Package deal

The new Package Travel Directive (PTR), under discussion since 2009, is entering
its final phase. Once the finalised directive is adopted, it will be implemented, it is thought,
no later than 2017.

Behind the new directive is a combination of technological developments, which have meant
a move away from traditional brochure holidays towards internet and telephone sales through which ‘package’ holidays may or may not have been sold, and the arguably less-than-level playing field created by these changes in terms of licensing and regulatory requirements, which may be costly and may impose obligations on the holiday provider.

It aims to enhance consumer protection by widening the definition of ‘package travel’ and increasing the obligations of the organiser, a key feature being a requirement to provide clear information.

In widening the definition of package travel, the new directive will capture holidays that are described as ‘packages’ or ‘under a similar term’ sold at a ‘total’ as well as an ‘inclusive’ price and separate services ‘purchased from a single point of sale within the same booking process’. It will also capture closely linked transactions where separate services are sold but the booking processes are linked, such that information necessary to conclude a booking is transferred between traders ‘at the latest when the booking of the first service is confirmed’. It also expressly covers travel ‘gift boxes’, where the package contract is concluded before the consumer chooses the precise components.

It excludes business travel unless this is not purchased through a framework contract.

The directive also recognises a new category of travel arrangement, termed an ‘assisted travel arrangement’ (ATA), which captures ‘separate bookings on the occasion of a single visit or contact with the point of sale’ or linked bookings where there has not been transfer of information.

The requirements under the PTR will have limited application to ATAs, which will have no liability for the performance of services. The ATA will, however, have to explain to consumers clearly that only the individual service providers are liable for the performance of the individual services. In addition, ATAs will have to have financial protection and will be obliged to repatriate consumers in the event of insolvency.

While the proposed directive widens the scope of the definition of package travel and increases the obligations on organisers (pending sight of the adopted directive), there is still likely to be room for debate in some cases as to what falls within the definition of a package.

Consumer protection legislation 

New domestic laws and pan-European regulations for consumer protection have been introduced recently by the European Commission to capture internet-based sales and to harmonise consumer protection laws throughout Europe. Here, we examine the potential effect of two pieces of consumer protection legislation on the travel industry.

A new Directive on Consumer Rights applicable to all distance contracts (i.e. those made on the internet or by telephone) was implemented in England and Wales in June 2014 in the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations, which cover sale of goods and services and digital content, and plug the gaps in the now revoked Distance Selling Regulations 2008.

This new regulation provides additional remedies for faulty or unfit goods and services.
It introduces new obligations to provide specific information at the time of contracting together with an express notification of the right to cancel.

The cancellation period by the consumer is extended from seven to 14 days and the schedule for repayment of a refund by the trader reduced to 14 days. No reason for cancellation needs to
be provided.

The travel and leisure sector will be relieved as contracts fully exempted include:

• Package holidays;

• Timeshare sales; and

• Personal passenger transport contracts (e.g. air, rail, and sea) and accommodation contracts, which would extend to chalet, villa, and holiday home rental.

Also exempted are contracts for services relating to leisure activity where the service is to be provided at a specific date or within a specific period (which would otherwise be difficult to sell for the trader if cancelled). These would include:

• Excursions;

• Car hire;

• Wedding venues; and

• Tickets for specific events.

Of greater concern to purveyors of retail and leisure services are the new Consumer Protection (Amendment) Regulations, which came into force in October.

These give consumers new remedies where they have been misled into purchasing goods
or services by false information about any material aspect of the goods or services, or by an omission to provide material information (that is, information which would be considered
material by a reasonable consumer).

Previously, traders could be prosecuted for misleading customers, but customers had
no private law remedy for claiming damages. Consumers can now bring civil claims for
damages in such circumstances.

These regulations will apply to all forms of holiday and leisure contracts. Expressly included are leases for holiday accommodation.

The new remedies include:

• The right to unwind a contract and obtain a full refund;

• A discount (for goods and services under £5,000, which is scale rate); and

• Damages for detriment.

The right to unwind a contract, restoring parties to their pre-contractual position, is exercisable within 90 days (three months from the later of the date of the contract or the day the goods or services were first supplied). Significantly, it is described as anything but an ‘all or nothing’ remedy, since so long as some elements of the goods and services can be returned or saved, the contract is capable of rejection and unwinding will be possible.

In practice, this will be a question of fact. However, if a holidaymaker arrives at a resort, property, or cruise ship which has been materially mis-sold, they will be entitled to exercise their unwinding or damages rights by giving notice on arrival. For example, in the case of a claim by a hotel to an on-site golf course which is in fact not yet completed, or the absence of advertised private pools at each villa.

Recent travel cases

The Court of Appeal decision in Wagenaar v Weekend Travel Ltd [2014] EWCA Civ 1105 dealt with the issue of qualified one-way costs shifting (QOCS), a principle with which we are all now familiar in the post-Jackson era. The court held that QOCS does not apply to a Civil Procedure Rules (CPR) part 20 claim made by a defendant against a supplier for the recovery of outlay following a personal injury claim. A defendant/part 20 claimant who unsuccessfully attempts to recover its outlay from a supplier will be liable to pay the part 20 defendant’s costs, as the part 20 claim is a recovery action and not a personal injury action to which QOCS applies. The part 20 claim may well be unsuccessful because the main claim was in fact dismissed – good news for the defendant/part 20 claimant. The sting in the tail
is that the defendant/part 20 claimant is unable to recover its own costs from the unsuccessful claimant as a result of QOCS.

Lougheed v On The Beach [2014] EWCA Civ 1538 saw the Court of Appeal reaffirm the importance of local standards evidence in travel cases. The burden of proof in evidencing a breach of local standards falls squarely with the claimant. A claimant who fails to adduce local standards evidence ‘does so at his peril’, in the now well-quoted words of Lord Justice Tomlinson. This has been followed recently in the High Court of Northern Ireland in Kerr v Thomas Cook [2015] NIQB 9, which has slightly more interesting facts than the slipping matter of Lougheed. Kerr involves cats (feral or not) roaming hotel grounds in Tunisia
and the standard of care and skill placed upon a hotelier to control cats to prevent incidents of them scratching hotel guests. The claimant in this matter had failed to adduce any local standards in this regard and the claim had to fail.

Finally, in Drew v Ryanair (29 January 2015) the interpretation of ‘compensation’ pursuant to the Denied Boarding Regulations (EC 261/2004) was provided. Ryanair had within its terms and conditions a limit to liability if any claim for ‘damages’ was not brought within two years of the date of arrival at a destination. Ryanair had denied the claimant’s claim for compensation following a delay to a flight as it was brought after the two-year time limit. The district judge in Liverpool held that ‘compensation’ pursuant to the Denied Boarding Regulations was not ‘damages’, therefore Ryanair’s terms and conditions did not apply. The term itself was held not to be unfair in accordance with the Unfair Contract Terms Act 1977 and two years was a reasonable time limit to place on claims for damages. The judgment in Drew was followed in another denied boarding case against another airline, also at Liverpool County Court, which held that, as compensation was not damages, section 69 of the County Courts Act 1984 did not apply and interest could not be claimed on the compensation awarded pursuant to the regulation. 

Dr Julian Morris is a partner and member of the travel law team at Parabis Law @ParabisGroup