supreme court of new south wales common law div …
TRANSCRIPT
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SUPREME COURT OF NEW SOUTH WALES
COMMON LAW DIV PROCEEDING
MOORE v SCENIC TOURS PTY LTD (‘SCENIC’)
PLAINTIFF’S FINAL SUBMISSIONS
INDEX
1. OVERVIEW 3
2. LIABILITY ISSUES ASSOCIATED WITH CONSUMER GUARANTEES 4
2.1. Application of consumer guarantees 4
2.1.1. ‘Consumers’
2.1.2. ‘Services’
2.1.3. Reliance upon Scenic
2.1.4. Making known the desired purpose or result
2.1.5. Extra-territoriality
2.2. The experience on the cruises 9
2.2.1. What happened on each cruise?
2.2.2. What did Scenic know before embarkation?
2.2.3. How did Scenic respond?
2.2.4. How should Scenic have responded?
2.3. Non-compliance with consumer guarantee 41
2.3.1. The principles of the purpose guarantee
2.3.2. The principles of the result guarantee
2.3.3. The exceptions in s 61(3) of the ACL do not apply
2.3.4. Non-compliance with the purpose and result guarantee
2.3.5. The care and skill guarantee
2.3.6. Non-compliance with the care and skill guarantee
2.4. Exclusions and limitations on liability do not apply 47
2.4.1. The proper construction of the clauses
2.4.2. Section 64 of the ACL
2.4.3. Unconscionable conduct
2.4.4. Unjust terms
2.4.5. Unfair terms
2.4.6. Remedies for unconscionable conduct and unfair terms
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2.5. Responsibility for loss 58
2.5.1. Scenic’s service providers
2.5.2. The exceptions in s 267(1)(c) of the ACL do not apply
2.6. Loss arising from non-compliance with consumer guarantees 62
2.6.1. Causation
2.6.2. Non-compliance could not be remedied
2.6.3. ‘Major’ failure to comply
3. QUANTUM OF DAMAGES 67
3.1. Heads of damages 67
3.1.1. Meaning of ‘foreseeable loss
3.1.2. Availability of damages for disappointment and distress
3.2. Methodology of loss of value 69
3.2.1. Background to admissions
3.2.2. Admissions as to how defendant calculated loss of value
3.3. Amount 72
3.3.1. Section 267(3)
3.3.2. Section 267(4)
4. RESTITUTIONARY ACTION FOR MONEY HAD & RECEIVED 73
4.1. Basis for recovery 73
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1. OVERVIEW
1. In its short opening written submissions dated 20 April 2016, the plaintiff set out its
position in respect to each of the identified common issues. Without repeating that
statement, those answers are also adopted in this document.
2. For the reasons that follow, the pivotal findings on liability that should be made are as
follows.
3. First, the plaintiff and group members made known to the defendant that the
recreational experience that they sought was a tour, by cruise, along European waters.
This experience included, along the way, the enjoyment of certain landmarks as well as
luxurious dining and accommodation centred on the cruise ship.
4. Secondly, albeit in varying degrees, the plaintiff and group members experienced
significant or substantial disruption to their tour by cruise.
5. Thirdly, in respect to all subject cruises, the defendant knew, or ought to have known,
that there was a significant risk of substantial disruption to the cruising component of
the tour.
6. Fourthly, properly construed, Scenic’s terms and conditions did not entitle Scenic to
unilaterally (and without any liability) substitute a different touring experience where
that would substantially diminish or negate the purpose or result which the plaintiff and
group members sought when acquiring Scenic’s services.
7. Fifthly, and alternatively to the last proposition, if Scenic’s terms and conditions did
have that effect, and the terms were not otherwise avoided by s 64 of the Australian
Consumer Law, then such terms would be unjust and/or unfair.
8. Sixthly, the consumer guarantees in ss 60 and/or 61(1) and (2) of the Australian
Consumer Law were not complied with by Scenic.
9. Seventhly, Scenic’s retention of the full purchase price paid for by passengers who
received a substantially downgraded or diminished touring experience constitutes
unconscionable conduct in circumstances where: (a) Scenic knew that its passengers
wished to enjoy a luxurious cruise experience; (b) Scenic knew, or ought to have
known, that there was a significant risk of substantial disruption to the cruising
component of the tour; and (b) passengers had no understanding (and Scenic took no
steps to see that they understood) that the application of Scenic’s terms and conditions
would permit such retention even in the face of that knowledge.
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2. LIABILITY ISSUES ASSOCIATED WITH CONSUMER GUARANTEES
2.1. Application of consumer guarantees
10. The consumer guarantees under the Schedule 2 of the Competition and Consumer Act 2010
(Cth) (the ‘ACL’) are not contractual obligations, but obligations imposed by statute,
concerning which s 267 provides a statutory remedy2.
2.1.1 ‘Consumers’
11. This is relevantly defined in s 3(3) of ACL, where:
a. The amount paid for the services does not exceed $40,000; or
b. The services were of a kind ordinarily acquired for personal, domestic, or
household use or consumption
12. By s 3(10), a rebuttable presumption applies that a person who acquires services alleges
that he or she is a consumer.
13. Although the matter was left in issue in the Defence, there is no serious suggestion that
Mr Moore is anything other than a ‘consumer’ for the purposes of the ACL.
2.1.2 ‘Services’
14. The word ‘Services’ is defined in the ACL in s 2 to include:
(a) any rights, benefits, privileges …. to be provided, granted or conferred in trade or
commerce;
(b) (without limiting (a)), the rights, benefits, privileges that are, or are to be
provided, granted or conferred under:
….
(ii) a contract for or in relation to the provision of, or the use or enjoyment
of … recreation..
It is noted that by this definition, ‘services’ need not be actually supplied pursuant to a contract.
This takes on some significance when considering the defendant’s argument concerning s 275 of
the Australian Consumer Law (see section 3.1.2 of these submissions below).
15. Scenic broadly functioned as a tour operator. It agreed to provide recreational services
to the plaintiff and group members by dint of a tour, by cruise (and associated luxurious
accommodation and dining), along European rivers, stopping at certain destinations.
The character of the services supplied is disputed, not the least in the sense of
identifying when the services ceased to be supplied.
2 Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWCA 219 at [77]
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16. Scenic initially appeared to contend (pars 4(b) & (d) of the Defence) that the services
ceased after the bookings were made by the passengers; that its role was simply to
“arrange” the tour. Such contention would be wrong, in that Scenic’s functions
included, but was not limited to, helping to arrange the tour bookings. Scenic’s initial
contention is contrary to the content of the powers that were exercisable by Scenic in
accordance with the Terms and Conditions3. Clauses 2.9 and 2.10 deal (respectively)
with the circumstances in which the tours could be cancelled or delayed after bookings
had been received, but prior to the embarkation of cruises. Moreover, to adopt the
extremely narrow construction that Scenic’s services ceased after the passengers had
made their bookings would relegate Scenic to a position that it was no different in
substance to the other intermediaries (eg travel agents, like Harvey Bay Travel) who
assisted passengers to book and pay for the tours
17. The defendant’s short outline of submissions revealed some shift: Scenic’s position was
now that the only services that it was required to perform were during the tour. In this,
Scenic relies upon Clause 2.7 of the terms and condition, which plainly indicates, by its
terms, that Scenic’s obligations extend beyond the point when the tour was booked.
But this position is also an incomplete expression of Scenic’s obligations. Clause 2.7 is
titled what are Scenic’s “Tour” obligations. It is not a statement that expressly or
impliedly limits the services that Scenic was required to perform before the tour
commenced. As has been noted, cll 2.9 and 2.10 are indicative of obligations to
perform prior to the embarkation of a cruise.
18. The contractual provisions setting out Scenic’s powers under the terms and conditions
evince a monitoring role for Scenic; of determining, for example, whether or not a
cruise could proceed at all (cll 2.9-2.10). It also had a role in managing passengers: for
example, explaining why there needed to be variations, or, indeed, why there needed to
be cancellations or delay of cruises, and generally adjusting passengers’ expectations.
Thus, Scenic had staff who, the night before an embarkation, gathered a group together
to explain changes to itineraries4. In several instances, Scenic sent out letters to
passengers on the eve of a scheduled departure, notifying them of changes of itinerary
and, even, changes of the booked ship. Given the nature of the particular recreational
experience: cruising along European waters, it is natural that the tour operator’s services
extend to dealing with the exigencies of cruise travel.
19. Scenic contends that clause 2.7 has the effect that Scenic was entitled to merely supply
the cruise where it could, if river conditions allowed it, but if that did not occur, its
obligation was merely to provide the best alternative tour to provide as many of the
tourist attractions in the itinerary as possible. This is a flawed conception of Scenic’s
obligations and the services it was required to provide. Firstly, the ‘terms and
conditions’ are not to be viewed in a vacuum, but in a context (known to passenger and
tour operator alike) which included both: (a) the representations made by Scenic as to
benefits (luxurious and relaxing cruise travel, ‘five star’ accommodation and dining)
3 These appear at Ex P8 (CB 4/1235) for Scenic Tours and P9 (Ex CB4/1343) for Evergreen Tours. Although there are some differences, these are insubstantial in the context of the issues in this proceeding. Henceforth reference will be made to the Scenic terms and conditions. 4 For example, see Moore, par 23 (CB 3/550)
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promoted in the travel brochure (in which the terms and conditions appear) as well as
(b) the backdrop of consumer guarantees applicable to the services5. At the time these
services were performed, Scenic’s obligations under the contract were affected by
statute6, even if the statutory obligations were not part of the contract. These consumer
guarantees cannot be effectively ousted by the contractual terms (s 64 of the ACL). Put
another way, one would not construe cl 2.7 in a way that its application would be
avoided by the statute.
20. Further, the scope of the obligations does not depend entirely upon Scenic’s subjective
perception as to how it should respond. Clause 2.7 speaks ultimately of “appropriate”
alternatives. What is ‘appropriate’ in this context includes consideration of whether the
alternative/s being considered by Scenic are reasonably fit for the purpose for which
they are conferred: or put another way, whether they would amount to compliance with
Scenic’s statutory obligations in ss 61(1) and (2) of the ACL. It is not simply a case of
what Scenic subjectively regards as ‘appropriate’. Thus to take the example of one of
the hypotheticals put to Mr Cairncross7, it may well have been appropriate for Scenic to
decide that, in the event that one of its cruises had enjoyed smooth sailing for a period
of a few days, until it suddenly came up against an unexpected lock closure, to utilise (if
it could), disembarkation to a nearby port, use of a bus to transport passengers to
another ship on the other side of the river; with the obstacle overcome in a matter of
hours. It is another thing, however, when the tour operator has notice of multiple
closures along a river, or rivers, along a cruise path and the obstacles presented to its
ships that had previously embarked, to take the unilateral decision to regularly bus
passengers to landmark excursions ashore over a substantial number of days in the
belief that it was doing its best to adhere to a passenger’s itinerary.
21. The unreasonable, if not absurd, result of Scenic’s interpretation of its obligations was
brought into sharp focus when its Senior Counsel, in response to a question from the
Court, argued that the terms and conditions were such that, if faced with the
hypothetical situation that no part of the tour could be conducted by cruise (because of
river conditions), Scenic could substitute coach travel in its entirety8. This, of course,
would be a complete negation of the purpose and result guarantees and the benefits
held out in the tour brochure. So, a litmus test for compliance with cl 2.7 should be that
a discretion upon Scenic is not properly exercised to such extent that the proposed
‘alternative’ to be taken would have the effect of substantially diminishing the result or
purpose of the services to be provided.
22. Scenic also contended that it had no obligation to cancel (or delay) a tour after
embarkation. Whilst it is true that there is no express provision to that effect, the more
relevant point is that there is no express provision which would fetter Scenic’s ability to
cancel a cruise after embarkation. In this, apparently, Scenic reads down cl 2.7, due to
5 The existence of the consumer guarantees is implicitly acknowledged in cl 2.15 of Scenic’s terms and conditions (CB 4/1235) 6 For a recent illustration of contracts being construed against a backdrop of statutory provisions, see Victoria v Tatts Group Ltd (2016) 90 ALJR 392; [2016] HCA 5 7 T 117 8 T 37.42
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circumstances outside of its control, which substitutes a promise to exercise reasonable
endeavours to “provide or arrange appropriate alternatives” where Scenic was unable to
provide the tour in accordance with a passenger’s itinerary. But neither the text, nor
context, indicates that the expression ‘appropriate alternatives’ is to be narrowly
construed. Where it became apparent that a cruise which had already embarked was, or
would continue to be substantially disrupted, cl 2.7 was broad enough to indicate that
Scenic had it within its power to cancel the tour and offer refunds9, or future credits to
further cruises at a later point in time. At any rate, cl 2.7 cannot overcome the content
of the statutory guarantees in s 61 and allow a tour operator to effect whatever
alternative it subjectively deems to be appropriate if that alternative does not comply
with the requirements of the statute.
23. In summary, Scenic agreed to supply services in the provision of recreation, by river
cruise along European rivers. This required it to assist with arrangements for the
bookings and, up to and beyond the point of embarkation, to continue to monitor
whether passengers were likely to experience, were experiencing, and were likely to
continue to experience, a relaxing recreational experience by cruise. Where it became
apparent that this was not likely to occur, or was not occurring, it was required to
properly manage the situation for its passengers, such as by putting in place alternative
arrangements, even if that meant that the recreational experience was to be deferred
until a later point than that which had been originally scheduled; or, at least, ensure
passengers’ would receive the money’s worth for what they had lost.
24. These services were provided in trade and commerce: they were integral to Scenic’s
commercial operations.
2.1.3 Reliance upon Scenic
25. Section 61(3) of the ACL effectively creates a (rebuttable) presumption that the
purpose and result guarantees apply unless a consumer did not rely upon the supplier’s
skill or judgment or it was unreasonable for the consumer to so rely upon the supplier’s
skill or judgment11.
26. Following the defendant’s late amendments to its Defence12, which puts reliance in
issue, the Court is no longer in a position to decide whether the presumption is
rebutted in the case of each and every group member; although it can decide whether it
was rebutted in the instance of the plaintiff and in the circumstances of the group
members called to give evidence.
27. It was not put to the plaintiff, or any of the other group members (nor, of course, Mr
Childs) who gave evidence, that they did not rely upon Scenic’s exercise of judgment. It
follows that the presumption of reliance was not rebutted in any of their cases.
9 Ex P24 (CB 5/1776, 1777); Ex P38 (CB 6/1958) 11 This exception does not apply to the care and skill guarantee in s 60 of the ACL. The current position reflects what occurred under the former Trade Practices Act 1974 (Cth) where the implied warranties concerning purpose and result in s 74(2) were subject to the exception but the implied warranty in s 74(1) was not. 12 Pars 13(c) & 14(c)
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28. As an objective matter and, in view of the circumstance that the passengers only had
contractual arrangements with the defendant, and that those arrangements envisaged
the monitoring and management functions referred to above (including by the cruise
director on the ship – an employee of the defendant), it is difficult to conceive that the
passengers would not rely upon Scenic to make decisions, in particular, as to whether
cruises should proceed at all, or if disrupted, what should thereafter occur.
29. Noting the specific denial of actual reliance in Scenic’s Defence (as amended), there is
no suggestion in the pleading that it was unreasonable for the plaintiff or other group
members to rely upon the defendant’s skill and judgment if, in fact, he or they did so
rely.
2.1.4 Making known the desired purpose or result
30. Mr Moore (and each other group member) impliedly made known that the particular
purpose and/or result they hoped to achieve in acquiring Scenic’s services was a
relaxing experience, derived from a tour by cruise (with associated luxurious dining and
accommodation facilities) to certain identified European destinations (identified with
reference to certain landmarks). The implication arises from the fact of acquisition, as
well as the defendant’s own description of what is acquired13. In this context, the
brochures that passengers relied upon in deciding to make the tours depicted a relaxing
holiday by cruise and other services on board (viz accommodation and dining).
Passengers did not pay for a tour to the European destinations by other means (train or
coach)14.
31. Scenic Tours (Evergreen) admit that they knew of the wish of the plaintiff and group
members to experience travel and accommodation by cruise15. It could hardly contend
otherwise, given its promotional brochure which extolled tour with these benefits.
2.1.5 Extra-territoriality
32. By s 32(1) of the Fair Trading Act 1987 (NSW), the ACL applies to persons16 carrying
on business within NSW, or bodies corporate incorporated or registered under NSW
law.
33. The facts that Scenic carried on business within NSW and was incorporated or
registered under NSW law are deemed to have been admitted as a result of Scenic’s
failure to dispute the facts asserted in the plaintiff’s notice to admit17.
13 Dillon v Baltic Shipping Co (1989) 21 NSWLR 614 at 642A; see also Taperell, Vermeesch & Harland, Trade Practices and Consumer Protection (3rd ed, 1983) [1732], p 829, with reference to the old s 71(2) of the Trade Practices Act 1974 (Cth) 14 Ex P8-9 15 Defence filed 16 December 2015, par 7(b), 8(a) 16 Which also means corporations: Interpretation Act 1987, ss 8(d), (e) 17 CB 1/114-115
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34. At any rate, the ACL extends to conduct (and other things) occurring or existing
outside or partly outside NSW: Fair Trading Act 1987 (NSW), s 32(2) & s 5A. In this
case, certain services were to be performed outside of New South Wales.
2.2 The experience on the cruises
2.2.1 What happened on each cruise?
35. The evidence relied upon by the plaintiff is generally an amalgam of two things: first,
indications (based upon the defendant’s internal email correspondence and the cruise
directors’ tour notes) as to what was lost, primarily, in sailing days on the subject
cruises. There is a caveat to the reliance that the Court should place on the tour notes.
They were plainly inserted by the cruise directors, however it is not always (or even
often) apparent what the source of the information was. Without it, the chronicle is
limited in terms of its reliability as a statement of fact. Sometimes what is expressed
amounts to bare opinion, such the opinion that an event is ‘unexpected’ or had
occurred ‘suddenly’. This type of evidence is inherently self-serving – cruise directors
have a natural sympathy towards their employer - and should be accorded no weight
unless the basis for the opinion is identified: there is no indication anywhere in the tour
notes of the qualifications or level of experience of the cruise director to make such
opinion. Further, at least one instance, there was an occasion where lines of
communication were blurred: where there was an inconsistency between what a cruise
director had said and what Lucas Sandmeier had reported18.
36. Scenic could have called the real decision-makers – Messrs Brown and/or Moroney – if
it wanted to put some explanation for the decisions that were taken; in preference to
hiding behind the unsourced opinions of its cruise directors. For its own unexplained
reasons it did not do so. The real probative value of the tour notes from the cruise
directors is where they contain admissions.
37. Secondly, there is testimonial evidence of group members on some of the cruises which
delineates the natural consequences, or ramifications of the lost cruising days. This
essentially consists of bus coaches to land excursions and the use of hotel
accommodation on-shore. The Court is invited to infer that the experience of these
sample group members (which is broadly similar) would have also broadly been the
experience of group members on other cruises, to the extent that those cruises also had
a diminished number of sailing days.
The days for which there were ‘alterations’ or ‘variations’
38. The defendant’s documents indicate its own internal assessment of the ‘days lost’ due
to the river levels and conditions. The references in the table below are (generally) tour
itinerary variations prepared by the defendant.
18 Ex P25 (CB 5/1794)
10
Cruise Ship scheduled to embark
Ship which actually embarked
Days lost
Reference
FRCR190513.1 Scenic Emerald Scenic Emerald 10 Ex P RB-119
STC200513.2 Scenic Jewel Scenic Ruby 6 Ex P27
EGFC250513.1 Amadeus Silver Amadeus Silver 9 Ex P5320
STC270513.1 Scenic Ruby Scenic Jewel 11 CB 2/415-41621 & Ex P5922
STC270513.2 Scenic Sapphire Scenic Sapphire 9 Ex P5523
STC290513.1 Scenic Pearl Scenic Pearl 11 Ex P5524
STC290513.2 Scenic Diamond Scenic Diamond 8 Ex P5725
STC030613.1 Scenic Jewel Scenic Ruby 10 Ex P5526 Ex P DM-127
EGFC080613.1 Amadeus Silver Amadeus Brilliant 8 Ex P6028
STC100613.1 Scenic Sapphire Scenic Diamond 1 Ex D7129
STC100613.2 Scenic Ruby Scenic Sapphire 6 CB 3/531-54130
STC120613.1 Scenic Pearl Scenic Ruby 1 Ex D5431
STC120613.2 Scenic Diamond Scenic Pearl 2 Ex P4332
39. The table also reveals that a measure of the defendant’s internal dislocation arising from
the conditions was that for most of these cruises, the defendant substituted a different
vessel, the so-called ‘ship swap’. Whatever the merits of this option for some
passengers, for those who had certain physical incapacities, and valued a cruise tour
partly for the benefit of leaving luggage in one place for an extended period, this was
not especially appealing, even if they put up with it.
