- The NSW Court of Appeal has handed down the first significant judgment on the damages awardable under s 267 of the Australian Consumer Law for breach of a statutory guarantee.
- Damages awarded under s 267(3)(b) must be based on evidence of the objective market value of the service in fact provided by the supplier.
- The decision confirms that damages assessed under s 267 should put the consumer in the same position as if the supplier provided a service that complied with the statutory guarantee rather than reversing the transaction.
In Scenic Tours Pty Ltd v Moore  NSWCA 74, the New South Wales Court of Appeal published a judgment in the long-running representative action taken by disappointed holidaymakers against Scenic Tours Pty Ltd (‘Scenic’) for breaches of statutory guarantees provided by the Australian Consumer Law (‘ACL’). The judgment provides useful insight into how courts will assess damages claimed under ACL s 267 for breach of statutory guarantees in respect of services supplied to consumers.
The history of the representative action is long and complicated. This article focuses on the damages awardable under s 267 and omits the other legal issues raised by the proceedings.
In 2013, unprecedented rain and floods closed many of the major canals and riverways of continental Europe. Scenic provided luxury cruises along these affected routes. Mr Moore and other holidaymakers (‘the Litigants’) had booked to travel on one of 13 cruises offered by Scenic between May to June 2013. Scenic’s brochure promised a ‘once in a lifetime cruise along the grand waterways of Europe … immersed in all-inclusive luxury.’ Such an ‘unforgettable’ luxury experience cost Mr Moore $10,990.
The flooding forced Scenic to significantly change the itineraries of the 13 cruises. Rather than spending most of their time luxuriously cruising down the ‘grand waterways of Europe’, the Litigants found themselves moored in unpleasant industrial areas, enduring interminable coach rides, and skipping promised sites of interest. In other words, the luxury cruises involved severely curtailed luxury and cruising.
In Moore v Scenic Tours Pty Limited (No 2)  NSWSC 733 (‘Scenic (No 2)’), Garling J found that Scenic had breached ss 60, 61(1) and 61(2). The sections apply if a person supplies services in trade or commerce to a consumer. Section 60 provides a statutory guarantee that the service will be provided with due care and skill. Section 61(1) provides that, if the consumer communicates that they are acquiring a service for a particular purpose, then there is a statutory guarantee that the services will be reasonably fit for that purpose (‘the Purpose guarantee‘). Section 61(2) provides a similar statutory guarantee that a certain result will be achieved, if the consumer communicates that they are acquiring the service to achieve a particular result (‘the Result Guarantee‘).