Should the White Island Volcano legal proceedings be heard in Florida or in New South Wales?

Royal Caribbean Cruises Ltd operated a vacation cruise on the Ovation of the Seas cruise ship which departed from Sydney on 4 December 2019 for a 12 Night New Zealand Cruise.

On Day 6 (9 December 2019) a number of passengers were on a shore excursion to Whakaari/White Island off Whakatāne in the North Island of New Zealand when the volcano on the island erupted. The eruption killed 22 people and injured 25 others, mostly passengers from the Ovation of the Seas. Two of the passengers injured, Paul and Ivy Reed, reside in the State of Maryland in the USA.

Whakaari/White Island is an active marine volcano that has attracted visitors from around the world for decades. It is famous for its ‘Incredible, moon-like landscape’.

Royal Caribbean arranged for passengers to purchase tickets for the shore excursion to White Island during the cruise. The tickets were issued in the name of a local tour operator, White Island Tours.

The Ovation of the Seas docked at Tauranga. The passengers for the tour travelled by road to Whakatāne, then boarded a boat operated by White Island Tours to travel to the island, which is 50 kilometres offshore. The website of White Island Tours describes the tour - https://www.experienceoz.com.au/en/bay-of-plenty/white-island-tour in terms such as: “you'll see the likes of roaring steam vents and ash-soaked ground as well as deposits of vivid yellow sulphur”.

The commencement of proceedings in Florida and in New South Wales

Paul and Ivy Reed were injured by a volcanic eruption while visiting the island. They commenced a proceeding against Royal Caribbean Cruises Ltd in the United States District Court, District of Florida, Miami Division, on 7 December 2020 by way of a “Complaint and Demand for Jury Trial”. Royal Caribbean Cruises Ltd (RCCL) is a company incorporated in Liberia and has its principal place of business in Florida.

In response, Royal Caribbean (both Royal Caribbean Cruises Ltd and RCL Cruises Ltd t/as Royal Caribbean Cruises (RCL)) commenced a proceeding against Paul and Ivy Reed in the Federal Court of Australia, New South Wales Registry, at Sydney, in December 2020.

The orders sought by Royal Caribbean in the proceeding were an anti-suit injunction against the Florida proceeding based on an alleged breach of an exclusive jurisdiction clause, or alternatively that the Florida proceeding is vexatious and oppressive.

In reasons for judgment on 1 February 2021 in Royal Caribbean Cruises Ltd v Reed [2021] FCA 51, the Federal Court of Australia (Stewart J) outlined why it granted leave to Royal Caribbean to file and serve an amended originating process and statement of claim upon Paul and Ivy Reed in Maryland, USA. This is a summary.

Background: the injuries and how they were caused

In their Complaint, Paul and Ivy Reed “say that the eruption and resulting emissions of volcanic gas, rock and ash heated to between 200° and 390°C caused them immediate fear for their lives, severe, life-threatening burns over large portions of their bodies, permanent and disfiguring scarring, reduced use of their limbs and extremities, and immediate, ongoing and future needs for medical and psychological treatment, ongoing pain and suffering and emotional distress.”

The passengers’ four causes of action were in tort or negligence

1. The cause of action for negligence/failure to warn was –
    
   1. "United States federal maritime law applies to actions arising from alleged torts committed aboard a vessel sailing in navigable waters.
       
   2. As the owner of a vessel in navigable waters, RCCL and its apparent agents owed to all who were on board the ship, including the respondents, the duty of exercising reasonable care under the circumstances in all matters related to the incident at Whakaari.
       
   3. The duty owed to passengers by RCCL extends to advising about potential dangers beyond the point of debarkation, specifically including excursions beyond the point of debarkation in places where passengers are invited or reasonably expected to visit, such as the shore excursion to Whakaari.
       
   4. RCCL breached its duty to warn the respondents of the risks and dangers associated with the Whakaari shore excursion.”
       
2. The cause of action for negligence based upon apparent agency was –
   “a relationship of apparent agency existed between RCCL as principal and White Island Tours, which conducted the excursion to Whakaari, and [therefore] RCCL is liable for the negligence of White Island Tours.”
    
