FEDERAL COURT OF AUSTRALIA
Karpik v Carnival plc (The Ruby Princess) (Stay Application) [2021] FCA 1082
SUMMARY
In accordance with the practice of the Federal Court in cases of public interest, importance or complexity, the following summary has been prepared to accompany the judgment published today. This summary is intended to assist the public in understanding the outcome of this part of the proceeding and is not a complete statement of the conclusions reached by the Court. The only authoritative statement of the Court’s reasons is that contained in the published reasons for judgment which will be available on the internet at www.fedcourt.gov.au together with this summary.
The proceeding before the Court
This case concerns the outbreak of COVID-19 on board the Ruby Princess, which departed Sydney on 8 March 2020 and returned to Sydney on 19 March 2020 after sailing via a number of ports in New Zealand. Many passengers on the vessel contracted the disease and some died.
The applicant, Susan Karpik, commenced representative proceedings against Carnival plc, the first respondent and time charterer of the vessel, and Princess Cruise Lines Ltd, the second respondent and owner and operator of the vessel. The persons on whose behalf the proceeding has been commenced (group members) are described by three groups as defined in the amended originating application and further amended statement of claim, namely Passenger Group Members, Executor Group Members and Close Family Group Members.
Mrs Karpik alleges that the respondents negligently and in breach of their duties of care allowed the voyage to proceed, failed to take adequate measures to protect passengers from the risk of COVID-19, and failed to warn passengers of the risk of contracting COVID-19 and that adequate measures to protect passengers from that risk could or would not be implemented. Mrs Karpik also alleges that the respondents engaged in misleading or deceptive conduct and breached their consumer guarantees under the Australian Consumer Law (ACL). As a result of those alleged breaches, Mrs Karpik alleges that she and the group members suffered various loss and damage.
The overseas passengers
Of the 2,651 revenue passengers on board, the respondents allege that 696 contracted on US terms and conditions and 159 contracted on UK terms and conditions. The balance are said to have contracted on Australian terms and conditions.
The US terms and conditions contain an exclusive jurisdiction clause that selects the US District Courts for the Central District of California as the court in which any claim must be brought. The US terms and conditions also contain a class action waiver clause by which the passenger agreed not to participate in any representative proceeding, and a clause that provides for the application of US maritime law. (Together, the relevant US clauses.)
The UK terms and conditions contain a non-exclusive jurisdiction clause in favour of English courts and a clause providing for the application of English law.
As a result of the respondents indicating that they wished to rely on those clauses, Mrs Karpik filed points of claim on behalf of group members proposed to be appointed as sub-group representatives. The sub-groups consist of passengers who the respondents allege contracted on the US terms and conditions (US sub-group) and passengers who contracted on the UK terms and conditions (UK sub-group).
Points of claim were then filed for Patrick Ho, who is resident in Canada, as a US sub-group representative and Julia Wright, who is resident in the UK, as a UK sub-group representative.
The interlocutory application the subject of the judgment
By amended interlocutory application, the respondents sought various orders which, in substance, are that:
(1) the US and UK sub-groups be formally established and Mr Ho and Mrs Wright be formally appointed as the respective sub-group representatives;
(2) Mr Ho’s claim and the claims brought by him as US sub-group representative be stayed by reason of:
(a) the US sub-group members being bound by the relevant US clauses; or
(b) this Court being a clearly inappropriate forum to hear those claims;
(3) Mrs Wright’s claim and the claims brought by her as UK sub-group representative be stayed by reason of this Court being a clearly inappropriate forum to hear those claims; and
(4) US maritime law applies to the US sub-group’s negligence claims and English law applies to the UK sub-group’s negligence claims.
The essence of the relief sought is that the claims of the overseas passengers no longer continue in this Court.
The law applicable to the US and UK sub-groups’ negligence claims
The Court held that it is not necessary or appropriate at this early stage of the proceeding to determine the law applicable to the negligence claims. That is mainly because the claims may still be amended or developed in ways relevant to that question and because resolution of that question is not necessary for the determination of the stay applications.
The incorporation of the relevant US clauses
The evidence established that when Mr Ho made his booking, which was made through a travel agent in Canada, he was not given, sent or directed to the US terms and conditions. The travel agent made the booking on a computer terminal that gave her access to Princess’s online booking platform. It was only over a month after he had made his booking that Mr Ho was sent any documentation. That documentation included a booking confirmation email from Princess.
