Passenger wins on liability, Carnival wins on damages, in the Ruby Princess class action for the COVID cruise

Key Points

• Mrs Karpik and her husband contracted the novel coronavirus COVID-19 during a cruise on board the Ruby Princess around New Zealand in March 2020.
• Mrs Karpik claimed compensation from Carnival for personal injury and for distress and disappointment, in the Federal Court of Australia.
• Mrs Karpik won on liability - The Court found that Carnival was liable for negligence because it had breached its duty of care for the health and safety of the passengers, was liable under the consumer guarantee for failing to provide a safe, relaxing and pleasurable holiday and for misleading representations that it was safe to board and be on board.
• Carnival won on damages - The Court rejected Mrs Karpik’s claim for about $300,000 for pain and suffering, saying that her injuries were minor. The Court awarded her $4,423.48 for her medical expenses. The Court rejected Mrs Karpik’s her claim for $50,000 for distress and disappointment, saying that Carnival’s refund of the cruise price was sufficient.

This article is an analysis of Karpik v Carnival plc (The Ruby Princess) (Initial Trial) [2023] FCA 1280, a decision of the Federal Court of Australia (25 October 2023) (Stewart J). Quotations are referenced to paragraphs in the judgment by square brackets [ ].

The Karpiks – the booking and the boarding

Mrs Karpik was the lead applicant in a class action (a representative action) against Carnival for passengers on the Ruby Princess cruise ship which sailed on 8 March 2020.

Mrs Karpik was a semi-retired nurse, aged 69. Mr Karpik was a retired police officer, aged 72 (at the time of the cruise). The Karpiks had a long history of taking holidays together on cruise ships, including sailing on nine Princess cruises since 2008.

In September 2019, they booked a 13-day cruise around New Zealand, from and returning to Sydney, on the Ruby Princess cruise ship, after reviewing a brochure and advertising materials. They paid the cruise price of $8,746.00.

On the morning of 8 March 2020, they travelled from their home in Wollongong, south of Sydney, to board the ship at Circular Quay.

Before boarding, they completed a health declaration in which they confirmed that they had not, in the past 14 days, had a fever, cough or difficulty breathing or had visited designated countries such as China or Hong Kong. Carnival did not carry out temperature screening for fever which is an early symptom of COVID-19. (Rapid Antigen Tests had not been invented)

Carnival gave no warning to passengers on the Ruby Princess of the risk of COVID-19 infection. Even had the Karpiks received a warning and decided to cancel, they would not have received a refund of the cruise price because a refund would only be available if Carnival had cancelled the cruise.

Carnival – the COVID-19 warnings

The first respondent was Carnival plc which traded as “Princess Cruises” and “Carnival Australia”. The second respondent was Princess Cruise Lines Ltd the owner and operator of the Ruby Princess, which it time chartered to Carnival. The ship was flagged in Bermuda. At the trial, no distinction was drawn between the two, and so are referred to as ‘Carnival’ in this article.

COVID-19 is a highly contagious coronavirus, transmitted via respiratory droplets [coughing, sneezing] in a 1.5 metre zone by aerosol, and on objects. It spreads more easily in enclosed indoor spaces. The flu-like symptoms are fatigue, cough, shortness of breath and fever. The consequences of infection include severe illness and death. In March 2020, there were no vaccines and limited treatment options.

As of 8 March 2020, Carnival knew of the heightened risk of the spread of coronavirus on its cruise ships. In early February all passengers on board the Diamond Princess off Japan were quarantined for 14 days because of a large number of infections. In early March, coronavirus infections had been recorded on the Grand Princess, another Carnival Princess cruise ship, on a cruise from San Francisco and return.

In February 2020, guidance and protocols to manage the risk of contagion had issued from the US Centers for Disease Control and Prevention, the World Health Organization and the NSW Government. On 11 March 2020, the World Health Organisation declared the novel coronavirus (COVID-19) to be a world-wide pandemic.

By March 2020, COVID-19 had spread to Australia. On 6 March 2020, the Australian Government issued a National Cruise Ship Protocol advising cruise ships to have “enhanced surveillance and control measures” for coronavirus.

When the Ruby Princess docked in Sydney early on 8 March 2020 at the end of its previous voyage around New Zealand, only a small number of passengers and crew had been tested for coronavirus. Carnival did not cancel the cruise, despite the Government warnings. This would turn out to be the last cruise to leave port because Carnival did cancel all cruises from 9 March 2020 and gave full price refunds.