3. The cause of action for negligent misrepresentation was-
   “RCCL never qualified its representations about the excursion, which included that it would be the “adventure of a lifetime” and an “unforgettable” opportunity to see one of New Zealand’s “epic” adventures, by noting any risk of serious and disfiguring injuries.”
    
4. The cause of action for negligent selection of tour operator was –
   “RCCL owes a duty to its passengers to select its excursion operators with due care for its passengers and their safety, which it breached by failing to enquire as to the fitness of White Island Tours to conduct the excursion to Whakaari.”

Royal Caribbean’s application for an anti-suit injunction

The Federal Court summarised Royal Caribbean’s application in this way:

“the principal relief sought by the applicants against the respondents in the proceeding is an anti-suit injunction based on an alleged breach of the exclusive jurisdiction clause that they contend for, or alternatively on the basis that the Florida proceeding is vexatious and oppressive.”

The exclusive jurisdiction clause / choice of law clause was:

… These terms and conditions are to be construed under the laws of NSW and you agree to submit to the exclusive jurisdiction of the court of that state in the event of dispute between you and Royal Caribbean International.
…
This contract and the terms and conditions of it are governed by NSW law.

Royal Caribbean said that these clauses formed part of the contract of carriage because they were referenced by hyperlink to “AU Terms” in the “cruise offer summary” issued to Paul and Ivy Reed by the travel agent Cruisefusion on behalf of RCL Cruises t/as Royal Caribbean Cruises (a UK company registered as a foreign company in Australia). They accepted the offer by paying the deposit, and then the balance price.

The Federal Court decided that it was a ‘court of that state’, that is, a court of NSW.

As to the Florida proceeding being vexatious and oppressive, Royal Caribbean said that there was no connection between the subject matter of the dispute and the State of Florida where the Reeds had commenced their proceeding, for many reasons: They included the fact that the contract of carriage was made in NSW (the travel agent was in North Sydney), the terms expressly provided that the law of NSW was to apply, the cruise departed from and returned to port in Sydney, NSW and the Reeds did not reside in Florida.

The Federal Court was satisfied that it had jurisdiction, the proceeding had a connection to NSW, and Royal Caribbean had a prima facie case. It granted leave under r 10.43 of the Federal Court Rules 2011 (Cth) to serve the amended originating process and amended statement of claim on Paul and Ivy Reed in Rockville, in the State of Maryland, USA, where they reside.

The sequel – Paul and Ivy Reed avoid service of process

The proceedings returned to court on 18 February 2021 for an order for substituted service because despite the process server’s many attempts at service, Paul and Ivy Reed failed to answer the knocking on the door, even though they appeared to be home. In the opinion of the process server they were attempting to avoid service.

The court granted leave to Royal Caribbean to serve the originating process and statement of claim on the US lawyers of Paul and Ivy Reed by email. See Royal Caribbean Cruises Ltd v Reed (No 2) [2021] FCA 114 (Stewart J).

Comments

There is a very good reason why Royal Caribbean would choose to have the law of New South Wales apply exclusively and for the courts of New South Wales to hear the claims, which is that in NSW the applicable law for tots/negligence claims is found in the Civil Liability Act 2002.

The Civil Liability Act 2002 places caps on liability for non-economic loss (such as pain and suffering and emotional distress) and outlaws awards of exemplary or punitive or aggravated damages. It also recognises liability waivers. Most importantly, it provides that there is no pro-active duty of care to warn of an obvious risk, and that a person who suffers harm is presumed to have been aware of the risk of harm if it was an obvious risk. ‘Obvious risk’ is defined to include a risk which has a low probability of occurring.

NSW law is less favourable to plaintiffs than Florida law because of these limitations.

The law of New Zealand is another possibility as it was the place of the accident (lex loci delicti). But no proceedings can be brought in tort or negligence against Royal Caribbean or White Island Tours under the law of New Zealand. Under the Accident Compensation Act 2001 (NZ), any person injured in New Zealand (including a visitor) is entitled to medical and hospital care in New Zealand, free of charge. But proceedings to recover any compensation for personal injury in any court in New Zealand are barred (see s 317(1)), unless brought under an international convention relating to the carriage of passengers (s 317(5)).

This image is a clip from a website promoting the cruise: in question:

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