The question in this case is the extent of tour operator liability for acts of employees of its suppliers. The claim arose as a result of the rape of the claimant by an employee of the hotel which had contracted with the defendant tour operator to provide holidays for the latter’s customers.
The 1992 regulations* at issue in this case provide that the “other party to the contract is liable to the consumer for the proper performance of the obligations under the contract, irrespective of whether such obligations are to be performed by that other party or by other suppliers of services.”
In a split decision in April this year, the Court of Appeal found that the operator was not liable to the claimant. The reasoning of the majority (in brief summary only) was that the hotel employee was not a “supplier of services” for the purposes of the regulations. In their view only the hotel, which had contracted with Kuoni, could be properly described as the “supplier”. The claim therefore failed on that basis. The majority also dismissed the contractual claim for improper performance of the holiday arrangements.
Longmore LJ (in the minority) took a broader, almost purposive, view of the regulations. For him, “the whole point of the Directive and the regulation which implemented the Directive is that the holidaymaker whose holiday has been ruined should have a remedy against his contractual opposite and that it should be left to the tour operator to sort out the consequences of the ruined holiday with those with whom it has itself contracted who can then sort things out further down the line whether with their own employees or their independent contractor.” He would therefore have allowed the claim under the regulations (subject always to any potential defences) since “it would not be just or fair to conclude that the concept of ‘supplier’ should stop with the Hotel. It should be just the same with an employee. There can be little doubt that some employees should be regarded as suppliers.”
The Court of Appeal’s decision appears to have undermined the straightforward and reasonably long-held approach that employees of overseas organisations providing holiday services to customers of tour operators readily fall within the definition of “suppliers of services” for the purposes of liability under the package travel regulations. As one barrister put it, the decision has (perhaps inevitably) “driven a coach and horses through the heretofore uncontroversial consensus amongst practitioners and the courts surrounding the operation of the regulations.”
It is probably unsurprising therefore that the Supreme Court has now agreed to hear the case, with permission to appeal having been granted at the very end of October. Assuming it is not compromised, we would expect that the earliest the case might be heard would be in the latter part of next year. Our experience following the Court of Appeal’s decision has been varied. We have seen discontinuances in a few similar cases after raising the judgment. Other firms, we suspect in expectation of this escalating to the Supreme Court, have sought to stay their claims pending a further and conclusive outcome.
* By way of footnote, the 1992 regulations have since been replaced by The Package Travel and Linked Travel Arrangements Regulations 2018. The new regulations took effect on 1 July 2018 and the direct replacement for the regulation quoted above is slightly differently worded, providing that: “The organiser is liable to the traveller for the performance of the travel services included in the package travel contract, irrespective of whether those services are to be performed by the organiser or by other travel service providers.” It may be noteworthy that the explanatory memorandum to the 2018 regulations explains this provision in what appear to be wider terms: “Liability for the performance of the package is also placed explicitly on the organiser (a trader who combines and sells packages), regardless of whether the services are performed by third parties.”
Alistair Kinley, Director of Policy & Government Affairs