40. More detailed descriptions of the disruption to cruise scheduling, both documentary
and testimonial, in respect to specific cruises, follows.
FRCR190513.1
41. On 20 May 2013, Ms Yyvonne de Sera, the tour director, recorded informing
passengers about the water situation and reported being informed by the ship’s captain
19 CB 2/499-501 20 Ex P53 (CB 6/2127-2128) 21 Part of Annex B to Holgye, 11/5/15 22 Ex P59 (CB 6/2255-2256) 23 Ex 955 (CB 6/2157-2158) 24 Ex P55 (CB 6/2149-2151) 25 Ex P57 (CB 6/2182-2183) 26 Ex P55 (CB 6/2152-2153) 27 CB 3/813-814 28 Ex P60 (CB 7/2853-2855) 29 Ex D71 30 This is Annex K to Peattie, 15/5/15 31 Ex D54 (CB 6/2093-2098) 32 Ex P43 (CB 6/1989A)
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that due to high water levels, the dock in Tournus was under water and, accordingly,
the ship would sail directly to Macon33. This occurred before the embarkation of the
cruise. It was noted that embarkation occurred whilst the ship was docked in an ugly
industrial harbour 34.
42. The First Captain of the Emerald reported that from 22 to 30 May 2013, the ship was
forced to stay in the Saone area during this period due to high water35.
43. A document discovered by Scenic indicated that there was an estimated increase of bus
travel of nearly 11 hours for this cruise beyond what was scheduled36.
44. Mr Britten gave evidence of his experience on the tour that commenced on 19 May
2013, featuring a cruise along the ‘South of France’ route. By the schedule the cruise
was scheduled to embark at Chalon-sur-Saone and disembarked at Tarascon/Avignon.
45. On the night of 19 May 2013, Mr Britten recalls that Scenic’s cruise director, Yvonne,
spoke of Scenic having experienced difficulties due to the weather.
46. On 20 May 2013, Mr Britten and his wife travelled to Paris in heavy rains, when they
boarded a train for a day journey to Dijon. After lunch, they took a coach from Dijon
to Chalon-sur-Saone, to take them to the dock for boarding.
47. On 21 May 2013 some land excursions were enjoyed, but the cruise did not proceed, as
was scheduled, to Tournus37.
48. Some land excursions (by bus) were experienced on 22 May 2013, before the ship
travelled to Macon.
49. On 23 May 2013, the ship was scheduled proceed to cruise down the Rhone River near
Macon39. No sailing occurred on 23 May 201340.
50. Between 24 and 26 May 2013, Mr Britten experienced further land excursions which
involved significant time on coaches41.
51. Later on 26 May 2013, Mr Britten recalled being informed by the cruise director that
passengers would need to pack their bags to leave the Emerald and travel to another
vessel moored down the river42.
33 Ex P13 (CB 5/1601) 34 Ibid 35 Ex P17 (CB 5/1739) 36 Ex P35 (CB 6/1935) 37 Britten, pars 24-26; (CB 2/424) 39 Britten, pars 33-34; (CB 2/424) 40 Britten, par 34 41 Britten, pars 37-58; (CB2/425-427) 42 Britten, pars 59-60; (CB 2/427-428)
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52. On 27 May 2013, Mr Britten recalled trips to Valance and Arch by coach travel. He
estimated that 10 hours were spent by coach travel43.
53. There were further land excursions between 28 and 30 May 201344, which again
featured extensive coach travel, until the ship commenced cruising in the evening. This
was the second day of cruising over the previous 10 days45.
54. The next day Mr Britten and his wife were looking forward to the scheduled trip to the
La Camargue National Park however, once informed of the extent of the bus travel to
and from that destination, and having regard to the extent of coach travel already
endured, they declined to go46.
55. Soon after his return home, Mr Britten prepared a detailed factual summary of his
experience47. The document chronicled his experience of extensive and uncomfortable
bus travel and perception of sub-standard hotel accommodation. Eventually, Mr Britten
listed his complaints in correspondence with Scenic on 24 July 201348.
56. Scenic identified variations to all but 3 of the scheduled 14 days49. Those variations
repeatedly listed coach excursions and accommodation in hotels.
57. It was put to Mr Britten, somewhat vaguely, that Scenic representatives had explained
to passengers that the cruise was being disrupted because of “sudden” and
“unexpected” events along the river system50. No evidence was adduced by Scenic to
provide any basis for the proposition that the events were sudden or unexpected.
STC2001513.2
58. This is the first of the 12 Jewel of Europe cruises, along the Budapest to Amsterdam
cruise path.
59. The plaintiff accepts that notes prepared by the cruise directors on the Scenic and
Evergreen cruises embarking on 11 May 2013 (from Budapest), on 13 May 2013(in
both directions) and 15 May 2013 (in both directions) indicated that those cruises had
proceeded without alternation.
60. On 26 May 2013, Patrick Doyle, the cruise director, recorded that River Main was
closed, with high water threatening the program. Already a tour was cut short because
43 Britten, pars 62-71; (CB 2/428-429) 44 Britten, pars 72-94; (CB 2/429-431) 45 Britten, par 95 46 Britten, pars 97-100 47 Britten, pars 104-105; (CB 2/485-488) 48 Ex P RB1 (CB 2/502-504) 49 Ex P RB1 (CB 2/500-501) 50 T 151.31
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of a “high water issue”51. The cruise director notified Lucas Sandmeier that according to
the ship’s captain there was no chance for the ship to move with water level rising52.
61. The next day, Doyle also noted that the cruise was being weather affected.53 Although
cruising from the opposite direction (from Amsterdam), it is pertinent to note that on
27 May 2013, Marin Dimow recorded a variation for that cruise, as a result of rising
river levels on the Danube54.
62. Between 28 and 31 May 2013, there were partial, if not complete closures on the Main
River, at Steinbach, Wurzburg and Schweinfurt55. The ship was still stuck in Bamberg.
EGFC250513.1
63. This ship, the MS Amadeus Silver, embarked (from Amsterdam) on 25 May 2013.
64. By 28 May 2013, tour notes for the cruise indicated that due to high water at a bridge
after Frankfurt, the ship was about to stop sailing58.
65. On 29 May 2013, by 8pm, Wurzburg was closed due to high water and the Captain of
the ship decided to dock the ship at Neustadt60.
66. On 30 May 2013, Alexandra Graeff reported that the water level on the Main had
increased again since yesterday. The ship was on its way to Wurzburg, but it was not
clear if it could be reached. On a worst case scenario (advised to it by Luftner), the ship
could be stuck in Wurzburg until Tuesday, 4 June 2013, as it would not be able to pass
the bridges.
67. By 31 May 2013, the ship was stuck just before Wurzburg – it could not pass the last
bridge63.
68. On 1 June 2013, a 2 hour drive to ‘Nurnberg’ was offered to passengers. It was raining
all the time64.
69. On 2 June 2013, a bus trip was provided to Salzburg. The longest route had to be taken
for one of the buses because it was the only one not under water65. The cruise director
recorded seeing flooded fields, forests in a pool and houses in the middle of lakes66.
51 Ex P27 (CB 5/1816) 52 Ex D16 (CB 5/1632) 53 Ex P27 (CB 5/1816) 54 Ex D29 (CB 5/1809) 55 Ex P52 (CB 6/ 2109) 58 Ex D66 60 Ex D66 63 Ex D66 64 Ex D66 65 Ibid. 66 Ibid.
14
70. On 4 June 2013, the cruise director arranged a land based excursion to the abbey at
Melk, however observed that a lot of guests should not be on a bus tour and some
should not be on walking tours67. By the next day, 5 June 2013, many guests on this
cruise were reported as getting really sick68.
71. As at 6 June 2013, the high water levels on the river Main and localised flooding had
made navigation impossible for the ship69.
STC270513.1
72. Mr Holgye and Mr Cairncross gave evidence in respect to this cruise, scheduled to
embark on Scenic Ruby on 27 May 2013 at Amsterdam. This cruise proceeded without
disruption until 30 May 2013.
73. Mr Holgye recalled70 that on 28 May 2013, as the ship was sailing from Amsterdam to
Dusseldorf, he observed large, mature trees growing out of the water: a tell-tale sign of
rising river levels. On the same day, he recalled a conversation with the ship’s cruise
director, Kurt, in which he wanted to take up the offer to sit in the wheel house with
the captain. He was told by Kurt that this was not possible because the ship’s captain
was dealing with very strong currents and the rising water levels. Kurt later referred to
rising river levels in the presence of the ship’s company later that evening. In answer to
this indication, one passenger sought assurance that the rising river levels would not
mean a “glorified bus tour” with the cruise director saying “definitely not. We just need
to make some adjustments”71. Mr Holgye was not challenged on the content of this
conversation; though it was suggested it occurred a few days later72. Mr Holgye’s
estimate of timing of the conversation should be accepted: it is supported by what is
contained in a letter of complaint he sent to Scenic on 23 July 201373. No one was
called by Scenic to contradict the timing of this conversation.
74. The ship made its way from Dusseldorf to Cologne on 29 May 2013. Mr Cairncross
recalled that this was the first tour he experienced. He and his wife got off the boat and
it was very wet and cold to proceed with an outdoor excursion in the circumstances74.
75. On 30 May 2013, however, the ship was unable to cruise to Rudesheim, but needed to
dock in Mainz75. That day, passengers were required to undergo a ship swap to the
Scenic Jewel, at that point in Bamberg,76 to continue to cruise up the rivers.
67 Ibid 68 Ibid 69 Ex P36 (CB 6/1950) 70 Holgye, pars 23-24, CB2/ 400 71 Holgye, pars 26-28 72 T 135 73 Holgye, CB 2/410 74 T 128-129 75 Holgye, pars 32-33 76 Holgye, par 34
15
76. Mr Holgye, and other passengers, arrived at Bamberg at 6pm to board the Scenic Jewel.
After lengthy bus tours, this was very debilitating to Mr Holgye, who suffered from the
disability of polio77.
77. The defendant suggested that on 31 May 2013, a cruise director had told passengers on
this cruise that it was because of unexpectedly high river levels that the cruise could not
cruise to Mittenburg78. The defendant did not, however, adduce evidence to support the
proposition that the high river levels were, in fact, ‘unexpected’.
78. On 31 May 2013, Scenic organised a 4 hour bus trip to Bamberg where it was expected
that passengers would embark upon the Scenic Jewel79. Mr Cairncross was told that the
conditions were such that there was no way that the ship could cruise80.
79. Mr Cairncross’ handwritten notes referred to “pissing” rain on 1 Jun 2013 and noted
that the region was flooded81. The next day, Mr Cairncross’ notes recorded that
passengers were ‘stranded’82. From 1 June to 3 June 2013, Mr Holgye recalled that there
was no cruising and passengers remained stuck in Bamberg. During this period, Mr
Holgye’s wife was ill and opportunities to visit sites in Nuremburg were missed.
80. On 3 June 2013, passengers were put on coaches for scheduled land-based excursions
to Nuremberg. However, that experience was interrupted83. On the evening of 3 June
2013, the cruise director, Kurt described the rivers were the “worst for 500 years” and
he could not confirm whether or not the ship could do any cruising84.
81. On or about 4 June 2013, passengers were bussed to Krems, and were required to
embark on Scenic Sapphire. Mr Holgye described the location as an abandoned
industrial area85. There passengers remained in Krems for at least the next 4 days. Mr
Holgye records extensive bus travel and walking during this period.
82. Mr Cairncross and his wife decided to leave the cruise on 5 June 2013, incurring
substantial expenses in accommodation and travel86.
83. From 5 – 9 June 2013, Mr and Mrs Cairncross made their own way independently,
before re-joining the cruise at Budapest on 10 June 2013, so they could get on with the
final limb of their holiday87.
77 Holgye, pars 38-41 (CB 2/402-403 78 T 125.50 79 T 126.7; see also Holgye, par 42 (CB 2/403) 80 T 126.21 81 Cairncross, Annexure ‘G’, CB 2/376 82 Ibid, CB 2/377 83 Cairncross, pars 39-40; CB 2/357 84 Cairncross, par 41 85 Holgye, par 65, CB 406 86 Cairncross, par 56, also CB 2/385 87 Cairncross, pars 58-60; also CB 2/386
16
84. On 6 June 2013, Mr Cairncross complained to his travel agent about his experience88.
85. As at 7 June 2013, Scenic records indicated that this ship had not been able to sail for
10 days89.
86. On 9 June 2013, Mr Holgye and passengers had to endure a 3 hour coach trip from
Krems to Budapest, where he and his wife finished the trip90.
87. A variation schedule annexed to Mr Holgye’s affidavit indicates the extent to which
cruising was disrupted, and was substituted with successive coach excursions and
relocations, according to Scenic’s own records91. Letters of complaint were sent to
Scenic92.
STC270513.2
88. This ship was scheduled to embark at Budapest on 27 May 2013. On 29 May 2013, the
ship cruised to Vienna99.
89. By 31 May 2013, the cruise director noted that the Melk lock was closed (just as the
ship had arrived in Melk) and it was questionable when the ship would sail again. The
cruise director noted that the ship could not sail onwards: there was high water on the
Danube and the lock of Melk had closed100.
90. As at 2 June 2013, the ship could not sail due to high waters101.
91. As at 3 June 2013, this ship was recorded as being stuck in Krems102. On 3 June 2013,
passengers were informed that they would be disembarking the ship and moving to the
Scenic Jewel in Bamberg103.
92. As at 7 June 2013, this ship had been unable to sail for 6 days104. By 10 June 2013, there
had been 8 ‘unplanned stationery days’105.
93. By 8 June 2013, the passengers were cruising through the Rhine Gorge106. On 9 June
2013 the cruise proceeded to Amsterdam.
88 Cairncross, Annex Q (CB 2/391-392) 89 Ex P45 (CB 6/1999-2000) 90 Holgye, pars 86-94, CB 407-408 91 Holgye, Annex ‘B’ (CB 2/415-416) 92 Holgye, Annex A (CB 2/410-411), Annex C (CB 417-419) 99 Ex D67 100 Ibid 101 Ibid 102 Ex P26 (CB 5/1802) 103 Ibid 104 Ex P45 (CB 6/1999-2000) 105 Ex P46 (CB 6/2002) 106 Ex D67
17
STC290513.1
94. This ship was scheduled to embark at Amsterdam on 29 May 2013.
95. As at 1 June 2013, the ship’s cruise director had recorded that the River Main was
closed due to high water107.
96. As at 7 June 2013, it was recorded that this ship had not been able to sail for 10 days108.
STC290513.2
97. This ship was scheduled to embark at Budapest on 29 May 2013.
98. As at 2 June 2013, the ship’s cruise director had noted that it was not possible to go to
Durnstein110.
99. On 6 June 2013, a coach left from Vienna but between Passau and Deggendorf, the
Regensburg Motorway was closed111.
100. As at 7 June 2013, this ship had not been able to sail for 8 days112. By the next day, the
cruise director had observed that passengers were tired of bus-rides113.
STC030613.1
101. The plaintiff, Mr Moore, and another passenger who is not a group member (Mr
Childs) gave evidence of their experience on the cruise STC030613.1 from Amsterdam
to Budapest. This was the ship earmarked to be undertaken by Scenic Jewel but which
eventually was undertaken by Scenic Ruby.
102. In his affidavit, Mr Moore provided very detailed recollections of his experience. His
account was not seriously challenged in cross-examination. Indeed the thrust of much
of the cross-examination was that he enjoyed the part of the tour which did not involve
any disruption to the cruise component. This was a proposition that had never been
disputed. He was a good witness. He wrote a contemporaneous letter of complaint114.
Mr Childs also sent a letter of roughly contemporaneous complaint on 1 July 2013115.
The Court should have no reservation in accepting his evidence. Mr Childs is not a
group member in these proceedings and his evidence was unchallenged by the
defendant.
107 Ex D68 108 Ex P45 (CB 6/1999-2000) 110 Ex D69 111 Ibid 112 Ex P45 (CB 6/1999-2000) 113 Ibid 114 Ex P DM-1 (CB 3/799-802) 115 Ex P HC-1 (CB 2/337-339)
18
103. Both Mr Moore and Mr Childs, and other passengers on this cruise, were sent a letter
of 1 June 2013. Scenic referred to high water levels being experienced on the river
Main, preventing navigation, noted that the ship that was due to embark (Scenic Jewel)
was not able to be in Amsterdam for the embarkation and foreshadowed a ship swap 116
.
104. Mr Childs recalls being told by the cruise director as early as the point of embarkation
on 3 June 2013, that Scenic was having problems with rising river levels, and that there
would be a ship swap after a few days117. Mr Moore recalls being told by the cruise
director that the Scenic Jewel had been stuck in Bamberg for 8 days due to the river
levels118.
105. The tour proceeded, as scheduled, from 3 – 5 June 2013. As at 3 June 2013, the Main
and Danube rivers were closed altogether with major flooding happening119.
106. On 5 June 2013, it was clear to Mr Moore that when the ship arrived in Cologne, the
river level was too high. On 6 June 2013, the ship only got as far as Marksberg when it
had to go back120.
107. The defendant’s records indicate that, between 5 and 8 June 2013, there were full
closures along the Main River, Danube (German border), Danube (Vienna) and
Danube (Budapest)121.
108. The next morning, on 6 June 2013, Mr Moore noted that the cruise commenced for
only a very short period of time towards the Marksburg Castle. The cruise was unable
to proceed up the Rhine Gorge but, instead, proceeded back to Koblenz. There the
ship became moored between four other boats; 2 on either side (obscuring the balcony
view that Mr Moore and his partner had paid for).
109. After several long and uncomfortable bus excursions for Mr Moore, on the afternoon
of 8 June 2013, passengers were taken to the Scenic Jewel, which had been moored in
Bamberg, an abandoned industrial area, where they remained until 12 June 2013.
Plainly, it was not just the periodical rainy weather which would have given rise to
disappointment122. A further factor was that road excursions were limited (not all could
be attended because of the road conditions) and uncomfortable in view of the weather,
which was both wet and cold.
110. By 7 June 2013, the ship’s cruise director had commented that, so far, more travelling
time had been spent on a bus than on the ship and “these guests hate travelling on a
bus”123.
116 Ex P HC-1 (CB 2/316) 117 Childs, par 22 (CB 2/294) 118 Moore, par 23 (CB 3/550) 119 Ex D27 (CB 5/1796) 120 T 64-65 121 Ex P52 (CB 6/2109-2114) 122 T 70.35 123 Ex D53 (CB 6/2084)
19
111. On 12 June 2013, the ship cruised from Bamberg to Berching, which cruise was
affected by several delays through the locks and bridges. Several planned excursions,
including one to Salzburg (which had particular value to Mr Moore’s partner) were
missed.
112. On 13 June 2013, plans were afoot to undertake a further ship swap in Vienna (on the
Scenic Pearl). Mr Moore did not think his back could withstand an 8 hour bus trip and
it was suggested he take a train to Vienna. This Mr Moore and his partner accepted and
they arrived in Vienna (in Mr Moore’s case) with significant back pain.
113. On 15 June 2013, Mr Moore experienced what he perceived as a rushed trip to
Bratislava, missing museums and shops. The scheduled departure to Vienna was
delayed, which meant that he and his partner spent only one of the two nights there.
114. Mr Childs annexed several photos depicting the high river levels and effects of
flooding: of the Rhine River near Marksburg castle125 (on 6 June 2013), Wurzburg126 (8
June 2013), the Danube River near Bamberg127 (9 June 2013), Regensburg128 (11 June
2013), the Danube River near Passau and river between Passau and Linz129 (14 June
2013), the Danube River near Vienna130 (15 June 2013), and Budapest131 (16 June 2013).
115. Mr Childs was not required to attend for cross-examination. His evidence should be
accepted in its entirety.
116. The defendant’s records corroborate the ship being stuck in Bamberg as at 10 June
2013132 .
EGFC80613.1
117. The cruise director, Herbert Heutter noted that most guests were unhappy and upset
when they arrived at the Novotel hotel conference, prior to embarkation. They were
upset about not having the choice to fly home or continuing to go on the tour,
especially when APT was doing so134.
118. Mr Willems gave evidence of his trip scheduled to embark on 8 June 2013, from
Budapest to Amsterdam. The intention was to embark on Amadeus Silver, but in the
event, the ship Amadeus Brilliant was used from Vienna.
125 Ex P HC-1 (CB 2/317-320) 126 CB 2/322 127 CB 2/323-325 128 CB 2/327-328 129 CB 2/329-330 130 CB 2/331 131 CB 2/333-334 132 Ex P46 (CB 6/2002) 134 Ex D70
20
119. Mr Willems recalled that on the evening of 8 June 2013, after being shown his and his
partner’s room, the cruise director indicated that the ship would be stuck in Budapest
for the first 2 nights. There, for the next few days, the bus tours, including a bus tour
that took passengers to where Amadeus Brilliant was located (moored alongside other
Evergreen ships in an industrial area near Vienna). The flooding around Budapest on 9
June 2013 was significant135.
