussion of the topic of damages for wasted expenditure in the context of breach of contract in the recent judgment of Brereton JA in 123 259 932 Pty Ltd v Cessnock City Council [2023] NSWCA 21 at [50]–[73] (Macfarlan and Mitchelmore JJA agreeing).

206. The parties did not identify any authorities on the issue whether damages under s 267(4) of the ACL could include wasted expenditure. My research did not reveal any such authority. Apart from the cases referred to above, which address the issue in the context of damages for breach of contract, two first instance decisions of the Federal Court of Australia provide some limited and indirect support for the primary judge’s approach, albeit by reference to other provisions in the ACL providing for the recovery of damages for breach of other consumer guarantees.

207. The first of those cases is Vautin v By Winddown, Inc (formerly Bertram Yachts) (No 4) [2018] FCA 426; (2018) 362 ALR 702. The provision there was s 259(4) of the ACL. It is in the same terms of s 267(4) of the ACL, save that it applies to remedies for breach of consumer guarantees by suppliers relating to the supply of goods. In Vautin at [293], Derrington J stated (emphasis added):

In addition to the right to return the goods or to damages representing the diminution in value [under s 259(3) of the ACL, which is in similar terms to s 267(3)], the consumer is entitled to recover loss or damage suffered “because of” the failure to comply with the guarantee if that loss was reasonably foreseeable (see s 259(4)). This second limb of damages appears to cover those losses which are sustained consequent upon the acquisition of the defective goods. The scope of that “head of damage” would include property loss which has occurred as a result of the defective goods (such as where a faulty electrical appliance causes a house to burn down); the cost of attempting to ascertain the defects in the goods; or, the cost of preserving the goods. It would appear that this sub-section is concerned with the recovery of “reliance losses” as the inclusion of the limitation of “reasonable foreseeability” pertains to such losses rather than expectation losses. Section 259(6) makes it clear the remedy for recovery of damages caused by the non-compliance with the guarantee is in addition to the alternative remedies of returning the goods or recovering an amount that represents the diminution in value of the goods.

208. The other Federal Court authority is that of Perram J in Capic v Ford Motor Co of Australia Pty Ltd [2021] FCA 715; (2021) 154 ACSR 235, which concerned s 272(1)(b) of the ACL. It is in substantially the same terms as s 267(4) of the ACL, save that it applies to remedies for breach of consumer guarantees by manufacturers relating to the manufacture of goods. Perram J adopted a similar approach to that of Derrington J in Vautin and ultimately held at [912] that the buyer of a defective car, who was entitled to recover 30% of the cost of the car for compensation for reduction in the value of the car, was also entitled to recover under s 272(1)(b) excess amounts of tax and finance.

209. In my respectful view, the primary judge did not err in taking the approach which he did in assessing damages under s 267(4) of the ACL. Having regard to Amann Aviation (including what Gaudron J said at 155–156 on the matter), damages were properly awarded to Mr Moore and five group members for the loss of the cost of the airfares, which was wasted expenditure having regard to Scenic Tours’ breach of the relevant statutory guarantees. Unlike the position in Milner, Scenic Tours’ conduct with respect to the breach of the guarantees was causative of this loss, at least where the five relevant group members travelled to Europe solely for the purpose of taking a Scenic Tours cruise (see PJ[810]) and, furthermore, in respect of Mr Moore, whose dominant purpose in travelling to Europe was to take a Scenic Tours cruise (see PJ[812]–[813] and [818]). Scenic Tours did not contend that this aspect of Amann Aviation had no application because of the terms of s 267(4) of the ACL. Nor did it claim that the loss of the cost of the airfares was unforeseeable. In the case of Mr Moore and the five group members whose sole purpose for flying to Europe was to take a Scenic Tours cruise, the loss was clearly foreseeable. Nor did it contend that the primary judge erred in applying a categories-based approach in awarding Airfares Damages to only some of the claimants.

210. I do not see any inconsistency in the fact that the primary judge awarded Reduction in Value Damages under s 267(3) whilst also awarding Distress Damages and Airfares Damages under s 267(4). They represent separate heads of compensation and/or damages (see s 267(5), which makes that plain). The award of Distress Damages is in the nature of damages for non-economic loss, while the Airfares Damages relates to economic loss and is a separate head (see 2020 HCA judgment at [66] per Edelman J). It is clear from the primary judge’s detailed reasons regarding the award of Distress Damages that he did not take into account the cost of airfares under that head of damages. There is no inconsistency in awarding both Distress Damages and Airfares Damages.