Shortly before midnight on 8 March 2020, the Ruby Princess set sail and passed through the heads of Port Jackson (Sydney) out to sea.

The ship sailed with about 2,671 passengers and 1,146 crew members.

The cruise itinerary included a number of ports in New Zealand, and return to Sydney.

The Ruby Princess is a large, modern, ocean-going cruise ship. It has a range of indoor and outdoor venues, including shops, restaurants, a gymnasium, a theatre, a casino, cafes and bars, an outdoor cinema, swimming pools, an outdoor sports court and a mini golf course. There are many venues and opportunities for passengers to mingle with other passengers and the crew.

The ship returned to Sydney on 19 March 2020, 3 days early, with at least 559 people on board who had contracted coronavirus, of whom 190 were crew members and 8 had died.

The reason for the early return was that on 15 March 2020, the Australian Government decreed that from 16 March 2020 it would deny entry to cruise ships that had left foreign ports, with an exception for international cruise ships that had departed their last foreign port and were headed to Australia.

Did the Karpiks contract COVID-19 on board the Ruby Princess?

Mrs Karpik claimed that she and her husband contracted COVID-19 on board, and that their losses were caused by that infection.

Carnival contended it did not cause the loss for which compensation was claimed. Carnival contended that Mr Karpik was already infected when he boarded and did not contract COVID-19 on the cruise, and Mrs Karpik did not contract COVID-19 at all (Carnival said she had a strain of influenza).

The issue of causation was highly contested. The Karpiks called 6 expert witnesses and Carnival called 7. The expert witnesses were epidemiologists, virologists, psychiatrists, infectious diseases physicians and pulmonary and critical care experts.

The evidence was that there were several opportunities for infection on board the ship.

The first was shortly after embarkation, when the Karpiks attended a safety muster in the Wheelhouse Bar. It was extremely crowded with 200 people in attendance.

Ruby Princess Wheelhouse Bar

For the first three days of the cruise Mr Karpik felt well – he walked around the ship, looked at the shops and attended the dining rooms for meals and trivia with friends. No mask wearing, physical distancing or proper isolation precautions were implemented by Carnival.

On 12 March Mr Karpik began to feel unwell, had a temperature and flu-like symptoms. On 16 March he visited the ship’s medical centre and was told to stay isolated (but still sharing the cabin with Mrs Karpik). On 18 March, Mrs Karpik contracted COVID-19.

On his return to Wollongong, Mr Karpik was admitted to the isolation section of the ICU at Wollongong Hospital, was intubated, ventilated and placed into an induced coma. By 27 March his condition had deteriorated so much that he was given a 10% chance of survival. But through new interventions his condition improved, and after spending two months in hospital, he recovered.

The Court found:

• Due to the “number and the variety of person-person contacts an individual person may have daily” in frequent events, small cabins, wealth of high-touched surfaces, “I have no hesitancy in finding that cruise ships are particularly susceptible to coronavirus infection and transmission and compare very poorly with the community, and that the respondents [Carnival and Princess] knew that.” [123, 124]
• “Because the risk exposure on the vessel was far higher than in Wollongong, … and because an incubation period of 3.5 days is within the usual range … I find it more probable than not that Mr Karpik was infected with coronavirus on board the vessel.” [294]
• “the likelihood [is] that Mrs Karpik [became] infected from her husband given the very close contact she maintained with him for the first 7 or 8 days of his illness.” “That could only have been on the voyage.” [396, 397]

Was Carnival negligent?

Mrs Karpik brought an action for negligence that Carnival had breached its duty of care for the health and safety of the passengers.  

The negligence action was brought under the Civil Liability Law (which codifies the tort of negligence) and the care guarantee under section 60 of the Australian Consumer Law. The Court applied both the Civil Liability Act 2002 (NSW) and Section 60 Australian Consumer Law without distinguishing between the two.

The three elements in an action for negligence are: existence of a duty of care, breach of the duty of care and damages to be awarded.

Existence of a duty of care (a foreseeable of risk of harm)

Did Carnival owe Mrs Karpik a duty to take reasonable care for her health and safety, including with regard to the risk of harm cause by coronavirus infection?