120. On 12 June 2013, after a bus tour from Vienna to Salzburg, the cruise director had
indicated to Mr Willems that the Amadeus Silver, located in Nuremburg, would sail that
night. It had been a 14 hour bus trip from Vienna to Nuremburg.
121. Despite the promise, on 13 June 2013, planned trips to Durnstein in the Wachau wine
region136, to Linz and the town of Passau and the Cesty Krumlov, did not eventuate.
The ship was docked about 40 kilometres away from the city of Nuremburg.
122. It was put to Mr Willems that on 13 June 2013, the cruise director, Herbert explained
that the closure of the locks, preventing cruising to Regensburg were “unexpected” or
“sudden”137. Whether or not this is what Herbert actually said, it was clearly a case of
the cruise director conveying Evergreen’s view. That did not make the view accurate, or
even reasonable, in the absence of any evidence by Evergreen to explain the basis for
the view. The Court could not determine that the closure was unexpected or sudden.
The better view is that it simply was a foreseeable result of the river conditions. Having
taken the decision to continue with the scheduled cruise (unlike its competitors at the
time), in the context of severe flooding, a closure of the lock should not be regarded as
unexpected or sudden.
123. On 14 June 2013, a walking tour of Regensburg was scheduled as was the sailing along
the Rhine-Main-Danube canal to Nuremburg. Due to the flooding this did not occur.
The defendant’s records confirm that, as at 14 June 2013, the ship could not sail to
Regensburg138.
124. On 15 June 2013, Mr Willems boarded a bus tour into Nuremburg. It was not until
7pm that day that Mr Willems and his partner were able to cruise.
125. The next day, after a walking tour of Bamberg, the ship cruised towards Wurzburg. The
cruise proceeded as scheduled until 22 June 2013.
126. The Court may more comfortably accept the accuracy of all of these accounts in view
of the defendant’s decision not to call evidence.
135 CB 2/265-266 136 Ex P MW1 (See the photo of Melk, as part of this region, at CB 2/269) 137 T 107-108 138 Ex P59 (CB 6/2255-2256)
21
STC100613.1
127. Before the scheduled date of embarkation (at Amsterdam) for this cruise, on 7 June
2013, Scenic notified travel agents for passengers that the Scenic ‘Space-Ship’ would not
be able to sail into Budapest due to high water levels. Clients would be put up in a hotel
for a night and join the ship in Vienna140.
128. Between 9 & 14 June 2013, there were full closures along the Danube German Border,
Danube (Vienna) and Danube (Budapest)141.
129. By 10 June 2013, the Faulbach (along the Main River) was closed. Bamberg to lock
Hausen (along the Main-Danube canal) was closed. Mr Sandmeier recorded that the
Hungarian Government had declared a state of emergency for 3 counties.
130. On 19 June 2013, the water police restrained the cruise at the Jochenstein lock142. The
same day, preparations were made for a ship swap with Scenic Pearl.
STC100613.2
131. Mr Peattie gave evidence of his experience on the Scenic ship due to embark Budapest
on 10 June 2013. It was intended to be on Scenic Sapphire but in the result turned out
to be the Scenic Diamond.
132. On 7 June 2013, passengers on this ship received a letter from Scenic (Kim Scoular)
indicating that passengers would be re-directed from Budapest to Vienna143.
133. Mr Peattie and his wife endured a long bus trip to Vienna. Mr Peattie took the
opportunity to video record this bus trip. The experience featured him feeling thrown
around and luggage also falling from the overhead storage144.
134. Contrary to what was represented, however, Mr Peattie recalled that the bus arrived in
the industrial town of Krems145. There they remained for 4 days, with Mr Peattie and
his wife being privy to a view of a concrete wharf 146.
135. On the evening of 14 June 2013, Mr Peattie received his first indication that there
would be sailing. This was subject to a ship swap to another Scenic ship 300 km away.
He recalled the cruise director explaining that because of a damaged lock, it was
necessary to escort the passengers by bus to go around it.147 It was put to Mr Peattie
that the cruise director had indicated that on the preceding two days, a lock had
140 Ex D44 (CB 6/1973-1974) 141 Ex P52 (CB 6/2109-2114) 142 Ex D71 143 CB 2/520 144 Peattie, pars 35-36; Ex P3; CB 2/510 145 Peattie, pars 40-44; CB 2/510-11 146 CB 2/528 147 Peattie, par 61; CB 2/513
22
suddenly and unexpectedly been discovered to be damaged. Mr Peattie denied this: they
were informed that the military had been working on it for some time148.
136. The next day, the ship sailed a short distance to Melk. Mr Peattie was disappointed that
this port was not near any town or village149.
137. On 14 or 15 June 2013, Mr Peattie and fellow passengers endured a 13 hour bus trip,
taking them away from the Scenic Sapphire and arriving on the Scenic Jewel150. By the
time he arrived on the Scenic Jewel, Mr Peattie was physically and mentally tired from
the coach trips and needed medication. He had endured 6 days of views of concrete
walls or dust bowls and had missed out on visiting Linz and Passau151.
138. Mr Peattie’s complaint to Donna Willis on 26 August 2013 described his experience152,
including the extended stay in Krems and the lack of sailing time.
2.2.2 What did Scenic know (or should have known) before embarkation of the cruises?
139. This question is germane to the case of non-compliance with the care and skill
guarantee. The plaintiff contends that the question (and the associated questions of
how Scenic actually responded to the knowledge and how it should have responded) is
not determinative of the claim for damages based on non-compliance with the purpose
and result guarantees.
140. The defendant admits (as it must) that there were high water levels in Europe from
about May 2013 along the paths of the cruises provided by it153. As at 30 May 2013,
Lucas Sandmeier knew enough to apologise to guests about adverse weather conditions
over the past few months causing various levels of disruption to all forms of navigation
on many major European waterways154.
141. The following survey highlights matters that would indicate that Scenic either knew, or
should have known, of the real and substantial prospect that certain cruises that were
about to embark were likely to face substantial disruption, in respect to the cruising
period.
142. It is important to note that save for the single South of France cruise in May 2013, all of
the following cruises concerned the same cruise-path; albeit that the path was
approached from differing directions (Amsterdam to Budapest; Budapest to
Amsterdam). It is also important to keep in mind the temporal proximity of these
cruises. Twelve of the thirteen subject cruises (not including the French cruise)
occurred in the period from 20 May to 12 June 2013. The store of knowledge acquired
(or which was ascertainable) developed over the subject period. That is, absent any
148 T 171.40 149 Peattie, par 62; and see the photos at CB 2/527 150 Peattie, pars 67-68 151 Peattie, pars 71-76, CB 2/ 514 152 CB 2/535-541 153 Par 10 of the Defence (CB 1/50-51) 154 Ex P16 (CB 5/1717A)
23
intervening event, it would naturally be inferred that what was known (or ascertainable)
about river levels along the Jewels of Europe cruise-path in the lead up to a cruise on
20 May 2013 was also likely to be relevant to the cruises on 12 June 2013. Such
inference is strengthened in circumstances where the defendant has not called any
witness to give evidence to the contrary.
FRCR190513.1
143. The high water levels along this cruise-path did not suddenly materialize. River levels
had risen across the cruise-path in early May 2013: between 1 and 4 May 2013, Scenic’s
vessels could not sail between Tarascon and Avignon156. On 6 May 2013, another tour
operator, Avalon, attributed the high water levels along the Rhone River due to a
sudden rise in temperature, which had caused snows of the past European winter to
rapidly melt158.
144. By 15 May 2013, Avalon had reported that water levels on the Seine were rising again,
so arrangements were made whereby the Avalon Scenery would leave for Paris earlier in
order not to get stuck in the bridges of Paris159.
145. By 16 May 2013, Scenic was advising its guests that the high water levels on the Rhone
and Saone had resulted in a revised itinerary160.
146. As at 18 May 2013 the ship of a different company, the ‘Avalon Scenery’ was stuck at
Viviers161.
147. On 23 May 2013, Avalon had reported that two of its ships, the ‘Avalon Affinity’ and
‘Avalon Luminary’ were supposed to enter the Moselle River, but the river was reported
as carrying high water162.
148. In the afternoon of 24 May 2013, Lucas Sandmeier’s email message to Justin Brown
indicated that the critical water level for safe passage at the Pont la Feuillee, at the entry
of the river Saone to Lyon was currently 50cm over the point where it needed to be163.
149. A communication from Lucas Sandmeier to Scenic personnel on 29 May 2013 indicated
that in the 24 hours from 8:00am on 28 May 2013, water levels at Pont de Feuillee in
Lyon exceeded the safe passage level164.
150. The experience endured by passengers like Mr Britten on board Scenic Emerald was
entirely foreseeable, if not the predictable outcome, resulting from the rising river levels
156 Ex P13 (CB 5/1585-1589) 158 Ex P10 (CB 5/1555) 159 Ex D14 (CB5/1578) 160 Ex P11 (CB 5/1579) 161 Ex P12 (CB 5/1580) 162 Ibid 163 Ex D15 (CB 5/1606) 164 Ex D22 (CB 5/1681)
24
that had occurred earlier in the month.
STC270513.1
151. On 26 May 2013, Patrick Doyle, the cruise director, recorded that River Main was
closed, with high water threatening the program. The cruise director notified Lucas
Sandmeier that according to the ship’s captain there was no chance for the ship to
move with water level rising165.
152. The next day, Doyle also noted that the cruise was being weather affected.166 It is
pertinent to note that on 27 May 2013, Marin Dimow recorded a variation for cruise
STC200513.1 (travelling in the same direction), as a result of rising river levels on the
Danube167.
153. Scenic’s tour director for the cruise STC030613.1 told David Moore on 3 June 2013
that the Scenic Jewel had been stuck in Bamberg for 8 days, at that point168. This was
about 25 May 2013.
STC270513.2
154. The day before this ship was set to embark, on 26 May 2013, Scenic was aware that the
River Main was closed and that high water was threatening the program of cruise
STC200513.2.
STC290513.1 & STC290513.2
155. The day before these ships were set to embark records show that Scenic knew or had
the means of knowing of the partial or complete closures along parts of the Main River,
at Steinbach, Wurzburg, Schweinfurt and Trunstadt.
156. On the day of the scheduled embarkation, the defendant knew or had the means of
knowing that:
a. the Scenic Jewel was stuck in Bamberg due to high water levels;
b. there was a concern that parts or all of the Amadeus Silver would have to be run as
a ‘land tour’
STC030613.1
165 Ex D16 (CB 5/1632) 166 Ex P 27 (CB 5/1816) 167 Ex D29 (CB 5/1809) 168 Moore, par 23; CB 3/550
25
157. Following the departure of the cruises on 29 May 2013, but before the scheduled
embarkation of the cruise on 3 June 2013 (from Amsterdam), Scenic knew, or it was
ascertainable that:
a. Scenic Jewel remained stuck in Bamberg and could not make it to Amsterdam in
time for disembarkation;
b. The Amadeus Silver could be stuck in Wurzburg for a further 4 days;
c. Lucas Sandmeier reported (on 1 June) that navigations may be impacted in certain
areas along the Rhine River, navigation on the Main River had stopped, a lock was
closed in Melk and the canals between the Danube and Main Rivers may be
closed170;
d. The Scenic Sapphire was stuck in Melk171;
e. The Avalon ships ‘Luminary’ and ‘Vista’ were stuck in Frankfurt172 and Avalon
ship ‘Visionary’ was stuck in Vienna173, and ‘Tranquility’ was stuck in Lindau174;
f. Other tour operators, Avalon and Viking, had started to cancel cruises, and noted
that, for 3 June 2013, the Main and Danube were closed, altogether, with the Rhine
probably closed from that date175;
g. (as at 2 June) Coblence (Germany) was forecasted to be closed for navigation on
the Monday (3 June)176;
h. There were likely to be interruptions of the Rhine, with water flowing from
Amsterdam177;
158. From 31 May to 2 June 2013, Lucas Sandmeier reported to Justin Brown that there was
a substantial rise in the water level at Basel179.
159. Lucas Sandmeier expressed his opinion to Justin Brown on Sunday, 2 June 2013, that
ships would certainly not move on 2 June, and likely not for a few more days180.
160. On 2 June 2013, it appeared that Justin Brown was resigned to the prospect of
substantial disruption affecting cruises that had embarked, as well as cruises about to
170 Ex P18 (CB 5/1744) 171 Ex P21 (CB 5/1762) 172 Ex P19 (CB 5/1750-1751); & Ex P23 (CB 5/1773) 173 Ex P19 (CB 5/1752) 174 Ex P22 (CB 5/1768) 175 Ex D27 (CB 5/1796) 176 Ex P20 (CB 5/1756 - 1757) 177 Ibid 179 Ex D26 (CB 5/1785) 180 Ex P24 (CB 5/1778)
26
embark: he raised the possibility with Glen Moroney that passengers might just need to
be kept on board, to try to get ships to their disembarkation and embarkation points as
best as they could and make a refund181.
EGFC080613.1
161. From the embarkation of cruises on 3 June 2013 until the embarkation of the Amadeus
Silver from Budapest on 8 June 2013, the defendant knew, or had the means of
knowing:
a. 4 of its ships (all embarking on either 27 or 29 May 2013, from opposite directions)
were stuck182;
b. The Czech Government had declared a state of emergency in response to
widespread flooding in most regions of Bohemia;
c. There were full closures along the Main River, Danube (German border), Danube
(Vienna) and Danube (Budapest) from 5 to 8 June 2013.
d. APT had cancelled 4 of its cruises scheduled for 6, 7 & 8 June 2013 (with two of
the 4 cruises embarking from the same point)183;
e. Uniworld had cancelled its cruises (Prague to Belgrade and Prague to Vienna)
scheduled for 7 June 2013184;
f. Viking had cancelled its cruises scheduled for 8, 9 & 12 June 2013 on the basis
that the Danube would be closed from Nuremburg to Budapest til 16 June
2013185;
g. Lucas Sandmeier’s opinion that the re-opening for navigation of various rivers
was very uncertain and his information that Passau (along the Upper Danube)
had experienced its highest water level in 600 years;
h. As at 6 June 2013, even coach travel between Passau and Regensburg was
affected by a closing of the motorway186;
162. On 3 June 2013, Evergreen published on facebook an entry, ostensibly to inform
people about the experience of those passengers on cruise number 3. The entry noted
the high river levels in northern Europe, the circumstance that high water levels were
affecting navigation on some rivers187.
181 Ex P24 (CB 5/1775) 182 Ex P26 (CB 5/1802) 183 Ex P30 (CB 5/1836); Ex P33 (CB 6/1870) 184 Ex P37 (CB 6/1954) 185 Ex P34 (CB 6/1921-1922) 186 Ex P46 (CB 6/2001) 187 Ex P MW-1 (CB 2/259)
27
163. On 6 June 2013, Evergreen sent a letter to passengers on its earlier cruise (number 3),
noting continued high water levels on the river Main and the ship’s inability to navigate
those areas of the river188.
164. On 7 June 2013, the day prior to embarkation, Angus Crichton predicted to Lucas
Sandmeier and others that the Amadeus Silver may only get 6 -7 days of cruising
(almost 50%)189.
165. On the same day, Kim Scoular sent a message to a range of people foreshadowing that
peak water levels were expected in Budapest on 9 & 10 June 2013190.
166. Later that evening (7 June 2013), Lucas Sandmeier reported that although certain parts
of the Rhine and Main Rivers were open (with limitations), the entirety of the Danube
River was closed. Passau had indicated that no ship could dock in Passau or Lindau
through to 16 June 2013191.
167. On 8 June 2013, the date of embarkation, Lucas Sandmeier reported that only daylight
cruising was allowed along the Main River. The lock Hausen (between Bamberg and
Nuremberg, along the Main-Danube canal) was closed during the work and various
parts of the Danube (Passau-Krems, Krems –Bratislava, Bratislava – Budapest) were
closed. Lock Hausen (between Bamberg and Nuremberg) was closed during work and
was expected to re-open mid-week. This meant that ships could not sail between
Nuremberg and Bamberg192.
STC100613.1 & STC100613.2
168. The defendant knew that from 9 – 14 June 2013, there were full closures along the
Danube (German border), Danube (Vienna) and Danube (Budapest).
169. On 9 June 2013, the day that these cruises embarked, Lucas Sandmeier reported that
Faulbach (along the Main River) was closed; Bamberg to lock Hausen (along Main-
Danube-canal) was closed; that the re-opening of rivers between Vienna and Budapest
was expected to occur no earlier than Wednesday (12 June 2013) and the re-opening of
the rivers between Budapest and Hungary would occur no earlier than Saturday (15
June 2013)193. Separately, Sandmeier reported that new arrangements would have to be
made for the disembarkation of cruise number 4 and embarkation of cruise number 13
because ships could not approach Budapest194.
170. By the date of the embarkation of these ships, on 10 June 2013, Scenic was aware that
cruises that had proceeded along the same river paths on 27 and 29 May 2013 had lost a
188 Ex P36 (CB 5/1950) 189 Ex P40 (CB 6/1969) 190 Ex D41 (CB 6/1960) 191 Ex D45 (CB 6/1976-1977) 192 Ex P42 (CB 6/1985-1986) 193 Ex D46 (CB 6/1987-1988) 194 Ex P43 (CB 6/1989A)
28
substantial number of sailing days195.
STC120613.1 & STC120613.2
171. On 11 June 2013, the day before the Scenic Pearl was scheduled to embark at
Amsterdam, and the Scenic Diamond was scheduled to embark at Budapest, Scenic was
aware that the Main-Danube Canal (Bamberg to lock Hausen) remained closed (with
an opening not before 12 June 2013); that the water authorities had extended the
navigation ban on the upper Danube, various locks on the Danube remained closed,
and flooding was scheduled to peak between Hungary and Budapest (whose cruise path
was expected to be closed until Saturday, 15 June 2013)196.
172. Another update on the same day (whose time was not apparent) indicated that the
Wurzburg bridge along the Main River could not be passed by passenger ships; the
Main Danube Canal (Bamberg to lock Hausen) remained closed (and would not re-
open before 12 June), that the Danube River was closed (between Straubing and
Ottensheim; and between Ennshafen and Novi Sad)197.
173. What was apparently the last update prior to the embarkation of cruises on this date
indicated that the stretch between Faulbach to Marktbreit along the Main River was
closed; the stretch between Straubing to the German/Austrian border along the
Danube was closed, that the stretch between Budapest and Mohacs was to be re-
opened for navigation no earlier than 15 June 2013198.
174. Records of Scenic and other tour operators the day after the embarkation of these ships
(13 June 2013) indicate that:
a. The lock in Altenworth (between Melk and Vienna) remained closed through to
18 or 19 June 2013 due to the off-shore terminal being washed out, as a result
of the floods199;
b. The ban on navigation between Vienna and Budapest would not be lifted until
midday on 14 June 2013200;
c. Shipping was closed from Vienna all the way to Belgrade201;
d. Part of the Danube (Kelheim to Regensburg and Regensburg to Vilshofen) was
closed202.
195 Ex P44 (CB 6/1995) 196 Ex P47-49 (CB 6/2012-13; 6/2015, 2018) 197 Ex D48 (CB 6/2021) 198 Ex D50 (CB 6/2024) 199 Ex P50 (CB 6/2050) 200 Ibid 201 Ex P51 (CB 6/2067) 202 Ibid
29
2.2.3 How did Scenic respond?
Proposals for providing refunds
175. Earlier in May 2013, in connection with the cruises along the South of France cruise-
path, Justin Brown was informed by Lucas Sandmeier that British guests, upon hearing
news about the weather and alarmed by the ramifications for their cruise, chose not to
fly to France but cancelled their trips. Sandmeier asked Brown what Scenic’s position
was as to reimbursing the unused portion of the cruise. Brown’s response was that
Scenic could not offer refunds but, rather obliquely, left it to Chris (Townson) to offer
‘action’ to the UK guests203.
176. On 29 May 2013, Justin Brown received a report from Melanie Koch about two guests
on the cruise FRCR190513.1 wanting to leave the cruise and pressing for
compensation. Brown stated the general position (consistent with Scenic’s position in
this proceeding) was, in Scenic’s belief, there were alterations (caused by events beyond
its control), Scenic would not offer refunds or compensation “should the guests choose
to leave the tour”. If guests wanted to leave the cruise, they would be encouraged to
stay, but if they did decide to leave, that request would be facilitated, but the guests
would have to bear the expense204.
177. Later that day, and in response to an indication that certain UK guests were wanting to
leave FRCR190513.1, Justin Brown sought advice from Emma Lindsay (Scenic’s UK
Operations Manager) as to whether Scenic’s terms and conditions would be effective to
oust UK laws in a way as to prevent compensation being delivered. Lindsay opined that
the UK laws ousted the terms and conditions, confirming Justin Brown’s beliefs.
