A world of 'not so' pure imagination

The Willy’s Chocolate Experience farce:  a classic case for solatium in damages for breach of contract?

It will have been difficult not to see the tale of woe that became of Willy’s Chocolate Experience, a story that dominated headlines in Scotland and beyond as it went viral via social media: children and their parents had been looking forward to around an hour of exhilarating entertainment, at up to £35 per ticket, only to receive the exact opposite. It is a box of wondrous legal issues aplenty: advertising, employment law, intellectual property law, consumer law, contract law – and there may well be some more. This piece looks at this story from a consumer redress angle, particularly focusing on solatium for breach of contract in common law, and how the thinking on the matter was driven by one – or two – prominent Scots.

What happened?

Advertising via the Willy’s Chocolate Experience website had promised “a place where chocolate dreams become reality”, “a journey filled with wondrous creations and enchanting surprises at every turn”, “an enchanted garden, with giant sweets, vibrant blooms, mysterious looking sculptures and magical surprises that add an extra layer of wonder to your Chocolatey Experience”, an “Imagination Lab”, a “Twilight Tunnel” – an “event [which] guarantees an immersive and delightful entertainment experience suitable for aged 3+ years old”. However, the reality turned out to be different.

Things started to unravel rather quickly when parents and their children found themselves in a largely empty warehouse with a few props and actors who did their best to work with gibberish scripts generated apparently by artificial intelligence (AI). Children were lucky to receive a jelly bean or two, with no chocolates in sight. There was not much enchantment, nor any activities for the children to do. In effect, the experience was all over after 5–10 minutes. Irate parents had called the police, and the event was abruptly cancelled among shouts for refunds. But based on the law on damages for breach of contract, could there be more compensation than just refunds of the cost of tickets?

Pecuniary and non-pecuniary loss – and classic case law

In cases of breach of contract, the primary focus may regularly lie on economic, pecuniary loss, whereby the remedy of damages seeks to compensate the party at the receiving end of the breach for their loss in monetary terms. Often, this is a mathematical exercise which compares the performance rendered with the performance that was expected. For example, damages may come in the form of a discount or a refund of the contract price.

In respect of non-pecuniary loss, the law is less straightforward. Solatium (injury to feelings, mental distress) is a well-developed heading of loss as part of a damages claim in delict, particularly negligence, but less so in contract. The starting point is the traditional rule set down by the House of Lords in Addis v Gramophone Co Ltd [1909] AC 488 (Addis), where it was held that a wrongfully dismissed employee could not claim for loss suffered by injury to his feelings as part of his claim for damages, no matter how cruel or demeaning the experience had been. The thinking behind this view was that the contractual matter was of a commercial nature first and foremost, thereby stemming a potential tide of claims based on mental distress. The law on contract formation then revolved around leaving the parties in charge, with little or no involvement by the legislator. The Sale of Goods Act 1893 was in place, but that statute had been developed with commercial contracts in mind in the context of the Industrial Revolution. ‘Consumerism’ and ‘consumer protection’ were still many decades away from becoming part of the terminology and thinking on contract law and policy, and from impacting – in a qualifying manner – on the bedrock provided by the key general principles of freedom and sanctity of contract.

However, the goalpost on solatium was moved significantly by Sheriff-substitute Peterson in Diesen v Samson 1971 SLT (Sh Ct) 49 (Diesen), a decision which influenced the law on the matter far beyond Scotland (William W McBryde, “Remedies for Breach of Contract” (1996) Edinburgh LR 1(1) 43-78, 72), representing a considerable claim to fame for a decision reached by the lowest rung of the Scottish judicial ladder. The dispute concerned a bride who had contracted with and was let down by a photographer who was expected to capture her wedding. The event involved both Scottish and Norwegian families, all contributing to a memorable occasion by wearing their respective traditional attire. While noting the general view in Addis, the court cited Mayne & McGregor on Damages (12th edition) in arguing that there was room for manoeuvre. Inverurie-born Harvey McGregor had significantly updated the textbook in 1961, and it became the leading text on the matter; indeed, in his obituary of McGregor, Tam Dalyell noted that “not since Moses has there been such an authoritative tablet” (. McGregor sought to carefully guard against “a dogmatic rule in the case of mental suffering” (p43): the yardstick was what had reasonably been in the contemplation between the parties at the time the contract was formed. Therefore, if a contract went beyond mere commercial matters and had the provision of pleasure and enjoyment at its heart, “the door [should] not [be] closed to awarding damages for mental suffering”.

