Transcript of Proceedings

[2020] HCATrans 7

[2020] HCATrans 007

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S285 of 2019

B e t w e e n -

DAVID MOORE

Appellant

and

SCENIC TOURS PTY LTD

Respondent

KIEFEL CJ
BELL J
GAGELER J
KEANE J
NETTLE J
GORDON J
EDELMAN J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA ON TUESDAY, 11 FEBRUARY 2020, AT 10.05 AM

Copyright in the High Court of Australia

MR J.T. GLEESON, SC:   May it please the Court, I appear with MR J.A. HOGAN‑DORAN and MS C.G. WINNETT for the appellant.  (instructed by Somerville Legal)

MR D.L. WILLIAMS, SC:   May it please the Court, I appear for the respondent with my learned friends, MR D.S. WEINBERGER and MS A.A. LYONS.  (instructed by SWS Lawyers)

KIEFEL CJ:   Yes, Mr Gleeson.

MR GLEESON:   Your Honours, the parties have agreed a division of time which will see the matter complete today.  If the Court has volume 1 of the core appeal book, could I emphasise these matters of fact in context.  Firstly, on page 10 at paragraph 3 – this is in the primary judge’s judgment – this case arose because the respondent issued a brochure to Mr Moore, promising him:

a once in a lifetime cruise along the grand waterways of Europe . . . be immersed in all inclusive luxury –

and an experience which was:

“truly unforgettable”.

The brochure in full is set out further on in the judgment.  Contrary to those representations the cruise was a disaster and, in the chronology that we have provided the Court, on pages 2 and 3, the sad reality of the cruise is summarised with the appropriate reference.  In short, he was forced to change boats several times.  Cruising took place on only three out of 10 days.  Most of the time was spent on long, arduous bus tours around various parts of Europe.

Now, the claim which Mr Moore brought was a claim under the Australian Consumer Law and in volume 1 of the authorities, at page 256 ‑ ‑ ‑

GORDON J:   You might tell us what you are looking at, Mr Gleeson.  Some of us are working off paper.

MR GLEESON: Yes, thank you. Your Honour, section 61 of the Australian Consumer Law.

GORDON J:   Thank you.

MR GLEESON: The guarantees upon which Mr Moore succeeded are set out in section 61(1) and (2). The first is a purpose‑based guarantee and the second is a result‑based guarantee. The findings of the trial judge, upheld in the Court of Appeal, were that Scenic failed to meet each of those guarantees.

In terms of the cause of action, in section 267 of the Australian Consumer Law on page 327, the relevant part of Mr Moore’s claim for the Court today is section 267(4). That provision does two things. Firstly, it creates the entitlement to damages where there is a breach of the guarantee. Secondly, it provides for the heads of loss and the measure of the damages, namely, the heads of loss are any loss or damage causally related to the breach within the limits of reasonable foreseeability – and there, also, is how the loss is to be measured – namely, it is any loss which satisfies that description. That is the basis of Mr Moore’s claim.

The particular type of loss that is in issue before your Honours can be seen from the primary judge’s judgment, again on page 10, firstly, at paragraphs 4 to 5.  He experienced something entirely different to what was promised to him.  Then specifically on page 19, at paragraph 38, the pleading was that – did not experience the travel by river cruise that had been promised.  Then, in paragraph 39(c), the precise head of loss is:

inconvenience, distress and disappointment –

arising from the failure to receive the promised benefit.  We emphasise there was no claim for physical injury and there was no claim for a recognised psychiatric illness.  The claim was the distress arising from the failure to honour the promise.

EDELMAN J:   To the extent that there was a failure to honour a promise that did not give the valuable services that were expected that would also come within the plea in 39(b), would it not, and 268(3)(b)?

MR GLEESON:   Your Honour is correct, and when I said the relevant head of loss for today I was focusing on 39(c).  There are, in fact, awards which were made referable to other heads within this paragraph.  If your Honours need the detail of those I can give them.

So that was his claim and three matters were then common ground by way of the legal architecture of the matter. The first was the court was in federal jurisdiction. The second was that the provision of State law, which I am coming to, section 16 of the Civil Liability Act (NSW), could not apply of its own force because of this Court’s decision in Rizeq.  Thirdly, section 79 of the Judiciary Act did not pick up section 16. The Court of Appeal correctly so held at paragraph 359, last sentence, although we have made a criticism in writing of its reasoning, and those matters were addressed between paragraphs 30 to 32 of our written submissions.

The question then can be identified from – if your Honours have volume 2 of the core appeal book - the Court of Appeal’s judgment at page 420, paragraph 391. The court made three conclusions of law which we challenge under the three grounds of appeal. The first conclusion was that section 275 of the ACL picks up and applies section 16 of the Civil Liability Act as a surrogate federal law.  That is ground 1 of the appeal. 

The next conclusion was that section 16 on its proper construction precludes Mr Moore claiming damages for distress and disappointment by reason of the breach of the guarantees. That is the Baltic v Dillon point which we challenge under ground 3.  The next conclusion is that this is so, notwithstanding the breaches occurred outside Australia.  That is the issue under ground 2 as to the reach of the Civil Liability Act as a whole.

Your Honours, I was proposing to deal with the three grounds in that order, unless the Court wishes me to take them in any other order. Each of them would be an independent route to success for the appellant. Your Honours, could I then show the terms of the State law, section 16. That is in issue and that would be in volume 1 of the authorities commencing at section 11A which is on page 364. Subsection (1) says:

This Part applies to and in respect of an award of personal injury damages, except –

in a certain case.  “Personal injury damages” are defined immediately above that in section 11 as:

damages that relate to the death of or injury to a person.

Section 11A(2) says:

This Part applies regardless of whether the claim for the damages is brought in tort, in contract, under statute or otherwise.

That is important because it indicates that there must be a claim for damages which leads to the award of personal injuries and the claim is one of the matters or things which on ground 2 we say is and of New South Wales.  The other purpose of subsection (2) is really an anti‑avoidance provision.  We submit that the whole of this Act is about tort.  That is its target to reform perceived problems in tort law but the Parliament recognised that sometimes claims can be brought by other means which are, in substance, tort claims and so it has that extra reach.  Subsection (3) is the command to the court; it:

cannot award damages, or interest on damages, contrary to this Part.

“Court” is defined in section 3 on page 354 as including a:

tribunal, and in relation to a claim for damages means any court or tribunal by or before which the claim falls to be determined.

On ground 2, the Court of Appeal has held that a court must be a court sitting in New South Wales. We do not challenge that. We raise the question whether there is a further matter in and of New South Wales which is either that the claim for damages must be one governed by New South Wales law, viewed as a tort, or whether the injury must have occurred in New South Wales. The relevant provision then is section 16, which is on page 370. Section 16:

No damages may be awarded for non‑economic loss unless the severity of the non‑economic loss is at least 15% of a most extreme case. 

There is then a maximum damages and then there is a formula for fixing damages within the scale.  “Non‑economic loss” is defined back in section 3 on page 354 in an exhaustive fashion.  The heads that are potentially relevant to this case are “pain and suffering” or “loss of amenities of life”.  So, structurally, that means for the Court of Appeal’s decision to be correct, this must be an award of personal injury damages and also it must be pain and suffering or loss of amenities of life so as to be non‑economic loss.

Your Honours, could I then move to the substantive argument on ground 1 and ask your Honours to go back to section 267 of the Consumer Law which is on page 327? I have indicated that subsection (4), which is the key provision, creates the cause of action and also provides the measure of the damages. One then comes to section 275, on page 335. It applies where there has been a failure to comply with the guarantee in respect of services. It is only for services – it is not for goods:

the law of a State or a Territory is the proper law of the contract –

So, there must be a contract in existence.  Then, what the provision says is that the State law applies:

to limit or preclude liability for the failure, and recovery of that liability (if any), in the same way as it applies to limit or preclude liability, and recovery of any liability, for a breach of a term of the contract –

What types of State laws are picked up?  Our argument commences with the text and then moves to the legislative history, the legislative context and the statutory purpose.  As to the text, a law which precludes liability – that is the easiest one – is a law which denies altogether legal responsibility for the breach which would otherwise arise at law – a law saying there shall be no liability in contract for X would be a law precluding liability.