Lindsay quipped that it was a shame that UK guests weren’t as “easy as the Aussie
guests”205.
178. What is notable about these two sets of communications, for present purposes, was a
consciousness within the defendant as to passengers’ wishing to leave their cruises and
seeking to recover refunds; as well as a clear statement that Scenic could facilitate
passengers’ voluntary cancellation if passengers took the positive step of requesting
same.
179. On or about 2 June 2013, Justin Brown had communications with Lucas Sandmeier
which suggested that he had in mind, as an option, cancellation of cruises that had
embarked, with refunds for the unused portion of the cruise206.
180. By 4 June 2013, Brown’s thinking had altered: those passengers who had embarked, and
who wanted to leave, would have their exit ‘facilitated’, but Scenic would not cancel
unless it was unable to offer reasonable services and there was a risk to the planned
disembarkation place and time207.
203 Ex P10 (CB 5/1556-1562) 204 Ex P15 (CB 5/1662) 205 Ex P14 (CB 5/1652-1653) 206 Ex P24 (CB 5/1775, 1777) 207 Ex P29 ( CB 5/1823-1825)
30
181. On 7 June 2013, Brown again indicated the prospect that in circumstances where the
defendant cancelled cruises, an ‘equitable’ refund could be given to passengers208.
182. As for those who were due to embark on Scenic cruises on 10 and 12 June 2013, (and
the Evergreen cruise on 8 June 2013), Scenic’s position was reactive: those not wanting
to embark could choose to cancel and obtain a refund, however Scenic would not
advertise this option. Scenic’s preference was to re-schedule the cruise tour for later in
the year.210
183. But even this reactive approach did not appear to be implemented. Mr Willems gave
evidence of the Evergreen tour director, Herbert Heutter telling passengers about to
embark on the Amadeus Silver on 8 June 2013 that if passengers wanted to go home,
they would receive no refunds, but very shortly thereafter, held out the prospect that
there might be some refund at the end of the cruise211. This appeared to be inconsistent
with what Mr Heutter was informed by Mr Crichton, who said Evergreen could
support passengers with transfers to airports, but not providing refunds212.
184. On 10 June 2013, Justin Brown proposed to Glen Moroney that for the Jewel of
Europe cruises (both directions) on 27 and 29 May 2013, Scenic should consider a
refund of $150 per person per lost day due to the significant loss of sailing days.
Moroney rejected that proposal213.
185. Separately, on the same day, Brown suggested to Moroney refunds for the disrupted
parts of tours to compensate for the “unplanned stationery days” tallied for cruises on
27 and 29 May and 3 June 2013. Brown thought passengers on these cruises would
expect a 50% minimum refund. He was plainly motivated by what he perceived that
Scenic’s competitors were offering214.
186. On 11 June 2013, Kim Scoular was telling call centre staff in response to inquiries to
inform passengers whose cruises were scheduled for late in June (ie beyond the period
in issue in this proceeding), that their cruises could be re-scheduled to later in 2013 or
2014215. It is not clear why this option was not presented to cruises in the subject
period.
187. These communications reveal at least two things: first, the fluidity in the decision-
making process of Justin Brown; and, secondly, it appeared that the ultimate say in
things rested with Scenic’s owner, Mr Moroney. Curiously, however, it appeared that
Scenic was informing local travel agents, who in at least one instance complained to
208 Ex P38 (CB 6/1958) 210 Ex P31 (CB 6/1841-1842) Ex P32 (CB 6/1851-1852) 211 Willems, par 58, CB 2/225 212 Ex P39 (CB 6/1964) 213 Ex P44 (CB 6/1995) 214 Ex P46 (CB 6/2002) 215 Ex P49 (CB 6/2019)
31
Scenic that passengers were expecting a full refund, that the decision not to provide
refunds rested with Scenic’s General Manager, Mr Brown216.
188. The issue as to precisely which person was responsible for the decision not to offer
refunds was left uncertain as a result of Scenic’s decision not to call either Messrs
Brown or Moroney, for fear of what might be exposed in cross-examination.
189. In the events that occurred, there was:
a. no cancellation by the defendant of any of the cruises; nor any re-scheduling of
the cruises to later in the year;
b. no policy of providing refunds for passengers for the unused portion of their
cruises in which no sailing occurred.
c. no options were provided to passengers, either before or after embarkation, that
the tours may be wholly or partly cancelled, delayed or re-scheduled for later in
the year.
190. A consequence of the defendant’s failure to cancel cruises before embarkation was to
negate the capacity of some passengers to claim upon any travel insurance that they had
arranged.
Scenic’s awareness of limits of Covermore insurance coverage
191. In its terms and conditions, Scenic recommended that passengers take out travel
insurance217. More than that, Scenic provided Covermore Travel Insurance218. As will be
later indicated (section 3.2.2), it appeared that Scenic intervened with Covermore, at the
behest of Mr Moore, after his claim for travel insurance had been initially rejected.
192. Scenic was therefore on notice of the basic terms and conditions of at least Covermore
insurance. As at July 2012, passengers who took out such insurance had the option of
seeking coverage for the costs of cancelling their tours (or ‘Journeys’) due to
circumstances outside the passenger’s control. However, there was an exclusion to this
coverage where the ‘transport provider’ caused the cancellation219. There was also a
general exclusion for claims for consequential loss, including loss of enjoyment220.
Arguably, these provisions in the policy would have entitled Covermore to decline
indemnity for the costs incurred through the cancellation of a cruise where the cruise
had embarked. In that situation, if passengers had embarked and Scenic took the
position not to provide refunds for the unused portion of the tour, passengers would
suffer a loss without any recompense. This is, of course, what occurred.
216 Ex P41 (CB 6/1978) 217 Clause 2.16 in Ex P8 (CB 4/1235) 218 Ex P5 219 Ex P7 (p 23 of the product disclosure statement) 220 Ex P7 (p 31 of the product disclosure statement)
32
193. Mr Britten gave evidence that the verbal explanation he received from Zurich as to why
his insurance claim was rejected was because he had received a ‘partial’ tour221. There is
no specific evidence that Scenic was aware of this, albeit that it would be surprising if it
was not also aware of Zurich’s terms.
194. The subject of Scenic’s awareness of the terms of insurance policies could not be
pursued without witnesses being called. However, it is likely that Scenic was at least
aware that a decision to engage upon a ‘partial’ tour might jeopardise the prospects of
passengers recovering from insurers. This, in turn, should have been a relevant
consideration as to what options should be presented to passengers.
Management of passengers
195. These omissions by the defendant necessitated careful management of passengers,
particularly those who had already embarked upon cruises.
196. On 6 June 2013, Mr Willems’ partner, Judy Buchanan, expressed her view on Facebook
that passengers scheduled to proceed (on the Amadeus Silver, for cruise number 9)
should have had the option to cancel if the tour could not be conducted in its original
form. What was Evergreen’s public response? It was not some statement of general
position capable of being read by Facebook users as a statement of general application,
but a request for Ms Buchanan to discuss her issues privately223.
197. Scenic was criticised for the adequacy of its communications with passengers scheduled
to embark on its cruises, insofar as travel updates were concerned. On 7 June 2013, a
passenger unfavourably compared Scenic to its competitors. Glen Moroney accepted
the criticism and Justin Brown promised that updates would be placed on its website224.
This exchange of messages occurred over half way through the subject period of
cruises.
198. In his email of 7 June 2013225, Angus Crichton predicted to Lucas Sandmeier and others
that, as a worse case, passengers on the Amadeus Silver (due to embark the next day)
would get almost 50% of sailing days. Probably anticipating that this prediction, if it
came to pass, would not reasonably achieve the purpose or result that passengers who
paid for a tour by cruise desired, Crichton suggested that:
“We need to work on their Europe dreams and make sure they get to experience
as much as possible but just on a different form of transport. I’m sure there can
be some very ‘quirky and unique’ experiences that they might be able to do and
happy to ‘value add’ where we can”.
199. This thinking evinces an approach by which the defendant was happy to retain the
monies it received from passengers for a full cruise tour that its marketing had
221 T 152.42 223 Ex P MW-1 (CB 2/264) 224 Ex P28 (CB 5/1819) 225 Ex P40 (CB 6/1969)
33
promoted if it could re-align passengers’ expectations so that they were content with
the result of experiencing a bus tour around European land destinations. The plaintiff
says that this is unconscionable conduct (see section 2.4.3 below).
200. That inference is supported by an email sent by Kim Scoular to Justin Brown on 5 June
2013226. With reference to the Scenic cruises of 27 May, 29 May and 3 June 2013, Ms
Scoular was emphasising the importance of ensuring that passengers could get as much
of their touring itineraries achieved as possible: Scenic would only look at compensation
(ie a whole or partial refund) if there was a discrepancy with what Scenic was finally able
to deliver. There is no reference, here, to the failure to deliver the cruise component of
the experience.
201. Crichton’s internal communications concerned cruise number 9. Crichton’s
expectations as to the extent of disruption (on 7 June 2013) appeared to be inconsistent
with what the Amadeus Silver cruise director was telling Mr Willems and his partner
(Judy Buchanan) on the same date. Both passengers informed the cruise director that
they did not want to spend the whole tour on busses. In response to Ms Buchanan’s
indication that she did not want to spend a week on a bus, the cruise director said she
was “98% sure that (you) will be on the ship in the next 2 days”227.
2.2.4 How should Scenic have responded?
202. This question is relevant to the issue of compliance with the care and skill guarantee,
which requires proof of fault.
FRCR190513.1
203. In circumstances where it knew that its vessels had been stuck along the cruise-path
(such as at Avignon) and other restrictions upon movement earlier in the month of May
2013 and through its own acknowledgment on 16 May 2013 of high water levels
existing along the Rhone and Saone Rivers, there was at least a real and foreseeable risk
of substantial disruption to the cruising of this vessel, due to embark on 19 May 2013.
Even if (which it should have) Scenic did not take the decision to unilaterally cancel (or
delay the cruise itself) passengers should have been informed of the risk, informed of
the alternative to cancel and re-schedule the tour at a later point within the next year.
204. The defendant’s failure to provide an explanation, subject to scrutiny, as to why it
embarked and proceed with the cruise, should fortify the Court in reaching this
conclusion.
STC200513.2
205. The plaintiff does not contend that it was unreasonable for the defendant to decide that
this cruise could proceed without some disclosure. However, the option that was
226 Ex D36 (CB 6/1898) 227 Willems, par 53; CB 2/224
34
actually considered for certain cruises that had already embarked but which ran into
(unexpected) disruption, was to cancel the remainder of the trip and offer an (equitable)
refund. This is what should have occurred in respect to this cruise.
EGFC250513.1, STC270513.1 & STC270513.2
206. It appears that by 25 May 2013, Scenic was aware that the Scenic Jewel (STC2001513.2)
was stuck in Bamberg due to high water levels.
207. By 26 May 2013, Scenic was aware from the report of one of its cruise directors that the
River Main had closed, with high water threatening the program of the cruise
STC200513.2. On the day of the scheduled embarkation of these cruises, the defendant
had also received a report of a variation for one of its other cruises (STC200513.1) as a
result of rising river levels along the Danube.
208. There was, accordingly, a real and foreseeable risk of substantial disruption to the
cruising of each of these vessels known by the defendant prior to or at embarkation.
Even if Scenic did not take the decision to unilaterally cancel (or delay the cruise itself)
passengers should have been informed of the risk, informed of the option to cancel and
re-schedule the tour at a later point within the next year.
209. Once embarked on these cruises, passengers should have had the option to cancel the
tour and be supplied with a refund for the unused part of their cruises.
210. On 3 June 2013, it appears that Evergreen prepared a letter228 for its guests on
EGFC250513.1, although Scenic had not proven whether or how it was disseminated
to its guests. Assuming in its favour that it was brought to its passengers’ notice, all that
the letter did, in substance, was to explain why it was necessary to accommodate
passengers in Salzburg for 2 nights.
211. On 4 June 2013, Scenic internal communications229 indicated an intention to send a
message to passengers on cruises STC270513.1 & STC270513.2, purporting to explain a
ship swap, whilst indicating that water levels over the next 72 hours were a ‘variable’
factor i.e. uncertain. However Scenic did not adduce any evidence to show that the
proposed message, or something like it, was actually sent to passengers on those
particular cruises. At any rate, in an earlier point in the letter, reference was made to the
river situation ‘improving’ and a prediction of improved weather. Further, no
alternative option was provided as to what passengers might do.
STC290513.1 & STC290513.2
212. By reason of the matters known or ascertainable prior to and up to the point of
embarkation of these cruises on 29 May 2013, including the closures of the Main River
and alterations being made to STC200513.2 (and EGFC250513.1), there was a real and
foreseeable risk of substantial disruption to the cruising of these vessels.
228 Ex D28 (CB 5/1804) 229 Ex D31 (CB 5/1834)
35
213. Prima facie, and in the absence of substantial evidence to the contrary, these cruises
should have been cancelled. If not, passengers should have been informed of the risk,
informed of the alternative to re-schedule the tour at a later point within the next year.
214. Once embarked on these cruises, passengers should have had the option to cancel the
tour and be supplied with a refund for the unused part of their cruises.
STC030613.1
215. Since the embarkation of the previous cruise tours on 29 May 2013, the Main River
continued to be at least partially closed (and completely closed from 1 June 2013) and
the Rhine, Upper Main was completely closed from 1 June 2013. The Scenic Jewel
remained stuck in Bamberg and the Scenic Sapphire was stuck in Melk. Other operators
(Avalon and Viking) had started to cancel its cruises, including a cruise for 2 June
2013230, for the stipulated reason of “unprecedented high water levels”. By 2 June 2013,
Justin Brown was already contemplating the possibility of providing partial refunds.
216. Prima facie, and in the absence of substantial evidence to the contrary, these cruises
should have been cancelled. If not, passengers should have been informed of the risk,
informed of the option to cancel and re-schedule the tour at a later point within the
next year.
217. On or about 1 June 2013, it appears that Scenic drafted a letter to guests indicating a
change of ship (from the Scenic Jewel to the Scenic Ruby) and attributed this to high
water levels on the Main River231. The letter only refers to the alteration in the form of a
ship swap, and to the extent it assigns a cause (the high river levels), that cause only
explains the circumstances of a ship swap; not the impact of those conditions upon the
cruise. The letter does not say anything about the risks of disruption to the cruise once
embarked: to the contrary, in the penultimate paragraph, the letter speaks in positive
terms about Scenic making the “cruise experience onboard .. truly memorable”.
218. Once embarked on these cruises, passengers should have had the option to cancel the
tour and be supplied with a refund for the unused part of their cruises.
EGRC080613.1
219. From 3 June 2013, the date when Scenic’s last cruise embarked (from Amsterdam), up
to 8 June 2013 parts of the Main River, the Main Danube Canal the Danube Kelhaim
German Border, the Danube German Border (Vienna) and Danube Budapest were
completely closed. Angus Crichton estimated that this cruise could only be expected to
get about 50% of is sailing days.
230 Ex P24 (CB 5/1775) 231 Ex D25 (CB5/1717))
36
220. APT had cancelled 4 of its cruises for 6, 7 & 8 June 2013232. Uniworld had cancelled its
cruises scheduled for 7 & 9 June 2013233.
221. As at 4 June 2013, Kim Scoular anticipated that passengers on this cruise would need to
be accommodated in a hotel. She recommended that for those guests anxious about
departure, they should be offered the alternative of sailing later in the year, with
refunds. On the same day, Justin Brown also indicated that passengers scheduled for
this cruise should be given the option of cancellation.
222. On 4 June 2013, Kim Scoular sent an email to Justin Brown and Andrew Kelleher
giving her opinion as to the responses that call centre employees of the defendant
should provide to anxious passengers inquiring about the status of the cruises
EGRC080613.1, STC100613.1, STC100613.2, STC120613.1 and STC120613.2234.
Scenic did not establish whether or how, this opinion was actually translated into
communications with passengers on those scheduled cruises, and/or whether what
responses were received by passengers.
223. The content of the document is, however, consistent with Scoular’s view that
passengers should be offered the opportunity to re-schedule their cruises for later in the
year, if not 2014; and if not, a refund. The message also demonstrates Scenic’s reactive
approach: the option to re-schedule was only to be provided begrudgingly: the “first
and foremost” message that the call centres employees was to provide to passengers
was upbeat – that Scenic was operating its cruise itineraries with best possible outcomes
for guests given current circumstances.
224. On 5 June 2013, Kim Scoular apparently was preparing a letter to be provided for
passengers on this cruise235. It is unclear, however, that a letter in those terms was
received by Evergreen’s passengers. It may have been received by passengers if they
made inquiry through their local travel agent236. However, the letter, or eblast was not
included, for example, in the exhibit to Mr Willems’ affidavit. He only referred to
Facebook entries as the means of communications he and his partner received. The
Facebook entry that Mr Willems and his partner saw late in the evening of 6 June
2013237 reported that Evergreen had not cancelled any departures and indicated
Evergreen’s expectation that it would continue to operate this cruise. Assuming, in
Evergreen’s favour, that most, if not all other passengers on this cruise saw the letter,
there is no reference in it to indicate any options that passengers may have. There was
certainly no disclosure of the option to cancel and re-schedule the cruise for later in the
year.
225. On 7 June 2013, the day before this cruise embarked, Scenic apparently drew comfort,
or perhaps hope, from the circumstance that river levels were dropping in the Main
232 Ex P33 (CB 6/1870) 233 Ex P37 (CB 6/1954) 234 Ex D34 (Ex CB 6/1843-1844) 235 Ex D37 (CB 6/1899) 236 Ex D38 (CB 6/1907) 237 Ex P MW-1 (CB 2/264)
37
River. It remained the case, however, that parts of that particular river were not
navigable238. It gambled that this situation would change. Even then, on the same date,
Angus Crichton predicted that passengers on this cruise would only experience almost
50% of the cruising experience.
226. Scenic/Evergreen should have implemented Kim Scoular’s and Justin Brown’s
recommendations to provide a cancellation option for passengers for cruises scheduled
to embark on 8, 10 & 12 June 2013 respectively, albeit that it should have done so pro-
actively; rather than in response to the initiative of passengers. It has not put anyone
forward to explain in this proceeding why it did not.
STC100613.1 & STC100613.2
227. As at 4 June, Justin Brown indicated that if guests requested cancellation of cruises
scheduled to embark on this date (and the cruises on 12 June 2013), Scenic would agree
to that.
228. Curiously, however, on the same day, Mr Brown sent to Donna Willis and Kim Scoular
a prepared ‘forward-looking statement’ in an email, intended to be directed to
passengers on these cruises239. Scenic has not proven that the content of this statement
was brought to the attention of passengers on these cruises. Assuming in its favour,
however, that it did, the statement did not contain the option of passenger cancellation
that Mr Brown had been contemplating that very day. At any rate, read as a whole, the
message speaks of the disruption as being a past event and speaks in confident tones of
these cruises being scheduled to operate “without impact”.
229. On 7 June 2013, Ana Wolfsteiner sent an email proposing some amendments to
proposed communications to passengers240. There is no evidence to indicate that the
message was converted into an actual communication to passengers. The only actual
interruption the email envisaged was simply to the embarkation process at Budapest,
although it did note that the flooding may not allow for uninterrupted cruising on 10 &
12 June 2013.
230. On the same day, the tour guide for the cruise scheduled to embark from Budapest on
10 June 2013 told the group that the “river had flooded and there (is) damage to the
locks. Other cruise operators have cancelled their cruises but Scenic are still sailing”241.
231. Leading up to and including 10 June 2013, at least part of the Danube River was
completely closed and Scenic vessels were stuck in various places along the cruise-path.
232. On 7 June 2013, Scenic sent a letter to passengers scheduled to embark upon
STC100613.2242. The letter warned that peak river levels were expected to reach
238 Ex D41 (CB 6/1960) 239 Ex D33 (CB6/1840)) 240 Ex D 40 (CB 6/1955) 241 Peattie, par 24 (CB 2/509). Mr Peattie’s evidence in this respect was unchallenged. 242 Ex D44 (CB 6/1973). The letter also appears as Annex “B” to Mr Peattie’s affidavit (CB 2/520)
38
Budapest that weekend. The main purpose of the letter, however, was to explain the
alteration: ie why instead of embarking at Budapest, passengers would be taken by
coach to Vienna to board the Scenic Sapphire. No options were presented to
passengers about cancelling the tours and re-scheduling them for later in the year.
233. Plainly, there was a real and substantial risk that these cruises would be substantially
disrupted, in respect to cruising time. The cruises should have unilaterally been
cancelled by the defendant. At least passengers should have been provided with the
option of re-scheduling their cruises at some later point in the year.
STC120613.1 & STC120613.2
234. On 4 June 2013, Justin Brown advised Glen Moroney that guests on these cruises who
voluntarily wanted to cancel could do so without penalty. This option was not,
however, to be advertised243.
