Travelling in uncertain times
This article looks at recent judgments in the courts and how they might affect decisions in disputes over holiday cancellations during Covid 19
Travelling in uncertain times — whether it be during civil unrest, or international health crises — can make it difficult for package holiday organisers and consumers. Both are often left wondering whether a future booking will go ahead as planned.
Covid 19 had a seismic effect on the travel industry — holiday organisers cancelled huge numbers of holidays over an extended period of time. Even if their holidays weren’t cancelled by the organisers many consumers made their own decision not to go on their planned trip, and to instead request a refund from the holiday company. This was often based on the effects of the pandemic on their chosen holiday location. Consumers’ requests for refunds for these trips were not always agreed to by the holiday company, and parties have found themselves in dispute.
Claims arising from these disputes will work their way through the court system. To give us an idea of what outcomes we might see, let’s look at some relevant previous judgments.
Where we were
Until recently the lead case in this area was Lambert Vs Travelsphere
The Lamberts booked a holiday that was affected by the Severe Acute Respiratory Syndrome (SARS) epidemic. The case centred on a holiday booked in January 2003 for travel between 27 April and 19 May 2003, including time in Beijing and Hong Kong. On 8 April 2003, the holiday company, Travelsphere, wrote to the Lamberts notifying them that they were rearranging some travel itineraries as a result of the SARS outbreak, but it might be possible for them to visit Hong Kong at the end of the trip. The Lamberts chose to cancel the holiday on 8 April and asked for a full refund including the cancellation fee chargeable under Travelsphere’s terms and conditions.
On 23 April 2003, Travelsphere cancelled the holiday for any consumers who had not yet cancelled their booking. They provided this group of people with a full refund.
As the Lamberts had already cancelled their booking Travelsphere did not issue them with a full refund. However, the Lamberts pursued a claim under The Package Travel, Package Holidays and Package Tours Regulations 1992 — specifically regulation 12, which states that:
where the organiser is constrained before the departure to alter significantly an essential term of the contract, such as the price (so far as regulation 11 permits him to do so), he will notify the consumer as quickly as possible in order to enable him to take appropriate decisions and in particular to withdraw from the contract without penalty or to accept a rider to the contract specifying the alterations made and their impact on the price.
On appeal, the judge considered that there was a possibility that Travelsphere would have to alter Lamberts’ itinerary.
But — the court held that it is permissible for the travel company not to alter an essential term until there is “not a flicker of hope” that the contract can be performed in accordance with the original term. This meant that the Lamberts should have waited for further clarification on whether the booking would go ahead as planned. As they cancelled the booking whilst there was still a “flicker of hope,” they were not entitled to a refund of the cancellation fee.
This concept of a “flicker of hope” set a high bar for consumers wanting to cancel a holiday, where the holiday company hadn’t cancelled the trip. It was then applied in various cases in the County Court, in favour of the holiday company.
Recent developments
Since the Lambert case, The 1992 regulations have been replaced by the The Package Travel and Linked Travel Arrangements Regulations 2018 (PTRs 2018).
There have also been two recent judgments in individual cases. Both were brought under the 1992 regulations, as the holidays under dispute took place prior to the PTRs 2018 taking effect.
X v Kuoni Travel Ltd 2021
By way of background, the case involved an assault in 2010 on a holiday-maker who was staying at a hotel as part of an all inclusive package. The appeal was allowed unanimously — Kuoni Travel Ltd was found liable under the package holiday contract as their obligations included ancillary services necessary to provide a holiday that was of a reasonable standard. These services included staff guiding guests round the premises — the assault occurred when an electrician employed by the hotel offered to show Mrs X a shortcut to reception.
The case’s facts are irrelevant to consumers wanting to cancel a pending holiday, but the judgment considered the way in which the PTRs 2018 as a whole should be interpreted. This case confirmed that the law holiday organisers should follow under the PTRs 2018 should be considered widely, and defences under the PTRs 2018 should be interpreted narrowly. Leading on from this, the PTRs 2018 should also be interpreted in this manner. This case opened the way for future cases of various types to be considered in a less stringent way for the consumer.
Sherman, Sherman v Readers Offers Limited
The judgement, on this unreported case, was reached in May 2022. The holiday in question was a cruise along the Northwest Passage which took place in September 2018. The break up of ice in the Arctic took place much later than usual, which meant that much of the itinerary had to be abandoned. The Shermans brought a claim for a refund under regulation 12.
The defendant relied on the “flicker of hope” test to claim that it was still conceivable that the important parts of the itinerary could be provided when the cruise began. The claimants stated that the holiday company was aware that the cruise would have to remain in the mouth of the Northwest Passage, rather than cruise down the Passage itself, before departure.
The judge considered that in this instance regulation 12 was not engaged as the holiday company “reasonably believed” that it would be possible to visit the North West Passage.
However, as part of his judgment, the judge referred to the Kuoni Supreme Court decision, in how it should inform its approach to the interpretation to the PTRs 2018.
In my judgment, the expression “a flicker of hope” does not constitute a formulated test for deciding whether a tour operator is constrained to alter an essential term of the contract and arguably would set the bar too low, having regard to the clear expression of policy in relation to the PTR set out by the Supreme Court in Kuoni
He went on to state that:
a tour operator is constrained to alter significantly an essential term of the contract if there is no longer a reasonable possibility that the contract can be performed in accordance with that essential term¹
In taking into account the Kuoni decision in his summing up, the judge arguably may have replaced the “flicker of hope” test with a “reasonable possibility” test. This appears to be a lower bar for consumers wanting to cancel a future holiday booking. “Reasonable possibility” may allow for a wider interpretation than “flicker of hope” and allow for a narrowing of defences from holiday companies.
What the future holds
There will be very close attention paid to any future judgments in package holiday claims relating to the Covid-19 era and other times of uncertainty for travel. The Sherman, Sherman v Readers Offers Limited case gives us a steer as to how those claims may play out in the courts based on the interpretation guidance in X v Kuoni Travel Ltd. The bar for consumers claiming full refunds for cancelled holidays may be lowered and consumers may no longer have to wait for a “flicker of hope”.
Jane Parsons is a Consumer Expert at Citizens Advice.
The information in this article is correct as of the date of publication.
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