The Dekagram: 6th November 2023

Articles, News

06/11/2023

As you know, we keep a weather eye on what’s going on in other jurisdictions; often developments internationally can inform and sometimes even influence our own domestic law. We wonder whether the recent increase in the personal injury discount rate from -0.25% to 1% might be one such indicator. The alteration is particularly important because it has been introduced by the government of the Isle of Man, under an amended version of the Damages Act 1996, and using the UK Government Actuary’s Department’s advice given in July of this year. As such, it may well be the strongest indicator yet of what the UK government is likely to do when it resets the rate for England and Wales next year, although it should be noted that there is no guarantee that economic circumstances will be the same (or even similar) by that point. Nevertheless, it may be taken as suggestive of a direction of travel which is likely to weight more and more heavily on the minds of litigators as Decision Day approaches.

Cosmetic Procedures: Is Regulation Imminent?

Having stroked my crystal ball and consulted the prophetic asparagus (if you know, you know), I confidently predict that non-surgical cosmetic procedures will prove a growth area for personal injury litigation. These invasive and popular procedures are often technically complicated, using new technologies and equipment administered in private (possibly unhygienic) clinics by people who may not be trained, regulated or even insured. They include chemical ‘peels’, anti-wrinkle botulinum toxin (i.e. Botox) injections, dermal fillers and energy-based treatments. Clearly there are considerable risks of adverse outcomes for consumers. Surprisingly there is very little reported case law arising from negligence claims.

Pursuant to an amendment to the Health and Care Act 2022, the Secretary of State for Health and Social Care now has the power to devise and implement a licencing scheme for these procedures. The Department of Health and Social Care accordingly launched a consultation which ran from the 9th September 2023 to the 28th October, inviting contributions on questions such as whether there should be age restrictions, and whether the procedures should only be allowed to be carried out by Care Quality Commission registered providers.

The Health and Care Professions Council responded to the consultation: hcpc-response-to-dhsc-consultation-on-licensing-of-non-surgical-cosmetic-procedures.pdf (hcpc-uk.org). It is a statutory regulator for a number of health and care professions, and maintains a register of professionals with set proficiency standards and training programmes. It may be that this mature regulator will contribute heavily to the development of the scheme, possibly even serve as a model.

There is considerable appetite for this licencing scheme and it will no doubt come into force in the fairly near future. It will hopefully improve safety for consumers and inject (excuse the pun) a welcome boost of dependability and proficiency. Whether or not there will be more regrettable incidences of malpractice and consequential harm, remains to be seen. The positive effect of more reliable proficiency may be outweighed by greater demand caused by the procedures being perceived by the public as more legitimate. From a litigator’s perspective, this professionalisation of these procedures and their providers raises an interesting question about the legal standard of care to be applied when judging negligence. Certainly the fact of more providers being insured would make litigation more attractive.

About the Author

Richard Collier was called to the Bar in 2016. Before that, he had worked as a Judicial Assistant to Lord Justice Jackson in the Court of Appeal. He is now instructed by solicitors for both Claimants and Defendants in cross border disputes, package travel and other related claims.

On The Beach v Ryanair, a Titanic Struggle

Regular readers will already be aware that for some years now Ryanair has been engaged in a Titanic battle against online travel agents, both in Ireland (where over a decade ago the airline issued proceedings against a number of OTAs, but does not appear to have pursued them), in Europe (with, it has to be said, somewhat mixed results), and, more recently in the English High Court.

The latest salvo in this ongoing struggle between the airline, which objects to OTAs selling its flights, and the OTAs, who say that Ryanair’s stance is anticompetitive, exploded in the High Court last week in the form of the judgment of Nigel Cooper KC in On the Beach v Ryanair [2023] EWHC 2694 (Comm). At the beginning of the judgment he set out in a succinct paragraph what the claim was about:

“OTB Group’s claim in this action is for a sum of some £2 million which they say represents the cost of flights which they have refunded to travellers for package holidays in circumstances where Ryanair have cancelled or made what are described as major changes to flights which were part of the packages. OTB Group says that Ryanair has a legal liability to the various group companies to make refunds for sums paid to travellers in respect of Ryanair flights, which were cancelled or to which major changes were made.”