The Court held that Mr Ho’s contract was formed when he made his booking with the travel agent. Accordingly, the booking confirmation email he received over a month later came too late in order to be incorporated into his contract. The Court further held that, even if the email was not too late, the US terms and conditions were nonetheless not incorporated because clicking on the link provided in those emails did not display the US terms and conditions but rather a selection of different possible contract terms without directing Mr Ho to the contract terms that Princess said applied.
Further, the Court held that, because the exclusive jurisdiction clause and the class action waiver clause were unusual or onerous, reasonable steps were required to bring those specific clauses to the attention of Mr Ho, and that Princess failed to take such steps. Accordingly, the relevant US clauses were not incorporated into Mr Ho’s contract.
In respect of the US sub-group members, the Court considered it inappropriate to decide the question of incorporation of the relevant US clauses as a common question, this being a class action. That is because the circumstances in which each passenger made their booking were likely to be different in ways material to that question.
Given these findings, it was strictly unnecessary for the Court to deal with many of the further issues raised by the parties. However, the Court considered the issues raised by the parties in case it erred on the question of incorporation. The separate basis for a stay on the ground that this Court is a clearly inappropriate forum for the determination of claims of the overseas passengers was required to be dealt with regardless of the US terms and conditions not being incorporated.
The enforceability of the relevant US clauses
Mrs Karpik challenged the validity and enforceability of the relevant US clauses on the basis that they are unfair under Pt 2-3 of the ACL and that they are unjust under s 7 of the Contracts Review Act 1980 (NSW). The class action waiver clause was further challenged as either void or unenforceable by reason of offending Pt IVA of the Federal Court of Australia Act 1976 (Cth), being the regime for representative proceedings. Mrs Karpik also contended that reliance on the class action waiver clause by the respondents would constitute unconscionable conduct contrary to s 23 of the ACL.
Save for the acceptance of the challenge to the class action waiver clause as being unfair under Pt 2-3 of the ACL, the Court rejected the challenges to the validity or enforceability of the relevant US clauses.
Whether this Court can grant a stay of proceedings brought under the ACL
The respondents’ application for a stay was also resisted on the ground that this Court does not have the power to stay proceedings in favour of the claims being pursued in a foreign court where those proceedings allege breaches of the ACL. That was said to be on the basis that s 138 of the Competition and Consumer Act 2010 (Cth), which confers jurisdiction on this Court in respect of matters arising under the ACL, contains an implied prohibition on the Court’s power to stay proceedings.
The Court rejected that argument and held that there is nothing in the section, and little in the authorities, to suppose that s 138 had the effect contended for on behalf of Mrs Karpik.
Whether a stay would have been granted in reliance on the relevant US clauses
The Court considered whether, if it had found the relevant US clauses to be incorporated and if it had not found the class action waiver clause to be void for unfairness, it would have granted a stay of Mr Ho’s claim in reliance on those clauses.
The Court held that, in respect of a stay in reliance on the exclusive jurisdiction clause, there were strong reasons not to enforce the clause. The principal reason for that is that a stay would result in the fracturing of the litigation with essentially identical claims being brought in this Court and any stayed claims being brought in the US. Such a result is wasteful of parties’ and judicial resources and runs the risk of producing conflicting outcomes in different courts, which would bring the administration of justice into disrepute. Also, the US sub-group has a clear juridical advantage in this Court, namely that they can take advantage of being part of representative proceedings, which would not be available to them in the US by reason of the class action waiver clause being enforceable in the US.
In respect of a stay in reliance on the class action waiver clause (if it were available), the Court held that a stay would not be an appropriate order to enforce any valid and enforceable contractual obligation not to be a part of a class action. Some other appropriate remedy would have to be fashioned.
Clearly inappropriate forum
The Court considered the stay sought on the basis of this Court being a clearly inappropriate forum, which does not depend upon the incorporation, validity or enforceability of the relevant US clauses.
The Court held that it is not a clearly inappropriate forum for the determination of the claims of the overseas passengers. Those claims have a substantial connection with NSW as many of the breaches of duty of care that are alleged concern conduct or omissions in Sydney. Further, the ACL claims fall to be decided in accordance with Australian law and the claims of some 1,800 passengers who contracted on the Australian terms and conditions will continue in this Court regardless of whether the US or the UK sub-group members form part of the class action. Many of the issues to be determined are common to all group members. There is simply no respect in which the continuation of the US or UK sub-group claims in the representative proceeding in this Court is oppressive, vexatious or an abuse of process in the sense used in the authorities. As such, the Court held that it could not be a clearly inappropriate forum.
JUSTICE ANGUS M STEWART
10 SEPTEMBER 2021
SYDNEY