235. By 11 June 2013, the Main-Danube canal remained closed, there was a navigation ban
on the upper Danube and flooding was expected to peak between Hungary and
Budapest. A state of emergency was declared, affecting Budapest. STC030613 remained
stuck in Bamberg, and the navigation route between Budapest and Mohacs (in
Hungary) was scheduled to re-open no sooner than 15 June 2013.
236. On 11 June 2013, Kim Scoular suggested that passengers anxious about tours scheduled
for late June could be assisted by re-scheduling their tours for later in the 2013/14
year244.
237. On 11 June 2013, Donna Willis foreshadowed that an eblast would be sent to the
Australian and New Zealand agents of passengers scheduled to embark the following
day at Budapest on STC120613.2245. There is no evidence as to whether or when such
message was ever conveyed to agents, let alone passengers for this cruise. Be that as it
may, and assuming in Scenic’s favour that the message was transmitted to the
passengers on this cruise, the message anticipated that water levels may disrupt the
cruise; and that there may be certain closed sections of the river. The only solution
offered to passengers was ship swaps. No offer or alternative was provided to
passengers on this cruise to cancel and re-schedule the tour for later in the year or
2013-2014.
238. Again, there was a real and substantial risk that these cruises would be substantially
disrupted, in respect to cruising time. Passengers should have been provided with the
option of re-scheduling their cruises at some later point in the year.
243 Ex P32 (CB 6/1851-1852) 244 EX P49 (CB 6/2018-2019) 245 Ex D47 (CB 6/2017)
39
Content of explanation of options
239. If, as is submitted, an option should have been presented to passengers to cancel
(where it was unnecessary for the defendant to unilaterally cancel) and to re-schedule
their cruises in advance of the embarkation of the cruises, an issue arises as to how that
option should be explained. Plainly, the option should be provided with some
explanation, or disclosure. The precise content of the explanation varied in accordance
with the specific circumstances affecting each individual cruise. However, the common
thread should have been to the following effect:
‘There has, for the past few months, been a very high (possibly unprecedented)
level of flooding along the cruise route for your tour, which has affected river
levels such that there is a real and substantial prospect that your scheduled tour
will be significantly disrupted, to the extent that the tour involves cruising along
the rivers. As to how much disruption there might be, we cannot say. However
where cruising cannot occur, this will mean much more transportation by bus
(where that is possible) and accommodation and dining on-shore in order to get
you to the places you want to go to on land. We propose to do what we can to
reduce interruption, but we cannot guarantee that you won’t experience
significant disruption to cruising time: it could be 2 days, it could be 5 or 6,
maybe more. We can, if you wish, cancel the tour now and look into providing
refunds. Alternatively, we can also offer to delay your cruise to some future point
within the next 12 months. Please let us know what you would like to do’.
240. As indicated there may be slight variations according to the particular cruise. Where the
cruises have occurred in close temporal proximity to other cruises affected by river
levels, it would also be reasonably expected that some reference might be made to that
circumstance as well. Thus, it might be expected that for cruises scheduled to occur on
3, 8, 10 and/or 12 June 2013, reference might be made to the fact that ships that had
embarked on 25 and 27 May 2013 had suffered a major loss of sailing days. For the
Evergreen cruise due to depart on 8 June 2013, it might have been expected that the
prediction of Angus Crichton – that the cruise was only likely to enjoy 50% of
scheduled sailing time – might be imparted.
241. Scenic disputes the above contentions. Its proposition is, apparently, that any
hypothetical warning, or disclosure, to passengers would have had to include a
prediction quantifying the extent of the likely disruption. That is not so. The plaintiff
accepts that any prediction by Scenic as to the extent or nature of disruption would be
imprecise. A predication is just that. It is not a promise. But when Scenic knew, for
example, that a major part of the cruise-path had been closed, that circumstance itself
says something as to existence and magnitude of a risk that that the cruise that had
embarked, and/or a cruise shortly to embark, was likely to be disrupted. Indeed, it is the
imprecision and uncertainty as to how long a cruise was likely to be disrupted which
generated the need for disclosure and the presentation of alternative options.
40
When to present the explanation
242. As has been noted, for certain cruises scheduled to embark in June 2013, Scenic’s
personnel had considered the option of cancellation several days in advance of the date
of embarkation. Further, there were instances where passengers were presented with
letters from Scenic prior to embarkation, indicating a ship swap or change in itinerary.
243. The testimonial evidence of the plaintiff’s witnesses indicates that there was staff,
particularly cruise directors (Scenic employees) who convened the passengers on the
night before or date of embarkation before the point of actual embarkation onto the
various ships. There does not appear to be (and the defendant has not taken any steps
to establish) any impediment preventing the defendant, through its cruise directors, to
provide the explanation and present the option to passengers just prior to embarkation,
if not a day or days before.
244. As indicated in the Opening address, for those instances (i.e. all cruises save for cruises
2 – 3) where the option of cancellation should have been provided to passengers before
they embarked, the option should have been provided as follows:
No. Cruise code Date by which option should have been provided (European time zone)
1 FRCR190513.1 18 May
2 STC200513.2 Not Applicable
3 EGFC250513.1 Not Applicable
4 STC270513.1 25 May
5 STC270513.2 26 May
6 STC290513.1 28 May
7 STC290513.2 28 May
8 STC030613.1 2 June
9 EGFC080613.1 6 June
10 STC100613.1 8 June
11 STC100613.2 8 June
12 STC120613.1 11 June
13 STC120613.2 11 June
245. For cruises 2-5 (incl), where it might be said that the risk of substantial disruption to the
cruising experience emerged after the date when the cruises embarked, the option of
cancellation and the provision of ‘equitable’ refunds should have been provided, as
follows:
No. Cruise code Date by which option should have been provided
2 STC200513.2 27 May
3 EGFC250513.1 30 May
4 STC270513.1 30 May
5 STC270513.2 3 June
41
2.3 Non-Compliance with Consumer Guarantees
246. This is not a case where the outcome of the question whether the guarantee of care and
skill has been complied with mandates the outcome of whether the purpose or result
guarantees were complied with.
2.3.1 Principles concerning the purpose guarantee
247. Where a supplier in trade or commerce supplies services to a consumer and the
consumer, expressly or by implication, makes known to the supplier any particular
purpose for which the services are acquired, there is a guarantee that the services (and
any product resulting from the services) will be reasonably fit for that purpose (ACL, s
61(1)).
248. Where the consumer makes known the result s/he wishes to achieve, s/he is at the
same time specifying the ‘particular’ purpose of achieving that result246.
249. Section 61(1) of the ACL closely resembles the former implied warranty in s 74(2) of
the Trade Practices Act. Authorities that had considered that earlier provision indicated
that:
a. It is a question of fact whether the services, or the finished product from the
services, were reasonably fit for the purpose247;
b. A breach of the warranty could occur without any negligence by the defendant.
In this sense, liability is strict248.
250. This guarantee is ‘more strict’ than the result guarantee249, since a result is less subjective
than a purpose250.
2.3.2 Principles concerning the result guarantee
251. Where a supplier in trade or commerce supplies services to a consumer and the
consumer, expressly or by implication, makes known to the supplier the result that the
consumer wishes the services to achieve, there is a guarantee that the services (and any
246 Taperell, Vermeesch & Harland, Trade Practices and Consumer Protection (3rd ed, 1978) [1741], p 837 247 Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 at 115, cited in Heydon, Trade Practices Law [16.760] 248 Gharibian v Propix Pty Ltd, t/as Jamberoo Recreational Park (2007) ATPR 42-171; [2007] NSWCA 151 at [62]; followed in Fugro Spatial Solutions Pty Ltd v Cifuentes [2011] WASCA 102 at [144]; Schepis & Ors v Elders IXL Ltd (1987) 40-759 at 48,219; Corones, The Australian Consumer Law (2nd ed, Thomson Reuters) [9.390] 249 Taperell, [1741], p 837 250 Explanatory Memorandum to the Trade Practices Amendment (Australian Consumer Law) Bill (No.2) 2010
42
product251 resulting from the services) will be of such a nature and quality that they
might reasonably be expected to achieve that result (ACL, s 61(2)).
252. Under the former s 74(2) of the Trade Practices Act, breach of the warranty could occur
without any negligence by the defendant.252 This reflected the position at common law,
where a supplier contracting to produce a specified result may be liable if the result is
not realized253. It has observed that it is expected achievement that is important in this
context254. Liability is strict255.
253. Whether the services might reasonably be expected to achieve the result is a question of
fact256.
2.3.3 The exceptions in s 61(3) of the ACL do not apply
254. The premise underling the exception, or presumption, is that the consumer usually
acquires the services of the particular supplier because its skills or knowledge are
beyond those of the consumer.
255. There is no suggestion that Mr Moore, or any of the other group members who gave
evidence, ignored the supplier’s advice, or perhaps stipulated that the supplier exercise
their skill or judgment in a certain way. The presumption of actual reliance is not
rebutted in the instances of Mr Moore or the other group members who gave evidence.
256. The defendant pleaded a lack of actual reliance. It did not plead an absence of
reasonable reliance (if there was actual reliance). It would, at any rate, be difficult to
conceive that it was unreasonable for the plaintiff to rely upon the defendant in
circumstances where the defendant did not clearly disclaim responsibility for Mr Moore
and others relying upon it’s skill or judgment, say, in determining whether a cruise tour
should proceed (prior to embarkation) or continue (once embarked).
257. A recurring feature, however, of the cross-examination of the plaintiff’s witnesses was
that they were aware of the risk that cruises may be disrupted because of river levels
before they set out. Conceptually, it does not matter for this purpose whether such
awareness sprang from awareness of the content of Scenic’s terms and conditions. It is
not part of the case for the plaintiff or group members that they were ignorant of such
risk. Their contention is that they did not bargain for a situation where the purpose or
result that they had made known to Scenic would be substantially diminished
(“compromised”). Awareness of a risk did not negate the existence of the consumer
guarantees in s 61(1) or (2).
251 An ordinary meaning of ‘product’ in this context may include the result from the services. 252 Corones, [9.390] 253 Young & Marten Ltd v McManus Childs Ltd [1969] 1 AC 454 per Lord Upjohn at 474; cited in Taperell et al [1741], pp 837-838 254 Crawford v Mayne Nickless ( 1992) 59 SASR 490 at 502.5 255 Taperell, [1741], pp 837-838 256 Warnock v ANZ Banking Group Ltd (1989) ATPR 40-928
43
2.3.4 The purpose and result guarantees were not complied with
258. The ACL imposed upon Scenic the obligation that the purpose or result of the services
it performed (including, relevantly, decisions whether or not to cancel or delay tours)
would be reasonably fit for the purpose or result desired by the passengers. They were
not. For all of the subject cruises, the result or outcome, albeit in differing degrees,
followed a pattern: a distressing and disappointing experience marked by discomfort
and upheaval arising from the substantial substitution of coach travel and on-shore
accommodation, for travel by cruise, generally over many days (see the table located at
paragraph 36, above).
259. It is true that some cruises were disrupted more than others: the cruises that embarked
on 12 June 2013 (and one of them on 10 June 2013), in the result, suffered a day or two
in terms of disruption of cruising time. Even in that case, however, this was still not an
insubstantial disruption affecting the result or purpose that group members bargained
for. In terms of whether the result or outcome was reasonably fit for purpose, group
members may have tolerated disruption measured in minutes, perhaps even some
hours, but not a day or days, and to the extent that even a day or two was lost, that
would still represent a diminution in value set against what was paid for in the tour
component of the booking price.
260. To reiterate, it is unnecessary, in respect to these consumer guarantees, to establish fault
on the part of the defendant. It is unnecessary, therefore, to establish whether the
defendant knew, or should have known (through the means available to it) that the
cruising component of the tour was likely to be disrupted before that occurred. To the
extent that the defendant relies upon forces at play that hindered achievement of the
purpose or result guarantees, this is considered in the section below concerning s 267 of
the ACL.
261. The defendant contends that a failure to cancel a cruise could not amount to non-
compliance with these guarantees, but, to the contrary, a decision to cancel (before or
after embarkation) would be antithetical to the purpose and result guarantees, because
cancellation would mean that the object of the service – the supply of a relaxing,
recreational experience – would not be achieved. Moreover, the defendant says, there
would have been incidental inconvenience and expense to the passenger if such
decision to cancel had been made.
262. However, if, as the plaintiff contends, the service to be supplied required monitoring
and management before or after a cruise had embarked, a decision to cancel, or a
decision to offer the opportunity for passengers to cancel, where those decisions were
justified, would be seen as a service that was reasonably provided, and therefore would
not amount to non-compliance with the obligation. Moreover, it would not just be a
decision to cancel. The decision to cancel (or option to cancel) would (or should) be
accompanied by the option of a re-schedule at a later date. If that option was exercised
by a passenger, the purpose or result desired by passengers (and implicitly made known
to the defendant) would be deferred; not defeated. If, alternatively, the option of a
refund was provided, and exercised, then although the original purpose and result
sought to be achieved may not have been exercised, for the purposes of s 267,
44
passengers would have no real grievance (other than fleeting disappointment) – they
would have received their money back. In short, the exercise of the options that should
have been provided would have meant that no loss would have been sustained.
263. In this case, it was the decision to embark, if not, the decision to continue proceeding
with the cruises, in the face of expected or actual disruption, that produced the
outcome or result which was the antithesis of the purpose or desired result: what
defeated the purpose or result sought to be achieved by the passengers was the
disappointment and distress they experienced and the grievance that they did not
substantially receive the value for what they had bargained for when each of them paid
their tour price.
2.3.5 Principles relating to the care and skill guarantee
264. Where a person (in trade or commerce) supplies services to a consumer, there is a
guarantee that services will be rendered with due care and skill (ACL, s 60)
265. The legislative intent is that this guarantee would apply in a similar way to the implied
warranty in the repealed s 74(1) of the Trade Practices Act. This provision was interpreted
so as to require the service to be of a quality that could reasonably be expected from a
competent person in the particular trade. The supplier would be liable in respect of the
services if s/he has, through a want of skill, fallen below that standard257, or put another
way, the warranty was breached if the service was performed in a careless or unskilful
way258.
266. Parliament chose the expression ‘due’ care in preference for ‘reasonable’ care. It has
been suggested that ‘due’ care is a higher standard than ‘reasonable’ care259. What is
‘reasonable’ is to be assessed objectively. That may be affected where the service
provider professes to have special skill260.
2.3.6 The care and skill guarantee was not complied with
267. For the reasons set out in section 2.2.4 above, save for the cruises 2 & 3, the defendant
was, or should have been, aware of facts that indicated that there was a real and
substantial risk or prospect that the cruising component of these tours would be
disrupted before each cruise embarked. The option of unilateral cancellation was
plainly considered by the defendant without reference to the wishes of the passengers,
especially for the cruises in early June 2013. The option of providing refunds and re-
scheduling tours was also considered.
268. For cruises 1 and 8-11, these should have been unilaterally cancelled before the cruises
had embarked. For cruises 6 & 7, these cruises probably should also have been
unilaterally cancelled, albeit that the case for unilateral cancellation in those cases is of
257 Taperell, Vermeesch & Harland, Trade Practices and Consumer Protection (3rd ed, 1978) [1740], p 836 258 Corones, The Australian Consumer Law (2nd ed), [9.355] 259 Corones, [9.430] 260 As occurs in the law of negligence: Rogers v Whitaker (1992) 175 CLR 479 at 483
45
lesser force.
269. In all cases other than cruises 2-3, the option of voluntary cancellation should have
been canvassed before embarkation. For cruises 2-5, the option of cancellation and
partial refunds (or re-scheduling) should have been provided.
270. To the extent that these alternative options were canvassed internally, the defendant’s
personnel were (at best) positively discouraged from promoting them. Indeed, the
defendant’s attitude was to manage or re-align its passengers’ expectations, so as to off-
set the loss of cruising time, in order to have passengers put up with much more coach
travel and accommodation on-shore. In other words, they could endure a holiday
experience with less benefits and to a lesser standard than what they paid for. The
defendant’s position was, apparently, that just because passengers were not cruising did
not mean that they were not enjoying the holiday experience. That is to miss,
altogether, the essence of the experience that Scenic’s promotional material emphasised.
271. In this, what is plain is that the defendant did not, in effect, take its passengers into its
consideration. Conceivably, some passengers might have been willing to negotiate to
receive an inferior ‘product’ than what they had bargained for: at the risk of
generalization, perhaps younger, fitter and healthier persons may have been prepared to
suffer the substantial loss of cruising experience in order to enjoy land destinations,
even if that involved more extensive coach travel and walking then which had been
scheduled. But because Scenic did not inquire, or offer alternatives, it was never in a
position to know. Scenic, instead, gambled that it could proceed to the point of
disembarkation, providing incidental or associated services whilst being indifferent to
whether, in doing so, its services were, or were likely, to substantially satisfy the desired
purpose or result made known to it by the passengers.
272. This should not have been Scenic’s decision to unilaterally make. Even by the terms and
conditions upon which it places so much store, where circumstances occurred that were
beyond the defendant’s control such that it was unable to provide the tour in
accordance with the itinerary, the defendant promised to use “reasonable endeavours to
provide or arrange appropriate alternatives” (cl 2.7) (emphasis supplied) . As explained
above, in Section 2.1.2 of these submissions, it is hard to see how the exercise of the
evaluative judgment that cl 2.7 required could be undertaken without reference to
consideration of what alternatives may have been suitable for the purposes of the
defendant’s passengers.
273. Scenic points to the absence of expert opinion evidence from the plaintiff as to what
reasonable tour operators would do. But this omission is hardly momentous in
circumstances where the reasonable practices of tour operators was demonstrated, in
part, by the conduct of Scenic’s competitors who did unilaterally cancel cruises in the
first ten days of June 2013. Scenic seeks to explain away its competitors’ conduct by
suggesting that the reason for the decision of other operators to cancel was simply a
lack of ships.
46
274. That is not, however, how the competitors explained the problem. In an undated
letter261 from Viking cruises, but apparently referable to a cruise that occurred on 2 June
along the Danube (‘Romantic Danube’), unlike Scenic, Viking was prepared to provide
a partial refund as well as credits to another cruise to those passengers who had had
their cruise disrupted. Viking made a point of contrasting the reasons why it allowed
one of its ships to cruise, but not another. The cruise which was cancelled before the
embarkation date on 2 June 2013 was cancelled because it had become stuck in
Frankfurt, along the Main River, from late May and could not reach Nuremberg in time
for the next cruise.
275. Another partial explanation for the refund and credit to another cruise was that Viking
did what Scenic/Evergreen did: as part of a contingency plan, it provided extra bus
rides and hotel stays in an attempt to get passengers to tourist destinations: a plan
which Viking conceded was “unsuccessful” in providing an “enjoyable experience”.
This is what led to Viking’s apology262.
276. APT’s announcement of cancellations for scheduled cruises on 4 June 2013, for
example, was founded upon its “indepth assessment of current and forecast water levels
for the coming days”263. APT had a capacity for ship swaps as well264. On the same day,
when explaining why he decided to cancel the 4 cruises scheduled for 6, 7 & 8 June,
Chris Hall, CEO of APT Tours265, referred to “safety concerns due to the high flood
waters.”266
277. On 4 June 2013 (a Tuesday), internal Avalon communications indicated that Avalon did
not expect any movement of ships before the end of the week267.
278. On 6 June 2013, Viking Cruises indicated that its decision to cancel cruises scheduled
for 8 & 9 June 2013 was explicable by the fact that the Danube River would continue to
be closed from Nuremburg til Budapest until 16 June 2013268.
279. On 6 June 2013, Uniworld explained that its decision to cancel cruises from Prague to
Belgrade and Prague to Vienna, scheduled for 7 June 2013, was explicable to ‘record
high water levels’269.
280. At a broader level, however, Scenic’s point about the omission of expert evidence is a
smokescreen for its own failure in this proceeding to explain why it did not proceed in
accordance with Justin Brown’s convictions and its unexplained failure to explain why it
conducted itself the way that it did.
261 Ex D61 (CB 7/2508) 262 Ibid 263 Ex P33 (CB 6/1870) 264 Ibid 265 Ex P33 (CB 6/1870) 266 Ex P30 (CB 5/1836) 267 Ex D30 (CB 5/1826) 268 Ex P34 (CB 6/1921) 269 Ex P37 (CB 6/1954)
47
281. In the event, and for reasons which Scenic has not been willing to divulge to the Court
under scrutiny, the options favoured by Justin Brown in respect to some of the cruises
were not pursued. The Court should infer such explanations as Scenic had do not assist
Scenic’s position.
282. Scenic also posits that any decision to cancel before or after embarkation, or any offer
of alternatives to its passengers, may have meant that the aspirations of those
passengers who were more willing to take risks (by commencing or continuing a cruise)
would be disregarded; that other passengers might be ‘abandoned’. It says that,
depending upon how many passengers may have wished to continue to travel, there
may have been commercial impediments to proceeding. This supposition, or
explanation for why Scenic conducted itself as it did, is not established in evidence.