211. For completeness, it might also be noted that the orders below dated 24 June 2022 awarded Airfares Damages not only in respect of the six persons identified above but also any group members who had (a) stayed in Europe for no more than one night before and/or after the scheduled commencement or conclusion of their cruise; (b) stayed in Europe to undertake a cruise extension offered by Scenic Tours of no more than three nights before and/or after the scheduled commencement or conclusion of their cruise, plus one night before and/or after; or (c) were the travelling companions of the “Identified Airfare Members” (ie the six persons identified above) and travelled to Europe under the same arrangements.

208. For these reasons, I would reject grounds 8 and 9.

Determination of application seeking leave to appeal

213. By its amended summons filed on 4 July 2022, Scenic Tours seeks leave (1) in relation to orders relating to group members not the subject of final orders, and (2) “to the extent necessary”, in respect of the orders relating to group members the subject of final orders.

214. Leave is sought pursuant to s 103 of the Supreme Court Act, which provides:

An appeal shall, by leave of the Court of Appeal, lie to the Court of Appeal from a decision in proceedings in the Court of any question or issue ordered to be decided separately from any other question or issue.

215. It is apparent from its summary of argument dated 12 May 2022 that, at least in respect of issue (1) above, Scenic Tours seeks leave “to the extent the relief sought challenges answers to common questions affecting the basis on which the claims of other Group Members are determined” (emphasis added). It contends that such leave should be granted because the issues form a common substratum for the individual and representative claims, and because the representative claims collectively involve a sum many times greater than the threshold identified in s 101(2)(r) of the Supreme Court Act (ie $100,000) (citing Queensland Bulk Water Supply Authority t/as Seqwater v Rodriguez & Sons Pty Ltd [2021] NSWCA 206; (2021) 393 ALR 162 at [20]).

216. It may be noted that the focus in Scenic Tours’ summary of argument is on challenging certain answers to Common Questions, which differs from the wording of the amended summons, which focuses upon the final orders.

217. Scenic Tours’ summary of argument in support of its application for leave is dated 12 May 2022 (ie it predates the date of the filing of the amended summons). This may explain why the summary of argument does not address why leave should be granted (“to the extent necessary”) in respect of issue (2). To the contrary, it is asserted there that, as the 2022 primary judgment was a final order resulting in the award of damages in excess of $100,000, leave is not required insofar as the appeal seeks relief in respect of orders made concerning relevant group members.

218. In brief (one page) written submissions on the issue of leave dated 15 September 2022, Mr Moore indicated that he took no position as to whether leave to appeal is required in respect of any of the awards of damages to the group members. Mr Moore states there, however, that if leave is required in respect of the award of Distress Damages, leave should be refused on the basis that there are insufficient prospects of success for reasons explored in its submissions on the substantive appeal.

219. Neither party sought to develop their submissions on the issue of leave any further in the oral hearing on the appeal.

220. It appears that Scenic Tours sought leave to appeal in respect of issue (1) because of this Court’s earlier decision in Rodriguez. Presumably, the summons seeking leave to appeal was then subsequently amended to add issue (2) out of an abundance of caution and to cover the contingency that the Court took the view that leave to appeal was required in respect of orders concerning group members who are the subject of final orders arising from the 2022 primary judgment.

221. Rodriguez was another class action. As explained by this Court at [15] of Rodriguez, s 103 of the Supreme Court Act requires leave for an appeal from a decision of any question or issue decided separately from any other question or issue. Where, however, the answers to the separate questions result in the proceedings being finally determined, there is some authority which indicates (by majority) that an appeal lies of right (see Plymouth Brethren (Exclusive Brethren) Christian Church v The Age Company Ltd (2018) 97 NSWLR 739; [2018] NSWCA 95).

222. In Rodriguez, the Court noted at [17] that the issue whether leave to appeal was required in that case was complicated by the fact that the proceeding involved a class action. Although a final order had been made as between the plaintiff and one of the defendants in that matter, which entitled that defendant to an appeal as of right, the Court noted that the answers to the common questions had not given rise to final orders involving members of the class, other than three members, who were not parties to the appeal.

223. In Rodriguez at [20], the Court (Basten, Meagher and Leeming JJA) concluded:

The correct view may be that to the extent that the appeal seeks relief with respect to the plaintiff’s judgment against Seqwater, which is in an amount in excess of the threshold in s 101(2)(r) of the Supreme Court Act, it is an appeal against a final order and may be brought as of right. However, to the extent the relief sought challenges answers to common questions affecting the basis on which the claims of class members are determined, Seqwater requires leave, pursuant to s 103. Because the issues form a common substratum for the individual and representative claims, and because the representative claims collectively involve a sum many times greater than the threshold, there should be a grant of leave to address the answers to the common questions.

224. It is this part of Rodriguez which Scenic Tours presumably had in mind when it filed its summary of argument, which uses very similar language.

