The Dekagram: 9th December 2024

This week we welcome our two newest tenants, Julia Brechtelsbauer and Megan Bithel-Vaughan, to the Dekagram family. Working collaboratively, as you have come to expect from Deka Chambers, they have produced a joint article on where the burden of proof lies in quality complaint cases, with reference to the decision of the Court of Justice of the European Union in KT and NS v FTI Touristik GmbH C-396/21 and of the Court of Appeal in Sherman v Reader Offers Limited [2024] EWCA Civ 412. And given that it’s the festive season and we know you’ll all want to be hearing more from us, here’s your link to the annual festive caselaw update, featuring Conor Kennedy, Ella Davies and Tom Yarrow – all names known well to our readers: Webinar Registration – Zoom.

Balancing Burdens when Package Travel Goes Wrong

Regulation 15(3) of the Package Travel Regulations 2018 can sometimes be dwarfed into irrelevancy when it comes to other, more pertinent provisions, when dealing with a package travel claim. However, it can be a useful tool in a travel defendant’s arsenal, when it comes to disputing both liability and quantum. It is not, however, a carte blanche to defeat claimants, and careful questions ought to be asked of any claimant to successfully refute its use by defendants in complete denial of liability.

The relevant provision reads as follows.

“Regulation 15 (3) The traveller must inform the organiser without undue delay, taking into account the circumstances of the case, of any lack of conformity which the traveller perceives during the performance of a travel service included in the package travel contract.”

In effect, it is a crystallisation of the common law principle of mitigation, the Claimant informing the provider of any issue, thereby being a “trigger” for them to remedy the defect within a reasonable period unless it is impossible or disproportionate to do so. Imagine, for example, a traveller arrives at his 5-star luxury package holiday and said 5 star rating is a quite out of date, amenities are shut, bedding is old fashioned, and the pool is unclean. Luckily for the traveller, there is another 5-star hotel with almost identical facilities as advertised, only a 20-minute drive away from the original hotel. And, they have space! The traveller decides that calling the holiday provider will be too much stress, and after all, he has come to relax – so he decides to not inform the package provider. However, on return, he makes a claim for loss of enjoyment and breach of his package travel contract. Regulation 15(3) provides protection for the package holiday provider in those circumstances.

This provision, and its impact in particular on quantum, came under scrutiny by the Court of Justice of the EU in 2023, in its decision in KT and NS v FTI Touristik GmbH C-396/21, 12 January 2023.

Background

Saggerson on Travel Law (7^th Edition, 2022, 7.88-7.89) (still available at all good bookshops – Ed.)  addresses the point made in general terms, as follows:

1. “Travellers are more likely to find themselves in difficulty with the mitigation of loss […] when they do not give the organiser adequate opportunity to make alternative arrangements.”
   1. “Where the loss complained of arises out of a breach of duty on the part of the Defendant, but could have been avoided by the Claimant taking reasonable steps – the loss will not be reflected in damages.”

A failure to act reasonably through informing the package provider, can act as a complete bar on recovery. For example, in Scott v Blue Sky Holidays [1985] CLE 943 the Claimants failed to complain on the spot about the food at their hotel, and as a result, were denied compensation for the cost of alternative eating arrangements.

This has been consolidated by the CJEU in KT above, with the natural and obvious caveat that CJEU decisions hold less sway in a post-Brexit English court. It concerned the relevant provision in the directive (Directive 2015/2302) which then informed Regulation 13(3):

“Article 13 (2) The traveller shall inform the organiser without undue delay, taking into account the circumstances of the case, of any lack of conformity which he perceives during the performance of a travel service included in the package travel contract.”

It is suggested, given the lack of caselaw on the point, and the Directive wording being identical bar “must” vs “shall” this ought to be very persuasive to an English judge.

The Court also considered Recital (34) of the Directive, the most relevant part of which for our purposes is:

“The traveller should be required to inform the organiser without undue delay, taking into account the circumstances of the case, of any lack of conformity he perceives during the performance of a travel service included in the package travel contract. Failure to do so may be taken into account when determining the appropriate price reduction or compensation for damages where such notice would have avoided or reduced the damage”

The Claimants purchased an FTI Touristik package holiday consisting of a return flight from Germany to Gran Canaria, and accommodation between 13^th and 27^th March 2020. As of 15^th March 2020, the Claimants were subject to Spain’s Covid-19 restrictions and were only able to leave their room to eat and access the swimming pools. They were not able to go to the beach or sunbathe etc from 15^th March 2020. In any event, on 20^th March 2020 they had to return to Germany. The applicants claimed for a 70% reduction of the price of their holiday. At Paragraphs 39 and 40, the court gave useful guidance as to quantum where the claim is for loss of enjoyment:

1. The reduction in the price must be appropriate for the entire period where there is a lack of conformity. An assessment must be made of the value of services which have not been performed, or not performed properly, taking into account the duration and the value of the package. It is not a simple percentage exercise.
2. Most importantly for this article, the traveller concerned is required to inform the organiser without undue delay, taking into account the circumstances, any lack of conformity during the performance of a travel service.  “Failure to do so may be taken into account when determining the reduction in the price of that package where such notice could have reduced the duration of the lack of conformity perceived.”