These were flights affected by the Covid-19 pandemic and the measures taken to contain it; On the Beach had refunded passengers for holidays pursuant to Regulations 11, 13 and 14 of the Package Travel and Linked Travel Arrangements Regulations 2018, and were seeking reimbursement of the flight component from Ryanair. Ryanair countered that it does not sell flights to OTAs and that any flight bookings made by On the Beach therefore contravened its terms and conditions of sale. This, the airline contended, meant that the equitable remedy of unjust enrichment should not be available to On the Beach because it did not come to equity with clean hands; and there was no freestanding cause of action under the Regulations enabling tour operators to seek redress against their suppliers. It has to be said that there are certainly two ways of reading Regulation 29, which states:

“Where an organiser or, in a case under regulation 27, a retailer—

(a) pays compensation,

(b )grants a price reduction, or

(c) meets the other obligations incumbent on the organiser or the retailer under these Regulations,

the organiser or retailer may seek redress from any third parties which contributed to the event triggering compensation, a price reduction or other obligations.”

The obvious question arises: is Regulation permissive (so that there is nothing in the Regulations to prevent such a claim being made) or prescriptive (so that Regulation 29 itself founds a cause of action)? Let’s find out.

At the beginning of his judgment the judge referred to the sums at stake. The claim was for £2 million, don’t forget. Each party had submitted a costs budget estimating that the costs to trial would be in the region of £1.6 million, and On the Beach’s incurred costs to summary judgment amounted to over £800,000. This, it is suggested, reflects both the complexity of the issues involved in such litigation, and the vigour with which the matter was pursued and defended.

In any event, On the Beach had made an application for summary judgment on the claims under Regulation 29 of the Regulations and in unjust enrichment, and Ryanair had made an application to strike out the claim for unjust enrichment. So both parties were sure they were right.

The judge gave short shrift to Ryanair’s argument that On the Beach had not acted as agent for travellers in booking flights that then went on to form package components. He held that there was no realistic prospect of Ryanair showing that the flights were not booked by On the Beach as an agent and that there was no evidence to show that they were not then converted by On the Beach to contribute to packages. Having made these findings of fact, he then turned to the law governing the claims.

Unjust enrichment

The main question for the judge was whether the failure to provide the flights constituted what used to be known as a ‘total failure of consideration’, now referred to as a ‘total failure of basis’, or breach of contract. Ryanair submitted that by reason of its terms and conditions, which stated that if flights had been incorporated into package holidays no refunds were payable, no claim for unjust enrichment could be made. The judge rejected this argument, holding that the terms and conditions did not exclude the provision of refunds. But he then went further, and in a passage in the judgment which is somewhat difficult to follow, held that because Ryanair had in fact offered some passengers refunds, the claim in unjust enrichment should succeed:

“Ryanair suggest that they offered refunds to travellers irrespective of their contractual liability to do so. It is said that this was a commercial decision based in part at least on Ryanair’s understanding of what was expected from them by regulatory authorities. But the refunds were also obviously intended to end any liability Ryanair had to the individual travellers arising out of the cancellation or change to the traveller’s flights however that liability might arise.

I do not, therefore, accept that the refunds offered had no contractual effect. Each of the travellers to whom a refund was offered had a contract for carriage by air with Ryanair which was made by them (or by another traveller on their behalf) acting through their agent, OTB Group. Whether Ryanair had a right under the [terms and conditions] to refuse that traveller a refund pursuant to clause 10.1 or not, Ryanair chose not to exercise that right and offered the travellers an unconditional refund, which on the evidence, the travellers accepted. In other words, as [counsel for On the Beach] submitted, Ryanair had a liability to the travellers to make the refunds offered.”

This appears to be an acceptance that if Ryanair waived its defence to a passenger’s claim under its terms and conditions, it must therefore have a liability to the passenger, which seems an odd result, particularly where the evidence showed that Ryanair did not know at the time the offers were made Ryanair did not know whether the bookings had been made via an OTA or not. The judge seems to have concluded that if Ryanair offered refunds to passengers whose bookings were or might have been made via an OTA, it was implicitly accepting an obligation to compensate those passengers notwithstanding that their bookings had been made in contravention of its standard terms; and, furthermore, that that acceptance was legally binding. This is not easy to follow as it is set out in the judgment and appears somewhat counter-intuitive.

