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Baltic Shipping Co v Dillon (The Mikhail Lermontov) (1991) 22 NSWLR 1

Facts: On the 10th day of a 14-day cruise, a ship owned by Baltic Shipping sank after hitting a rock. Mrs Dillon, a passenger on the ship, suffered personal injury and loss of property. She was successful in recovering damages for disappointment and distress. The NSWCA also considered whether she was precluded from bringing her action against Baltic by a settlement agreement she had executed where, in return for $4,786, she had released them of ‘all claims’.


Held (Gleeson CJ at 9): ‘The starting point for a consideration of whether the settlement agreement, including the release, was ‘unjust in the circumstances’ is the conclusion reached [that the plaintiff was entitled to damages of $56,182], which produces the result that the respondent settled her claim for less than one-tenth of what it was worth. Further, there are findings made by [the trial judge] that there was a material inequality in bargaining power between the parties to the contract and the respondent’s capacity to protect her interests was, owing to her physical and emotional condition, diminished.’

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