Case Update: The Supreme Court Judgment in X v Kuoni Travel [2021] UKSC 34

The Supreme Court handed down its long awaited judgment in X v Kuoni Travel Ltd [2021] UKSC 34 this morning.

Background

Those who have followed X v Kuoni in its long journey through the High Court, Court of Appeal, Supreme Court and Court of Justice of the European Union will be familiar with the facts, but by way of reminder:

Mrs X and her husband entered into a package holiday contract with Kuoni for return flights to Sri Lanka and two weeks’ all-inclusive accommodation at a hotel in July 2010.

The booking conditions incorporated into the contract, which were standard terms used in the industry, provided that: ‘Your contract is with [Kuoni]. We will arrange to provide you with the various services which form part of the holiday you book with us’. Clause 5.10(b) of the contract provided that:

‘… we will accept responsibility if due to fault on our part, or that of our agents or suppliers, any part of your holiday arrangements booked before your departure from the UK is not as described in the brochure, or not of a reasonable standard, or if you or any member of your party is killed or injured as a result of an activity forming part of those holiday arrangements. We do not accept responsibility if and to the extent that any failure of your holiday arrangements, or death or injury is not caused by any fault of ours, or our agents or suppliers; is caused by you; … or is due to unforeseen circumstances which, even with all due care, we or our agents or suppliers could not have anticipated or avoided.’

In the early hours of 17^th July 2010, whilst making her way through the grounds of the hotel to the reception, X came upon N, an electrician and hotel employee, who was on duty and wearing the uniform of a member of the hotel staff. After offering to show X a shortcut to reception, N lured her into an engineering room where he raped and assaulted her.

At first instance, Judge McKenna dismissed the claim on the grounds that “holiday arrangements” in clause 5.10(b) did not include a member of the maintenance staff conducting a guest to reception. He further held, obiter, that Kuoni would in any event have been able to rely on the statutory defence under regulation 15(2)(c)(ii) of the Package Travel, Package Holidays and Package Tours Regulations 1992 (“the PTR”) because the assault was an event which could not have been foreseen or forestalled even with all due care. The Court of Appeal (Sir Terence Etherton MR, Longmore and Asplin LJJ) dismissed the appeal by a majority (Longmore LJ dissenting).

The Questions Referred

On a further appeal, the Supreme Court decided that a referral to the CJEU was necessary to determine the appeal. In essence, the issues referred were as follows:

• Where there has been a failure to perform/improper performance of a package holiday contract due to the actions of an employee of a hotel supplier, (1) is the defence under regulation 15(2)(c)(ii) of the PTR available to a tour operator in principle and if so (2) how does the defence operate? Alternatively,
• Is an employee of the aforesaid hotel himself a ‘supplier of services’ for the purposes of regulation 15(2)(c)(ii)?

It is important to note that the CJEU was asked to assume for the purposes of its decision that (1) a member of maintenance staff conducting a guest to reception was within the scope of the ‘holiday arrangements’ contracted for and (2) the rape and assault constituted improper performance of the contract. Neither issue had been determined by the Supreme Court.

The Decision of the Court of Justice of the European Union

The CJEU determined that:

I      An employee is not a ‘supplier of services’ since he has not concluded any agreement with the package travel organiser, but merely performs work on behalf of a supplier of services.

II     However, an organiser may be liable for the acts or omissions of an employee of a supplier of services, where they constitute improper performance of an obligation under the contact.

The Court held that:

• Where the obligations arising from a package travel contract are performed by the employees of suppliers of services, the performance or failure to perform certain actions by those employees may constitute non-performance or improper performance of the obligations arising from the package travel contract.
• That non-performance or improper performance, although caused by acts of employees of a supplier of services, is such as to render the organiser liable.
• In the present circumstances ‘a travel organiser such as Kuoni may be held liable to a consumer such as X for improper performance of the contract between the parties, where that improper performance has its origin in the conduct of an employee of a supplier of services performing the obligations arising from that contract’.

III    The deliberate act of an employee of a supplier of services is not an ‘event’ which could not be ‘foreseen or forestalled’.

The exemption from liability provided by article 5(2)(iii) of Directive 90/314 refers to situations in which the non-performance or improper performance of the contract is due to an event which ‘the organiser or the supplier of services, even with all due care, could not foresee or forestall’.

The Court held that an organiser may rely on the exemption:

(i) even if the event is not unusual, provided it cannot be foreseen; or,

(ii) even if it is not unforeseeable or unusual, provided it cannot be forestalled.

However,

• The ‘event’ is not the same thing as a force majeure (which constitutes a separate ground for exemption from liability).
• The grounds for exemption from liability listed in article 5(2) contain specific instances in which non-performance/improper performance is not attributable to the organiser/supplier of services (e.g. where failures are attributable to the consumer or a third party). Those instances reflect the aim of the Directive that an organiser/supplier of services should be exempt where they are not at fault for the failure.
• ‘That absence of fault means that the event which cannot be foreseen or forestalled referred to in the third indent of Article 5(2) of Directive 90/314 must be interpreted as referring to a fact or incident which does not fall within the sphere of control of the organiser or the supplier of services.’
• Since (for the reasons under point II above) ‘the acts or omissions of an employee of a supplier of services, in the performance of obligations arising from a package travel contract, resulting in the non-performance or improper performance of the organiser’s obligations vis-à-vis the consumer fall within that sphere of control, those acts or omissions cannot be regarded as events which cannot be foreseen’.

The Supreme Court

The Supreme Court, in an admirably brief judgment handed down by Lloyd Jones LJ this morning, unanimously allowed Mrs X’s appeal from the decision of the Court of Appeal, finding that:

• The deliberate acts of the hotel employee constituted an improper performance of the tour operator’s obligations under the package contract within the meaning of Regulation 15;
• A ‘broad view’ should be taken of the obligations owed by tour operators, to include obligations in relation to a range of ancillary services necessary for the provision of a holiday of a reasonable standard;
• It is an integral part of a holiday that a hotelier’s employees should provide guests with assistance with ‘a range of ordinary matters affecting them during their stay’, including assistance guiding them around the hotel;
• (Perhaps unsurprisingly) the actions of the hotel’s employee constituted a failure to provide this service with proper care;
• There was no defence under Regulation 15(2)(c). Following the binding judgment of the CJEU, a narrow view of the defence relied on (and presumably the other defences under that provision) must be taken. It does not apply where the acts or omissions forming the basis of the claim are those of employees of the supplier.

Comment

The decision of the Supreme Court relates to the operation of the 1992 Regulations, of course; but the proceedings in the claim have been going on for so long that these Regulations have now been replaced by the Package Travel and Linked Travel Arrangements Regulations 2018. Nevertheless, the judgment is an indicator that under the new Regulations the scope of the duty of the tour operator under Regulation 15 is likely to be interpreted widely, whilst the scope of its potential defences under Regulation 16(4) is likely to be interpreted narrowly. Furthermore, it is now clear (if it was not before) that a tour operator is liable for the deliberate acts and omissions of the employees of its suppliers within that wide scope.

The author and Conor Kennedy will be discussing the implications of the decision in the next in the 1CL series of webinars.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she has recently been invited to join the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists and the Admiralty Court Users’ Committee.