Travel – breach of contract – can I claim for distress and disappointment?
Paradise
In Baltic Shipping Company v Dillon (1993) 176 CLR 344, the High Court distilled the law in Australia for claims for compensation for non economic loss such as stress and disappointment or injured feelings where a provider of holiday products breached their contract with the holiday maker.
The Court recognised that there were entitlements to damages for ‘non-economic loss’ where the subject matter of the contract was for the provision of pleasure and enjoyment. Those losses included damages for injured feelings, damages for pain and suffering, damages for vexation and discomfort, damages for distress, vexation and frustration, and distress and disappointment. The Court distinguished those losses from the pure financial measure of the actual value of the lost benefit. Such damages were in the Court’s view consequential losses from a breach of contract and compensable where reasonably foreseeable as the result of the breach.
Paradise Lost
In a string of NSW Supreme Court and Court of Appeal cases in 2010 an 2011 – Insight Vacations Pty Ltd v Young [2010] NSWCA 137; New South Wales v Corby [2010] NSWCA 27; and Flight Centre v Louw [2011] NSWSC 132 – non-economic losses such as distress and disappointment were found to be captured by the definition of ‘personal injury’ under section 11 of the Civil Liability Act 2002 (‘CLA’) as an “impairment of a person’s physical or mental condition” regardless of whether the claim was brought in tort, in contract, under statute or otherwise (section 11A(2) CLA).
As such in NSW, mere injured feelings, distress and disappointment, in the absence of a physical injury and consequential to it, were not compensable given the restrictions imposed under section 31 CLA in that the liability to pay damages for mental harm arises only where the harm consists of a recognised psychiatric illness. Moreover, the threshold under section 16 requiring that the injury exceed 15% of a most extreme case before any damages were payable for non-economic loss meant any claim for mere injured feelings was doomed.
Paradise Found
The High Court’s decision in Moore v Scenic Tours Pty Ltd [2020] HCA 17 delivered 24 April 2020 has enlivened claims for damages for non-economic loss for injured feelings for breach of consumer warranties under the Australian Consumer Law and for breach of contract in cases where the subject matter of the contract was pleasure and enjoyment such as holiday contracts. The Court rejected the contention that injured feelings were a mental impairment and thus came within the definition of ‘personal injury’ for the purposes of the CLA.
Mr Moore’s case was a representative action brought in the Supreme Court of New South Wales in respect of a luxury river cruise holiday promising a 14 day cruise aboard the Scenic Jewel from Amsterdam to Budapest. The cruise was severely disrupted by adverse weather conditions that resulted in high water levels preventing the passing of the vessel under various bridges. Mr Moore was promised a “once in a lifetime cruise” in “all inclusive luxury”. Instead Mr Moore spent two days in all cruising, changing ship twice and the rest on coaches and in hotel rooms. There was no dispute by scenic as to the payment of damages in respect to the loss of value of the holiday. The primary issue for determination was whether there was an entitlement at law for Mr Moore to be compensated for his injured feelings, physical inconvenience, distress and disappointment.
The Court found that non-economic loss damages were payable as a form of expectation damages where the injured feelings were a natural consequence of the breach. The Court distinguished this species of damages for non-economic loss from pain and suffering which arises as a consequence of a physical injury or psychiatric illness and which is caught by the CLA. The Court was also at pains to point out that the CLA concerned claims for personal injury and that section 11A was ‘an anti-avoidance provision designed to ensure that a claimant cannot avoid the restrictions in Pt 2 by bringing their claim for damages consequential upon physical injury as a claim in contract or under statute.”
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