Regulation 29

 In dealing with this aspect of the claim the judge noted that there was no authority as to whether Regulation 29 operates to permit tour operators to exercise common law rights of redress against suppliers, or whether it creates a new and freestanding right of redress. Nevertheless, he was content to determine the question as a matter of law without the need for a full trial; and, it is suggested, rightly so, given that it is a question of law which could equally well be ventilated on an application for summary judgment as at trial. He concluded that the Regulation can be read either way but that it should be read as providing a freestanding right of redress on a tour operator. His reasons for so finding are practical:

“A conclusion that Regulation 29 is intended to confer a right of redress is consistent with the overall framework of the PTRs which is intended to provide a straightforward and comprehensive package of rights and obligations for travellers and organisers (retailers). It makes sense that, in circumstances where the regulations provide travellers with rights of compensation from an organiser notwithstanding that the holiday arrangements are being provided by other suppliers, the regulations also provide the organiser with a right of redress against those suppliers (and possibly other third parties). It is also consistent with the intention behind the regulations and, indeed, Regulation 261, namely consumer protection. It is in the interests of consumers that there is a straightforward and comprehensive package of rights which means that travellers, organisers and third parties know where they stand.”

This determination should provide domestic tour operators with some comfort when they are considering whether to seek a contribution or indemnity from their suppliers, although interesting questions of applicable law will no doubt arise where those suppliers are (like Ryanair) registered abroad.

In the instant case, having found that there was a right to redress in principle, the court went on to hold:

“in relation to the holidays which are the subject of this claim, OTB Group were prevented from performing the contract because of unavoidable and extraordinary circumstances within Regulation 13 of the PTRs, thereby triggering a potential right to contribution under Regulation 29 equivalent to the refund offered by Ryanair. I have already found that OTB Group were obliged to pass on the offers of refund to their travellers and that OTB Group are also entitled in principle to rely on their claim in unjust enrichment.”

Vouchers

In some cases where On the Beach had refunded travellers for the cost of their flights Ryanair had also issued vouchers to passengers, and Ryanair submitted that the claim should be reduced by the value of these vouchers. The judge rejected this submission on the basis that there was no evidence that the vouchers had been redeemed or (more importantly perhaps) that they were of any value to On the Beach so as to discharge Ryanair’s obligations to them under Regulation 29. Nor were cash refunds made by Ryanair after On the Beach’s refunds taken into account:

“So far as refunds paid by Ryanair after OTB Group have already paid the traveller are concerned, I am satisfied that the refunds do not provide Ryanair with a defence whether as a matter of unjust enrichment or under Regulation 29. In relation to unjust enrichment, OTB Group’s right to reimbursement arose at the time it made the payment to the traveller. So far as Regulation 29 is concerned, a similar analysis applies. OTB Group’s right of contribution arose at the time it made payment to the traveller and I do not consider that a subsequent direct payment to the traveller by Ryanair is a reason to deprive OTB Group of that contribution.”

The converse applied, however, in respect of those passengers who had already been reimbursed by Ryanair prior to receiving a refund from On the Beach; those claims will go forward to trial if they are pursued by the tour operator.

Interpreting the Regulations

Because the judge was being asked to interpret the Regulations in circumstances in which there was no domestic or foreign precedent to assist him, he turned his mind to those documents which assist in clarifying their meaning He concluded:

“only the following documents might sensibly be considered as travaux préparatoires from the materials provided to me:

a. In relation to the Directive, the European Commission’s proposal for what became the Directive and the European Parliament’s proposal for the Directive.

b. In relation to the PTRs, the Explanatory Notes attached to the regulations.

The other materials from the Commission and from UK government departments may be helpful as guidance to how those institutions interpret the Directive and PTRs respectively but they are not indicative of the intention of the legislators.”

This might be thought to be so particularly where two different government departments had come to diametrically opposed views as to whether Regulation 29 conferred a freestanding right of redress, the Department for Business, Energy and Industrial Strategy concluding that it does, and the Department for Transport believing that it does not. Very helpful! Strangely the judge was referred to Grant and Mason on Holiday Law but not to Saggerson on Travel Law, but in any event did not derive assistance from the former textbook because when it was written (and indeed until last week) there was no authority on the subject; the latter is coquettishly silent on the issue. A good reason to purchase the next editions of both, perhaps, so as to derive the benefit of their respective authors’ opinions on the judgment?

Conclusion

This judgment is highly significant from the point of view not only of airlines and online travel agents, but also tour operators and their suppliers. Ryanair’s failure on all but the smallest of points also suggests that its campaign against online travel agents is unlikely to go any more smoothly in the courts of England and Wales than it has in the EU. It will be interesting to see how its battle against On the Beach in competition law proceeds.

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 Deka Chambers, Matthew Chapman KC, Jack Harding, Dominique Smith, Tom Yarrow and Henk Soede, 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. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases. She was appointed a KC in March 2023.

Featured Counsel

Sarah Prager KC

Call 1997 | Silk 2023

Richard Collier

Call 2016

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