“[Carnival’s] knowledge [of the virus, its transmissibility, consequences, and so forth] means that the respondents [Carnival/Ruby Princess] were in a special position to appreciate the risks facing their passengers, and the facts underlying the knowledge establish that it was reasonably foreseeable that passengers might contract COVID-19 on board from other passengers or crew.” [545]

“I find that the respondents owed Mrs Karpik a duty to take reasonable care for her health and safety. … that duty extends to the risk of harm caused by COVID-19 infection.” [559]

Mrs Karpik [was owed] a duty of care with respect to a recognised psychiatric illness arising from Mr Karpik contracting COVID-19 on the voyage.” [579]

Breach of duty of care (failing to take reasonable precautions for health and safety)

Mrs Karpik’s case was that Carnival failed to either cancel the cruise or to warn passengers of the risks of contagion or to take sufficient protective measures such as to screen passengers and crew before boarding, physical distance rules, isolation, and wearing face masks.

The Court agreed.

Starting with the failure to cancel the cruise:

• The Court found that Carnival failed to take the most effective precaution to protect from harm: “the reasonable operator would have cancelled [the cruise] on 8 March 2020” [609, 702 (1)].

Alternatively, in proceeding with the cruise, Carnival failed to warn:

• The Court found that Carnival was negligent (breached its duty of care) by failing to: “warn passengers about the heightened risk of contracting COVID-19 on board the Ruby Princess as compared with other cruise ships (by reason of the outbreak of ARI/ILI on the previous voyage and the insufficient quantity of face masks available for use on board)”. [702 (2)]
• In doing so, it dismissed the ‘obvious risk’ defence which was: “the heightened risk coronavirus on board cruise ships when compared with the community generally was an obvious risk” [as at 8 March 2020]. [617, 618]
  The Court asked rhetorically: should Carnival, acting reasonably, “have warned of giving the heightened risk on the Ruby Princess when compared to other cruise ships”? [622]
  The Court found that: “Mrs Karpik ought to have been warned of “the heightened risk of COVID-19 on board [the voyage to depart on 8 March] because of there being an outbreak of ARI/ILI [acute respiratory infection (ARI) and/or influenza-like illness (ILI)] on board the previous voyage, most of the crew remaining on board for the next voyage and that only nine of the 366 individuals [on the previous voyage] that presented themselves in response to a call for screening were tested for COVID-19. That information was vital to understanding that there was a heightened risk of COVID-19 on board the Ruby Princess. The respondents had access to that information, but the passengers did not. Mrs Karpik was entitled to make an informed choice regarding whether or not she accepted that heightened risk before embarking on a 13-day journey, mostly in the confines of the vessel. There would have been no burden to the respondents in offering her that choice.” [625]

Alternatively, Carnival failed to implement these precautions and protective measures:

• Carnival should have “implemented better pre-embarkation screening” – it failed to “provide temperature screening of passengers and crew prior to boarding the Ruby Princess for the cruise;” [649, 702 (3)]
• Carnival failed to “ask all passengers and crew whether they were experiencing symptoms consistent with COVID-19 and deny boarding to those who answered yes;” [649, 702 (4)]
• Carnival failed to “encourage passengers and crew to physically distance (ie, remain 1.5 metres from other people) on board the vessel;” [702 (5)]
• Carnival failed “implement a system of physical distancing on board” to “limit numbers of people within all parts of the ship so as to allow for physical distancing (ie, 1.5 metres per person) and closing such parts which could not permit it;” [665, 702 (6)]
• Carnival failed to “isolate all passengers and crew who presented with ARI or ILI until 24 hours after their symptoms subsided;” [702 (7)]
• Carnival failed “from 11 March 2020, [to] isolate passengers and crew who had travelled from or through designated countries and who presented with ILI or ARI for 14 days (ie, for the remainder of the cruise); and [681, 702 (8)]
• Carnival failed to “provide roommates of isolated passengers with face masks, alcohol hand rub and information on how they could protect themselves from disease.” [681, 702(9)]

Were there reasons not to compensate (despite the breach)?

Was the injury within the scope of the duty of care? “The harm which Mrs Karpik suffered was within the scope of the respondents’ duty of care … for the health and safety of their passengers which extended to the risk of harm caused by COVID-19 infection.” [836]

Was there causation? “it is more probable than not that Mr Karpik would not have been infected with COVID-19 on board the vessel but for the respondents’ breach of duties owned to the Karpiks.” [failure to cancel, warn or implement precautions] [823, 837]

Was there an acceptance of risk? “Mrs Karpik would not have boarded the vessel if she had been warned of the heightened risk on board the Ruby Princess. She therefore did not accept … a heightened risk of some harm occurring”. [835]

What damages should be awarded?