One caveat as to the implication of this judgment is that concerning the right to a price reduction. This is an easier burden on the Claimant, as there is no fault required – the only aspect of contention, is to compare between the services promised and that actually provided. Arguably, therefore, the CJEU was seeing the Regulation 15(3) equivalent through those lenses. It may be, given the overall consumer leaning of the legislation, that when looking from a compensation angle, where fault is required, a judge may be tempted to place less of a burden on the traveller.

It is important to emphasise also, that the delay or failure to inform is only effective in reducing or denying liability if it would have made a difference.

Say, for example, there is a failure to inform on day 1, and they did so on day 5. In scenario 1, on day 5, there were available alternative provisions, and so due to the delay, the claimant can only claim for loss of enjoyment from day 5 onwards. In scenario 2, imagine no alternative provisions are available until day 5, it seems difficult to argue there can be any reduction in price. 

Beyond any specific regulatory provision, the failure to inform can be of the same utility as in general civil cases, in particular personal injury. If you did not inform the package travel provider of the default at the time of the holiday, can it really be that important so as to reduce enjoyment by any considerable amount? Further, if they did inform, is there a consistency in reporting? Is the claim exaggerated to how it was first reported? All these aspects go the veracity overall of the claim.

Learning Points – Claimant and Defendant Perspective

As a matter of practicality, what can assist in utilising this provision in terms of liability, is evidence from the Defendant pointing out that which would have been provided had they been informed earlier. This can, in effect, completely neutralise the breach at its highest. Imagine in our example, the Claimant informed the Defendant as soon as he arrived, and the Defendant could have provided the services right away. There may be a nominal amount for that delay, but really, has there been a breach in any real terms? Not really. If the Defendant is deprived that opportunity, they should not have to foot the bill – when the Claimant is in breach of an implied term of the contract. 

From a claimant perspective, usually, at the point lawyers are involved, it may be too late. The next points of consideration may assist, however. Travellers in general would be well-advised to read carefully in the Terms and Conditions who and how they should contact, so as to not fall foul of this provision, and record anyone who they did speak to. For a claimant lawyer interrogating whether the Defendant’s argument on 15(3) will work, some questions worth asking are:

• Was it abundantly clear who the Claimant ought to have contacted, and how (either from the Terms, or otherwise generally from the website etc.)?
• Did they attempt to contact at all? Or did a general customer service number ring out?
• Did they inform anyone “on the ground” i.e. another who was providing the services on behalf of the Package Travel Company.
• Is there any reason why the Claimant could not have contacted the Defendant – e.g. do they have a disability which prevents them from using the phone? Are they an elderly couple on a cruise without smart phones and/or wifi?
• In any event, would there have been no solution due to impossibility / disproportionality and therefore the failure would have made no difference? Where defendants have no given evidence on what was available earlier, or if warned at all, this can be a convincing “hole” in the evidence so as to prevent any impact on liability and/or damages.

In terms of maximising this obligation on travellers, defendant package travel companies would be well-advised to lay out specifically in their Terms and Conditions, who, and how they should be contacted. Ideally, this should provide multiple forms of contact so as to avoid arguments from Claimants (for example, I could not phone as there was no facility available). This should be laid out in an easily understandable format for the consumer, as well as the impact on potential recovery if no contact is made. In the long term, this can prevent litigation and therefore be a commercially sensible expense.

Sherman v Reader Offers Limited [2024] EWCA Civ 412

This case further considers where the burden lies when travel plans go awry. 

This case involves the Claimants, Mr and Mrs Sherman, who had booked to go on a cruise to the Northwest Passage in Arctic Canada with the Defendant, Reader Offers Limited, a travel company.  Due to ice conditions, which had not been as severe for the preceding ten years the cruise was not able to follow the scheduled itinerary or visit the areas of historical importance in the Northwest Passage.

The Claimants failed to establish their case in the County Court, but appealed this decision to the High Court, which found in their favour that there were instances of a breach of the parties’ contract.  The Defendant then, unsuccessfully, appealed the High Court’s decision seeking to restore the decision of the County Court.