What does it mean for a law to limit liability?  A law limits liability if it places a monetary or other cap or ceiling on the liability in the sense of the legal responsibility for the breach that would otherwise arise and the concomitant entitlement to a remedy.

Now, your Honours, why have the words “and recovery of that liability” been added?  That is simply to reflect two sides of the same coin, that sometimes a law will be expressed in terms of a limit or preclusion on the liability and sometimes it will be expressed as limiting or precluding the recovery of that liability.

If that construction is correct the short reason that section 16 is not picked up is that it does not limit or preclude the legal responsibility for the wrong. It accepts the legal responsibility. It then proceeds to identify how a particular head of loss is to be measured.

EDELMAN J:   Does that mean that the words “recovery of that liability (if any)” are not doing any substantive work?

MR GLEESON:   They are doing the same work in that sometimes the law may be targeted directly to recovery.  Sometimes it will be targeted to liability.  I want to come very shortly – perhaps now is the moment to come directly to the decision of this Court in Wallis, which explains why the predecessor provision was introduced and why this language is found in it.

Your Honours, moving to paragraph 8 of our outline, the predecessor provision was introduced in 2004.  It is section 74(2A) of the Trade Practices Act and the legislative history is largely reflected in the Court of Appeal’s judgment, although I will need to go to some of the primary material. 

In volume 2 of the core book, at page 405, paragraph 352, the predecessor provision is there set out.  It was introduced into the Trade Practices Act in 2004 at the time when the relevant provisions were implied warranties in the contract as opposed to the current statutory guarantees.  The reason it was introduced is shown in paragraphs 353 to 356 of the Court of Appeal.  It was all about the professional standards legislation, which was introduced in New South Wales and other jurisdictions, and the essence of the professional standards scheme, as is set out in 1.3 there, was there would be a combination of:

improved professional standards – by requiring risk management strategies, compulsory insurance cover, professional education and appropriate complaints and disciplinary mechanisms ‑ in return for caps on the liability of professionals who are covered –

by the scheme.  So if one was under the scheme and there was insurance the scheme would provide for a cap on your liability of, for example, not more than $1.5 million.  What is critical about the PSL is that it imposed a cap on the liability or the recovery of the liability.  What it did not do was alter the rules for assessing damages against professionals.

Up to the $1.5 million, say, the ordinary rules for measurement of loss remained intact.  Now, why was this a problem?  As you will see from paragraph 354, what was recognised following this Court’s decision in Wallis v Downard‑Pickford was that the professional standards scheme could be got around by bringing a claim under federal law based on the implied warranty in the contract and that claim would not be answered by the State professional standards law because of a section 109 problem.

But the Parliament said because of Wallis, if we are to give effect to the professional standards scheme in federal law we will have to introduce 74(2A), and the language of 74(2A) which is relevantly similar except that it is in the world of implied warranties, introduces the concept of limiting or precluding the liability for the breach and the recovery of that liability.  That is the critical concept.  You will see over at paragraph 355 the second reading speech.  It is tolerably clear that this Act was all about supporting the professional standards laws; indeed, that is in its name.

With that context could I ask the Court to go to Wallis, which is in volume 4 of the authorities at tab 27, or page 1486.  In Wallis, the State law is found at the foot of page 1492, or 394 of the report:

“A carrier shall not be liable for loss of or injury . . . in an amount greater than twenty dollars . . . unless –

a condition is complied with.  So this was a law imposing a cap upon the liability.  The argument which was put for the appellant can be seen in two places, firstly, in the report of the argument at page 1488, or 390.  The argument was that section 74 was implying a warranty into the contract as a matter of federal law and necessarily creating a secondary obligation to pay a sum of money as damages in compensation.  As it is expressed on page 1488 near the top:

Section 68(1)(c) reflects the view that s. 74(1) creates a contractual liability and a correlative contractual right that sounds in damages.  An express statement that contractual remedies flow from breach . . . was not necessary.

Now, returning to your Honour Justice Edelman’s question, this notion that there is a liability on the one hand and a correlative right of recovery under the secondary obligation on the other was at the core of the argument and that also can be seen in the report at page 1494, or 396.  It is a very short passage which recites the appellant’s argument and then accepts it and the argument was that the statutory creation of a contractual obligation, that is the implied warranty, is inherently accompanied by a full contractual remedy. 

Section 74, it was submitted, implies into the contracts a term which contains the primary obligation to take care and skill and a secondary obligation to provide compensation for breach.  The next paragraph further sets out the argument, including in the last sentence, it said it would:

be extraordinary if non‑contractual parties had greater rights to recovery than did a consumer who is a party to a contract in relation to which s. 74 operates.

Now, the dispositive passage is the next few sentences:

It follows that the warranty created by s. 74 carries with it full contractual liability for breach.  Section 6(1) of the Queensland Act purports to limit that liability.  The consequence is that there is a conflict between the two statutes, a conflict which amounts to a direct inconsistency in the sense that the Queensland Act detracts from the full operation of a right granted by –

the Commonwealth law.  So, once that decision was handed down, the Commonwealth drafters looked at it and said that the professional standard scheme is on all‑fours with a Wallis law because it limits the liability and the recovery in the sense of saying you cannot recover more than X and so the professional standard schemes would be inoperative under section 109 unless something was done in the federal law to give them life.

What that shows as a matter of history, we submit, is that there was nothing in the purpose of section 74(2A) in any way related to modifying or picking up State wills for measurement of damage or loss.  They were left intact but the cap was placed on the liability and the recovery. 

BELL J:   Accepting the history based on the argument in the way it was presented in Wallis, to return to Justice Edelman’s question, what added work does the inclusion of the words “recovery of that liability (if any)” do, or put another way, would not – absent those words, the effect would, in all cases, achieve the result for which you contend the provision was introduced.

MR GLEESON:   It may well do, your Honour.  What it does is to say, if you have a law which, in terms, imposes the limitation upon the recovery or focusing on the right to the money – which is the way part of the argument went – it will be caught as well.  So, the law could inform – either put the ceiling on the liability or it could put it on the recovery side as two sides of the same coin.  So, it is not doing independent work.  It is saying the liability and the recovery, two sides of the one coin, whichever way it is worded, if it is a limitation then this applies.

BELL J:   Does that accept that the words are unnecessary, that is, the addition of the words, “recovery of that liability (if any)”?

MR GLEESON:   No.  But it says their purpose is perhaps for the avoidance of doubt. 

GAGELER J:   How does this work with a typical limitation of actions provision, an action on the contract has to be brought within six years? 

MR GLEESON:   Your Honour, that is a difficult question.  We have thought about that.  Limitation of action provisions, of course, take two different forms.  Some, no action may be brought unless within a period and others speak of the extinguishment of the cause of action if not brought within a period.  So, there are different forms of those.  Our primary answer would be that a limitation of action provision would not be a provision picked up by this section because it is not concerned with placing a ceiling or a cap on the liability in the way I have identified.

GAGELER J:   It might be concerned with recovery.

MR GLEESON:   It may be concerned with recovery and a possibility is that that is what the recovery limb is there for.  So, I would not preclude ‑ ‑ ‑

GORDON J:   It is an odd result, is it not, to have one set of limitation provisions picked up on that analysis and one not?

MR GLEESON:   We know from Wallis that the specific target was the type of law I have mentioned – a law imposing a ceiling or a cap.  There is nothing in the extrinsic materials or the texts to say whether the Parliament adverted to whether it would have a broad effect into the area of limitation of actions.

