Baltic Shipping Company v Dillon (The Ship Mikhail Lermontov) (1993) 176 CLR 344
Contract; remedies for breach; damages; distress and disappointment.
Facts: Dillon booked and paid for a 14-day cruise on a passenger ship. Eight days after the cruise began, the ship struck a rock and sank. Apart from physical injuries and psychological trauma, Dillon suffered from disappointment and distress when her planned holiday ended in catastrophe. She sued Baltic Shipping for damages to compensate for this.
Issue: Was Dillon entitled to damages for distress and disappointment flowing from a breach of contract?
Decision: The damages should be awarded.
Reason: This type of case provides an exception to the general rule that a plaintiff cannot claim damages for disappointment, distress or injured feelings by reason of a breach of contract. Where the defaulting party has expressly or impliedly agreed to provide pleasure, relaxation, and entertainment, or to prevent molestation or vexation, then damages of this type are recoverable following a breach. The same principle applies in cases of a breach of contract that causes a physical injury, or a breach that causes physical inconvenience.