283. Moreover, just as with the position before a cruise has embarked, whereby Scenic may
cancel a cruise if there are insufficient bookings (which would disappoint those
passengers who had booked a tour, expecting it to proceed), so too a decision to cancel
because of actual or anticipated river levels (either unilaterally, of because after an
option to cancel had been exercised there were insufficient passengers willing to
proceed) would also likely displease some passengers. Those ‘disappointed’ in that sense
would not have suffered a compensable loss. To the contrary, those passengers would
either receive an equitable refund or the opportunity to re-schedule a tour at a later
point in time. Conceivably, some might also have looked to travel insurance
arrangements in the event that they could not recover from Scenic. Faced, then, with a
potential choice between inconveniencing some who might be temporarily put out if a
cruise did not commence or proceed, because of a cancellation decision, for which
Scenic could not reasonably be criticised, and inevitably disappointing others for whom
there was a real and substantial risk that the purpose and result that they had hoped for
(the luxurious holiday cruise of a lifetime) would not be achieved, Scenic preferred the
latter course.
2.4 Exclusions and limitations on liability do not apply
2.4.1 The proper construction of the clauses
284. By its Defence, the defendant rely upon clauses in cll 2.10(h), 2.12(b), 2.13 and 2.14(b)
of its Terms and Conditions, to either exclude altogether or limit its liability.
285. Upon its proper construction, cl 2.12(b) does not apply in this proceeding. The
plaintiff (and group members) do not claim loss arising from conduct of the service
provider. In this proceeding, the loss that was suffered arose from the defendant’s
conduct. The point is considered further in Section 2.5, below.
2.4.2 Section 64 of the ACL
286. Section 64 of the ACL avoids contractual provisions to the extent that it (or they)
purport to exclude, restrict or modify, or has the effect of excluding, restricting or
modifying certain types of clauses. If an exclusion clause is void under s 64, it has no
force or effect.
48
287. An obvious example is a clause which purports to exclude, altogether, the existence of
the guarantees, however, a clause only purporting to restrict the application of the
guarantee is no more effective. Similarly, a clause purporting to limit the monetary
liability of the supplier for consequential losses is also ineffective270.
288. All of the exclusion clauses relied upon by the defendant infringe s 64 of the ACL.
They all effectively exclude (or limit) liability for what, in the circumstances, was non-
compliance with the consumer guarantees.
289. Against the possibility that s 64 of the ACL does not apply, the exclusion and limitation
clauses would not be effective because it is unconscionable in the circumstances for
Scenic to rely upon them. Further, or alternatively, the provisions are unjust or unfair.
2.4.3 Unconscionable conduct
290. Section 21(1) of the ACL prohibits persons, in trade or commerce and in connection
with the supply of services to a person, from engaging in conduct that is, in all of the
circumstances, unconscionable.
Considerations of whether conduct is unconscionable
291. Section 21(1) is not confined by the notion of unconscionable under unwritten law (s
21(4(a))).
292. In considering whether conduct, to which a contract relates, is unconscionable, the
Court’s consideration of the contract may include consideration of its terms and the
manner and the extent to which the contract is carried out (ie it is not limited to
circumstances relating to the formation of the contract): s 21(4)(c). The provision is not
limited, in its scope, to ‘consumers’.
293. The concept of ‘unconscionable’ is not defined. Ordinarily, the conduct must be doing
what would not be done in good conscience, or is irreconcilable with what is right or
reasonable: ASIC v National Exchange Pty Ltd (2005) 148 FCR at 140. It is a value-laden
term and indicates a degree of moral tainting. It may include undue pressure and unfair
tactics, taking advantage of vulnerability or a lack of understanding: Tonto Home Loans
Australia Pty Ltd v Tavares [2011] NSWCA 389 at [291]; ACCC v Lux Distributors Pty Ltd
[2013] FCAFC 90 at [41]; Paciocco v ANZ (2015) 321 ALR 584; [2015] FCAFC 50 at
[296] – [306].
294. A non-exhaustive list of discretionary considerations that a court may have regard to in
determining whether a supplier has contravened s 21 include:
a. Relative bargaining power of the supplier and customer (s 22(1)(a))
270 Eg Dillon v Baltic Shipping Co (1989) 21 NSWLR 614 at 642B-C
49
b. Whether as a result of the supplier’s conduct, the customer was required to
comply with conditions that were not reasonably necessary for the protection of
the supplier’s legitimate interests (s 22(1)(b));
c. Whether any undue influence or pressure was exerted on, or any unfair tactics
were used against the customer by the supplier (or a person on the supplier’s
behalf) (s 22(1)(d)
d. The extent to which the supplier was willing to negotiate the terms and
conditions of the contract, the terms and conditions of the contract, the conduct
of the supplier and customer in complying with the terms and conditions, any
conduct that the supplier or customer engaged in, in connection with their
commercial relationship, after they entered into the contract (s 22(1)(j)
Analysis
295. The action for unconscionable conduct is set out in paragraphs 17E to 17I of the
pleading. It embraces procedural and substantive ‘unconscionability’.
296. As to its procedural aspects, it is the circumstances that the defendant made no effort
to ensure that the terms and conditions (including relevant exclusions) were brought to
the attention of passengers until after tour bookings had been made and paid for.
Passengers became bound once they had paid their non-refundable tour deposit. (per cl
1.2 of the terms and conditions). In answer to this, the defendant initially accepted this
position271. However, it subsequently changed its position to contend272 that a new, or
substituted contract came into existence even after the deposit had been paid when
passengers actually signed the terms and conditions. Such proposition should be
rejected: any document containing the terms and conditions signed by the passengers
itself indicated that the passenger would have been bound by the time they had paid
their deposit. A new contract would only be substituted if it contained materially
different terms. In the circumstances, the group members were bound when they paid
their deposit; not when some of them signed terms and conditions.
297. It was a matter of chance whether, at the time they paid their deposits, passengers were
even aware of the existence of the terms and conditions; let alone their content. Mr
Willems and Mr Peattie admitted that each was aware of the existence of the terms and
conditions before booking. Mr Cairncross read the terms and conditions, but it was not
entirely clear whether that was at the time he made his booking or paid the balance of
his tour price273. Others (Messrs Moore274, Holgye275, Britten276) had not read the terms
and conditions prior to their bookings. Another passenger on cruise STC120613.1
complained that the terms and conditions were not sent to him before he paid his tour
price277.
271 T 38.40 272 T 44.2 273 T 113.21-.34 274 T 54 275 T 133.7 276 T 145-146; Britten, pars 8-13 (CB 2/422). 277 Ex D54 (CB 6/2093)
50
298. In each case, however, the cross-examination of the plaintiff’s witnesses stopped short
of attempting to elicit admissions that these passengers understood and accepted
Scenic’s view that, pursuant to the terms and conditions, Scenic was entitled to convert
a cruise experience into an extended bus tour for a substantial period.
299. For those passengers who were even aware of the existence of the terms and
conditions, none of these passengers could reasonably have been expected to be
particularly assiduous in studying them. It was more likely that passengers may have had
regard to them when they received a special booklet, after paying the balance of the
tour price, where that booklet contained the itinerary and map. It was only at this point
that Scenic took a positive step to bring the terms and conditions to the (booked)
passenger’s attention.
300. That Mr Moore was ignorant of the terms and conditions by the time he had paid his
non-refundable deposit279 is not to the point. Scenic’s terms and conditions stipulated
he was bound by that point and Scenic had no basis for assuming that an excited
passenger in the position of Mr Moore, who would likely be focussing on the benefits
of the experience Scenic promoted, had understood the fine print. The point, here, is
that the terms and conditions, written in (barely legible) small font, were tucked away
towards the back of a voluminous document280 and it was only once a passenger had
booked and paid up his or her money, that they were more prominently brought to a
passenger’s attention. This occurred by means of the provision of a booklet that
contained a passenger’s itinerary, a map of the cruise and the terms and conditions.
301. In these circumstances, it could hardly be said that there was any, or any reasonable,
bargaining as to the content of the terms and conditions. In a real sense, Scenic was
relying upon the inertia (or lack of inquisitiveness) of the run of the mill passenger who
would, at the time of booking and paying a deposit, naturally be focussing and excited
about the prospect of a luxurious holiday experience; rather than being concerned
about the fine print.
302. Thus, the circumstance that a passenger like Mr Moore became bound to the contract
at the time he paid his non-refundable deposit means that it is irrelevant that Mr (and
Mrs) Moore may have later signed the terms and conditions at or about the time he
paid the balance of his tour price281. Depending upon when that booklet was received,
in terms of the proximity to the departure date, if passengers, once apprised of the
terms and conditions, were so dissatisfied with them as to want to cancel the tour, the
passengers might then be liable to a cancellation fee282.
303. The defendant apparently assumed, and still relies upon the proposition, that either
passengers were either previously aware, or would, or should become aware (by reading
and understanding) of the terms and conditions themselves, or have them explained to
279 T 54 - 56 280 Ex P DM1 (CB3/773-774. The brochure begins at CB 3/562) 281 T 79-82 282 This is the effect of cl 2.6(d) of the terms and conditions (Ex P8, CB 4/1235)
51
them by local travel agents, whom the passengers approached to make the bookings,
prior to, or at the point of the bookings being made.
304. The assumption that the local travel agents would answer any queries in relation to
terms and conditions, or even knew of them, was misconceived. Further, there is no
evidence of the defendant’s practices (or arrangements with retail travel agents) to
support the assumption in any event.
305. Moreover, it is incorrect to impute to the passengers any knowledge held by the local
travel agents in any event. Any knowledge of the terms and conditions by travel agents
for the customers would not be necessarily imputed to the customers themselves. In
this context, a travel agent is essentially a broker, selling travel products, and acting a
‘middleman’ between potential traveller and the supplier and it is unclear whether the
agent is acting for one, the other, both, or merely for itself283. In this context, where the
supplier (the defendant), as tour operator, is relying upon brokers to dispense or
disseminate information such as the content of terms and conditions, such disclosure
should be taken to be on behalf of and for the benefit of the supplier. To that extent,
the agent would be the agent of the supplier in that respect.
306. Thus, at the procedural level, plainly, the terms and conditions (all, of which were
standard terms of a consumer contract), as a whole, were not the subject of any real, or
reasonable negotiation, prior to the plaintiff (and other group members) being bound
by them. They were not the subject of any explanation to passengers, in terms of their
legal or practical effect. Clauses 2.10, 2.12 – 2.14 all were exclusionary clauses. It was
important that these passengers be made aware of them and it was not until the tour
bookings were made that the defendant took any positive step to make the passengers
aware of them.
307. At a substantive level, the defendant was very conscious about the existence of the
exclusionary clauses. In late May 2013, once the difficulties of the South of France
cruise became apparent, Justin Brown inquired of one Scenic’s UK Operations
Manager (Emma Lindsay) whether Scenic’s terms and conditions284 could effectively
“eliminate” compensation that might arise to passengers under UK law. This was in a
context where it had been reported that British guests departed the cruise in question
and a query had been raised as to whether they might be entitled to refunds285.
308. Scenic’s whole approach during the pendency of the cruise period (and continuing
throughout this proceeding) has been that where variations had to be made because of
rising river levels, it was simply a misfortune for passengers for which it bore no
responsibility. This was irrespective of whether the purpose or result for which the
passengers paid their money and booked their tickets was reasonably accomplished.
283 Cameron v Qantas Airways Ltd (1995) ATPR 41-417 at 40,436. 284 Presumably the terms and conditions applicable to British guests were the same as, if not at least substantially similar to, those applicable to Australian passengers. 285 Ex P14 (CB 5/1652-1653)
52
309. But where circumstances arose, as the plaintiff says they arose in this proceeding, where
consumer guarantees were not complied with, and where that occurred because the
defendant was aware of the real and substantial risk that passengers would have their
cruising experience disrupted (because of river levels) before they embarked, and/or
refused to provide options to cancel cruises to passengers after the cruises had
embarked (when the risks had materialized) it is unconscionable for the defendant to
continue to retain the monies paid to it by the passengers and to rely upon the
exclusion clauses as justification for refusing to pay refunds.
310. It is unconscionable to retain monies paid by passengers on a particular (promoted)
basis (a luxurious, relaxing cruise) when the defendant knew, or should have known
(before embarkation), and/or became aware (after embarkation) that there was a not
insignificant risk that a substantially different experience would occur. That is
particularly so where the basis for retention of the monies is the content of terms and
conditions of a contract which became binding upon passengers as early as when they
had paid their deposits and Scenic took no steps to ascertain that passengers
understood that Scenic could continue to retain the whole of the tour price if, in fact,
the purpose or result of the tour experience was substantially diminished.
2.4.4 Unjust terms
311. Upon finding a provision to be unjust (in the circumstances relating to the contract at
the time it was made), the Court may:
a. decide to refuse to enforce any or all provisions;
b. declare the contract wholly or partly void (Contracts Review Act 1980 (NSW), s 7)
Considerations as to whether provisions are unjust
312. In determining whether a provision in a contract is unjust in the circumstances relating
to the contract at the time it was made), the Court shall have regard to the public
interest and to all of the circumstances of the case, including the consequences or
results as those arising in the event of compliance with any or all provisions, or non-
compliance with, or contravention of, any or all of the provisions (Contracts Review Act, s
9(1)).
313. Mandatory considerations that the Court shall have regard to (to the extent that they are
relevant to the circumstances) in determining whether provisions are unjust include:
a. Whether or not there was any material inequality in bargaining power between
the parties to the contract;
b. Whether or not prior to or at the time the contract was made, its provisions were
the subject of negotiation;
c. Whether or not it was reasonably practicable for the party seeking relief to
negotiate for the alteration of or to reject any of the provisions;
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d. Whether or not any provisions impose conditions that are unreasonably difficult
to comply with or not reasonably necessary for the protection of the legitimate
interests of any party to the contract,
e. Whether any undue influence, unfair pressure or tactics were exerted on or used
against a party seeking relief under the Act by any other party (or any person
acting or appearing or purporting to act for or on behalf of the party);
f. The commercial or other setting, purpose and effect of the contract (Contracts
Review Act, s 9).
314. The concept of ‘unjust’ is defined (s 4) to include the notions of something that is
“unconscionable, harsh or oppressive”, however it is by no means limited to those
concepts: West v AGC (Advances) Ltd (1986) 5 NSWLR 610 at at 620. Contracts, or
contractual provisions may be unjust because its terms, consequences or effects are
unjust (substantive injustice) or because of the unfairness of the methods used to make
it (procedural injustice). Most unjust contracts will be the product of both procedural
and substantive injustice: West at 620. At the heart of the evaluative exercise that courts
use to determine whether a contract is unjust is recognition of the inadequacy of one
party to protect his or her interests in the circumstances: Provident Capital Ltd v Papa
(2013) 84 NSWLR 231at [7].
Application
315. The plaintiff relies upon the same circumstances applicable to his action for
unconscionable conduct to contend that the exclusionary clauses were unjust terms. In
particular, there was no serious efforts made to draw the content of the terms and
conditions to the attention of passengers, at least until they were bound by them and
the effect of the application of the terms, should Scenic’s construction of the terms be
accepted, would be to allow it to continue to retain the monies paid to it in the
knowledge that the purpose, result and indeed bargain that passengers paid their monies
for would be substantially diminished.
2.4.5 Unfair terms
Relevant provisions
316. A term of a ‘consumer contract’ is void if the term is unfair and the contract is a
‘standard form contract’ (ACL, s 23(1)).
317. A ‘consumer contract’ is (relevantly) a contract for the supply of services to an
individual whose acquisition of the services is wholly or predominantly for personal,
domestic or household use or consumption (s 23(3)). There is a rebuttable presumption
that a contract is a standard form contract where that is alleged (s 27(1)). There is also a
list of mandatory matters that a court will take into account in determining whether a
contract is a standard form contract (s 27(2)).
318. A term in a consumer contract is unfair if:
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It would cause a significant imbalance in the parties’ rights or obligations arising
under the contract (s 24(1)(a)); and
It is not reasonably necessary in order to protect the legitimate interests of the
party who would be advantaged by the term (s 24(1)(b)); and
It would cause detriment (financial or otherwise) to a party if it was to be
applied or relied on (s 24(1)(c)).
319. The consumer carries the onus on the matters in s 24(1)(a) and (c); the supplier carries
the onus re s 24(1)(b): ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [43].
320. ‘Significant imbalance’ is a factor regarded as established if a term is so weighted in
favour of the supplier as to tilt the parties’ rights and obligations significantly in its
favour. This may be by granting to the supplier a beneficial option, discretion or power,
or by imposing on the consumer a disadvantageous burden, or risk or duty: Director
General of Fair Trading v First National Bank Plc, per Lord Bingham at [17]; followed in
ACCC v Chrisco Hampers Australia Ltd [2015] FCA 1204 at [47]-[49] and in ACCC v
ACN 117372915 Pty Ltd (formerly known as Australian Medical Institute Pty Ltd) [2015] FCA
368 at [950].
321. It has been suggested that the question whether an imbalance should be regarded as
‘significant’ is resolved by answering whether the imbalance is ‘large, weighty,
considerable, solid or big’286.
322. By s 24(4), there is a rebuttable presumption that a term will not be reasonably
necessary in order to protect the legitimate interests of the party who would be
advantaged by the term.
323. Relevant matters that a court must take into account in determining whether a term is
‘unfair’ include:
a. The extent to which the term is transparent; and
b. The contract as a whole (s 24(2)).
324. A term is ‘transparent’ if it is:
a. Expressed in reasonably plain language; and
b. Legible; and
c. Presented clearly; and
d. Readily available to any party affected by the term (s 24(3))
(see Director General of Fair Trading v First National Bank plc [2002] 1 AC 481, per Lord
Bingham)
286 Miller’s Australian Competition and Consumer Law Annotated (38th ed, 2016) [1.S2.24.15], p 1660
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325. Section 24(2)(a) only requires the Court to consider transparency in relation to the
particular term that is said to be unfair and only in relation to the matters concerning
that term in s 24(1)(a) – (c).
326. Examples of unfair terms are:
terms that permit, or have the effect of permitting, one party (but not another)
to avoid, or limit performance of the contract (s 25(1)(a));
terms that permit, or have the effect of permitting, one party unilaterally to vary
the characteristics of the services to be supplied (s 25(1)(g).
327. The examples, or categories, of unfair terms (in s 25) are not exhaustive: Chrisco Hampers
at [96].
Analysis of cl 2.6(d)
328. The defendant admits that the subject contracts were consumer contracts and standard
form contracts287.
329. Clause 2.6(d) provides that any cancellation of the tour by the passenger prior to the
departure would result in cancellation fees being incurred at various staggered levels.
Where cancellations were notified 61 days or less before the departure date, this would
be at the level of 100% of the tour price.
330. Clause 2.10 generally provided the grounds upon which the defendant was entitled to
vary the passenger’s itinerary, in the event of certain circumstances. In this proceeding,
the defendant relies upon the grounds in sub-paragraphs (e)(1) and (f). The variation
comprises the substitution of another vessel or motorcoach for all or part of the
itinerary and also to provide alternative accommodation. By cl 2.10(h), the defendant
purported to disclaim liability for such variations.
331. Clause 2.6(d) caused a significant imbalance in the parties’ rights and obligations. This is
so because if, as the plaintiff contends, the proper performance of the defendant’s
consumer guarantees required it to provide an option to passengers to cancel the
cruises (as distinct from unilaterally cancelling the cruise itself) prior to the relevant
departure date, and if such option was exercised, the passenger would be liable to
essentially forfeiting its tour price, without having the tour re-scheduled. The
passengers should, in this case, be relieved against this form of forfeiture.
332. It would also cause detriment if relied upon by the defendant. Here, the clause would
have been relied upon: the defendant’s denial that the plaintiff and group members
suffered any loss flowing from non-compliance with the guarantees is centred upon the
proposition that the plaintiff and group members would have suffered loss anyway288.
That is because if, as its obligation to provide a service with due care required Scenic to
287 par 17D of the Defence, as amended. 288 Par 24(b) of the Defence
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present an option to passengers to cancel before they embarked on a cruise, they would
have been liable to pay the entirety of the tour price to Scenic as a ‘cancellation’ fee.
333. As a matter of substance, therefore, cl 2.6 is unfair. Relevant also to that determination
is the circumstance that the clause was neither presented clearly or readily available and
hence, was not ‘transparent’. The term appeared amid a series of other terms which
themselves were obscurely tucked in towards the back-end of the travel brochure.
334. The defendant has not adduced evidence on whether the provision was reasonably
necessary in order to protect the defendant’s legitimate interests. Accordingly, it has not
rebutted the presumption (s 24(4)) that the term was not reasonably necessary. It
should therefore be found that cl 2.6(d) is an unfair term.