GORDON J:   Or broader altogether.

MR GLEESON:   The broader altogether, I can deal with because the next step of our argument is going to show that when this amendment was made in 2004 there were, in fact, two parallel amendments to the Trade Practices Act.

EDELMAN J: Just before you do, do I understand your argument to accept that section 275 would apply to section 16(2) which, unlike section 16(1), imposes a ceiling?

MR GLEESON:   No. Our answer to that is no, your Honour, because we say that the whole of section 16 – indeed, the whole of Part 2 is what it said. It is fixing damages for non‑economic loss. It is creating a formula saying, this is how you go about fixing the damages.

EDELMAN J:   If 16(2) had stood alone and was effectively a standalone ceiling‑type provision, that would be the very sort of thing, like Wallis, that would be picked up, would it not?

MR GLEESON:   The answer to that is probably yes, had it stood alone, had it not been a part of this scheme for fixing the damages.  So, if your Honours have volume 2 of the authorities, the two amending Acts which I will call the two streams in 2004, are found first at tab 10, page 733.  That is the one I have been focusing on so far which is the Treasury Legislation Amendment (Professional Standards) Act. 

It amended three federal statutes and relevantly on page 743 when it amended the Trade Practices Act it introduced section 74(2A) but it also introduced section 87AB as a qualifier to damages and other remedies under section 82 and 87 and that is over the page and that is a provision which used similar but not identical language by saying the professional standards law limits occupational liability in the same way as it limits occupational liability under the law of the State or Territory. So, it confirms that professional standards laws were the core object of the change. I would accept, however, that 74(2A) is not limited solely to a professional standards type law. It would apply to any Wallis or professional standards type law.

Now, what actually happened under that first stream was that originally 87AB was the only subject of it and late in the piece it was picked up that section 74(2A) was necessary to deal with the case where the implied warranty was the means of getting around the professional standards law. 

Now, the second stream – if I can come to the second stream, it is the statute at tab 9 page 708 which is the Trade Practices Amendment (Personal Injuries and Death) Act (No 2)1974.  Each of these Acts was passed on the same day and given royal assent on the same day.  Part VIB, commencing on page 715, is broadly equivalent to the Civil Liability Act provisions of Part 2 in New South Wales. I say “broadly equivalent”, it is not identical. Some important changes have been made including that the caps are different. You will see in section 87M on page 721 the cap is $250,000 not $350,000, so it is not identical but it structurally uses many of the same concepts.

Critically, if the Court goes to section 87E, on page 717, the part applies to proceedings taken under the Act that relate to certain divisions of the Act:

in which the plaintiff is seeking an award of personal injury damages –

Those divisions do not include Part V, Division 2 – which is the division where section 74 is.  We would submit that there is a deliberate legislative choice which has two features to it here.  The first is, to the extent that the Commonwealth Parliament wishes to regulate the measurement of damages in personal injury cases arising from federal law it has done so expressly by its bespoke mechanism rather than by picking up State law.  It has decided to have a single federal law regulating these damages.

The second decision it has made is that it will apply that regulation to some parts of the Trade Practices Act but not others.  It has quite deliberately not applied it to the provisions in which section 74 is found and it would be a most peculiar result if, by introducing section 74(2A) in the other statute, the Parliament has picked up State Civil Liability Act‑type provisions when it has deliberately not picked them up in the place you would expect to find them.

EDELMAN J: But, on any view, it could have picked up some State civil liability‑type Act in some personal injury claims – even on your case – if they are formulated in the right way – like the section 16(2) example.

MR GLEESON:   It could have, but it did not, is the answer.  So, can I then show your Honours what form Part V, Division 2, took at the time this Act came into force?  The Trade Practices Act, at that time, is found at tab 7, page 512 and Part V, Division 2, is found at page 557.  It was a section dealing with conditions and warranties in consumer transactions. 

Could I point to three aspects of it?  Section 71 implied warranties into goods transactions.  Section 74 is the provision we have already seen which is on page 573.  Each of those two provisions, under the Wallis reasoning, would see federal law give rise to the secondary obligation.  But, in addition to that, under section 73 – which is a different technique where goods are supplied and there is a linked credit provider involved and the consumer suffers loss by reason of any number of a range of matters – there is a joint and several liability to the consumer for the loss or damage and the consumer may recover that amount by action in a court of competent jurisdiction.

So the section 73‑type case is the creation of a federal cause of action and a federal measure of damages. So across this whole part dealing with consumer protection we would submit the decision made in section 87AB is we will not institute a regime of fixing the damages in the Civil Liability Act‑type form.  It would be very odd if that result, as I say, were achieved by a provision which has a clearly different target.

I should say in answer to your Honour Justice Edelman that, on our submission, section 16(2) would have to be radically reworked to be picked up on our case. It would not be a provision dealing with the damages. It would have to be a provision imposing a cap upon the liability or the recovery of the liability.

GORDON J:   That is the question, is it not?  It is whether or not recovery extends in the broadest sense.

MR GLEESON:   Well, interestingly, the Court of Appeal did not base their judgment on the recovery limb, they spoke of it limiting the liability, and they said any law which fixes the damages is a limitation on the liability.  Now, it is a rather odd use of language actually to say laws which fix the measurement of damages are laws which limit the liability.  Of course, in a general sense the New South Wales Parliament was attempting to bring damages awards into line because of major insurance problems.

One of the things that Parliament actually was told though in the second reading speech was that by fixing the formula in non‑economic loss cases, although we will be getting rid of the small ones, we will in fact be more generous to some people than they otherwise would be in the pure common law assessment of damages.  So, fixing the damages by a formula, we would submit, is not apt, even textually, to be captured by limiting liability or recovery.

NETTLE J:   How does one recover a liability relevantly otherwise than by obtaining an award for damages?

MR GLEESON:   Your Honour is correct that you recover it by obtaining what would usually be damages.  It will not always be damages, but that would be the usual remedy.  There may be other remedies but ‑ ‑ ‑

NETTLE J:   I follow that, but sticking with damages ‑ ‑ ‑

MR GLEESON:   Sticking with damages, our point is to say to limit the recovery is not the same as saying we will regulate the heads of loss or the measurement of those losses.  They are distinctly different jurisprudential tasks.  One task is about saying there is a legal responsibility for a wrong and a concomitant entitlement to recover for that wrong.  The second task is the measurement task and that is simply not there in the language of 275; that is our argument.

KIEFEL CJ:   Is 275 to be understood to implicitly include the words:

limit or preclude liability for the [damage resulting from the] failure, and recovery of that liability –

for damage, as distinct from damages?  Liability is for damage, and damages are the assessment of that damage.

MR GLEESON:   Yes, that is a way of understanding it.  It is interesting that it never uses the word “damages” at all.  It speaks of, starting with the State law ‑ ‑ ‑

KIEFEL CJ:   That is because it talks about failure, but you do not actually recover liability for the failure as such.  You recover liability for the damage caused by the failure.

MR GLEESON:   Yes.  I was going to say you recover liability for the breach of the term or for the failure so far as it sounds in damage.  It must sound in damage.  If there is no damage, then there is nothing to limit.  But what it is not saying is that damages, as in the process of assessment of the amount which you will ultimately recover, is something which it is picking up.  That is our submission.

KIEFEL CJ:   Well, one is injury and one is quantum of injury.

MR GLEESON:   Yes, your Honour.

EDELMAN J:   Would it have been different if the words were “extent of recovery of liability”?

MR GLEESON:   That would probably not have been enough to make it different because that would not have been an indicator that it is the quantum as opposed to the injury where State laws are being picked up.

EDELMAN J:   Are rules of remoteness not rules that are concerned with either recovery of liability or extent of recovery of liability?