The claim: “Mrs Karpik claims to have suffered three personal injuries, namely infection with COVID-19, suffering from Long COVID and an adjustment disorder with mixed anxiety and depressed mood. The heads of damage claimed by her for personal injuries are non-economic loss (pain and suffering and loss of amenities of life) and past and future medical expenses. No damages are claimed for economic loss or care.” [863]

Mrs Karpik’s claim for non-economic loss damages for Long COVID and adjustment disorder injuries was between $274,360 and $303,240. The range reflected “a severity assessment of between 38% and 42% of the “most extreme case”. [868]

The reference to the “most extreme case” is to the maximum amount set under the Civil Liability Act that may be awarded for non-economic loss. Currently, that maximum amount is $722,000.

A complication exists that the Civil Liability Act sets a threshold of at least 15% of the MEC for non-economic loss so as to exclude minor claims.  This means that the severity of the injury must be at least 15% of the most extreme case before any amount can be awarded.

The Court did not find that Mrs Karpik suffered the Long COVID injury claimed, but if she had, “her symptoms were very mild” and “can only contribute a very small amount to her damages”. [863, 893]

The Court found that Mrs Karpik did suffer an adjustment disorder injury. The Court’s findings were:

“Mrs Karpik, a person vulnerable to experiencing depressive and anxiety symptoms, suffered from a new adjustment disorder as a consequence of the voyage and its aftermath. From March to June 2020, Mrs Karpik was very distressed and depressed and required professional psychiatric treatment [resulting from her husband’s near death experience] … Mrs Karpik’s mental health improved from June 2020 when her social functioning returned to normal and she has returned to her baseline state of psychological health and appears to be working and socialising at the level that she was prior to the cruise. By early 2021, the adjustment disorder had essentially resolved … I find that, overall, the psychiatric illness experienced by Mrs Karpik in the form of her adjustment disorder was of moderate severity and relatively short duration.” [938]

The Court concluded that “the non-economic loss for the adjustment disorder is assessed at 8% of the most extreme case, and if Mrs Karpik had Long COVID that would be assessed at 4% of the most extreme case …”. [1054] The total is 12%.

“In the result, no personal injury damages are awarded on the ACL ss 60, 61(1) and 61(2) claims [the consumer guarantee and care guarantee claims] or the negligence claim as the non-economic loss is less than the threshold of 15%.” [1054]

All that was left of the personal injury damages claims was $4,423.48 for out of pocket expenses for GP consultations, specialist consultations and cost of Valdoxan (a pharmaceutical). The Court awarded that amount.

Did Carnival breach the consumer guarantee?

Justice Stewart said:

“To put it rhetorically, how can the services have been reasonably fit to keep passengers safe when so many became infected with COVID-19?” [503]

Section 61 of the Australian Consumer Law implies consumer guarantees of fit for purpose and expected results into contracts for the supply of services. They are:

Section 61 (1) If:

(a)   a person (the supplier) supplies, in trade or commerce, services to a consumer; and

(b)   the consumer, expressly or by implication, makes known to the supplier any particular purpose for which the services are being acquired by the consumer;

there is a guarantee that the services, and any product resulting from the services, will be reasonably fit for that purpose.

Section 61 (2) is similar except it is that if the consumer makes known the result they wish to achieve, there is a guarantee is that the services will be of such a nature, and quality, state or condition, that might reasonably be expected to achieve that result.

In particular:

• Services While Carnival preferred to describe its services in general terms “the services reasonably necessary to enable the passengers to have a safe and enjoyable cruise”, the Court preferred to describe the services in more detail as: “everything necessary to provide a 13-day recreational cruise including accommodation, meals, transportation and amenities, onboard activities, cleaning services, medical services, … [including] those necessary to safeguard and protect the health and safety of the passengers.” [463]
• Particular purpose “I consider that Mrs Karpik by making the booking and going through with it, including by turning up to embark on the vessel, made known to the respondents that her particular purpose in acquiring the cruising services was to have a safe, relaxing and pleasurable cruise holiday substantially in accordance with the advertised and booked itinerary.” [469]
• Safety “In putting their health safety, like their navigational and operational safety, in the hands of the cruise line – as the cruise line acknowledges in its pre-cruise communications – they impliedly make known that part of their purpose in acquiring the services, and part of the result that they wish to achieve, is that the cruise be safe.” [470]
• Reasonably fit / expected “the guarantee is that the services be reasonably fit for the purpose and as might reasonably be expected to achieve the desired result.” [480]
• Not safe - Carnival “failed to keep the passengers safe” and should have cancelled the cruise because “they could not reasonably have been expected to keep the passengers safe in light of what we know about the virus and what occurred in the days and weeks following the cruise”. [509]

The Court found that Mrs Karpik’s loss and damage claims were “because of” Carnival’s failure to comply with the consumer guarantee. [772]

Despite the breaches of the consumer guarantee, no non-economic loss damages were awarded for the same reasons as none were awarded under the negligence and care guarantee claims. [1043]

Was Carnival’s conduct misleading or deceptive?

