The Dekagram: 29th April 2024

Articles

29/04/2024

This week’s Dekagram sees the team in action on all fronts, both in applying and in making the law. Sarah Prager reports on a cancellation claim decision from the Court of Appeal and on the recent Symposium on Air Accessibility, attended by all the great and good of the air travel world. We do love a collaborative approach at Deka Chambers – although as Tom Collins reports, our old friend and former colleague His Honour Judge Alan Saggerson doesn’t seem to have got the memo. We’re sure however that the forthcoming ABTA Travel Law conference will be an object lesson in harmonious bonhomie, and hope to see many of our readers there.

Secret Commissions in PI Litigation: Aba Aminu-Edu v Esure Insurance Company (HHJ Saggerson, Central London County Court, 8 March 2024)

A senior Circuit Judge has delivered a stinging rebuke to medical agencies – now prevalent in PI litigation – which seek to conceal their commissions from the Courts.

In a typically forthright judgment, HHJ Saggerson took aim at what he described as a ‘non-transparent cartel’ profiting from ‘unknown and unknowable commissions’ to the benefit of ‘nobody but lawyers and insurance companies’. The Judge noted that it had now become an established system whereby commissioning solicitors simply passed along invoices to the paying party, ‘shrugging and saying: “that’s the system”, assuming someone else will pay for it’.

The claim

This was a fairly typical PI case, which had settled pre-allocation for £40,000. It was agreed that the claimant was entitled to her fixed recoverable costs but the defendant queried the cost of a medico-legal (Pain Management) report obtained via the medical agency Premex. The claimant presented an invoice for £2,916.00 for the report, inclusive of VAT.  The defendant requested a breakdown but Premex declined on grounds of commercial sensitivity, asserting that “there is no obligation, and it is not necessary” to do so in order to assess its reasonableness and proportionality. It also said: “The [fee] is not calculated on a case-by-case basis and full consideration of any breakdown provided would require a detailed and complex analysis of the macro-economics of the wider medical reporting market, which is disproportionate.”

The defendant applied to the Court for further information regarding the agency fee and the claimant cross-applied for her costs to be determined.

The decision

As is often the case in summary assessments, the claimant invited the Court to take a ‘broad brush’ approach in assessing the proportionality of the report’s cost and contended that it could do so without needing to know the referral element of the sum charged. The Court rejected this ‘grimly arithmetical approach’ as it ‘does violence to the very concept of multi-factorial proportionality’. The Court went on:

“In my judgment, any adjudication on proportionality, in all its various component parts, demands transparency. Such an adjudication should not be hijacked by empty grandiloquent protestations of ‘macro-economic’ factors. “The unavoidable suspicion is that the absence of transparency indicates that the agencies have something to hide. I entirely exclude from my thinking any unworthy suspicion that cross-commissions (‘back-handers’) are in play in this process. If I am wrong, the agencies will no doubt be pleased to demonstrate so.”

The judge insisted that medical agencies should be able to provide “at least sufficient indicative information” as to the proportion of a medical invoice that reflected the true value of their work and predicted that, if claimant solicitors required breakdowns, the market would “soon adjust” to provide them.

Ultimately, the Court was not invited to order further information be given by Premex/the claimant but simply to assess the cost of the report, either in the sum claimed (urged by the claimant) or at £nil (urged by the defendant). The Court concluded that without a breakdown it could not assess proportionality so it had to err on the side of caution, however the agency’s work plainly was worth something, so to assess it at £nil ‘would be an unduly harsh sanction’. But finding the report in the case was ‘very straightforward’, it awarded allowed £750 plus VAT.

Practice points

The Court emphasised that the need for transparency could, in other cases, be enforced by an application under Part 18 for further information, backed up with an unless order.

Defendant insurers have long argued for this transparency, borne (in part at least) out of concern that agency fees often incorporate inappropriate and irrecoverable elements. These may include the cost of offering write off provisions for failed cases or deferral of payments until the conclusion of a claim which, in effect, constitute insurance and/or credit facilities.

This decision will be of real interest to defendant practitioners given the cost of these agency fees to the insurance industry and is likely to spark a flurry of similar applications under Part 18. The claimant in Aminu-Edu seems to have declined to renew her application for permission to appeal but the issue is likely to find its way to the Court of Appeal before long.