MR GLEESON:   Well, your Honour, there are no absolutely crystal clear lines here.  The line that we are trying to draw generally is between the breach sounding in the injury or the damage, and then a legal responsibility.

EDELMAN J:   It might be said that the analogy of this scheme is to draw a line to say beyond a particular line damages are too remote or are not recoverable.

MR GLEESON:   I am not wishing to “preclude”, to use that word, a law which, if it is appropriately drafted to target and thereby deny or limit the liability or the recovery, then the Parliament’s language is sufficient to pick it up.  It might be that a law with respect to remoteness might, depending on how it is worded, be doing the same thing as a Wallis law.  

The Wallis law is the simplest one.  You shall not be liable for more than $20.  A law which said you shall not be liable for the failure in circumstance X may attract a Wallis‑type approach, but not the Civil Liability Act, which says for personal injury damages, here is the entire process of quantum; this is how you go about the measuring of the loss.

NETTLE J:   Mr Gleeson, what is the difference between a law which says that you shall not recover more than $20 and a law that says you shall not recover unless your damages are within the top 15 per cent of the most grave suffered?

MR GLEESON:   Our answer is that the second law is a law about the measurement of the damages, not a law about whether your responsibility for the wrong sounding in damages has been limited and the best way to test it is the one that I gave earlier.  In the Wallis‑type law or the PSL law, the ordinary rules for damages for quantum are all untouched but what it says is your legal responsibility for the wrong is limited at X dollars. 

So, it may be possible to achieve the same result by different drafting and that is just a consequence of the terms that have been used but conceptually there is a reasonably clear distinction between a law about the measurement of the damages and a law limiting the liability for the breach and what I have sought to do with this material is show Parliament was alert to these matters in 2004 and to the extent it wanted personal injury damages to be measured in a particular way under federal law it did it firstly itself and, secondly, without applying it to the provision of matters in this case. 

KIEFEL CJ: Are you saying that section 275 as a matter of language could be understood to say where it says “recovery of that liability” that you may not receive any money with respect to that liability regardless of quantum?

MR GLEESON: Yes, and it says “recovery of that liability (if any)”, it may say that. So, the law is saying, yes. Your Honours, at point 10, if I could move to that, the 2010 legislative history is even clearer in a sense. The Court of Appeal dealt with this at paragraph 357 on page 407. So, what happened in 2010 is that the – as we have seen, the new section 267(4) created a federal cause of action in damages as opposed to the previous position where it was an implied contractual right to damages and when that happened - there are two key parts of the history.

The first which you will see set out in the explanatory memorandum on page 408 is that the Parliament thought that the target of the old provision and the new provision was a provision like section 5N of the Civil Liability Act which was the provision which allowed providers of recreational services to exclude or limit their liability in the contract and the Parliament thought that the State and Territories might extend provisions like 5N to the new statutory guarantees and the Parliament wanted to give the States the same ability they had under section 5N.

The problem with all of that reasoning is that, as this Court exposed in Insight Vacations in the next year, section 5N was never picked up by section 74(2A). It was not a law which limited or excluded liability because it was merely a law which permitted the parties to bring about that result. So, the one purpose that the Parliament was told for 275 miscarried. The Parliament was not reminded of the real reason that 74(2A) had come in which was the professional standard scheme but what is absolutely critical is there was nothing in any of this material to say with the new 275 we will be picking up State laws on quantum.

Now, the other thing that happened in 2010 was to the second stream, as I have called it.  Could I show your Honours what happened there.  In volume 1 of the authorities ‑ ‑ ‑

GORDON J:   Sorry, where are we going now, Mr Gleeson?

MR GLEESON: We are going to the current version of the Australian Consumer Law, to section 87E, which is also found in volume 1 at page 74. These are the quantum provisions for personal injury cases. Under section 87E, the Parliament has said the part applies to certain provisions of the ACL. I would ask the Court to observe that what has been left out from those provisions are firstly Part 3‑2, which is where the consumer guarantees are found and, secondly, Part 5‑4, Division 1, which is where section 267 is found.

So at a time when section 267 is undoubtedly creating a federal entitlement to damages and setting out the quantum, the Parliament has very deliberately not applied these quantum provisions of Part VIB to the provisions in issue in our case. There is an explicable reason for that, that we are dealing here with provisions for consumer protection.

It would be an extremely odd result, just reading the current Act together as a whole, if section 275 was a mechanism to bring in State provisions on quantum for one particular category of case services not for the whole of Parts 3‑2 and 5‑4, Division 1 when the federal provisions for quantum have not been applied to such provisions.

KIEFEL CJ: The distinction we discussed before between failure, damage and damages on one view might be thought to be reflected in section 267(4). Do you rely upon that provision to that effect?

MR GLEESON:   Yes, your Honour, yes.  You are recovering the damages for a loss or damage.

KIEFEL CJ:   The damage suffered as a result of the failure.

MR GLEESON:   Yes.  So, in the present case, the loss or damage is the distress or the disappointment and you are recovering damages for that loss or damage. 

KIEFEL CJ:   The liability would be for the damage.

MR GLEESON:   Yes.  Your Honours, the respondent has helpfully pointed out there are several other provisions in the current Act which use the same or similar language.  Could I go to them briefly?  The first is section 64A.

BELL J:   What page do we find that on in the ‑ ‑ ‑

MR GLEESON:   Yes.  Page 258 of volume 1.  This is a carve‑out from section 64.  It allows provisions which limit:

the person’s liability for failure to comply with a guarantee –

So, that is very similar language:

to one or more of the following -

“replacement’, “repair”, “payment of the cost”, “payment of the cost”.  So, what that indicates is that a limitation of liability could be either to a money sum or it could be to an activity.  But, even in that usage there, this is saying nothing about the damages, that is, the process of the quantification.  It is simply saying this is the upper limit. 

Next, section 276A, which is on page 336, is of the same type as the previous provision.  Next, on page 340, section 281 – this is a limit on the liability of the linked credit provider to an amount that does not exceed X.  That is a Wallis, PSL‑type law.  Section 285(2) is a similar one.  So, our argument, from statutory context, is that Parliament in four or five places has dealt with this concept of limiting the liability and in each case it is placing a ceiling or a cap on that which can be recovered. 

So, our final argument on ground 1, which is then an argument on legislative purpose, but informed by this history, is that the Parliament effectively made two distinct choices.  The first choice, which is the section 74(2A), 275 choice, is to pick up, as federal law, State laws of the type I have described performing the Wallis, PSL‑type function.

The second choice was that when it came to the quantum of personal injury damages for claims sourced in federal law, the Parliament used its own rules, not State rules, and it chose to apply them not to the types of claims in issue in the present case.

GAGELER J:   Mr Gleeson, just looking at section 281 – you took us to that – it is concerned with liability under section 278(1), and if you look at the way in which liability is defined in section 278(1) by the words at the conclusion of the provision – I think draftsmen call it the “the sump” – the liability – and it is expressed in terms of a liability is:

to the consumer for the amount of the loss or damage.

Now, your first ground might turn on whether, relevantly, the liability created by section 267(4) is properly understood as liability for the loss or damage or liability for the amount of the loss or damage. I think you have to read it in the first way.

MR GLEESON:   That is probably so, your Honour.  The critical thing is how that links, though, into 275.  What is the linkage between the two because you have to work out whether the liability for the failure has been limited or precluded.

Your Honours, could I make a start on ground 3 which is the Baltic v Dillon point.  In a sense, it is the shortest point because the argument is simply that where something has been promised or guaranteed and is not delivered and that results in a person suffering distress or disappointment as the natural consequence of not receiving the promise, then if the law compensates for that distress or disappointment – which is a separate question – that has nothing to do with personal injury damages, pain and suffering, impairment of the mind or any of the concepts in the Civil Liability Act.

