Special Report: A new limit to liability?

Special Report: A new limit to liability?

UK Appeal Court ruling will cut 80% of claims against travel firms but is ‘obviously wrong’.

A ground-breaking UK Court of Appeal ruling appears to have drastically reduced travel organisers’ liability for personal injury under the package travel regulations.

However, a leading UK industry lawyer has warned that the ruling, at the end of April, is almost certain to be reviewed.

Sarah Prager, a barrister at London law firm 1 Chancery Lane, described the reasoning behind the Appeal Court ruling as “obviously wrong”.

The case of X v Kuoni Travel involved a woman on a package holiday to Sri Lanka who was sexually assaulted in her hotel.

Travel Weekly reported the ruling last month, quoting one of the UK’s most-experienced travel lawyers, Stephen Mason – senior partner at legal firm Travlaw – on the significance of “the finding that only the hotel is a ‘supplier’ as defined within the Package Travel Regulations, not its employees”.

Prager agreed, saying: “This is the most important case for many years for this sector. It could be the basis for a defence in 80% of [personal injury] claims.”

But she suggested the Court of Appeal “reached a conclusion on the meaning of the phrase ‘supplier’ in the Package Travel Regulations [PTRs] so far removed from previous decisions as to be obviously wrong”.

Prager told an Abta travel law seminar: “The finding is really good for tour operators, [but] I don’t understand the chain of reasoning.

“It will cut down the vast majority of claims and provide a defence in the vast majority of cases. It is a really big deal, but it is very confusing.”

She noted the claimant intends to appeal to the UK Supreme Court and suggested: “Further clarification is likely to restrict the judgment of the Court of Appeal.”

Prager said: “The purpose underlying the [Package Travel] regulations is to protect the consumer by providing a remedy against a UK-domiciled tour operator for acts and omissions of its foreign suppliers.

“Those suppliers act through their employees or contractors in performing the services the tour operator has promised to the consumer.

“This has been the basic principle underlying the regulations since their inception. Case law abounds with references to tour operators being held liable under the regulations for the acts of their supplier’s employees or agents.”

Prager suggested: “The potential implications are very significant. The vast majority of ‘routine’ accident claims would now appear to fall outside the statutory regime.”

She described the decision as “a very powerful weapon in the tour operator’s arsenal”.

X versus Kuoni Travel

Mrs X was sexually assaulted while on a package holiday in Sri Lanka and claimed damages for the assault against Kuoni.

Prager explained: “The claimant had been making her way to the reception at the hotel. One of the hotel’s employees [an electrician] indicated she could take a shortcut and led her into a room where he assaulted her.

“She sued Kuoni as liable for the actions of the hotel employee. The judge [at the High Court hearing] did not believe parts of her evidence and found she had embellished her case, although the sex offence he did believe.

“He found against her and for Kuoni. The Court of Appeal backed the judge.”

The High Court found there was no “improper performance” of the package in the case of X v Kuoni, that the sexual assault was an event the hotel (and Kuoni) could not “with all due care foresee or forestall”.

Unusually, the Appeal Court judges came to a majority decision, rather than a unanimous one, with Lord Justice Longmore dissenting.

The majority decision was that the term ‘holiday arrangements’ in the Package Travel Regulations (PTRs) did not extend to the employee’s conduct in purporting to escort X to the hotel reception since “it was no part of the functions for which (he) was employed”.

In addition, the claim could not succeed “because it was the hotel itself, and not its employee, which was the ‘supplier of services’ for all purposes” under the PTRs.

But it was the opinion of Lord Justice Longmore, in dissenting from the ruling, that “guiding guests to the hotel reception was clearly part of the holiday arrangements from Mrs X’s perspective . . . [and that] for such a holiday to be of a reasonable standard, hotel staff must be helpful to guests when asked for assistance.”

Longmore argued: “The whole point of the [Package Travel] Directive and the regulation is that the holidaymaker should have a remedy against his contractual opposite and it should be left to the tour operator to sort out the consequences with those whom it has itself contracted.”

Prager suggested: “The Court of Appeal has opened a Pandora’s box in this area of the law.”

 

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