X v Kuoni Travel Limited

The Supreme Court (“the SC”), following guidance from the Court of Justice of the European Union (“the ECJ”), has answered some controversial questions about the Package Travel, etc., Regulations 1992 in X v Kuoni [2021] UKSC 34 (following a reference to the ECJ in [2019] UKSC 37 and a judgment of the ECJ on 18.03.21 in the reference C-578/19).

Mrs X went on a package holiday to Sri Lanka purchased from Kuoni which included accommodation at the 4 star Club Bentota hotel.  She was making her way through the grounds of the hotel one night when she came upon an employee of the hotel who was an electrician (and known to Mrs X as such) and who offered to show her a shortcut to the reception area.  Mrs X accepted.  While purporting to show her the way, the electrician raped and assaulted Mrs X.

Kuoni was obliged to provide services promised under the contract with reasonable care and skill.  By regulation 15(1) of the 1992 Regulations, Kuoni would be liable to Mrs X for a failure of performance of the obligations under the contract whether the service was performed by Kuoni itself or by another person (e.g. the hotel).  It would be a defence to prove that a failure in performance was due to an event which neither Kuoni nor the other person supplying services could foresee or forestall even with the exercise of all due care (reg.15(2)(c)(ii)).  That provision was in different words made a term of the contract.  The 1992 Regulations were made to bring into UK law the provisions of Directive 90/314/EEC.

Mrs X sued Kuoni claiming that the rape and assault amounted to improper performance of the contract and a breach of the 1992 Regulations.  Kuoni denied that the conduct of the electrician was performance (albeit improper) of any obligation under the contract and further invoked the 15(2)(c)(ii) defence.  The trial judge found for Kuoni holding that the holiday arrangements did not include a member of staff conducting a guest to reception.  He also held that Kuoni would have had a defence under 15(2)(c)(ii) because the hotel could not have foreseen or forestalled the rape even with all due care.  The Court of Appeal dismissed the appeal 2-1.

The SC allowed the appeal of Mrs X.

Before deciding the case, the SC referred to the ECJ questions relating to the scope of the 15(2)(c)(ii) defence on the assumption that showing a guest to the reception area was (contrary to the conclusion of the courts below) a service within the holiday arrangements.  The questions posed were as follows (and note that the references are to Article 5(2) of the Directive but the terms of 15(2)(c)(ii) are essentially the same):

‘(1) Where there has been a failure to perform or an improper performance of the obligations arising under the contract of an organiser or retailer with a consumer to provide a package holiday to which [Directive 90/314] applies, and that failure to perform or improper performance is the result of the actions of an employee of a hotel company which is a provider of services to which that contract relates:

  • is there scope for the application of the defence set out in the second part of the third alinea to Article 5(2) [of Directive 90/314]; and, if so,
  • by which criteria is the national court to assess whether that defence applies?

(2) Where an organiser or retailer enters into a contract with a consumer to provide a package holiday to which [Directive 90/314] applies, and where a hotel company provides services to which that contract relates, is an employee of that hotel company himself to be considered a “supplier of services” for the purposes of the defence under Article 5(2), third alinea of [Directive 90/314]?’

The ECJ held that the employee of a supplier of services was not himself a supplier of services but that his acts or omissions could nonetheless give rise to liability on the part of the package provider and further held that where the liability of the package provider arises from the acts or omissions of the employees of the service provider the defence that the events could not have been foreseen or forestalled is not available.

The case was then returned to the SC which in allowing Mrs X’s appeal held:

  1. Directing Mrs X to the reception was a service within the holiday arrangements, so within the package. “It is an integral part of the services to be provided on a holiday of such a standard that hotel staff provide guests with assistance with ordinary matters affecting them at the hotel as part of their holiday experience.” ([32]).  It makes no difference that the guilty employee was engaged as an electrician not a member of the customer services staff.  One needs to focus on the content of the holiday Kuoni agreed to provide rather than on the job description of the staff member performing the service (though in fact the hotel’s rules for all employees enjoined them to familiarise themselves with all the facilities so as to be able to guide the guests).  The SC was fortified by the ECJ’s stress on the high level of consumer protection the Directive was intended to confer.
  2. The effect of the ECJ decision was that the 15(2)(c)(ii) defence was not available to Kuoni.

Since Mrs X’s case arose, the EU has passed Directive 2015/2302/EU which was brought into UK law by the Package Travel and Linked Travel Arrangements Regulations 2018 (coming into force on 1 July 2018).  The 2018 Regulations supersede the 1992 Regulations.  Regulation 15(2) of the 2018 Regulations makes the organiser of the package liable for breaches by other service providers (as under the 1992 Regulations).  Regulation 16(4) of the 2018 Regulations sets out the scope of the defences available to the organiser in cases where the package does not conform to the contractual requirements:

(4) The traveller is not entitled to compensation for damages under paragraph (3) if the organiser proves that the lack of conformity is—

(a) attributable to the traveller;

(b) attributable to a third party unconnected with the provision of the travel services included in the package travel contract and is unforeseeable or unavoidable; or

(c) due to unavoidable and extraordinary circumstances.

The words of 16(4)(b) and (c) are therefore different to the words of the defences under 15(2) of the 1992 Regulations.  However, the reasoning of the SC and the ECJ make it seem likely that Mrs X would have won her case if suing under the 2018 Regulations.

mm
Author: Bernard Doherty