That argument rests in important part on the judgment of this Court in Baltic v Dillon which is in volume 3 of the authorities at tab 17.  If the Court goes straight to page 934 of the book, or 373 of the judgment of Justices Deane and Dawson, one sees the heads of damage and the calculation of the damages, and we need to distinguish between what was in issue in the case, which was the third head, which was:

Compensation for disappointment and distress at the loss of the entertainment, etc. –

That is the Baltic v Dillon damages – with the next one, which is:

Damages for personal injuries [including emotional trauma] –

So there is no doubt that in the $35,000 reward there was compensation for the injury which the plaintiff suffered when the ship sank in terrible circumstances and for the trauma and that could comfortably be called pain and suffering and typical personal injury damages but it is clearly distinguished from the compensation for disappointment and distress at the loss of entertainment, et cetera, i.e., not receiving that which you were promised thereby not receiving the peaceful state of mind you expected to get and compensation for that loss. 

Now, that distinction can then be seen in Chief Justice Mason’s judgment as well as all the judgments in various ways commencing at the foot of page 359 of the report.  In the first sentence his Honour refers to:

Pain and suffering is a well‑known common law head of damage recoverable in actions for damages for person injury –

of various sorts.  At that point, his Honour is speaking of pain and suffering as something recovered in damages for personal injury actions.  He then, in the next sentence, distinguishes something rather different:

And, in some circumstances at least, a plaintiff can recover damages for injury to his or her feelings caused by tortious conduct –

and various tort actions are there identified.  At that point, we would say, his Honour was not speaking about pain and suffering or personal injury damages, he is speaking about the areas where the law compensates for injury to feelings and, in particular, going back as far as Kemp v Sober in 1851 “the feeling of anxiety” can be damage, particularly, that the plaintiff can recover for:

anxiety, disappointment or distress when those feelings were the consequence of conduct for which damages are recoverable and the damages recoverable for that actionable wrong include compensation –

So, there are two concepts there.  The feeling can be damage but it must be recoverable under the relevant legal principle.  So, then after discussing where the law perhaps moved too narrowly by denying such damages in contract, his Honour at 923, point 6 or 362 and over the page, identified five categories of case which appear to be exceptions to the so‑called general rule that damages for distress are not available in contract.  Relevantly, for our case is at least the first so‑called exception:

damages for injured feelings were recoverable in the action for damages for breach of promise of marriage. 

That, we would submit, is not pain or suffering or personal injury damages.  The second example his Honour gives is pain and suffering but it involves the breach of contract causing physical injury. If that were the sort of distress and disappointment, that would be personal injury damages.  He then speaks of a third and fourth category ‑ ‑ ‑

NETTLE J:   Why is it different?  It is just a limitation, is it, that you will not recover those damages as damages for personal injury which are constituted of distress and disappointment unless you have also suffered physical injury.  What he is saying now is, but there are other cases where you can get such damages without also suffering physical injuries.

MR GLEESON:   I accept what your Honour puts to me.  What I am seeking to come to is that when his Honour identifies the first category and, importantly, the fifth category, which is the key one for us over the page:

there are other cases in which the plaintiff has recovered damages for distress, vexation and frustration where the very object of the contract has been to provide pleasure, relaxation or freedom from molestation -

that is our case ‑ ‑ ‑

NETTLE J:   Yes.

MR GLEESON:   ‑ ‑ ‑ that the damages there are awarded because the distress is simply the natural human reaction to the promise not being honoured and that, when we map it onto the Civil Liability Act, is not an impairment of the mind ‑ ‑ ‑

NETTLE J:   Well, just to test that, take a case, say, in New South Wales where a gynaecologist specialising in artificial insemination botches the job, not causing physical injury but to the point, obviously, where the woman cannot bear the child and is disappointed and distressed, would that not be covered by section 16 of the Civil Liability Act?

MR GLEESON:   Can I reflect on that one, your Honour?

NETTLE J:   Certainly.

MR GLEESON:   So, the ultimate rule that his Honour adopts, which is enough to resolve the case, is at page 365, that damages and distress and disappointment are not recoverable unless one of two situations is present ‑ our case is the second ‑ and the breach results in the failure to provide the promised benefit.  So, on the application of the facts at page 927, the contract was a contract:

the object of which was to provide for enjoyment and relaxation.

Therefore, the award was appropriate for damage and distress as well as:

physical inconvenience flowing from that breach of contract.

EDELMAN J:   There are really two different concepts that are at play, are there not, that may be being conflated?  One is the concept that a contract which to an extent has promised happiness or enjoyment has not delivered upon that promise; an expectation has not been fulfilled, so a service has been paid for and what you have paid for you have not received.  A second concept, which is not concerned with fulfilling that expectation, is that consequent upon the breach of contract there is some mental suffering that has resulted, and that might vary from consumer to consumer, unlike the first category which the difference would be the same for all consumers.

MR GLEESON:   We would broadly accept that, your Honour, and the damages here are in the first category.

EDELMAN J:   The difficulty then is that first category is encompassed, is it not, within 267(3)(b)?  You have an award of damages, at least one that has been remitted back to the trial judge for assessment.

MR GLEESON:   Well, subsection (4) is an additional provision.  We know that from subsection (5).  I note the time – my submission would be they are not the same thing conceptually.  What (3)(b) is about is to say you paid X for the cruise.  What was the overall value one would attribute to the cruise you actually got, and then you get the difference there.  But what (4) is about, it is to focus on a particular thing, which is the distress and the disappointment which could be different.  It could be greater.  It could be any amount that is appropriate to measure the distress and the disappointment.  So we would submit that distress and disappointment appropriately fits within subsection (4) and is not completely subsumed within subsection (3)(b).

KIEFEL CJ:   That might be a convenient time, thank you.  The Court will adjourn.

AT 11.17 AM SHORT ADJOURNMENT

UPON RESUMING AT 11.31 AM:

KIEFEL CJ:   Yes, Mr Gleeson.

MR GLEESON:   Your Honours, on Justice Nettle’s question, one would have to trace through both Part 2 and Part 3 of the Civil Liability Act to give a complete answer. Part 3 of the Civil Liability Act, which is in volume 1 at page 389, regulates mental harm and it defines “pure mental harm” as:

mental harm other than consequential mental harm –

section 27.  “Mental harm” is an:

impairment of a person’s mental condition –

and “consequential mental harm” is also defined.  When one goes to section 31:

There is no liability to pay damages for pure mental harm resulting from negligence unless the harm consists of a recognised psychiatric illness.

So, the way to even get into damages is first of all to recognise psychiatric illness or to have consequential mental harm where you have already had a personal injury of some other kind and apart from that you will have difficulty at the stage of Part 3. If you have something which can be quantified and you then had section 16 in mind, we submit one would have to have a close look at the cause of action in question to see precisely what was required of the gynaecologist and precisely what the damage is that has been compensated for.

We submit it would be unlikely that a claim could be made that the contract promised relaxation, peace, freedom from anxiety in the sense of the holiday tours cases. One would probably be in a different area where the negligence would lead to the suffering of a mental harm and then one would ask, do you survive Part 3 and if you do, most probably, you might be able to show you have personal injury damages of some sort at that point.

NETTLE J:   Thank you very much.

MR GLEESON:   In answer to your Honour Justice Edelman, we would not accept that in the assessment under section 267(4) for distress in a case like the present, that would ordinarily or necessarily be a similar figure for everyone. It would depend very much upon the expectations that were generated and the extent to which the service fell short of those expectations leading to the scale of the distress and disappointment.

In Mr Moore’s case, of course, one of the central reasons he booked a cruise rather than a bus tour was that it was to give him the freedom and peace of not having to move his luggage around every night to some different place, given his own personal back problems.  So, in his case, the assessment of $2,000, which the trial judge said is probably modestly low, would not necessarily be $2,000 for each person.  It would need to be an assessment. 