225. Assuming (without deciding) that leave is required, it is apt to revisit and elaborate upon the history of the Answers to Common Questions in the present proceeding. As Garling J said in the 2017 judgment at [10], that judgment dealt with the whole of Mr Moore’s claim, and the determination of a number of questions which the parties agreed were likely to arise regarding the claims of the group members. His Honour then added that whether in fact those questions did arise, and if so in respect of which group members, would form part of the ultimate determination. Ultimately, the Court made final orders arising from the 2017 judgment, which included judgment for Mr Moore for some heads of damage, plus interest. His Honour noted at [945] of the 2017 judgment that it was appropriate for the parties to have an opportunity to make submissions on the way the Common Questions should be answered, and the form which they should take, including on the issue whether the questions were no longer to be regarded as common.

226. This led to Garling J publishing on 15 November 2017 further reasons for judgment in Moore v Scenic Tours Pty Limited (No 3) [2017] NSWSC 1555. His Honour noted at [3] of those reasons that the parties had been directed to bring in short minutes of order setting out the answers to questions contained in an amended statement of issues which had been filed in Court on 13 May 2016. The statement of issues was intended to identify common questions of law and fact identified in the representative proceedings. It went through various iterations as the proceedings progressed (see 2018 CA judgment at [63]). Garling J accepted Scenic Tours’ submission that some of the questions proposed by Mr Moore did not raise questions which were common to the claims of all group members. His Honour then proposed that this issue itself be added to the statement of issues, which asked which of the answers to the preceding questions were common to all, some or none of the group members (this became Question 22 in the statement of issues).

227. The Court of Appeal noted in the 2018 CA judgment at [68] that the final form of the statement of issues was not settled until Garling J made orders on 15 November 2017 (see Moore v Scenic Tours Pty Ltd (No 3)). Those were the issues which the parties thought were likely to be common. His Honour noted at [4] of Moore v Scenic Tours Pty Ltd (No 3) that, during the course of the hearing on 15 November 2017, and in large measure with the agreement of the parties, the terms in which those answers were to be given were determined. His Honour then proceeded in that judgment to set out the questions and answers given by the Court with respect to the identified issues.

228. After noting at [70] in the 2018 CA judgment that the identification of substantial common questions of law and fact “is a critical element in the conduct of representative proceedings”, the Court of Appeal identified some problems with the statement of issues which had been ultimately finalised in the proceeding before Garling J. This resulted in the Court of Appeal making the following observations at [77]:

The incompleteness of the answers to the “common questions” reflects the dangers of leaving the finalisation of common questions of law and fact to the end of the hearing. It also reflects the length and complexity of the “common questions” identified in the present case, some of which conflate a number of distinct concepts. Moreover, the answers to the “common questions” do not accurately record all material findings of fact made by the primary Judge.

229. The 2018 CA judgment was published on 24 October 2018. The Court made certain orders at that time, including a direction that the parties file agreed Common Questions and Answers that gave effect to the 2018 CA judgment insofar as they addressed the entitlement of group members to compensation and damage by reason of Scenic Tours’ breaches of consumer guarantees. Subsequently, the parties agreed on reformulated “agreed Common Questions and Answers”, a copy of which became Annexure A to a second set of reasons for judgment which were published by the Court of Appeal on 7 December 2018 (see Scenic Tours Pty Ltd v Moore (No 2) [2018] NSWCA 300).

230. As noted above, this was followed by the decision of the High Court in the 2020 HCA judgment, where Scenic Tours’ appeal was successful in part. Following the 2020 HCA judgment, the agreed Common Questions and Answers were further amended by order of that Court. The terms of the amended Answers to Common Questions are set out in the 2022 primary judgment at [11] (and are Annexure A to these reasons for judgment).

231. Finally, as noted at [58] above, the Answers to Common Questions were subsequently amended by the agreement of the parties after publication of the 2022 primary judgment (with particular reference to the deletion of the qualification or rider to the Questions 7, 8 and 15).

232. Accordingly, with this rather complicated procedural history in mind, and with a view to facilitating a degree of finality in these otherwise protracted proceedings, if leave be required, Scenic Tours should have leave to appeal as sought by it with respect to both limbs of its amended summons. For the reasons given above, however, the appeal should be dismissed.

Determination of notice of contention

233. It is unnecessary to set out the terms of the notice of contention. It is sufficient to note that this notice relates only to the issue whether Scenic Tours could rely upon the s 61(3) defence. By this notice, Mr Moore sought to raise additional or alternative grounds upon which that defence should be rejected. Given the rejection of grounds 1 and 2 of the appeal (which both relate to the s 61(3) defence), it is unnecessary to determine the notice of contention.

Conclusion

234. For all these reasons, I consider that the following orders should be made:

1. To the extent necessary, the applicant have leave to appeal.

2. The appeal be dismissed, with costs.

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Annexure A (75757, pdf)

Amendments

20 April 2023 - Hyperlink to Annexure A added

Decision last updated: 20 April 2023