Holiday: Package holiday

The appellant had a contract for a package holiday to Sri Lanka with the respondent tour operator, Kuoni. While on that holiday, she had been raped and assaulted by a hotel employee in the course of directing her to the hotel reception. She successfully appealed against the decision of the Court of Appeal, Civil Division, to the effect that in those circumstances, the tour operator would be liable for damages. The Court of Appeal took the view that pursuant to reg 15(2)(c) of the Package Travel, Package Holidays and Package Tours Regulations 1992, SI 1992/3288 (the Regulations), which implemented Council Directive (EEC) 90/314, the words 'holiday arrangements' in cl 5.10(b) of the Booking Conditions did not include a member of the hotel's maintenance team, known to be such to the hotel guest, directing the guest to the hotel's reception and 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. On hearing the appeal, the Supreme Court had referred certain questions to the Court of Justice of the European Union for a preliminary ruling. On receipt of the CJEU’s judgment, the Supreme Court gave a final judgment in the present appeal, deciding that: (i) the Court of Appeal was wrong to accept that N’s direction had not been part of the 'holiday arrangements'; and (ii) reg 15(2)(c)(ii) of the Regulations which had implemented the Directive provided no defence to Kuoni in the present proceedings. In those circumstances, Kuoni was liable to the appellant both under the Regulations and for breach of contract because the services it undertook to provide were not provided with care and skill by an employee of the hotel which was a supplier of the services.

In July 2010, the appellant (X) had travelled to Sri Lanka with her husband for a holiday. The holiday had been booked through the respondent tour operator (Kuoni). Under that contract, Kuoni had agreed to provide a package holiday in Sri Lanka which included return flights from the UK and 15 nights' all-inclusive accommodation at a hotel (the hotel). Clause 5.10(b) of that contract provided, first, that Kuoni accepted responsibility: '... if [the other contracting party] or any member of [his or her] party is killed or injured as a result of an activity forming part of those holiday arrangements' and, second, that Kuoni did not 'accept responsibility if and to the extent that any failure of [the] holiday arrangements, or death or injury is not caused by any fault [on the part of the company], or [that of its] agents or suppliers; is caused by [the other contracting party] … or is due to unforeseen circumstances which, even with all due care, [the company] or [its] agents or suppliers could not have anticipated or avoided'. On 18 July 2010, X was raped and assaulted by an electrician (N) employed by the hotel where they were staying. N had attacked X after offering to show her the way to the hotel reception. N had been on duty and wearing the uniform of a member of the maintenance staff.

X commenced proceedings against Kuoni for damages by reason of the rape and assault. The claim was for breach of contract and/or under the Package Travel, Package Holidays and Package Tours Regulations 1992, SI 1992/3288 (the 1992 Regulations), which implemented Council Directive (EEC) 90/314 (the Directive) in the UK. Pursuant to reg 15(2) of the 1992 Regulations: 'The other party to the contract is liable to the consumer for any damage caused to him by the failure to perform the contract or the improper performance of the contract unless the failure or the improper performance is due neither to any fault of that other party nor to that of another supplier of services, because - '... (c) such failures are due to – (i) unusual and unforeseeable circumstances beyond the control of the party by whom the exception is pleaded, the consequences of which could not have been avoided even if all due care had been exercised; or (ii) an event which the other party to the contract or the supplier of services, even with all due care, could not foresee or forestall …'.

At trial, X's case was that the rape and assault had amounted to the improper performance of a contractual obligation. Kuoni denied that the rape and assault by N had constituted a breach of any obligations owed by Kuoni to X under the contract or the 1992 Regulations and relied, by way of defence, on cl 5.10(b) of the contract and reg 15(2)(c)(ii) of the 1992 Regulations. Pursuant to the latter, the liability of the other party to the contract to the consumer was excluded where the failure to perform the contract was due to an event which the other party to the contract, even with all due care, could not foresee or forestall. Clause 5.10(b) was intended to replicate the terms of reg 15(2)(c), which, in turn, was intended to implement art 5 of the Directive.

At first instance, the judge dismissed the claim. He held that 'holiday arrangements' in cl 5.10(b) did not include a member of the maintenance staff directing a guest to reception. He further held, obiter, that Kuoni would in any event have been able to rely on the statutory defence under reg 15(2)(c)(ii) because the assault was an event which could not have been foreseen or forestalled (by inference by the hotel) even with all due care.