But I would maintain the submission that that is functionally different to valuing the service – the value of the service as a whole by reference to the cost and what was delivered is a functionally different exercise to saying this is the distress you suffered because of the failed promise, this is the appropriate award for that.

EDELMAN J:   I mean, obviously a very strong argument that is correct but does that not mean that (3)(b) is what is concerned with the expectation and subsection (4) is what is concerned with not the expectation but consequential mental effect upon particular individual claimants. 

MR GLEESON:   Our submission would be that subsection (4) is any loss or damage which satisfies causation and reasonable foreseeability and that could amply include the distress and disappointment arising from - as the natural consequence of not receiving that which you are promised. 

Your Honour, could I complete Baltic Shipping and return to the next judgment of Justice Brennan which is at page 932, or 371.  His Honour’s statement of the principle in the first full paragraph is consistent with Chief Justice Mason and helps us identify that it is the obtaining of the peace of mind which was the object of the contract which is what is being compensated for.  It is true that in the next paragraph his Honour says:

In breach of the contract, she was shipwrecked:  an event provoking severe tension of mind and depression of spirit. 

The respondent seizes on that and says, well, that looks like pain and suffering.  We submit that needs to be read carefully once one recalls that the emotional trauma was compensated for as part of the damages for personal injury and the $5,000 was what I have described earlier.  That is perhaps confirmed by the end of his Honour’s judgment, the foot of 933, where he agrees the $5,000:

should not be increased when it is intended to cover simply the plaintiff’s disappointment and distress suffered by reason of the ship’s foundering.

Next, in Justices Deane and Dawson at the foot of 942, top of 943, the principle is stated in similar terms to the Chief Justice, including a useful extract from Lord Justice Bingham in Watts v Morrow:

damages will be awarded if the fruit of the contract is not provided or if the contrary result is procured instead.

Now, when it comes to whether the 5,000 was appropriate, at 383 the judgment is important because it tells us more about the separate head of damages for the trauma because the sense of panic, preoccupation with the event, nightmares and so on, which might well now have been diagnosed as PTSD, sustained as a result of the shipwreck, that is covered under the separate head and that would be personal injury damages.  But their Honours say, compared to that: 

any disappointment and distress caused by Baltic’s failure to provide the whole of the pleasure cruise seems to us to have necessarily been comparatively insignificant -

and so on.  Chief Justice Toohey agrees with the Chief Justice.  Justice Gaudron agrees but, interestingly, on page 387, at point 3, describes:

Disappointment is a natural consequence of the shortening of her holiday -

and distinguishes again separate damages for the trauma suffered in the shipwreck.  In that brief sentence by Justice Gaudron, we submit the key concept is captured, that the damages are for the natural reaction to the failure to receive that which was promised.  Finally, in Justice McHugh at page 405, in the middle paragraph, he speaks of three distinct categories of damages – and this is of assistance.  The first is consistent with the Chief Justice:

an award of damages for distress or disappointment where it is an express or implied term of the contract that the promisor will provide pleasure or enjoyment or personal protection for the promisee.

The second category is damages for:

distress or disappointment consequent upon the suffering of physical inconvenience as the consequence of a breach of contract.  Furthermore, because damages for personal injury may be recovered in an action for breach of contract and because psychiatric illness constitutes personal injury, damages for mental distress associated with a psychiatric illness or physical injury must also be recoverable in an action for breach of contract.

So in that distinction his Honour is drawing we would submit one sees in the personal injury frame other cases, but one sees our case outside the personal injury frame.

Your Honours, the Court of Appeal in this case simply followed its earlier decision in Insight Vacations on this question and so that becomes the reasons that we wish to ask the Court to reject.  So could I ask the Court to go to Insight Vacations in the Court of Appeal, which is in volume 5 at tab 30 at page 1577, and first to Justice Basten’s judgment.  Could I emphasise on the facts that Insight Vacations was a different case to ours because there was physical injury and the distress was consequent upon the physical injury.

Now, if I could pick it up at paragraph 119, on page 1600, in the earlier case of Ibbett the question was whether Part 2 applied to damages for an assault. Chief Justice Spigelman, in the passage there extracted, said that:

The concept of “personal injury” is reasonably well established in Australian legal practice.  It has rarely, if ever, been used to refer to harm to reputation, deprivation of liberty, or to injured feelings such as outrage, humiliation, indignity and insult or to mental suffering, such as grief, anxiety and distress, not involving a recognised psychological condition.  (See e.g. Baltic Shipping Co v Dillon -

At that point we submit Chief Justice Spigelman’s appreciation of the law was correct.  When one then moves ‑ ‑ ‑

NETTLE J:   Mr Gleeson, Chief Justice Mason in Baltic said that damages for injured feelings can be recovered as “damages for pain and suffering”.  He only said it in a footnote, but he said it.  It is Commonwealth Law Report page 362, footnote (95).   

MR GLEESON:   Your Honour, that is the footnote to the second of his five categories and it is a category about the defendant’s breach of contract causing physical injury and mental suffering and anxiety in that circumstance.  We do not challenge that in that context of physical injury and consequent mental suffering the law has traditionally treated that as personal injury damages. 

NETTLE J:   But he says it is “for injured feelings”:

damages for pain and suffering may include compensation for injured feelings.

MR GLEESON:   We would invite your Honour to read that part of the footnote together with the first sentence which commences with:

Damages for pain and suffering consequent upon physical injury caused by breach of contract may be awarded –

and the last sentence:

The class of physical injury for which damages are available includes nervous shock –

and it is a footnote to the second proposition which is about ‑ ‑ ‑

NETTLE J:   To repeat something I said to you before, the significance of personal injury in that case was that it was the discrimen adopted as a policy consideration not to ordinarily award damages for injured feelings and to limit the field – said you could have them as long as you had suffered personal injuries too.

MR GLEESON:   I accept what your Honour is saying – that the logic of this judgment is to say there appeared to be a generally expressed prohibition ‑ ‑ ‑

NETTLE J:   Yes.

MR GLEESON:   ‑ ‑ ‑ then there appears to be a ‑ ‑ ‑

NETTLE J:   A carve‑out.

MR GLEESON:   ‑ ‑ ‑ significant number of exceptions or carve‑outs and his Honour is saying one course would in fact be to restate the entire rule affirmatively rather than have exceptions but it is sufficient for the purposes of this case that I can slot this case into the ‑ ‑ ‑

GORDON J:   This category.

MR GLEESON:   ‑ ‑ ‑ into this particular category.  So, when his Honour is doing the analysis of the exceptions, we submit that what is being addressed in footnote (95) is a category which is not ours where there is physical injury which has led to associated mental suffering.  Some of his Honour’s categories here are like ours, such as the first and the fifth.  Some are not.

GORDON J:   Even assuming for the moment that category two is not ours, what is the answer to – is it just wrong then, on your argument, that damages for pain and suffering may include compensation for injured feelings?

MR GLEESON:   Your Honour, part of the answer to that may be to go back to the way in which these general damages were assessed originally before juries, where one would tend to have a fairly global award in which various things would be wrapped up.  So in a case where there was physical injury and one was – and there was mental suffering and anxiety, one might see that wrapped up in a single award or a head which is what we see in – happened in Baltic v Dillon in the damages I took you to at page 934. 

So the damages for personal injury including emotional trauma, it would be permitted to be wrapped up as one because you self‑evidently have some personal injury you are compensating for.  The distinct issue raised by our appeal is if you are seeking compensation for disappointment and distress at the loss of the promised entertainment and cruise, are you then to shoehorn that into a concept of pain and suffering and personal injury, which are really rather different we would submit.

