Tour operator liability case referred to the EU

X v Kuoni Travel [24.07.19]

Date published

24-07-2019

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Today the Supreme Court judgement confirmed that questions need to be answered by the Court of Justice of the European Union (CJEU) before determining the appeal as to whether a tour operator will be liable for the criminal acts of hotel employees against hotel guests.

The travel industry will need to wait a little longer for the final outcome, but in the meantime the Court of Appeal judgment, which confirmed that Kuoni were not liable, stands.

Background

On 8 July 2010, Mr and Mrs X arrived in Sri Lanka for a 15-day package holiday booked through Kuoni Travel Ltd (Kuoni). They stayed at the Club Bentota Hotel (the hotel), where, in the early hours of 18 July 2010, Mrs X was raped and sexually assaulted by an electrician (N) employed by the hotel who she stated was guiding her back to reception.

She sued Kuoni for ‘improper performance’ of the holiday contract she made with them. She based her claim both on her contract with Kuoni, namely their booking terms and conditions, and on Regulation 15 of the Package Travel, Package Holidays and Package Tours Regulations 1992 (the Regulations), which implemented into the United Kingdom, Council Directive 90/314/EEC (the Directive).

Mrs X’s case was that the services provided by Kuoni via the hotel, pursuant to the package holiday contract, were to be ‘properly performed’ in that services would be provided with reasonable care and skill. This was irrespective of whether the services were to be rendered by Kuoni or other suppliers of services. Mrs X asserted that N was providing such a service pursuant to the holiday contract and that he did not provide that service with reasonable care and skill and that N, as the supplier of that service, could easily foresee that his sexual attack was not a proper performance of his services.

In its defence, Kuoni denied the assault constituted a breach of any obligations owed by Kuoni under the Regulations or that it constituted improper performance of any obligation under the contact and that the hotel, not N, was the supplier.

The decisions so far

At first instance, the judge concluded that the obligations under the contract did not include a member of the maintenance staff conducting a guest to reception and that in any event the assault could not have been foreseen or forestalled even with all due care. The judge also held that the hotel would not have been vicariously liable as a matter of Sri Lankan Law, which it was agreed, was the same as English law.

Mrs X appealed the decision, and her appeal was dismissed by the Court of Appeal, accepting the decision at first instance. They agreed with the original interpretation of the contract and that a member of the hotel’s maintenance team conducting the guest to the hotel’s reception was no part of the functions for which N was employed. Further, the Regulations were not designed to facilitate a claim against a tour operator for wrongful conduct by an employee of a supplier, where that conduct was ‘not part of the role in which he was employed’, and where the supplier would not have been vicariously liable (albeit the Court did not decide on the point of vicarious liability).

The Court confirmed that the judge at first instance was right to hold that Kuoni was not liable under either the express terms of the contract or by the Regulations, since N was not a ‘supplier’ within the meaning of either of those provisions.

Mrs X appealed the Court of Appeals decision and the case was heard in May by the Supreme Court.

Supreme Court

The Supreme Court needed to consider whether:

  1. The actions of N constituted improper performance of the obligations of Kuoni under the contact?
  2. And, if so, whether Kuoni is liable in respect of N’s conduct given the contractual wording and potential defence under the Regulations?

Mrs X asserted that the Unfair Contract Terms Act 1977 prevents Kuoni from ‘contracting out’ of their liability for death or injury if negligent. And in addition, they could not seek to rely on a Regulation 15 (2)(c)(ii) defence against a breach of contract claim.

Kuoni disputed this by confirming that this runs contrary to the intention of the Directive.

Due to the importance of the decision on the travel industry, the Supreme Court granted permission for ABTA Ltd (represented by Kennedys) to intervene in the appeal and to provide submissions. The principle submissions made on behalf of ABTA was that N was not ‘a supplier of services’ but instead the hotel was the supplier and was not at fault (either directly or vicariously) for N’s actions. As such the defence under the Regulations should succeed. To uphold the case for Mrs X on this point would lead to the startling result that a tour operator could be liable despite the fact that its supplier, the hotel, would not be liable for the actions of its employee.

The Supreme Court unanimously decided to refer two questions to the CJEU in relation to the second issue before determining the appeal.

The questions that the Court have referred to the CJEU are as follows:

  • If guidance by a member of the hotel’s staff of Mrs X to the reception was a service within which Kuoni had contracted to provide, and the assault constituted improper performance of the contact:
    • Is there scope for a defence pursuant to the Directive (and thereby the Regulations) that the tour operator could not have foreseen or forestalled the incident.
    • If so, by which criteria is the national court to assess whether that defence applies?
  • Where a tour operator enters into a contract with a consumer to provide a package holiday to which the Directive applies, and where a hotel company provides services to which that contract relates, is an employee of that hotel a ‘supplier of services’ for the purposes of the defence under the Directive (and thereby the Regulations)?

Comment

We will have to wait for the CJEU to consider whether a defence, pursuant to the Regulations, will stand to protect an operator in such circumstances, where the hotelier is not liable for the actions of its employees.

To date, the judgments in the first instance and Court of Appeal have been helpful to tour operators and supported the much accepted approach that a defence under the Regulations  can be relied upon for incidents and accidents which the defendant or hotelier even with all due care could not foresee or forestall.

For now, it seems unlikely that we will have a confirmed decision in this calendar year.

Read more items in Personal Injury Brief - October 2019