Analysis of cl 2.10
335. The substantive effect of this provision (with its various sub-paragraphs) is to confer a
power upon the defendant to unilaterally alter the nature and extent of the touring
experience enjoyed by passengers, even if that was to thwart the purpose or result for
which they bargained for. The evidence shows the internal convictions of the
defendant’s personnel, at certain times, were that certain tours should be cancelled (with
passengers encouraged to re-schedule a new tour) and that refunds may be given in
certain circumstances. But where, as here, those convictions were not acted upon, by its
terms, cl 2.10 entitles the defendant to do what it liked, even to substitute a bus tour for
a cruising tour, without reference to the passengers, and if any passenger complained,
the passenger would be shown cl 2.10.
336. This is a paradigm example of an unfair term: s 25(1)(a) of the ACL.
337. The provision would cause detriment if relied upon. In this proceeding, the detriment is
very real: the defendant’s essential Defence is that it could properly substitute a vastly
different (and inferior) touring experience to that which it promoted, because of
circumstances beyond its control and not be liable for it.
338. Again, in the absence of any evidence establishing the provision was reasonably
necessary to protect its interest, the defendant has not rebutted the presumption that it
is not. It should therefore be found that cl 2.10 is an unfair term.
Defence
339. Neither cl 2.6(d) nor cl 2.10 of the terms and conditions could properly be
characterised as “defining” the subject matter of the contract, such as to fall within the
exception in s 26(1)(a) of the ACL.
340. The former provision dealt with a liability to bear a cancellation fee in the event of a
contingency.
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341. The latter provision concerned changes to tour price and variations to a tour itinerary
(as well as purporting to exclude liability for variations). The circumstance that parties
foreshadow circumstances in which their rights or obligations may change (and purport
to regulate what might occur if those circumstances come to pass) does not “define”
the subject matter of the service that is provided. In its interpretation of corresponding
legislation in Britain, the English Court of Appeal characterised a legislative provision
like s 26(1)(a) of the ACL as a provision that goes to the “core” of a contractual
arrangement. The English Court of Appeal determined that contractual provisions that
were contingent upon the occurrence of a particular event could not be the subject of
bargaining between supplier (in that case, a Bank) and the customer such as to amount
to core terms289. Another way of putting the point is that a term ‘defines’ the subject
matter of the contract where the consumer has a choice whether to acquire the service
having regard to the term290. That reasoning would not apply to an alteration of rights
or obligations arising from a contingent (and necessarily hypothetical) event.
2.4.6 Remedies for unconscionable conduct and unfair terms
342. These provisions appear in Chapter 2 of the ACL.
343. By s 237, a person (‘injured person’) who has suffered, or is likely to suffer, loss or
damage because of conduct by another person engaged in in contravention of (these
provisions), or is appearing, or purporting to rely upon a term that has been declared
(under s 250 of the ACL) to be an ‘unfair term’, to make such order/s as the Court
thinks fit.
344. Such order must be an order that the court thinks will compensate the injured person
(wholly or partly) for the loss or damage, or will prevent or reduce the loss or damage
that has been suffered, or will be suffered, by the injured person.
345. Without limiting s 237, the orders that a court may make under that provision against a
respondent includes:
An order declaring the whole or part of the contract void (s 243(a));
An order varying the contract (s 243(b));
An order refusing to enforce any or all of the provisions (s 243(c))
346. An order may be made under s 243 whether or not the Court makes an order under s
237 (s 244).
347. The Court may declare that a term is ‘unfair’ pursuant to s 250 of the ACL, or its
inherent jurisdiction.
289 OFT v Abbey National plc [2009] WLR (D) 69, cited in Corones, The Australian Consumer Law [6.70] 290 Explanatory Memorandum to Trade Practices (Australian Consumer Law) Bill 2010, [5.60]-[5.61]
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348. An injunction also lies to prevent the attempt to enforce an unfair term: s 232(3) of the
ACL.
Unfair terms
349. A declaration and order avoiding cll 2.6 and 2.10 should be made, at least in the suit of
Mr Moore. Alternatively, an injunction should be made so as to prevent the
defendant’s reliance upon those terms.
2.5 Responsibility for loss
2.5.1 Scenic’s service providers
350. When it came to performing the critical function of monitoring and managing the
cruise experience of passengers, either before or after embarkation of the scheduled
cruises, Scenic did not delegate those functions to its ‘service providers’: Scenic Europe
or Luftner. If it had, there would have been no reason for Justin Brown, Kim Scoular,
Angus Crichton and others to have engaged in the communications that they did with
Lucas Sandmeier and others who were closer to the events along the European rivers.
351. Moreover, delegation of such functions would not have reflected the arrangements
Scenic had with its passengers. Clause 2.7 (to reiterate) indicated that when
circumstances (including river levels or weather conditions) arose which were outside
“Our” control, and “We” were unable to provide the tour in accordance with the
itinerary, “We” would use reasonable endeavours to provide or arrange appropriate
alternatives. The personal pronoun is for Scenic, used in a context where cruise ships
have embarked.
2.5.2 The exceptions in s 267(1)(c) of the ACL do not apply for non-compliance with
the purpose or result guarantees
352. Section 267(1)(c) of the ACL provides an exception to a consumer’s right to take action
against a supplier for non-compliance with the purpose and result guarantees291. To
paraphrase, the exception arises where the failure to comply with (either) guarantee did
not occur only because of:
(i) conduct (including a representation) by some person other than the supplier
(or an employee or agent of a supplier); or
(ii) a cause independent of human control that occurred after the services were
supplied (emphasis supplied)
353. As a whole, the exception in s 267(1) generally deals with what, in general law, would be
regarded as true intervening causes – the ‘novus actus interveniens’ doctrine. The result
or purpose could not be achieved only because of (i) the conduct by third persons or (ii)
291 The exception does not apply where the non-compliance is with the due care guarantee in s 60 of the ACL.
59
circumstances which, effectively, severed the causal link between the failure to achieve
the result or purpose and the non-compliance with the guarantee(s).
Scenic Europe personnel were not acting as independent contractors
354. The persons referred to in s 267(1)(c)(i) might include sub-contractors, although the
categories are not limited to that292. In relation to sub-contractors, or independent
contractors, suppliers will not be liable for the conduct of sub-contractors.
355. It is anticipated that the defendant will cite cl 16.1 of the services agreement between
Scenic Australia and Scenic Europe293 in support of its contention that personnel from
the latter were not agents, but independent contractors. Certainly, a statement by which
the parties identify what they understand to be their legal relationship is entitled to
weight. However, the Court looks to the substance, not the form of arrangements and
may characterise, for itself the arrangement294. In this case, there were other provisions
in the arrangements indicating that Scenic Europe personnel acted on behalf of, and as
agents, for the defendant:
a. Clause 4.1, which provides that STE is to deliver services “promptly in response
to … and to the satisfaction of STA”
b. Clause 12.2, which provides that in performing services, STE is to “make all
reasonable enquiries of STA to ascertain requirements and comply with all
reasonable directives and instructions provided by STA from time to time”
356. There are a range of indications in the defendant’s correspondence pointing to the
reality not only of a close collaborative relationship between STA and STE but that, on
occasions, STE acted in accordance with STA’s instructions and direction:
a. On 16 May 2013, in a different letter to guests, Kim Scoular referred to “our”
helpful cruise director (the concept of “cruise director” was itself defined in
Scenic’s terms and conditions as “Our guide on Your cruise who is Our
employee”);
b. On 29 May 2013, Lucas Sandmeier sought opinions from Scenic personnel in
response to options he presented to them295;
c. On 30 May 2013, Lucas Sandmeier expressed an apology to guests “on behalf of
Scenic Tours”296;
292 Another example may be a terrorist hijacking a cruise, preventing the cruise from proceeding. 293 The agreement begins at Ex D2 (CB 5/1356) 294 South Sydney District Rugby League Football Club v News Ltd (2000) 177 ALR 611; Dal Pont, Law of Agency (3rd ed, 2014) [1.6], p 8 295 Ex D22 (CB 5/1682) 296 Ex P16 (CB 5/1717A)
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d. On 2 June 2013, when commenting to his colleagues (Kim Scoular and Aleisha
Fittler) on water levels, Justin Brown foreshadowed that he would be talking with
Lucas Sandmeier about “our options”297;
e. Later on the same day, Brown set out what those options for current cruises
(including partial refunds and a return home) for Sandmeier298.
f. On 14 June 2013, Mr Kozma, of Scenic Tours Europe299, admitted to Mr
Willems that the European service provider was “just following directions from
Scenic in Australia who said they wanted to proceed with a bus tour”300.
357. It is not disputed that ‘nautical partners’, such as KD Cruise Services Ltd, who were
contracted to Scenic’s European ‘agents’, were themselves, independent contractors.
The plaintiff sought particulars of the advices that KD Cruise provided to its service
providers, but received an essentially non-responsive reply301. It is not apparent,
however, that the defendant itself relied upon the advice of such nautical partners and
the defendant has not adduced evidence as to the nature of and the extent to which
advice provided by those nautical partners was relied upon by Scenic Europe (or
Luftner Cruises) in respect to the subject cruises in this proceeding.
358. At any rate, whether decisions were taken by the defendant based upon information
and advice received from its European service providers, and/or, more indirectly, from
nautical partners who provided information or advice to the service providers, for this
exception to be properly invoked, the defendant still needs to establish that the relevant
decisions affecting what happened on the cruises were those (entirely) of other people.
Here, the responsibility for making decisions did not lie only with its agents, or sub-
contractors, or those informing (or advising) them. The evidence indicates that critical
decisions affecting the management of the cruises were with Scenic, and Justin Brown
in particular. Doubtless, in performing its functions as a service provider to its
passengers, the defendant relied upon information supplied to it by its European
affiliates who, in turn, relied upon local or regulatory authorities. But ultimately, the
arrangements between the defendant and Scenic Europe were such that the defendant
had the power to make, and made, the critical decisions on whether a cruise could
proceed at all (or be delayed) or, once commenced, whether the cruise might continue
(and, if not, what consequence would follow). Thus, on 29 May 2013, Justin Brown
referred to “the circumstances where we continue the cruise or tour and alterations are
made due to circumstances out of our control, we do not offer refunds or compensation
…In this cruise, we have continued to offer the cruise and associated attractions as best
we can”302 (emphasis supplied).
297 Ex P24 (CB 5/1776) 298 Ex P24 (CB 5/1777) 299 Ex P MW1 (CB 2/275) 300 Willems, par 107, (CB 3/232) 301 CB 1/111 (the request) and CB 1/116 (the response) 302 Ex P15 (CB 5/1662)
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359. It is not clear at all, even at a conceptual level, how any unspecified conduct of nautical
partners caused loss in this situation. It might have been one thing if these nautical
partners had informed Scenic’s European agents that its cruises could not proceed
because of certain one-off, or unexpected incidents, for such directive to be conveyed
to the defendant and for the defendant then to heed the directive. In such a case, the
defendant might fairly argue that any loss or damage was caused by the directive of the
nautical partners. In such a case, the defendant might say that it did what it could in
presenting a cruise, but was prevented from doing so because of the decisions and
information of local officials.
360. These were not, however, the circumstances in any of the subject cruises. In the case of
every cruise, the defendant allowed the cruise to proceed, independent of any advice
supplied by ‘nautical partners’ and, once embarked, allowed each cruise to continue to
proceed. It apparently did so, motivated by a desire to ensure that as much as the land-
based itineraries were adhered to and to that end, it did not matter that the cruising
component would be substantially impaired. The loss in value (and disappointment)
was suffered by passengers because of the defendant’s conduct in not cancelling tours,
or providing alternative arrangements to passengers, once it became known to the
defendant (irrespective of the source of that knowledge) that there would be substantial
disruption; and not because of any temporary obstacle that needed to be overcome.
361. Even if the conduct of some other person or entity frustrated Scenic in delivering a
cruising experience, this did not prevent Scenic from providing services that would
satisfy the consumer guarantees. Thus, a decision by some other person to close a lock
or part of a river along a cruise-path was not, or could not, generate a loss to the
passengers if the defendant was reasonably adaptable in providing an alternative, such
as cancelling a cruise (coupled, perhaps with the offer of a re-scheduled tour), offering a
refund
The harmful result did not occur only because of circumstances beyond Scenic’s control
after Scenic had provided services
362. By its terms, the causes beyond the suppliers’ control, for the purposes of s 267(c)(ii) of
the ACL, must have occurred after the services were provided. But where the supplier
has the capacity, in its provision of services, to respond (in terms of affecting the result
or purpose desired by the consumer) to circumstances not of its making, in a way that
might affect the outcome or result sought to be achieved by the consumer, the
exception would not apply.
363. In this case, even with the difficulties faced by the river levels, Justin Brown was
internally weighing, and canvassing with other Scenic personnel, the prospect of
cancelling cruises, offering partial refunds or credits for future cruises. These
deliberations, and communications, occurred after cruises had embarked. For the
purposes of the exception, however, these deliberations would not have occurred if, on
a proper characterization, Scenic’s services had already ceased to be provided and
Scenic was doing no more than acting as a conduit for other persons.
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364. The tour operator may not have been able to control the weather, or river levels. It was,
however, in a position (in the performance of services) to offer alternative
arrangements to passengers in the event of conditions occurring that were beyond its
control, both before and after cruises had embarked: cancellation and the offer of an
alternative tour or cruise. This explains why, as part of his management of the problem,
at different times, Justin Brown proposed303 providing ‘equitable’ refunds to affected
passengers to those who had embarked.
365. It follows that even if it be found that river levels rose unexpectedly (or to a degree
greater than that which was anticipated) or other conditions impeded the result or
purpose made known by the passengers, such circumstances do not avail Scenic in the
sense of acting as an intervening cause.
366. Accordingly in the circumstances of this case, s 267(1)(c) of the ACL does not bar a
claim arising from non-compliance with the purpose or result guarantees.
2.6 Loss arising from non-compliance with consumer guarantees
2.6.1 Causation
367. Section 267(3) of the ACL confers a right upon a consumer, who satisfies the pre-
requisites in s 267(1) and where the failure to comply with a guarantee cannot be
remedied, to recover compensation against a supplier for a loss of value.
368. Since liability under ss 61(1) and (2) of the ACL is strict, it is unnecessary for the Court,
in determining contravention of each of those provisions, to consider counter-factuals
as to what would have happened if Scenic, acting reasonably (and in compliance with its
guarantee in s 60 of the ACL), provided explanations or options to the passengers; and,
specifically, how passengers would have responded. In this regard, in an action under s
267(3) for non-compliance with the purpose and result guarantees, loss (of value) or
damage is sustained, for the purposes of s 267, simply because the purpose or result has
not (reasonably) been achieved.
369. Where the action under s 267 arises from non-compliance with s 60 of the ACL, the
requirement of causation may be different. As indicated, for some of the cruises
(particularly those of early June 2013), compliance with the care and skill guarantee
required unilateral cancellation and re-scheduling by the defendant (as was undertaken
by other tour operators, such as APT and Viking). For other cruises (in late May 2013),
compliance with the care and skill guarantee required the presentation of a choice.
Different requirements of causation apply in those situations.
370. Where the exercise of proper care and skill required (for example) unilateral conduct by
the supplier, it is irrelevant to consider the potential response of passengers. This is
because, ex hypothesi, there was no need to present passengers with an option. Thus for
group members (and the plaintiff) on the cruises 1 and 8-11(incl) and (probably) cruises
303 Ex P38 (CB 6/1958); Ex P44 (CB 6/1995-1996)
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6-7, where the cruises should have been unilaterally cancelled, evidence as to what
passengers would have done is unnecessary.
371. If it was to be found, however, that proper care and skill merely required the
presentation of an option to passengers, then the response of passengers as to what they
would have done in a hypothetical situation is relevant. In this context, the option
would need to be presented and explained in similar terms to what is set out in
paragraph 237 above.
Evidence of what passengers would have done
372. Much of the cross-examination of the plaintiff and the sample of group members
proceeded upon the limited nature of explanations actually provided by
Scenic/Evergreen or limited hypotheticals. No one was asked what they would have
done in circumstances where Scenic:
a. explained that there was a real risk of substantial disruption (measured in days) to
the cruising component of the tour; and
b. explained that a likely consequence of such disruption was (aside from the loss of
cruising time), substantially increased coach travel time, and dining and
accommodation on-shore; and
c. explained that so long as passengers could reach certain landmark events on the
itineraries, by whatever means, including the extended use of coach travel (and
dining and accommodation facilities on-shore), Scenic/Evergreen would
interpret that as compliance with its obligations to provide services to its
passengers; and
d. (accordingly) would not in lieu of cancelling tours itself, offered or presented
passengers the opportunity to cancel the tours, before or after they had
embarked, and re-schedule tours to occur in 2013/14.
373. It was put to Mr Moore (cruise 8) that if, upon arrival at Amsterdam, before he had
embarked, he had been informed that the river situation was uncertain, that there was a
prospect of sailing for a few days but Scenic did not know what was going to happen
after that, he would have wanted to proceed with the cruise. Mr Moore denied this and,
reasonably enough, said he would have asked lots of questions304: one of which was why
didn’t Scenic cancel the cruise305; another might have been what were his alternatives
and another one, yet, was the likelihood of whether he would stay on the ship or get on
a bus306. It was not a question that delay of a cruise would have suited his position: he
had a timeframe to get back to the college.
374. Mr Childs was on the same cruise as Mr Moore. His letter of complaint to Mr Moroney
of Scenic Tours of 1 July 2013 clearly indicated his position: Scenic should have
unilaterally cancelled the tour so as to enable him to claim on travel insurance and re-
schedule the cruise at a later date307. Mr Childs was not cross-examined.
304 T 73 305 T 74.41 306 T 75 307 Ex P HC1 (CB 2/337)
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375. Certain hypothetical scenarios were put to Mr Cairncross (cruise 4), but they were very
limited; and did not particularly concern the question of how he would have responded
in the hypothetical events postulated. It concerned what he would do if, after travelling
smoothly for four or five days, the ship had unexpectedly had its progress halted
because of closure of a lock. The question was whether he would be prepared to take a
bus to another ship on the other side of the lock. Mr Cairncross assented to that
position308. There was subsequently argument with the defendant’s counsel as to
whether or not Scenic was negligent at the point of which Mr Cairncross proffered his
opinion that Scenic should have advised passengers that his cruise may be severely
compromised309. Mr Cairncross was not asked what he would have done if, having
received advice, he would have exercised any option made available to him.
376. A further hypothetical was put to Mr Cairncross as to whether he thought Scenic
should cancel the cruise if, as at 27 May, the entire river system was free or open. Mr
Cairncross accepted that, in those specified circumstances, it would be reasonable to
proceed310. No questions were raised as to what he would have done if he had received
a warning after the cruise had embarked.
377. Mr Holgye was on the same cruise (cruise 4). When it was put to him that had he been
informed that he might have to spend only one or two days on buses, he would have
continued to proceed with the cruise, Mr Holgye disputed the proposition311. His
evidence that he would have attempted to cancel had he known that there was likely to
be significant bus time was unchallenged312.
378. In the case of Mr Willems (cruise 9), it was suggested that by reason of a Facebook
entry posted on 6 June 2013, which referred to the challenging conditions, he and his
wife were prepared to accept a ‘compromised’ experience. However, there was no
evidence from Evergreen to indicate what options it presented to passengers on this
cruise to avert such compromise. To the contrary, on 6 June 2013, an Evergreen
representative indicated that Mr Willems could not cancel his cruise313. Besides which,
if, by that time, Mr Willems had cancelled the trip, he “would have lost everything”
because of his travel insurance arrangements314.
379. Plainly, after the Facebook entry was posted by Evergreen (apparently on 6 June 2013),
Mr Willems’ partner, Ms Buchanan unambiguously indicated that she expected an
option to cancel to be presented: she only wanted a cruising delay to be for a short
time315 and did not want to spend 2 weeks on a coach316. The next day, Mr Willems
308 T 117-118 309 T 121-122 310 T 124 311 T 138 312 T 138.19 313 Willems, par 46 (CB 2/222) 314 T 100, 102.44 315 Britten, par 53 (CB 2/224) 316 Ex P MW1; (CB 2/264); also Ex D74
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recalled an Evergreen representative predicting that s/he was “98% sure that you will
be on the ship in the next two days.”317
380. In the case of Mr Peattie (cruise 11), he received the opinion from his travel agent on 4
June 2013 (before his scheduled embarkation on 10 June 2013) that based on a Scenic
update, everything looked as though it would operate as normal318. Whilst the Scenic
update, upon which that opinion was based, indicated that high water levels had
dramatically impacted cruising on the Rhine, Main and Danube rivers (between
Amsterdam and Budapest) in the previous week, it emphasised that Scenic was (at that
point) currently scheduled to operate the June 10 (and 12) cruises “without impact” to
embarkation or ship availability319. Mr Peattie interpreted the opinion and update as
suggesting that there may be some disruption, but it was not going to be significant;
particularly because of the use of the words “without impact”320. That interpretation
was reasonable. On 7 June 2013, passengers were told that because Budapest was under
water, passengers would be moved to Vienna by coach. When it was put to him that he
was content to proceed, without embarking at Budapest (ie that he was content with the
variation), Mr Peattie explained that he had no choice: the tour director said that if they
did not proceed, they would not receive a refund321. Contrary to what they had been led
to believe, however, passengers embarked at Krems. Mr Peattie was not asked what he
would have done if Scenic had presented to him the option of cancelling the tour and
re-scheduling it for later in the year.