Your Honours, in Insight in the Court of Appeal, if I could resume at page 1601, the key paragraphs of Justice Basten are 124, 125 and 129.  In 124, Chief Justice Mason is cited from Baltic and then 125 is the key paragraph:

It is undoubtedly true‑

as Chief Justice Spigelman noted in Ibbett:

that injury to reputation, deprivation of liberty and outrage, humiliation, indignity and insult are not commonly referred to as forms of personal injury; rather they usually derive from torts other than negligence, often intentional torts.  Matters such as grief, anxiety, distress and disappointment, may fall into a different category.  They can be elements of pain and suffering which are the subject of awards for non‑economic loss.

That proposition is consistent with what your Honour Justice Nettle put to me about footnote (95):

Similarly, as reflected in the definition of non‑economic loss in the Civil Liability Act, an award may be made for “loss of amenities”, to cover the non‑economic loss resulting from “the deprivation of the ability to participate in normal activities and thus to enjoy life to the full and to take full advantage of the opportunities that otherwise it might offer” –

Pausing there, although the respondent says it would categorise this award as loss of amenities if it needs to, we would submit it is self‑evidently not loss of amenities, it is pain or suffering or nothing.  Then, Justice Basten says:

This is not a different concept from that accepted in Baltic Shipping; where such damages are said to flow from a breach of contract, they are limited to the loss of the benefit to be provided under the terms of the contract. These, however, are heads of damage which fall within the general law understanding of non‑economic loss and the statutory definition of that term. Accordingly, they are subject to the constraints imposed by s 16.

I think, given the time, I am not going to take your Honour to the case in detail but could I give your Honour the reference to the critical passages?  It is in the judgment of Justices Emmett and Ball and it starts at [144] and goes down to [146].  In [146] their Honours said that “The presumption” – this is talking about the presumption concerning extraterritoriality:

must be applied, however, by reference to the central concern of the legislation or hinge by reference to which it operates . . . It would not be said that s 42 has an extraterritorial operation – or at least not one that is inconsistent with the principle – simply because it may catch a person who is engaged in misleading or deceptive conduct in New South Wales while a resident of another state.

Your Honours will see at paragraph [200] that the New South Wales Court of Appeal rejected the various territorial hinges that all the parties had propounded, and held that the only geographical hinge was a claim that was brought in a New South Wales court.  Your Honours will see that that is to be found in paragraph [200]:

s 6 is directed at claims instituted in New South Wales courts, and that that is the territorial connection with New South Wales that is required for s 6 to operate.

Once having found that hinge, or the central conception, it was not necessary to read the Act down in any other way.  Now, insofar as the appellant seeks to gain support from Insight Vacations in the High Court, it is important to note that we would submit the text, context and legislative history are against the appellant’s contentions.

That starts with the proposition that Part 1A, to which the High Court was dealing in Insight Vacations, had a very different field of operation to Part 2, and a number of other parts of the Civil Liability Act. Now, the appellant’s submissions proceed on the assumption that Part 2 is directed at the same concern as Part 1A. We submit that legislative history and text would suggest to the contrary and that once that assumption is discarded the reason for reading in one of the geographical limitations proffered by the appellant evaporates.

So far as the text and content is concerned, there is nothing within section 16 or the part itself that confines its operation to negligence or torts. That is very different to the field of operation of other parts, including Part 1A, upon which the High Court ruled in Insight Vacations.  Part 1A is entitled “Negligence”, and it is specifically concerned with negligence.  Section 5A says that:

This Part applies to any claim for damages for harm resulting from negligence –

and then it goes on to say:

regardless of whether the claim is brought in tort, in contract, under statute or otherwise.

So I will call that latter part quasi negligence – so it is dealing with negligence and quasi negligence. Now, it is immediately apparent that that is very different language to the language used in section 11A, which deals with Part 2. In 11A, the concern is all causes of action, howsoever they arise. Other parts of the Civil Liability Act – sorry, 11A(2) says:

This Part applies regardless of whether the claim for the damages is brought in tort, in contract, under statute or otherwise.

In other words, it has a field of operation that is beyond negligence, or quasi negligence. It applies to every personal injury damages claim that is brought. Of course, Part 2 was introduced before Part 1A. While I am on the other parts, can I just give your Honours a few references to show the different fields of operation of other parts? “Part 3 Mental harm” – one needs to go to section 28 on page 389:

This Part . . . applies to any claim for damages for mental harm resulting from negligence, regardless of whether the claim is brought in tort, in contract, under statute or otherwise.

In other words, it is a similar field of operation to Part 1A but different to Part 2. “Part 4 Proportionate liability” is dealt with in section 34(1) and it has a different field of operation. Subsection (a), deals with claims for:

damages . . . arising from a failure to take reasonable care, but not including any claim arising out of personal injury –

and then, in subparagraph (b):

a claim for economic loss or damage to property in an action for damages under the Fair Trading Act 1987 for a contravention of section 42 –

Part 5 is unusually expressed.  Section 40(1):

applies to civil liability in tort –

but then subsection (2) goes on to provide that:

This Part extends to any such liability even if the damages are sought in an action for breach of contract or any other action.

However one interprets that, it is a different field of operation from Part 2. It is tort based, whereas Part 2 is not. Part 2 applies to everything – or every claim to personal injury damages.

There are other parts that appear to have the same field of operation as Part 2, although not always expressed in the same language. Can I just give your Honours a list of them: “Part 6 Intoxication”, “Part 7 Self‑defence and recovery by criminals”, “Part 8 Good samaritans”, “Part 8A Food donors”, “Part 9 Volunteers”, Part 10 Apologies” and “Part 11 Damages for the birth of a child”. Each seemed to apply to civil liability, howsoever it arises.

One must then read the High Court’s observations about the unstated assumptions in Insight with some care because it is dealing – the High Court was there dealing with Part 1A that contained a different field of operation to Part 2. If one goes to paragraphs 14 to 16, one sees that although at times the Civil Liability Act is referred to without the particular part being referred to, it is plain that it is dealing with Part 1A.  You can see that, in the start of paragraph 14, it talks about the:

Civil Liability Act . . . enacted in 2002 in response to the final report‑

In fact, Part 2, the original Part 2 that contained the part with which we are concerned, predated the final Ipp report. Your Honours will go - see that it goes on to expressly refer to Part 1A. That is where it gets the central conception of negligence by reason of examination of Part 1A but not by reason of examination of Part 2, which had a different field of operation.

In other words, what we submit is that when one comes to the unstated assumptions in paragraph 16 of that judgment, those are to be read as unstated assumptions in respect of the particular parts of the Civil Liability Act with which the Court was concerned, in particular, that which directly concerned the tort of negligence.  We submit that it is therefore inappropriate to use the High Court’s discussion of Part 1A as the launching pad for the different central conception that the appellant relies upon in this case. 

So far as the legislative history is concerned, I have already made the observation that stage one was the Civil Liability Bill 2002. That introduced our Part 2. The original Act did not have the provisions dealing with negligence and it did not have Parts 3 to 10. So far as the reasons for enacting tort reform, your Honours will see that in the second reading speech for the Civil Liability Bill - that is at volume 6, tab 50, 1907 - there is a specific reference to small businesses and tourism operators that would have a field of operation beyond the State of New South Wales.

Finally, in relation to the policy considerations, the appellant says it would be strange if section 16 applied merely because the claim was brought in a New South Wales court. We would ask rhetorically why?

That was enough of a link for this Court in Old UGC and for the New South Wales Court of Appeal in Chubb.  The High Court in Insight clearly did not think it was so strange that they raised it, because it was raised as a potential unstated assumption.  Can I just give your Honours a reference to Chubb at [202] where - I will just read the passage:

It is difficult to see why the New South Wales legislature would not have intended to protect any person who properly brings a claim in New South Wales, even where that claim is governed by some other law, given the focus in s 6(4) upon the powers of the court in the s 6 enforcement process.