About the Author

Called in 2010, Tom Collins is ranked in the Legal 500 as a specialist in Travel Law. He has considerable experience across a wide range of travel and private international law disputes and has advised claimants and defendants in multi-party actions.

Cancellation Claims: Sherman v Reader Offers Limited [2024] EWCA Civ 412

The facts

The facts of this case will be all too familiar to regular readers. The Claimants booked a North West Passage cruise holiday costing over £20,000 over the telephone, without having first seen a brochure or advertisement, and entirely on the recommendation of friends they had made on a previous Antarctic cruise. The basic itinerary provided to them when they booked was for a cruise holiday entitled ‘Northwest Passage – in the Wake of the Great Explorers’ to take place between 8th and 24th September 2018. The Claimants were subsequently provided with a detailed itinerary which set out the embarkation point and ports of call, some of which were in the North West Passage, and others in Greenland, from where they would then be transferred to Copenhagen for their return flights to the UK. There was some dispute over whether this much more detailed itinerary was a term of the contract such that any alteration to it entitled the Claimants to a full refund; the court at first instance found against them on this, since it had been provided only after the formation of the contract. On appeal to the High Court Collins Rice J found that by operation of Regulation 9 of the Package Travel, Package Holidays and Package Tours Regulations 1992 the contract was not binding until after all of the extensive information set out in that provision and in Schedule 2 to the Regulations was provided to the consumer. The detailed itinerary, she therefore found, was a term of the contract.

The claim centred around whether prior to the holiday departure date the Defendant’s supplier had been constrained to alter significantly an essential term of the contract, thus entitling the Claimants to a refund pursuant to Regulation 12. The problem arose because in 2018 the break up of ice in the Arctic, and in particular in the North West Passage, occurred very much later and to a lesser extent than in previous and subsequent years, rendering it impossible for the cruise to follow the detailed itinerary and causing much of that itinerary to be abandoned as the vessel spent some time in the mouth of the Passage, before sailing to Greenland, where the rest of the itinerary was performed as described in the detailed itinerary. The Claimants asserted that the supplier was aware that this would be the case before the holiday began and that this entitled them to a refund under Regulation 12; the Defendant contended that at the time of departure it was still possible for much of the itinerary to be provided as planned and that therefore no refund was payable. Furthermore, Regulation 14 (which relates to post-departure alterations) was not engaged either, and even if it was,  the tour operator had a defence under Regulation 15(2)(c)(i) – the failure to provide a cruise through the North West Passage as set out in the itinerary was due to unusual and unforeseeable circumstances outside Reader Offers’ control.

The decision at first instance

At first instance the court found as a matter of fact that the relevant itinerary was the basic one provided at the time of contract formation and not the detailed one provided subsequently. Further, at the time of departure, the cruise supplier and the tour operator reasonably believed that it would be possible to visit the North West Passage and to provide a good cruise experience. Nevertheless, as it turned out, and due to unusual weather conditions, some of the detailed itinerary could not be provided, and this amounted to a post-departure alteration under Regulation 14, for which compensation was payable if this was appropriate. In the instant case, however, it was not appropriate. The Defendant had made out the Regulation 15(2)(c)(i) defence. The claim therefore failed.

The appeal to the High Court

The Shermans appealed on the basis that because Regulation 9 of the Package Travel Regulations sets out information to be provided to consumers prior to formation of the contract, albeit dependent on the nature of the booking, the contract could not have been formed prior to the provision of that information, which included a detailed itinerary which, notwithstanding the express terms of the contract, was binding.

Collins Rice J found that Regulation 9(3) made it an implied condition of a package holiday contract that the provider should ensure that the contract contained at least the elements specified in Schedule 2. It was also an implied condition that the provider should ensure that all the terms of the contract were communicated before the contract was made. Regulation 9 did not determine when a contract was formed or what its express terms were; and it did not by itself insert the Schedule 2 details into a contract, but use of the expression “implied condition” rather than “implied term” used elsewhere in the Regulations signalled something of potentially fundamental significance, something which, unless satisfied, went to the extent to which the other party was bound. If the “implied condition” in Regulation 9 was not satisfied, then the consumer might be entitled to regard themselves as not bound by the contract, at least until the condition was fulfilled. Schedule 2 at item 6 required that the contract should include the itinerary, and at item 7 the details of visits, excursions or other services included in the total price. A cruise itinerary which omitted any mention of a route or stopping places strained the ordinary meaning of the word to breaking point. Accordingly, the judge’s finding that the tour operator had complied with the Regulation 9 implied condition could not be sustained. The appellants would have been within their rights to decline to consider themselves bound by any contract until they received a detailed itinerary, which then became a term of the contract.

