Last November Kate Strahan, 50, took part in the "Pop stars" contest on the Pacific Jewel cruise ship, appearing in a leopard skin dress for an imitation of Tina Turner's River Deep Mountain High.

As it came to judge the performance, one of the judges, Rory Healey, allegedly told her he could see her underwear through her dress, commented on her breasts and suggested she could "cougar" him any time.

After her performance she was interviewed backstage and the interview was screened on three large screens to the audience of about 1200 fellow passengers.

Ms Stahan's husband, John O'Brien, alleges Mr Healey then touched the screen showing her image, fondling and kissing the screen image of her breasts.

P&O is trying to have the sexual harassment case dismissed, arguing the incident took place outside Australian waters, therefore the sexual harassment laws do not apply.

However, the couple's claim is also based on breach of contract and civil law, and Mr O'Brien said they would be seeking exemplary damages, designed to punish the company. It is understood the total claim exceeds $1 million, and a spokesman for P&O called it "excessive".

Mr O'Brien said if the company was successful in getting the sexual harassment case thrown out it meant that passengers had no protection under Australian laws for most of the cruise.

He said the case also raised important legal issues about maritime law and whether a screen image could be the object of sexual harassment.

He said his wife, a nurse in palliative care, was so stressed by the matter, she has had to stop working.

Ms Strahan said she was disgusted by Mr Healey's behaviour.

"I could not believe or understand how such a thing could happen. As a mother and a grandmother Rory's actions were absolutely abhorrent for a man of his age and he should know better as a cruise entertainer."

P&O spokesman Peter Taylor acknowledged the remarks were in poor taste.

"While there is disagreement surrounding the allegation, any incident of this nature is unfortunate and does not reflect the high standard of staff behaviour and passenger service offered across our ships."

He said the couple had been offered an apology and Mr Healey was reprimanded and his contract has not been renewed.

"We take our responsibility to report and investigate crimes at sea seriously and led the industry in developing protocols with the Australian and Pacific Islands police that ensure any crime is immediately reported to authorities," he said.

"Like any other organisation facing private civil litigation, particularly where a claim is excessive as in this case, we will consider our legal options.

"The courts expect to be informed of matters relevant to their jurisdictional limits and for this reason we flagged the question last week. Similarly we questioned whether Mr O'Brien has genuine grounds to bring a personal claim under the Sex Discrimination Act as no conduct was directed to him."

However, there's understood to be a Facebook page to "save Rory".

The Australian Human Rights Commission has been unable to resolve the complaint.

The case returns to the Federal Magistrate's court on September 21.