November 29, 2023

Readers will recall that Ruby Princess – a Carnival vessel – sailed from Sydney on 8 March 2020 for New Zealand and returned on 19 March due to a Covid outbreak, short-changing its 2,671 passengers by three days on the promise of a pleasurable 13 day South Pacific cruise and setting up a disappointment damages claim from affected passengers.

In preparation for their much-anticipated holiday, passengers had completed an online “cruise personalizer” that displayed high level health and safety assurances and commitments to the very highest safety management and monitoring standards in the International Safety Management Code.

There had been significant respiratory infection among guests who disembarked from the vessel – having completed the prior Ruby itinerary – just hours before the vessel cast off from Circular Quay in Sydney Harbour to begin its next ill-fated voyage.

Indeed Carnival had prepared a mailout – that was never sent – cancelling the cruise with an offer to passengers of a 100% refund and a 100% future cruise credit as well as hotel accommodation in Sydney, “some incidentals” and onward flights.

As it happened, some 700 passengers contracted COVID-19 by the time the ship arrived back in Sydney and some later died.

The class action against the cruise operator alleged it knew of the likelihood of a Covid outbreak before setting off for New Zealand; that that the cruise should have been cancelled before departure; and that far more vigilance should have been exercised in passenger management during the voyage.

Susan Karpik – then 69 yrs – sued in negligence and for breach of Australian Consumer Law s 60 and s 61 statutory guarantees for injuries comprised by coronavirus and long covid. Her 72 yr old husband also contracted a version of the virus that put him in a coma and from which he almost died while she was separately confined to her cabin.

The case came before Justice Angus Stewart in the Federal Court in Sydney. He found – despite Carnival’s contentions that he had been exposed to the disease in his hometown of Wollongong before departure – that Mr Karpik most likely contracted COVID-19 on board the Ruby Princess and that Mrs Karpik contracted it from him on the voyage.

Regardless, the cruise line argued it had a complete defence to the s 61 claims because Karpik had not made known any specific purpose or result she wished to achieve from her holiday given her only expectation was for the things for which a cruise holiday is ordinarily acquired.

Its promises like “come back new”, it asserted, could not be relied on.

Agreeing an expectation to “come back new” added nothing, Justice Stewart concluded the passengers had accepted the “promise or ambition as illustrated and amplified in the glossy brochures” by booking the cruise and turning up to embark on the vessel and had thereby made known their purpose and the result that they wished to achieve.

The particular purpose and the result were “the usual and ordinary purpose or result associated with taking a cruise holiday, namely to have a safe, relaxing and pleasurable cruise” and to “enjoy” the services as promised. The looked-for outcome did not have to be something different from the ordinary expectation.

The desire to be kept “safe” – extending as it did to both “health safety” and “navigational and operational safety” – was doubly apparent by the passengers making themselves “captives” within the confines of the vessel at sea in the hands of the company and its crew.

What then did the cruise operator guarantee – having regard to the notified purpose and result that were desired – in relation to the services it had agreed to supply?

Justice Stewart observed the guarantees “necessarily” extended “to something more than what the contract offers on its terms”.

The guarantees were in this instance – he concluded – to do everything reasonably necessary “to provide a safe and pleasurable 13-day recreational cruise” including accommodation, meals, transportation and amenities and onboard activities substantially in accordance with the advertised and planned itinerary.

Its obligation was not to “absolutely” ensure the desired outcome was met and indeed “a small departure may be permitted” to even the most meticulous travel arrangements. Rain interruption to a holiday in the sun does not for example, defeat the desired outcome unless the service provider “knew that the holiday was scheduled for the monsoon season”.

Similarly – he observed – a cruise is not necessarily rendered unfit for purpose simply because the vessel is required to dock at a secondary port on one or two days or because one or two of the land tours cannot take place as scheduled.

That said, the court was at pains to point out that the control mechanism of “reasonableness” does not protect a supplier from all the consequences of circumstances beyond its control.

“Parliament has chosen to allocate to the supplier risks that neither the supplier nor the consumer could have anticipated,” the judge reflected, noting the only exception being where the loss is proved to have been caused by some other person.

Further, services cannot be reasonably fit for purpose if they merely achieve some narrow and immediate purpose – eg, passage to ports according to the itinerary – but otherwise have a catastrophic result that defeats the desired outcome.

After a trial extending more than three sitting weeks, the judge was able to conclude that as a result of Mr and Mrs Karpik contracting COVID-19, she did not have a safe, relaxing and pleasurable cruise holiday.

That put the company in breach of the s 61 guarantees because the services supplied were not capable – from before the start of the cruise – of being reasonably fit for the notified purpose and were not of such a nature or quality that they might reasonably be expected to achieve the desired result.

That situation did not change once the voyage had begun.

He also found Carnival breached its duty of care and the ACL s 60 due care and skill guarantee in various respects, namely by failing to cancel the cruise or warn of the heightened risk of the virus being on board Ruby Princess compared to cruise ships generally.

The failure to warn of the heightened risk of infection from the virus on a cruise ship compared to the community generally was not though a breach because that was risk ought to have been obvious to passengers given the catastrophic shipboard outbreaks that had been widely reported on ships Diamond Princess (Yokohama) and Grand Princess (Hawaii).