Males LJ described the case brought by the Claimants in the lower courts as “extravagant”, as amongst other things they claimed damages for “deceit, misrepresentation, negligence and breach of Article 5”.  These were rejected by the lower courts, and the only part of the claim with which the Court of Appeal were concerned was the claims for breach of contract and for compensation under the Package Travel, Package Holidays and Package Tours Regulations 1992.

The Court of Appeal focussed on four primary issues:

1. When the contract between the parties came into force;
2. Whether the itinerary provided by the Defendant was a term of this contract;
3. Whether a significant proportion of the services were not provided;
4. Whether this was foreseeable.

In determining when the contract was concluded, the lower courts had had regard to Regulation 9 of the 1992 Regulations, which stated that the contract must include the elements specified in Schedule 2, which expressly includes an itinerary.  The Court of Appeal rejected this approach, noting that whilst the 1992 Regulations form part of the background in the making of a contract, deciding when a contract was made should be a decision made with regard to the ordinary principles of domestic law.  Therefore, the Court of Appeal examined the wording of the telephone conversations between the parties and the terms and conditions sent by the Defendant. The Court found that the wording of the calls demonstrated that neither party had the intention to be bound and the terms and conditions expressly stated that a contract will exist upon the Defendant issuing the confirmation invoice.  This invoice was sent alongside a detailed travel itinerary, which was found to form part of the contract. The Defendant’s submission that the itinerary was no more than an aspirational list of places which the cruise would attempt to visit was rejected as untenable.

At this point, the Court considered clause 7.3 of the Defendant’s terms and conditions which distinguished between “minor” changes which may not necessarily be advised and would not qualify for compensation and “major” changes of which the passengers would be advised in advance, and given the choice between accepting the change in arrangements (if they be of lesser quality, being entitled to the price differential), or cancelling the holiday and being issued a full refund.  Clause 7.3 stated that “the order and timings of your confirmed itinerary are subject at all times to changes, substitutions and variations, without notice, and this will always be considered a ‘minor change’ for which no compensation will be payable”.  Major changes were described as including “changing your departure airport”, “a difference of more than 12 hours in departure times, or a change in your cruise ship”. 

Regulation 12 of the 1992 Regulations was also considered here: “where the organiser is constrained before the departure to alter significantly an essential term of the contract, such as the price (so far as regulation 11 permits him to do so), he will notify the consumer as quickly as possible in order to enable him to take appropriate decisions and in particular to withdraw from the contract without penalty or to accept a rider to the contract specifying the alterations made and their impact on the price”.

The Court of Appeal found that there had been a breach, both of Regulation 12 and clause 7.3, as the Defendant was under an obligation to inform passengers of the change of itinerary as quickly as possible and to inform them of their options, including their right to a refund.  Instead, the Defendant had only explained the revised itinerary to the Claimants a matter of hours before the flight to the revised destination was due to take off. Importantly, the communication that had occurred prior to that was found to be insufficient as it did not fully communicate the extent of the change, the revised itinerary or the steps that the Claimants were entitled to take.  Indeed, at no point, did the Defendant inform the Claimants of their right to a refund. 

The Court then considered unforeseeability. In this case, the inability to perform the original route was due to ice conditions which were described in expert evidence as unusual for the time of year, such that for the previous ten years, the Defendant’s itinerary would have been possible.  Yet, the Court of Appeal did not agree with the findings of the lower courts, that the change in ice conditions were unforeseeable, instead finding that “the commencement, duration and end of the ‘summer navigational season’ in the Northwest Passage are highly variable, that the navigation is not always possible, and that annual patterns that were once considered reliable are now very much less reliable. It was, therefore, entirely foreseeable that it might prove impossible to perform the cruise in accordance with the detailed itinerary”.

To conclude, this case is an important reminder to travel companies of their obligations to fully inform the passengers about not only the extent to which the original contract is not performable, but also the replacement itinerary and any rights which may exist for a full or partial refund.  Moreover, it is a reminder that unforeseeability is a high bar, and that the failure being due to circumstances outwith the Defendant’s control does not prevent the Defendant from owing this obligation.

As a result of the above, the Court dismissed the appeal and remitted the case to the County Court. The Court emphasised the need for parties to approach litigation in a proportionate manner and reinforced that alternative dispute resolution is a process which should be considered at every stage of proceedings.  Indeed, it was heavily recommended that the parties resolve the quantum matters outside of Court to protect themselves from further costs.

About the Authors

Julia and Megan were both called in 2023 and successfully completed their pupillages with Deka Chambers in October 2024. Both undertake work across all of chambers’ practice areas, and both have had the experience of being led by Sarah Prager KC, Julia in a case involving novel arguments around assumption of responsibility on the part of an online accommodation booking platform, and Megan in a case making new law on the interplay between the liability cap and contributory negligence under the Montreal Convention. Sarah speaks very highly of both of them.