Furthermore, the detailed itinerary was an essential term of the contract within the meaning of Regulation 12, and although the express terms explicitly provided that it was subject to change, the decision to replace the original confirmed itinerary with a circular tour of the eastern section of the Northwest Passage could properly be described as a significant or major change, as the Northwest Passage stage was the most distinctive aspect of the cruise. “Constrained” in Regulation 12 had to be considered on the basis not of an abstract formulation of words, but of practicability in real life and of the choices available at the time. The tour operator had been constrained before departure to alter significantly an essential term of the contract, but the consumers had not been notified as quickly as possible in order to enable them to take appropriate decisions and in particular to withdraw from the contract without penalty. Therefore, the respondent was in breach of Regulation 12.

As regards the tour operator’s defence that the inability to provide the detailed itinerary as advertised was due to unusual and unforeseeable adverse weather conditions, the breach of Regulation 12 was not the failure to follow the detailed itinerary, but rather to inform the consumers of the alteration. The failure to inform the appellants as quickly as possible of the change of itinerary had not been due to force majeure or to unforeseeable or unavoidable circumstances beyond anyone’s control; it was due to an administrative oversight.

Moreover, the reason the ship could not cruise the Northwest Passage was because of the presence of ice, which was not unforeseeable. On the accepted evidence, it was not unforeseeable that the ice would close in eastwards and the passage would become impassable. Non-navigability due to ice was within the range of the respondent’s entirely knowable, and known, omnipresent and substantial risk. That was why they monitored it closely and continuously with expert assistance. The judge had not tested the unforeseeable circumstances element of the test against the expert’s evidence as to the ever-present danger of unpredictable sea ice. Therefore, the respondent was not entitled to rely on the exemption from liability in Regulation 15 on this basis.

The appeal to the Court of Appeal

The Defendant appealed to the Court of Appeal on the basis that Regulation 9 cannot affect contract formation in the absence of express wording to this effect – Collins Rice J had been wrong to find that a binding contract could only come into existence after the provision of all of the information contained within the Regulation and Schedule 2.

In what readers may regard as a surprise plot twist, the Court of Appeal disagreed with both Collin Rice J and the judge at first instance.

The Court found that the Defendant’s terms and conditions contained a term to the effect that a contract would come into existence upon issue of the confirmation invoice – the invoice, though it carried the date of the telephone conversation, was only sent to the Shermans some time thereafter, and at the same time as the detailed itinerary. The contract therefore came into effect only at this time – not because of Regulation 9 (which as the Defendant submitted did not affect contract formation) but because of the provisions of the Defendant’s own standard terms and conditions.

Moreover, ROL’s terms and conditions did not explicitly state that all alterations to the detailed itinerary would be considered as minor alterations not carrying an obligation to refund the consumer. This allowed the Court to go on to consider whether itinerary alterations could be viewed as being significant within the meaning of Regulation 12.

The Court found that:

  • Ordinarily an itinerary should be included within the information required by Regulation 9 and Schedule 2, and this is particularly so in the case of a cruise, since the itinerary is such an important part of the cruise experience;
  • Not all of the information prescribed by these provisions will be considered to be essential terms of the contract, but in the case of a cruise an itinerary will usually be such a term;
  • There is ‘considerable force’ in the test formulated by the judge at first instance determining that a tour operator is constrained to make an alteration to an essential term ‘if there is no longer a reasonable possibility that the contract can be performed in accordance with’ the term in question;
  • The tour operator must notify the consumer not only that it is constrained to make the alteration to the holiday, but also of the consumer’s right under Regulation 12 to withdraw from the contract without penalty or to accept a partial refund;
  • Prior to the departure date the Defendant’s supplier was aware that the itinerary would be subject to significant alteration;
  • The Defendant did notify the Claimants of some of the alterations known at that time, but in failing to notify them of their right to a refund it was in breach of Regulation 12. The consequence of this will depend on what the Claimants say at an assessment of damages hearing about what they would have done had they been notified of their rights;
  • No Regulation 15 defence was available for the reasons given by Collins Rice J – the very unforeseeability of the ice conditions was itself foreseeable.