The Australian Consumer Law, Section 18(1), contains a prohibition against engaging in conduct that is misleading or deceptive.

Mrs Karpik alleged this conduct was misleading or deceptive:

• The use of the trademark “come back new” in the material to promote and market cruises on the Ruby Princess;
• The statement in an email sent to passengers on 5 March 2020 stated that “we continue to implement increased monitoring, screening and sanitation protocols to protect the health of our guests … designed to be flexible to adapt to changing conditions and recommended best practices” (the “Reasonable Care” and “Best Practices” representations); and
• Permitting passengers to board the Ruby Princess on 8 March 2020 (the “Safe to Board” and “Pleasurable Cruise” representations). [710]

The Court found that the use of the “marketing language “come back new” is relatively meaningless and adds nothing to having a safe, relaxing and pleasurable cruise”. It was not misleading. [720]

The Court found the “Reasonable Care” representation for the safety of passengers that it would take adequate precautions during the cruise was misleading for the same reasons that the Court found Carnival negligent (see breach of duty of care). [736, 740]

The representation that Carnival had implemented “Best Practices” protocols to protect the health of passengers was misleading because it had no reasonable grounds to make it – it had inadequate stock of face masks on board and did not “implement the specific measures of asking all passengers and crew if they were experiencing symptoms of COVID-19 [prior to embarkation] and if so, denying boarding to them”. [751, 752]

The “Safe to Board” and “Pleasurable Cruise” representations implied from the marketing and promotional materials, were not misleading at the time the cruise was booked but became misleading by the time of embarkation because the lack of temperature screening and medical supplies gave rise to “an appreciable risk they [Carnival] would not be able to deliver the promised cruising services”. [763]

A separate head of damages for non-economic loss, unrelated to personal injury, is claimable for misleading or deceptive conduct. It is not claimable in the care guarantee, negligence or consumer guarantee claims.

The head of damages is for distress and disappointment, as recognised in the decisions of the High Court of Australia of Moore v Scenic Tours Pty Ltd [2020] HCA 17 and Baltic Shipping Co v Dillon [1993] HCA 63. The Court referred to them as Dillon damages.

Mrs Karpik claimed damages in the range of $50,000 to $60,000 for her distress and disappointment.

The Court found:

“Mr and Mrs Karpik each paid approximately $4,400 for their cruise. They received a total refund from the respondents after the cruise. I do not consider that Mrs Karpik’s Dillon damages exceed that amount – I would assess them at about the costs of the cruise at the most. To a substantial extent she lost the benefit of the cruise in the sense that she was worried, distressed, disappointed and so on thereafter rather than feeling refreshed and reinvigorated, but when on the cruise she essentially enjoyed the experience that she had purchased and paid for. On balance, she suffered no more than $4,400 worth of Dillon damages.” [1028]

“Because of the refund, she should receive nil Dillon damages.” [1029]

Comments

This class action has a long way to go. This decision was labelled “Initial Trial”. There will be orders as to the future conduct of the class action. Appeal lies to the Full Court of the Federal Court of Australia, and to the High Court of Australia on questions of law (liability & damages).

In terms of Mrs Karpik’s compensation claim, the decision is a win for Carnival. But each passenger’s circumstances will be different. There will be claims for economic loss which Mrs Karpik did not have because she was semi-retired. There will be claims for non-economic loss which will exceed the 15% threshold. It’s a work in progress.

The class action lawyers who conducted this action said: “This is the first class action in the world to take on a cruise company and succeed.” Presumably this statement is limited to COVID-19 claims. The significance of this decision outside of Australia is limited by the fact that the decision relies in the main upon the Australian Civil Liability and Consumer Law legislation. Also, the COVID-19 pandemic was an extraordinary circumstance.

The High Court of Australia recently decided that foreign persons who were passengers were able to join the class action – the decision is Karpik v Carnival plc [2023] HCA 39 (6 December 2023). The Court did not comment on the merits of the claims made in the Initial Trial. The addition of about 700 foreign persons to the class action will make the action more costly and lengthy.

Footnote: Princess Cruises have heeded the lessons. If you take a Princess line cruise today, at the end of the cruise you are given a farewell gift of a Rapid Antigen Test for Covid.