Having ruled that causation and loss were established on each of the causes of action pleaded, the court found that Mrs Karpik’s COVID-19 infection gave rise to very mild symptoms and that the adjustment disorder she acquired by reason of her husband’s condition was also in the mild category.

Her  non-economic loss assessment at 8% of the most extreme case was well short of the CLA s 16 threshold of 15% that Carnival argued was picked up and applied as surrogate federal law thru ACL s 275 so as to result in nil general damages for her injuries.

The court rejected Mrs Karpik’s fierce contention that CLA s 16 was constrained geographically to apply only to events occurring within NSW because – it reasoned – the section was not directed to where the event occurred but to how a court in NSW could award damages.  It mattered not whether the court was exercising federal or state jurisdiction or was a federal or state court.

On the other hand Justice Stewart decided that CLA s 5H – which specifies there is no duty is owed to warn of an obvious risk – is not picked up and applied in the same way as it is not a provision that “limits or precludes liability” as described by s 275, but rather is a “duty denying” provision not caught by the section. This conclusion differs from those of at least two NSW Supreme Court justices.

He cleared the claim over all other CLA liability hurdles including that cancellation of the voyage – which he ruled should have occurred – was a feasible and proportionate precautionary measure.

“That the respondents decided to suspend cruising worldwide merely five days later shows that the burden of cancelling the cruise would not have been intolerable,” Justice Stewart observed. “Although a drastic measure, to cancel one cruise at the last minute is a very minor measure compared to suspending all cruising worldwide”.

The applicant also sued for distress and disappointment by reason of her ruined holiday, occasioned – she argued – by conduct that had mislead her into believing the cruise could be conducted pleasurably and safely notwithstanding the significant risk of the Covid outbreak.

The company was found to have made many misleading representations as to on-board safety and the ability to enjoy a pleasurable cruise holiday.

Its “pleasurable cruise representation” promised the cruising services pictorialised in its advertising brochures and the doing of all things reasonably within its ability to enable the passengers to have a safe, relaxing and pleasurable cruise.

Karpik argued that even if the cruise line had reasonable grounds for making the representation at the time it was made, those grounds disappeared before embarkation as the Covid crisis grew and catastrophic shipboard outbreaks erupted on Ruby’s sister ships and other cruise ships of which the company had inside knowledge.

She had thus boarded the ship – so her argument ran – because of the company’s misleading and deceptive conduct namely, its failure to disclose the appreciable risk that they would no longer be able to deliver the promised services.

“I am satisfied that had the respondents withdrawn the pleasurable cruise representation before embarkation, Mrs Karpik would not have gone on the cruise,” decided the judge.

What though was her loss in relation to such disappointment?

The answer was complicated by having also sued for a psychological injury for which she was awarded no damages.

The cruise line contended that in those circumstances, no aspect of that loss could be claimed as “disappointment” damages. Her distress, disappointment, anxiety, frustration had after all – they claimed – grown out of her personal injury and that of her husband.

It also drew attention to the absence of any complaint from Susan about the “cruising, hotel and vacation-type services” that were provided.

Mrs Karpik’s ask for an award of $50,000 to $60,000 for disappointment damages – as distinct from the psychological injuries she suffered – was dismissed with the court accepting Carnival’s submission that the features of her disappointment arose out of the couples’ injuries and “there is very little left to compensate her for” as disappointment damages.

As the company had argued, the cruise had in any case gone ahead essentially as planned, permitting her to engage with her travel companions in shipboard activities (trivia, bingo, art auctions), restaurants, cafe and bar visits, shopping, theatre events and excursions to several destinations in New Zealand.

Having each paid approximately $4,400 for their cruise, the couple received a total refund from the company.

In those circumstances – “having essentially enjoyed the experience that she had purchased and paid for” (except for her non-compensable injuries) – Justice Stewart considered an appropriate sum for the distinct disappointment damages was “at about the cost of the cruise at the most” which she had already received by way of the refund.

Mrs Karpik received nil for disappointment damages and nil for personal injury damages. Her only recovery was for medical treatment expenses of about $4,500.

The ruling is rich in important observations concerning the ACL as it pertains to services acquired by consumers. It does not necessarily prevent other Ruby Princess group members being assessed differently and qualifying for personal injury damages and additional disappointment damages.

Karpik v Carnival plc (the Ruby Princess) [2023] FCA 1280 Stewart J, 25 October 2023

And in a victory for the non-Australian Ruby passengers, the High Court of Australia ruled on 6 December that the class action waiver clause in the cruise operator’s contract was unfair and therefore void pursuant to ACL s23. Their claims should therefore not be stayed by reason of the exclusive US jurisdiction clause because of a “strong countervailing reason not to enforce” it.

That is because those passengers have “a strong juridical advantage in remaining as part of the class action in the Federal Court of Australia, as [they] may not be able to participate in a class action in the United States. Enforcement of the exclusive jurisdiction clause may reduce the potential for [them] to participate in litigation concerning the voyage by denying them access to justice as well as the associated benefits of a class action. Further, “enforcement of the exclusive jurisdiction clause would fracture the litigation”.

Karpik v Carnival plc [2023] HCA 39 Gageler CJ, Gordon, Edelman, Gleeson and Jagot JJ, 6 December 2023

Categories: Cruise ship injury

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