The Court therefore rejected the appeal in the light of the way in which the cruise was marketed and in accordance with its own standard terms [101]:

it is entirely fair that ROL should bear that risk. It was ROL which had marketed the cruise, acknowledging the possibility of minor changes being necessary, but giving no indication that the detailed itinerary described in such glowing terms might be incapable of performance. The consumer could not be expected to understand that the cruise for which they had paid a premium price might be dramatically curtailed, with no compensation payable.

It remains open to question whether the result would have been the same had the terms and conditions made it clear to the Shermans that all of the itinerary was subject to change and that this would never be considered to be a significant alteration to an essential term – however it may well be that this would be considered to be an unfair contract term within the meaning of the Consumer Rights Act 2015.

Notwithstanding its conclusion, the Court of Appeal made it clear that the Claimants’ expectations should be moderate [106]:

If the Court concludes that Mr and Mrs Sherman would have cancelled, they will be entitled to a refund of what they paid, together with some compensation for disappointment at the loss of their holiday, but such compensation will be modest, bearing in mind that disappointment is transitory and that the offer of a refund would have gone a considerable way to assuage their feelings (cf. Milner v Carnival Plc [2010] EWCA Civ 389, [2010] PIQR Q30). They could also have been expected to understand, as reasonable people, that the reason why the cruise had to be curtailed was not due to any bad faith or incompetence…However, if the Court concludes that Mr and Mrs Sherman would have gone ahead, they will not be entitled to a refund, but will be entitled to compensation based on the difference between the price which they paid and the value of the services actually supplied.

Comment

The decision therefore complies with Prager’s First Law of Law – an outcome which leaves all parties equally (dis)satisfied is probably to be cherished, no matter how bitter the losing advocate might feel at the time (very, on this occasion). Regulation 9 does require that detailed itineraries are provided as part of the information obligation – although it should of course be borne in mind that the 2018 Regulations have very different information obligations – but it might be possible to draft marketing materials and standard terms so as to narrow down refund obligations in the event of cancellation. Consumers should, however, be informed of their right to cancel as and when this arises, and this finding will be of relevance to the ongoing refund claims working their way through the courts.

Lastly, the case of Milner (in which the author also acted) remains good law and has now been cited with approval by the Court of Appeal. Awards for loss of enjoyment and diminution in value should always be modest and proportionate to what has been lost.

Sarah Prager KC and Thomas Yarrow, instructed by Stephen Mason of Travlaw, represented the Defendant in this case.

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. 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.

The Clyde & Co Deka Chambers Rights on Flights Air Accessibility Symposium: Some Learning Points

The Symposium, which took place on 16th April, was a great opportunity for representatives of the travel industry, trade organisations, government, the legal profession, disability rights organisations, and many others to get together in a mutually supportive environment to discuss, freely and openly, the issues around making air travel safely accessible to all. It was attended by invitation only, and Chatham House rules applied. These are the learning points I took from it.

As a lawyer I learnt a huge amount about the challenges faced by people with reduced mobility and other particular needs. But I also learnt of the obstacles facing the CAA and airlines in trying to ameliorate those challenges, not least the lack of data which must always inform evidence-based legislation. Anecdotally we know that air travel is not safely accessible to all – but it came as a shock to find that we cannot quantify the number of incidents giving rise to injury because the CAA does not have evidence-gathering powers in that respect and this information does not appear to be kept by any industry body.