We would submit that likewise, in the case of Part 2 of the Civil Liability Act, the fundamental legislative purpose is to protect defendants in New South Wales courts, typically New South Wales‑based defendants, and it is difficult to see why the New South Wales legislature would not have intended to protect any person who was a defendant in that court where the claim was governed by - even where the claim was governed by some other law, given the focus of section 16 as being on the board of personal injuries damages in New South Wales.

The Court of Appeal in Chubb also noted at [172] that if the application of the section turned on whether the contract was breached or the loss or damage occurred in New South Wales, that would mean the application of section 6 would turn on something entirely fortuitous and capricious, a point which could be made here as well.  In other words, the fact that the New South Wales tourism operator is being sued in respect of an injury that occurred overseas or an event that occurs overseas does not undermine the concern the legislature had to protect such a person from such claims.

Finally, in connection with the “beacon to litigation” argument, that is a rather odd one for the plaintiff in this case. It is the party that wishes to interpret this legislation on a basis that there is no cap that is applicable to this particular cause of action, whereas there is apparently a cap that applies to every other. That is because it sues in respect of a federal statute in respect of circumstances or an event that occurred overseas. It does not prove the foreign law. That means, we would submit, that the local law applies, section 16 operates and for that reason alone, the appeal should be dismissed. Those are our submissions.

KIEFEL CJ:   Any reply, Mr Gleeson?

MR GLEESON:   Your Honours, the parties have joined issue on the Baltic Shipping point. I do not need to mention that. On the ground 2 question, in terms of the central focus of the legislation, could I go back to the extrinsic materials which are rather helpful - they are in volume 6, firstly, at tab 50, page 1907. That is the second reading speech by Mr Carr for stage 1, which introduced Part 2 and section 16. You will see in the rather pointed language of Mr Carr in the first two paragraphs the essential purpose was to protect our community, our operators, our local communities, our local government representatives. So the focus was very much, we would submit, on the lex loci delicti.

KIEFEL CJ:   What about the approach of the courts to public liability?

MR GLEESON:   In these cases, protecting our beaches, our parks, our roads and our schools being free from unrealistic standards.

EDELMAN J:   Our operators and our tourism providers would be providers and operators, as the respondent says, that puts them beyond the borders of New South Wales.

MR GLEESON:   And to the extent they operate beyond the borders, they voluntarily submit themselves to the legal regimes of the other State, or of the foreign country.  And there is nothing expressed in here that we are trying to give them the benefit of these rules, when they choose to take on that further activity.

Could I then show you in the preceding tab, which is Mr Carr’s speech later in the year for the second round of changes, at page 1904.  After mentioning the Ipp Report, Mr Carr was pleading for national consistency, and recognising that other States would need to come on board with similar reforms in order to achieve an overall gain for Australia.

And the recognition there, we submit, was that if wrongs are occurring in Queensland, for instance, one would need the Queensland law to bring in similar provisions to New South Wales.  And that approach, finally on this topic, of the lex loci delicti is consistent with the Ipp Report approach which is at tab 55, page 2024.

The top paragraph, which is the end of 13.10, and 13.14, both proceed on the basis that under existing law:

personal injury claims are decided according to the law of the State or Territory in which the negligent conduct occurred.

And therefore there was going to be a need either to have uniform or consistent legislation across the States and Territories on the assumption that the lex loci delicti would continue to be the hinge for each State Parliament.

GAGELER J:   Mr Gleeson, insofar as a claim is brought in contract, how does your analysis apply? The claim of the part says section 11A(2) applies to a claim for damages brought either in tort or in contract.

MR GLEESON: Our answer to that is that the central focus of Part 2 are tort claims, claims for fault as they are described in the long title that Justice Nettle referred to leading to personal injury.

NETTLE J:   It would still be the law of the place where the acts or omissions constituting the breach of contract took place.

MR GLEESON: That would be the hinge. It would be the same; contract is included for anti‑avoidance purposes but it would not alter the scope of the Act. If it occurred in New South Wales, the wrong, then the provisions apply; if not, they do not. Your Honours, could I say one matter then on ground 1. Could I perhaps ask your Honours to go back to volume 1 of the authorities to section 275, page 335. The central argument of the respondent is that you should read section 275 as picking up any State or Territory law that affects the quantification of the damages in the sense of bringing them down from the measure which would otherwise flow from, for example, section 267(4).

Our responses to that argument are, firstly, it does not really grapple with the distinction between “damage” and “damages” which your Honour the Chief Justice raised this morning, and on that distinction can I give the reference to Ogus which is in the materials at volume 6, 1926, and to this Court’s decision in Mahony v Kruschich 156 CLR 522 at 527. Secondly, it does not grapple with the timing and the conceptual question raised this morning, which is that the liability in terms of the legal responsibility for the wrong, will arise as soon as there is a failure to comply with the guarantee or a breach of the term of the contract.

From that moment, assuming the wrong has sounded in damage, there will be an entitlement to a remedy for that wrong. It is at that point, we submit, section 275 cuts in and limits or precludes both the liability and the:

recovery of that liability –

to emphasise the words. What then occurs is a subsequent stage in the process where the court is engaged in the assessment of damages, damages not damage, the end result of which will be the court produces an award. Section 16, and the whole of Part 2, is directed to that stage of the assessment of the damages.

What then occurs is that section 275 is not concerned with that process of damages, but it operates to say because the liability has been limited and the recovery has been limited, at the end of that process that limitation, if relevant, will be reflected in the court’s ultimate award. And at that stage, as your Honour raised, a second form of liability is in issue, the liability created from the award for damages.

Now, if the assessment produces a figure below the limitation on liability then the assessment will simply be reflected in the award.  If the assessment produces a figure higher than the limitation then the ultimate order of the court must reflect that limitation on liability.  So, in that sense, at the stage of the damages award the underlying limitation on the liability may have work to do in the court’s ultimate order.  That, we submit, is the way the provisions work.

Some of your Honours raised some of the other provisions; for instance, your Honour Justice Gordon asked about section 274, what is happening with that provision, and that links back to section 259(4) and to section 271.  Even within section 274 we can see the same distinction involved because it speaks of the liability:

to pay damages . . . for [the] loss or damage suffered by the consumer –

So we see there the distinction between the loss or damage at which point the liability has arisen, and we see then at the end of a stage of assessment a liability to pay damages.

Your Honour Justice Gageler asked about section 278, and in that provision – which creates the cause of action – there is a liability:

to the consumer for the amount of the loss or damage.

So, again, we see the distinction between the loss or damage and the process of awarding the damages which will end up with a damages award.

Your Honours, there are just two other provisions I wish to mention finally. The first is in section 87AB of the old or it is now section 137 which is on page 172 to 173, and this perhaps illustrates the difference between the parties. Mr Williams embraces section 137 and says that is what section 275 is talking about, this concept of liability being limited. We agree section 275 is talking about this concept of liability, but this concept of liability is a world away from the Civil Liability Act.  What is limited is the occupational liability and the definition of that in subsection (5) speaks of the civil liability in the sense I have put our submissions.

Your Honours, the final provision I wish to refer to was in Part VIB, which commences at page 72, we have the provisions I put the argument about this morning which was let go to the keeper by Mr Williams. When your Honour looks, for instance, at section 87L, that is the analogue for section 16 of the CLA. Within the same federal statute, when the Parliament did come to pick up damages rules it did not speak in terms of limiting or precluding liability, it spoke in the terms your Honour the Chief Justice put to Mr Williams of giving a direction to the court as to how it is to award the damages. So within the very Act we seek the distinction between limiting liability and rules governing the way in which the court awards damages, and that distinction, we submit, helps inform section 275.

May it please the Court, they are our submissions.

KIEFEL CJ:   The Court reserves its decision in this matter and adjourns to 9.30 am tomorrow for pronouncement of orders and otherwise to 10.00 am.

AT 4.14 PM THE MATTER WAS ADJOURNED