381. Mr Britten (cruise 1) was cross-examined on the basis that the disruption that affected
his cruise was declared to be sudden or unexpected322. It was not put to him what he
would have done if options had hypothetically been presented to him, either before or
after he embarked.
382. To reiterate, for certain cruises in particular (cruises 2-5), the causation inquiry will be
affected by timing. Thus, for Messrs Holgye and Cairncross, who embarked on cruise 4
(STC270513.1) the relevant question is not what they would have done in a
hypothetical situation before the cruise embarked on 27 May, but what they would have
done when the exercise or proper care and skill would have made it reasonably
apparent that the cruise they had embarked upon was being, or was likely to be,
substantially disrupted. In their case, the cruise proceeded without disruption for 4 days,
but there was little if any cruising thereafter. The causation question (as to what they
would have done when presented with an option at the appropriate date) really applied
as at 30 or 31 May 2013323.
383. That most of the witnesses accepted that they were aware of a risk that their tours may
be disrupted due to river levels (whether they had read the terms and conditions or not)
does not advance the defendant’s position, in circumstances where (a) it is a statement
317 Willems, par 54 (CB 2/224) 318 Peattie, Annex ‘A’ (CB 2/518) 319 Ibid (CB 2/519) 320 T 166.22 321 T 169.11 322 T 151 323 As indicated in the Opening, at T 32.22
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of the obvious and (b) the plaintiff and witnesses have not asserted that passengers
believed that their tours would be completely free from disruption. It would have been
one thing if one of the subject cruises embarked from Amsterdam in, say, March 2013
(ie where there could be no suggestion of any recent flooding or rising river levels) until
a ‘sudden’ or ‘unexpected’ closure of a lock, caused a ship to be stuck for 2 hours, until
the ship could be safely moored and a bus could take passengers to a nearby adjacent
port where the cruise would continue. In such case, it is very likely that the
inconvenience, temporary and perhaps fleeting, would have willingly been endured.
384. The case for the plaintiff, and the circumstances of the witnesses called is that (a) the
defendant was aware before embarkation that there was a risk of substantial disruption;
and/or (b) the defendant became aware of a risk of substantial disruption after
embarkation. ‘Substantial’, in this context, means real or substantial; not temporary,
fleeting or ephemeral. In neither category of case did the defendant take the steps that
proper care and skill required of it. To the extent that the exercise of proper care and
skill required the provision of an option to a passenger, that option should have been
provided with an explanation (and prediction) that the cruising component of the tour
was likely to be substantially disrupted, which would necessitate alternative
arrangements that might substantially diminish the purpose or result that passengers
wished to achieve from their tour experience. None of the plaintiff’s witnesses were
asked what they would have done had an explanation by Scenic of this kind been
supplied to them.
2.6.2 Non-compliance could not be remedied
385. There is no indication in the ACL as to how a supplier may be expected to ‘remedy’ a
failure to comply with a consumer guarantee in relation to services. Here a harmful
result – a ruined holiday – has occurred. The defendant has not offered the passengers
another cruise.
386. Since the non-compliance with the consumer guarantees cannot be remedied, the
plaintiff has a right to compensation under s 267(3)(b) of the ACL, and it is
unnecessary to consider whether there was a ‘major’ failure to comply.
2.6.3 ‘Major’ failure to comply
387. In any event, there was a ‘major’ failure to comply. A failure to comply is a ‘major
failure in a range of circumstances, such as where:
The services would not have been acquired by a reasonable consumer fully
acquainted with the nature and extent of the failure (ACL, s 268(a);
The services are substantially unfit for a purpose for which the services of the
same kind are commonly supplied and cannot, easily and within a reasonable
time, be remedied to make them fit for such a purpose (ACL, s 268(b));
The services were unfit for the particular purpose for which they were acquired
or were not of such nature as might reasonably be expected to achieve the result
the consumer desired (made known to the supplier) and the services cannot
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easily, and within a reasonable time, be remedied to make them fit for such
purpose or to achieve such result (ACL, ss 268(c)-(d)).
388. The considerations relevant to ss 268(b)-(d) have effectively been addressed above. As
to s 268(a), the question is an objective one: how would the reasonable consumer have
reacted. That hypothetical reasonable consumer would need to be acquainted with the
circumstances that:
Scenic had actual or constructive awareness of the likely substantial disruption of
the cruising component of the tours;
Notwithstanding such awareness, Scenic had not:
o exercised its power to cancel the tours; or
o offer to its passengers the opportunity to cancel (either before or after
embarking), with refunds and/or the opportunity to re-schedule for
another tour;
Even in the absence of any prior knowledge of the risk or prospect of
substantial disruption, once the cruises had embarked Scenic had not cancelled
tours, or offered passengers the opportunity to leave.
3. QUANTUM OF DAMAGES
3.1 Heads of damages
389. There are two kinds of loss under s 267 of the ACL. First, there is the head
representing the reduction in the value of the services below the price paid (s 267(3)(b)).
390. Secondly, the consumer may also recover damages for any loss or damage suffered
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 the failure (ACL, s
267(4)). Legislative emphasis has been given to the separate and independent nature of
these heads of damage (s 267(5)).
391. The methodology for calculating reduction in value is considered below in section 3.2.
3.1.1 Meaning of ‘foreseeable’ loss
392. The remedy in s 267(4) is discretionary. The expression ‘reasonably foreseeable’ has
been equated to ‘probable consequence of’324
393. Professor Carter325 makes the following points about s 267(4):
rules on contract damages would not be applicable save by analogy;
the concept of ‘reasonably foreseeable’ would displace general contract damages
rules (Hadley v Baxendale);
324 Explanatory Memorandum, Trade Practices Amendment (Australian Consumer Law) Bill (No.2) 2010, [7.114] 325 J W Carter, Contract Law and the Australian Consumer Law, [2-23]
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Whether loss or damage is ‘reasonably foreseeable’ is probably determined at
the time that the consumer guarantee is not complied with;
The impact of the provision is to enable recovery not only of out of pocket
expenses, but other consequential loss.
3.1.2 Availability of damages for disappointment and distress
394. Under general law, compensation is available for disappointment and distress as a
reasonably foreseeable head of damage. This head of damage is apposite in this context:
Baltic Shipping Co v Dillon (1993) 176 CLR 344 at 364.2; 22 NSWLR 1; Jarvis v Swan Tours
Ltd [1973] QB 233). This head of damages has been recognised under the
corresponding legislative provision providing compensation for foreseeable loss for
contravention of a consumer guarantee in New Zealand326, whose legislative framework
was a model for the consumer guarantees in the ACL.
395. In response, the defendant relies upon s 275 of the ACL, and it asserts that the
provision picks up and applies provisions of Part 2 of the Civil Liability Act (NSW)
limiting damages for non-economic loss, of which, the defendant asserts a claim for
disappointment and distress is a species.
396. Firstly, s 275 of the ACL does not pick up the provisions of Part 2 of the Civil Liability
Act. By its terms, s 275 applies to a state law limiting liability for a breach of contract for
the supply of services327. The intent of s 275 of the ACL, similar to the former s 74(2A)
of the former Trade Practices Act, is to ensure that in actions for damages for breaches of
contract for breach of implied warranties, state laws quantifying or regulating damages
for breach of contract are not evaded. More specifically, the intent is to prevent a
constitutional inconsistency between a federal provision imposing a warranty in a
contract and whose contravention would otherwise have provided ‘full contractual
liability’ (like the old s 74(2) of the Trade Practices Act) and a state law regulating or
modifying damages recoverable in contract328.
397. Here, however, the plaintiff and group members do not sue in contract or seek
recovery for damages for breach of a term of the contract. They (relevantly) sue under s
267(4) of the ACL329, that is, a statutory claim for damages for ‘foreseeable loss’ (a
notably tortious measure) because of non-compliance with a statutory obligation.
Section 60 and 61 of the ACL (unlike the former Sections 74(1)-(2) of the Trade Practices
Act) are not terms that are implied, by statute, into a contract. The provisions are
independent statutory obligations applicable to the supply of services to a consumer330.
326 Malbon & Nottage (ed), Consumer Law and Policy in Australia and New Zealand (2013), p 124, citing Hosking v The Warehouse Ltd (District Court of NZ, 5/10/98) 327 Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWCA 219 at [63]. In this case, the claimant sued in tort and under the ACL, but not in contract. 328 Perisher Blue Pty Ltd v Nair-Smith [2015] NSWCA 90 at [185]-[187] 329 It is not suggested that the caps under the Civil Liability Act (NSW) apply to the compensation recoverable under s 267(3) of the ACL. 330 Alameddine v Glenworth Valley Horse Riding Pty Ltd [2015] NSWCA 219 at [77]
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398. Secondly, even if the provisions of Part 2 of the Civil Liability Act were picked up and
applied by s 275 of the ACL, the provisions were not engaged. The provisions should
be construed as being subject to a geographic limitation that the relevant injury be
suffered in New South Wales. The central focus of Part 2 is reducing liability for
personal injury damages, which makes it appropriate to fix the geographic limitation to
the place where the personal injury was suffered. This would be consistent with the
High Court’s reasoning in Insight Vacations Pty Ltd v Young (2011) 243 CLR 149 where,
as in this case, although the relevant contract may have been governed by NSW law, the
injury, and the performance of the services, occurred outside of New South Wales. In
this case, the personal injury – the ‘suffering’ or ‘loss of amenity’ constituted by
disappointment and distress – was also suffered outside of New South Wales.
3.2 Methodology of loss of value
399. The defendant’s opposition to the claim extended even to resisting the proposition that
Mr Moore suffered any loss, or disappointment at all. His cross-examination suggested
that he enjoyed the early part of the tour and was exaggerating the difficulties associated
with extended bus – travel331. This was probably the least attractive aspect of the cross-
examination: to suggest that Mr Moore enjoyed the early part of his tour, and therefore
that it wasn’t all a bad experience: the insinuation is that Mr Moore should have been
grateful for the benefits that he received. Moreover, it does not reckon with the facts,
not seriously contradicted by the defendant, that there was a reduction in the cruise
time promoted by Scenic332. Mr Moore was not challenged on that.
400. A statement of loss of value, in this respect, is very much an objective matter. It is a
matter that the defendant is peculiarly positioned to know. Put another way, it is a
matter in which there are real practical limitations upon proof that a plaintiff can
supply. The difficulties in assessing loss of value in a case of this kind were observed by
Devlin J in Biggin v Permanite [1951] 1 KB 422. In that case, the plaintiff was entitled to
damages against a seller for delivery of defective goods, with the damages referable to a
diminution in the market value of goods333. But the law does not permit difficulties in
estimating loss to defeat an award of damages by way of compensation for loss actually
suffered334. In cases of this kind, it is recognised that there may be an element of
guesswork in the damages calculation335.
331 T84.39 332 Ex P DM1 (CB 3/813-814) 333 Cited in McGregor on Damages (18th ed) [8-008] 334 Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 at 349; Gray v Richards (2014) 88 ALJR 968; [2014] HCA 40 at [55] 335 Fink v Fink (1946) 74 CLR 127; applied in Placer (Granny Smith) v Thiess Contractors (2003) 77 ALJR 768; 196 ALR 257 at [38]
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3.2.1 Background to admissions
401. This principle does not however find complete expression in this context because at
least some evidence has been adduced, centred around admissions made on the
defendant’s behalf, and other documents tendered by the plaintiff.
402. On 23 August 2013, Covermore indicated to Mr Moore that it would pay out his claim
for insurance for the sum of $1293 per passenger. The letter expressly indicated that
this sum was calculated by reference to information provided by Scenic in a letter336.
Covermore’s letter also identified that the sum of $1293 was attributable to the
‘difference between cruise and bus tour’.
403. That description can only have come from Scenic. It is to be recalled that only one
week before, Covermore informed Mr Moore that his claim was unsuccessful337. Why
the change of position? A clue lies in Justin Brown’s letter to Mr Moore back on 6
August 2013, in which he expressed “disappointment” with Covermore’s position and
which he also indicated that he had “advised Covermore that their reply to you was not
aligned with the way in which they had advised us they would review such claims’338. It
should be inferred that the reference to ‘their reply’ was probably some verbal
indication, if not some prior notification made by Covermore prior to its letter of 16
August.
404. The point, however, is that Scenic was providing information to Covermore and it was
probably the case that this information included the bit about the $1293 being
attributable to the difference between a cruise and a bus tour. The information would
not have come from Mr Moore.
405. This collaboration between Scenic and Covermore, trying to work in the interests of its
disgruntled former passengers, and providing information to enable the insurer to
assess the loss of value, also appears to have occurred with other travel insurers,
including Zurich339.
406. As part of its preparation for trial, the plaintiff sought to elicit information from the
defendant as to the loss of value arising from the reduction in cruising days: in effect, to
tease out how, in the case of Mr Moore, Scenic had calculated the difference between a
bus and a cruise tour. It issued a notice to produce340 directed to that purpose. That
notice was the subject of objection by Scenic (notwithstanding that no application was
formally brought to set aside the notice. The notice simply was not complied with).
Commercial confidentiality was cited as a concern.
336 The letter being Ex 4 (formerly MFI 3) 337 CB 3/819 338 CB 3/816 339 T 139.15 340 CB 1/66-67 (especially, par 2-3). Paragraph 3 of the notice referred to the figure of $732.66 identified in CB2/824
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3.2.2 Admissions as to how the defendant calculated loss of value
407. In order to avoid debate about whether to produce documents that might reveal
Scenic’s calculation of loss of value, the defendant’s counsel342 indicated the way in
which Scenic itself had calculated the loss in value:
i. identify the number of days allocated to a cruise (A);
ii. divide the total price of the cruise (B) tour by the days allocated to a cruise (B
divided by A);
iii. multiply the figure in (ii) by the number of days lost.
408. Counsel for Scenic did not qualify his statement as to how Scenic calculated the loss of
value to the Court by stating that this was purely a mathematical calculation. It can only
be inferred that the statement by counsel reflected a considered position in itself
reflecting his client’s instructions343.
409. Scenic argues that even on some of the ‘lost’ cruising days, benefits were provided
(accommodation and dining). There are two answers to that. First, the loss of value
centres upon the lost cruising experience. If the relevant promise by Scenic was to
provide benefits A + B + C344, but all that was provided was B + C, the loss is the lost
benefits A.
410. Secondly, Scenic did not otherwise adduce evidence that would dis-entangle the
provision of some benefits from other benefits that were not provided. The plaintiff
tendered various ‘variation schedules’, prepared by Scenic, which were indicative of the
loss suffered through impacts on the passenger’s sailing schedule. Those variation
schedules were enclosed with ‘itinerary variations’, which, on their face, appear to
reflect Scenic’s assistance to passengers to make travel insurance claims345. It is notable
that in arriving at a figure for ‘daily cost’, Scenic did not separately try to break down or
apportion the benefits attributable to accommodation and dining from the cruising
component of the tour.
411. In summary, through the issue of its notice to produce and the tender of the variation
schedules and itinerary variations, the plaintiff did all that it practicably could to identify
the loss of value arising from the lost, or reduced, cruising component of the tours. In
contrast, the defendant had ample opportunity to put on evidence to indicate its view
of the proper methodology of loss. It did not do so. It was confronted with coercive
court process issued by the plaintiff to flush out that position. It initially resisted that
process before its counsel made admissions in Court. It was notified that the plaintiff
would rely upon Scenic’s documents, which did not apportion the ‘daily cost’ in
accordance with individual benefits. The principle of Armory v Delamirie (1722) 93 ER
342 CB 1/205 - 208 343 That the defendant’s counsel sought instructions is apparent at T35.29 (CB 1/207) 344 Where A represents the cruise component; B represents accommodation and C represents food and beverages. 345 Ex P54 & 55 (CB 6/2146-2165)
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664346 indicates that in the absence of any competing methodology proposed by the
defendant, the methodology proposed by the plaintiff should be accepted. Further, and
more generally, in support of its position, the plaintiff invokes Lord Mansfield’s dictum
in Blatch v Archer347 that all evidence is to be weighed according to the proof which it
was within the power of one side to produce and in the power of the other to have
contradicted348.
3.3 Amount
3.3.1 Section 267(3)
412. The standard cost for Mr Moore’s cruise was $7,195, per person349. Mr Moore
purchased an upgrade from the Moselle deck standards stateroom to the category PP
Balcony suite, at a costs of $2,455350.
413. The total cost incurred (and paid for) by Mr Moore was $10,990. This comprised the
costs of the standard room, plus the upgrade, together with port costs and taxes351.
414. Based on the above expenditure, the cost per day to Mr Moore was $732.66.
415. Mr Moore’s cruise was disrupted for 10 of the 15 days352.
416. Applying the loss methodology referred to above, Mr Moore should receive $7,362.60.
That sum is the result of multiplying 10 days at the rate of $732.66.
417. To this sum should be added an interest component, which is calculated at $1,350 up to
to the date of these submissions.
418. The plaintiff does not propose to make submissions on the loss of value of other
passengers, even including group members, on the basis that calculations of individual
group members’ claims for damages is not a common issue for determination.
3.3.2 Section 267(4)
419. It was put to Mr Moore, and some of the other witnesses for the plaintiff, that they
enjoyed parts of the tour prior to the disruption. It was not, however, put to Mr Moore
that he enjoyed the compromised part of the experience: the extended coach travel, the
inconvenience of participating in a ship swap; and the accommodation and dining
onshore that was of an inferior quality to that which Scenic had promoted as being
available on the ship.
346 applied in Tobin v Ezekiel (2012) 83 NSWLR 757 at [100]-[101] 347 (1774) 98 ER 969 at 970 348 The dictum was referred to by the High Court in ASIC v Hellicar (2012) 247 CLR 345 at [166]-[168], [250]-[269]. 349 Ex P8 (CB 4/1058) 350 Ex P DM1 (CB 3/783) 351 Ibid (CB3/813) 352 Ex P DM1 (CB3/813-814)
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420. According to the defendant’s documents, Mr Moore did not receive approximately 2/3
of the cruising experience he bargained for. An award of damages under this head is
very much based on impression. Relevant in this regard was the genuineness of the
complaints made to Scenic after his experience353. Relevant also was the circumstances
in which Mr Moore had used long-acquired savings (and long service leave) to pay for
this particular tour experience, which was partly designed to alleviate his grief (and that
of his partner) from recent family deaths354. It is submitted that an appropriate
allowance for this head of damages is $2,000.
4 RESTITUTIONARY ACTION FOR MONEY HAD & RECEIVED
4.1 Basis for recovery
421. This action (in common law) is relied upon as an alternative: ie, if the action for
damages (for contravention of the statutory guarantees) fails.
422. The action is for money had and received. A category of that action355 is where there is
a failure of consideration (Moses v Macferlan) which arises where payments are made for a
purpose that fails, such as where the contemplated state of affairs disappears.
423. Where the consideration is partly severable (such that the purchase price may be
apportioned), and where a claimant has no remedy in damages, there should no longer
be any requirement that the failure of consideration be “total”. This is a proposition
accepted, separately, by Gummow J in Roxborough356. That view was approved by
Callinan J in his concurrence in Roxborough357. It was also approved by Heydon J in
Equuscorp358, It was also the view of a majority of the High Court in David Securities Pty
Ltd v CBA that the concept, when applied to circumstances where consideration could
be apportioned or “broken up”, was misleading and inapt359.
424. It is also a proposition shared by Basten JA and Young AJA recently in the New South
Wales Court of Appeal361 and previously by McColl JA (with whose reasons Basten JA
and Campbell JA agreed) in the Court of Appeal362.
353 Ex P DM1 (CB 3/799-802, 805-806, 809-812) 354 Moore, 2/6/15, par 6 (CB 3/548) 355 Recovery for money had and received “depends on the existence of a qualifying or vitiating factor”: Farah Constructions v Say Dee Pty Ltd (2007) 230 CLR 89 at [150]; David Securities Pty Ltd v CBA (1992) 175 CLR 353 at 379 356 Roxborough v Rothmans (2001) 208 CLR 516 at [105]-[107] 357 (2001) 208 CLR 516 at [198] 358 Equuscorp Pty Ltd v Haxton (2012) 246 CLR 498 at [136]-[137]. The plurality alluded to, but did not decide the issue: at [33] 359 (1992) 175 CLR at 382-383 361 Nu Line Construction Group v Fowler [2014] NSWCA 51 at [11], [192] 362 Juul v Northey [2010] NSWCA 211 at [217]