Having been given a masterclass in the UK legislative framework by Deka’s Jack Harding and Dominique Smith, together with Chris Smith from Clyde & Co, we discussed developments in air accessibility legislation in the US, and whether these might indicate what the future holds for our jurisdiction. The panel and audience session allowed us to ventilate a number of issues and possible solutions, of which I thought the following were the most noteworthy:

  • Language. We heard from a number of delegates that a cultural shift is needed and that this starts with language. “Special requests”, regarding accessibility as a “customer service” problem rather than a safety issue – thinking about the language we use is cheap, easy and can drive a shift in thinking that will lead to tangible results.
  • Listening. At the symposium we didn’t just talk about people with reduced mobility and other assistance requirement –  we talked to and with them. Greater use of surveys would be helpful. But the entities that are serious about equal rights employ the people who know from firsthand experience what is required, both as employees and as consultants. We wouldn’t take seriously a set of chambers that said it believed in equality, but was composed only of white men. Why wouldn’t the same be true in this context?
  • Education. People need to know what their rights are. The Package Travel and Linked Travel Arrangements 2018 and the Denied Boarding Regulations 2004 both provide for the provision of information – it is unclear why people with disabilities should not be properly informed of their rights and – crucially – who is responsible for the provision of assistance.
  • Training. All agreed that a little bit of training for cabin crew, ground handlers, and other service providers as regards what to do to assist passengers would go a long way – and would, in my view, prevent many of the incidents which give rise to personal injury claims.
  • Data collection. The CAA does not have the tools to quantify the problem either as regards individual airlines, airports, or the industry as a whole. It is therefore difficult for them to assist in fixing it.
  • The disability codes. A good deal of frustration was expressed that consumers are unable to express their particular needs to airlines, who are then unable to pass those on to service providers. The codes are seen as being unhelpful and unnecessarily restrictive and they block effective communication. This can be seen as being at the root of many incidents involving passenger safety, some leading to injury and even (in my own professional experience) death. Changing the codes to expand the information provided would not be expensive or, as it seems to me, difficult.
  • Special declarations under the Montreal Convention. These are not sufficiently prominent on some airline websites and are often confusing.
  • Technology. As technology improves and further innovations are made, we will soon reach a point where passengers can travel on aircraft with their mobility aids – as we do with trains and other forms of transport. Keeping informed of advances and investing in them is costly, but no airline (or at least none present at the symposium) wants to be the last to catch on. Not least because in due course there will be legislation providing for the use of such technology.
  • Enforcement. The US and Canada are getting to grips with enforcement backlogs. The CAA needs to be properly resourced and empowered to enforce passenger rights where the data shows that this is necessary.
  • Seeing mobility and other aids as part of the person. This is not an uncontroversial concept, particularly for lawyers, but it is clear that the people who rely on aids themselves regard them as part of their bodily autonomy. If service providers were to do so, it is overwhelmingly likely that the passenger experience would improve. This involves a cultural shift which might start with language.

It is clear that there is a good deal of support for making air travel safely accessible to all – and that some airlines are already making significant progress in this respect. But with the best will in the world, individual airlines cannot be expected to solve the accessibility problem without some overarching guidance and assistance, whether from a trade group or from government. It is our responsibility and privilege to do what we can to help drive that movement forward.

About the Author

Called to the Bar in 1997, Sarah Prager KC has been listed in the legal directories as a Band 1 practitioner in travel law for many years, and, more recently, listed in aviation as well. 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.

Featured Counsel

Sarah Prager KC

Call 1997 | Silk 2023

Tom Collins

Call 2010

Latest News & Events

Consultation Paper Seeks Reform of Limitation Law in Child Sexual Abuse Cases

The Ministry of Justice has released a consultation paper seeking views on potential reforms to the law of limitation in child sexual abuse cases in England and Wales. Under the current law, child sexual abuse cases in civil courts are subject to the same three-year…

The Dekagram: 20th May 2024

We trust that our readers have been enjoying the Spring sunshine; the team have spent their time in the sun wisely, reading cases so you don’t have to. First we noted a decision which considers the interplay between English and Scottish guardianship; secondly we read…

The Dekagram: 13th May 2024

Last week brought the news that the Australian airline Qantas and the Australian Competition and Consumer Commission have agreed to resolve their dispute over cancelled flights by asking the court to impose a $100 million fine, together with an undertaking by the airline to pay…

Subscribe to our mailing list

Deka Chambers: 5 Norwich Street, London EC4A 1DR

© Deka Chambers 2024

Search

Portfolio Builder

Select the expertise that you would like to download or add to the portfolio

Download    Add to portfolio   
Portfolio
Title Type CV Email

Remove All

Download


Click here to share this shortlist.
(It will expire after 30 days.)