On appeal, the Court of Appeal, Civil Division, upheld the judge's decision, deciding that on their proper interpretation, the words 'holiday arrangements' in cl 5.10(b) did not include a member of the hotel's maintenance team, known to be such to the hotel guest, conducting the guest to the hotel's reception. That was no part of the functions for which the employee had been employed.

X appealed to the Supreme Court. The trade association representing British travel agents (ABTA Ltd) was permitted to intervene in the appeal. The Supreme Court found that two main questions had been brought before it: (i) whether the rape and assault of X constituted improper performance of Kuoni's obligations under the contract; and (ii) whether, in the event that the first question was answered in the affirmative, Kuoni could avoid its liability in respect of N's conduct by reliance on cl 5.10(b) of that contract and, where appropriate, reg 15(2)(c) of the Regulations. In order to rule on that second question, the Supreme Court made a reference to the Court of Justice of the European Union (the CJEU) for a preliminary ruling, namely: (i) whether the third indent of art 5(2) of Council Directive (EEC) 90/314 (the Directive), in so far as it provided for a ground for exemption of an organiser of package travel from liability for the proper performance of the obligations arising from a contract relating to such travel, concluded between that organiser and a consumer and governed by that directive, should be interpreted as meaning that, in the event of non-performance or improper performance of those obligations as a result of the actions of an employee of a supplier of services performing that contract that employee should be regarded as a supplier of services for the purposes of applying that provision; and (ii) whether, where a package travel organiser had entrusted to a supplier of hotel services the performance of a contract linking that organiser to two consumers, and an employee of that supplier of services had committed a rape and assault on one of the two consumers, that could constitute an event that could not be foreseen or forestalled, within the meaning of art 5(2) of the Directive.

For the purposes of that reference, the referring court stated that it should be assumed that guidance by a member of the hotel's staff of X to the reception was a service falling within the scope of the 'holiday arrangements' which Kuoni had agreed to provide and that the rape and assault had constituted improper performance of the contract.

In its judgment in March 2021, the CJEU held that a travel organiser, such as Kuoni, could be held liable to a consumer, such as X, for improper performance of the contract between the parties, where that improper performance had its origin in the conduct of an employee of a supplier of services performing the obligations arising from that contract (see [2021] All ER (D) 89 (Mar)). Since that ground for exemption from liability in the third indent of art 5(2) of the Directive derogated from the rule laying down the liability of organisers, enshrined in art 5(1), the CJEU held that it should be interpreted strictly. Further, since the acts or omissions of such an employee in the performance of obligations arising from a package travel contract, resulting in the non-performance or improper performance of the organiser's obligations vis-à-vis the consumer fell within the sphere of control of the organiser or the supplier of services, those acts or omissions could not be regarded as events which could not be foreseen or forestalled within the meaning of the third indent of art 5(2). Consequently, the third indent of art 5(2) could not be relied on in order to exempt organisers from their obligation to make reparation for the damage suffered by consumers as a result of the non-performance or improper performance of obligations arising from package travel contracts, where those failures were the result of acts or omissions of such employees performing those obligations.

On receipt by the Supreme Court of the CJEU’s  judgment, a direction was made pursuant to s 43 of the Constitutional Reform Act 2005 (CRA 2005), with the agreement of the parties and the intervener, that the court was still duly constituted in the proceedings and all parties and the intervener agreed that the Supreme Court should proceed to deliver its judgment without hearing further submissions.

(1) Whether the rape and assault of X constituted improper performance of the obligations of Kuoni under the package travel contract.

A holiday was intended to be a pleasant and enjoyable experience. That was reflected in the availability in domestic law of a remedy in damages for loss of enjoyment of the holiday experience and also in the approach required to be adopted in EU law under art 5(2) of the Directive, which established a right of compensation for non-material damage resulting from the non-performance or improper performance of the services constituting a package holiday. In connection with tourist holidays, compensation for non-material damage arising from the loss of enjoyment of the holiday was of particular importance to consumers. That encouraged a broad, not a narrow, interpretation of the holiday services contracted for (see [29] of the judgment).