This found traction with the court in Diesen (at 50): “Wedding photographs generally are of no interest to anyone except the bride and bridegroom and their relatives and friends, and then only because they serve to stimulate recollection of a happy occasion and so give pleasure. What both the parties obviously had in their contemplation was that the pursuer would be enabled to enjoy such pleasure in the years ahead [emphasis added]. This has been permanently denied her by the defender’s breach of contract and, in my opinion, it is as fitting a case for the award of damages as the examples cited [in Mayne & McGregor].” Acknowledging that the quantification of this type of loss was difficult, the court awarded £30 in damages, while trying to “preserve a sense of caution”.

Essentially, a core element of joy and pleasure is present in most consumer–trader transactions, particularly in agreements for specific services or events, like holidays or experiences. This was confirmed spectacularly in Jarvis v Swans Tours [1973] QB 233, likened to “the Donoghue v Stevenson of Tourism Law” by Atherton and Atherton (“The Legalities of Overbooking” (1999) UNSW Law Journal 22(3) 858-869, 867). Many will be familiar with Mr Jarvis’s disappointing two-week Swiss alpine holiday, when he had been looking forward to gemütlichkeit. He had been promised an amazing time based on the travel agents’ “lavishly illustrated brochure with its ecstatic text” (as described by Lord Justice Edmund Davies at 239). This, however, did not become a reality, with many facilities unavailable and the loneliness he was familiar with as a solicitor in Barking extended to his holiday.

While Sheriff-substitute Peterson’s jurisprudence in Diesen did not (yet) make an appearance as helpful authority in this case, it is noteworthy that the work by another Scot of rapidly increasing scholarly prominence did. McGregor on Damages – by then in its 13th edition and bearing the name of Harvey McGregor as sole author – was cited in support of this decision by Lord Justice Stephenson, pointing out that “there may be contracts in which the parties contemplate inconvenience on breach which may be described as mental: frustration, annoyance, disappointment”. Comparing Jarvis’s expectations based on the promises made to him and what had in fact been provided to him, Lord Denning, as Master of the Rolls, had no difficulty to award damages for the loss of enjoyment and entertainment amounting to just under twice the price of the holiday. The tide on the availability of solatium as part of a damages claim for breach of contract had firmly turned.

The courts in Diesen and, particularly, in Jarvis understood that contracts for tourism and entertainment are experiential as a matter of principle. The key purpose of these agreements is that their purchasers have a great time, which brings us back to Willy’s Chocolate Experience: the parents and their children were promised much by a lavishly illustrated website with ecstatic text; they arrived with high expectations; the reality came close to neither. Cue Lord Denning (at 237): “In a proper case, damages for mental distress can be recovered in contract, just as damages for shock can be recovered in tort. One such case is a contract for a holiday, or any other contract to provide entertainment and enjoyment [emphasis added]. If the contracting party breaks his contract, damages can be given for the disappointment, the distress, the upset and frustration caused by the breach.”

The globe-spanning story about a disappointing family experience in a Glasgow warehouse seems to represent a classic situation, ‘a proper case’ where solatium could be part of the tricky discussion around compensation for mental distress and disappointment caused by a breach of contract. Forthcoming contract law assessments have again started to write themselves…

Written by Thorsten Lauterbach. Thorsten Lauterbach is teaching law at the Robert Gordon University. He serves as non-solicitor member on the Admissions Sub-Committee and the Consumer Law Sub-Committee.