In the case of any contract for a package holiday, the provider of the holiday necessarily undertook to provide not merely transport, accommodation and meals but also to provide other services ancillary thereto. That was inherent in the express obligations undertaken because it was only in that way that an enjoyable holiday of the reasonable standard contracted for could be provided. It was an integral part of the services to be provided, on a holiday of such a standard, that hotel staff would provide guests with assistance with ordinary matters affecting them at the hotel as part of their holiday experience. Guidance by a member of the hotel’s staff of X from one part of the hotel to another was clearly a service within the 'holiday arrangements' which Kuoni had contracted to provide. N was able to assault X only as a result of purporting to act as her guide. Further, the assault was a failure to provide that guiding service with due care. Therefore, the majority in the Court of Appeal were wrong to accept that N’s guidance was not part of the 'holiday arrangements'. The performance or failure to perform certain actions by those employees might, therefore, constitute non-performance or improper performance of the obligations arising from the package travel contract (see [30], [32]-[36] of the judgment).

N’s guiding X from one part of the hotel to another clearly fell within the scope of the obligations undertaken by Kuoni under its package travel contract with X (see [47] of the judgment).

Jarvis v Swans Tours Ltd [1973] 1 All ER 71 approved; Leitner v TUI Deutschland GmbH & Co KG: C-168/00 C-168/00 considered.

(2) Whether any liability of Kuoni in respect of N’s conduct was excluded by cl 5.10(b) of the contract and/or reg 15(2)(c) of the 1992 Regulations.

The question for consideration fell into two parts: (i) the possibility of an employee of a supplier of services himself being a supplier of services for the purposes of art 5(2) of the Directive; and (ii) the scope of the exemptions from liability under art 5(2) of the Directive (see [37] of the judgment).

The effect of the CJEU ruling, which was binding on domestic courts within the UK, was that Kuoni could not invoke the exemption from liability established by the third indent of art 5(2) of the Directive or the corresponding provision in reg 15(2)(c)(ii) of the 1992 Regulations, which had implemented the Directive, as a defence to a claim for improper performance of obligations under the package travel contract because that improper performance had been caused by the acts of N, an employee of the hotel which was a supplier of services performing those obligations. Consequently, Kuoni was liable to X under reg 15 of the 1992 Regulations. Further, it followed that Kuoni was liable to X for breach of the package travel contract. It was common ground between the parties that cl 5.10(b) was intended to replicate the terms of reg 15(2)(c) which, in turn, was intended to implement art 5 of the Directive. It was further agreed that liability under reg 15 could not be excluded by any contractual term (reg 15(5) of the 1992 Regulations). The defence in contract was co-extensive with the statutory defence (see [45], [46] of the judgment).

The CJEU had taken a narrow view of the exemption from liability under the third indent of art 5(2) of the Directive. It had no application where a failure of performance of obligations under a package travel contract was the result of acts or omissions of employees of suppliers of services performing those obligations. Accordingly, reg 15(2)(c)(ii) of the 1992 Regulations which had implemented the Directive provided no defence to Kuoni in the present proceedings. In those circumstances, Kuoni was liable to X both under the Regulations and for breach of contract. Kuoni was liable both under the Directive as implemented by the 1992 Regulations and in breach of contract because the services it undertook to provide were not provided with care and skill by an employee of the hotel which was a supplier of the services. The Directive as interpreted by the CJEU had established a simple rule whereby a tour operator was liable for the non-performance or improper performance of the obligations it had undertaken where those failures were the result of acts or omissions of employees of suppliers of services performing those obligations (see [47]-[50] of the judgment).

Anthony McNicholl Ltd and others v Minister for Agriculture. Reference for a preliminary ruling: High Court - Ireland. Beef and veal - Disposal of intervention stocks for export - Security - Force majeure. Case 296/86. C-296/86 considered; Tesco Supermarkets Ltd v Nattrass [1971] 2 All ER 127 considered; Meridian Global Funds Management Asia Ltd v Securities Commission [1995] 3 All ER 918 considered.

Appeal allowed.

Robert Weir QC and Katherine Deal QC (instructed by Irwin Mitchell LLP (Birmingham)) for X.

William Audland QC, Nina Ross and Achas Burin (instructed by MB Law Solicitors Ltd t/a MB Law (Leeds)) for Kuoni.

Howard Stevens QC and James Hawkins (instructed by Kennedys Law LLP) for ABTA Ltd.

Barrister.