The Weekly Roundup: The August Edition

Articles | Mon 15th Aug, 2022

Everyone seems to be on holiday. This is of course cheery news for travel practitioners, who depend on people taking holidays as the foundation for our work, and who are, therefore, the Forgotten Victims of the Covid pandemic. The work of the courts continues, of course, with another in the series of costs cases we’ve been reporting on recently; and at least one government department has also been doing a bit of governing in the strange interregnum we find ourselves in.

New Guidance on the Package Travel and Linked Travel Arrangements Regulations 2018

When the Package Travel and Linked Travel Arrangements Regulations 2018 replaced the Package Travel, Package Holidays and Package Tours Regulations 1992 on 1^st July 2018, they were intended to, and did, capture many more holidays than the old Regulations; the new Regulations introduced the concept of ‘linked travel arrangements’ and, at a stroke, did away with the old arguments around what was, or wasn’t, a package holiday. Or at least, that was the intention. But the arguments never really went away; they just mutated as the wording of the regulatory framework changed. And with the greater complexity brought by the new Regulations, the arguments multiplied.

As a reminder, the new Regulations contain, at Regulation 2(5), the definition of the word ‘package’ within the meaning of the legislation:

 a “package” means a combination of at least two different types of travel services for the purpose of the same trip or holiday, if—

(a) those services are combined by one trader, including at the request of, or in accordance with, the selection of the traveller, before a single contract on all services is concluded; or

(b) those services are—

(i) purchased from a single point of sale and selected before the traveller agrees to pay,

(ii) offered, sold or charged at an inclusive or total price,

(iii) advertised or sold under the term “package” or under a similar term,

(iv) combined after the conclusion of a contract by which a trader entitles the traveller to choose among a selection of different types of travel services, or

(v) purchased from separate traders through linked online booking processes where—

(aa)the traveller’s name, payment details and e-mail address are transmitted from the trader with whom the first contract is concluded to another trader or traders, and

(bb)a contract with the latter trader or traders is concluded at the latest 24 hours after the confirmation of the booking of the first travel service,

irrespective of whether the traveller concludes separate contracts with one or more travel service providers in respect of the services.

However, pursuant to Regulation 2(6) a combination of travel services is not a package if the component(s) combined with carriage or accommodation:

(a) do not account for a significant proportion of the value of the combination and are not advertised as, and do not otherwise represent, an essential feature of the combination; or

(b) are selected and purchased after the performance of a travel service of the kind listed in paragraph (a), (b) or (c) of the definition of “travel service” has started.

These provisions, as well as the related definition of ‘travel services’ within Regulation 2(1), have created their own hotly contested arguments. The uncertainty revolves around the words ‘significant proportion’ and ‘essential feature’, which, it can immediately be appreciated, provide fertile ground for disagreement. If a holidaymaker books a golf hotel and rounds of golf, for example, is the provision of the golf a significant proportion of the value of the holiday? Is golf an essential feature of the holiday at the hotel? And who should make these judgments? Should the holidaymaker’s objective opinion be determinative, even if it is unreasonable? Or ought the holiday provider or hotelier’s assumptions be taken into account? After all, they are best placed to know the relative value of the two services and they need to be able to predict whether what they are providing is a package in order to insure themselves adequately against any claim.

On 25^th July the Department for Business, Energy and Industrial Strategy updated its guidance on the interpretation of the Regulations with a number of new case studies. One of them answers the question posed above; BEIS takes the view that this does constitute a package (so long as the golf accounts for a significant proportion of the value of the stay). Other case studies relate to school trips (packages if arranged by a travel company), entry to amusement parks (a package component) and waterparks (not a package component), and hotels with spas (may be packages, depending on context). There are also case studies providing some elucidation in respect of the knotty issue of when linked travel arrangements amount to Linked Travel Arrangements within the meaning of the Regulations.

It should be emphasised (indeed it is emphasised in BEIS’ document) that the guidance is only that – guidance, not legal advice; and it is not determinative of how the Regulations would be interpreted by a court. But it is a useful tool for those advising clients as to the applicability of the Regulations and as to the approach likely to be taken by the courts if these matters of interpretation were to be heard by them in future.

About the Author

Called to the Bar in 1997, Sarah Prager has been listed in the legal directories as a Band 1 practitioner in travel law for many years. Together with her colleagues at 1 Chancery Lane, Matthew Chapman QC and Jack Harding, she co-writes the leading legal textbook in the area, and has been involved in most of the leading cases in the field in the last decade. Last year she was named Best Lawyers’ Travel Lawyer of the Year 2020/2021 and the Lawyer Monthly Women in Law Awards 2020: Personal Injury, and she was a member of the Consultative Group of Experts to the UNWTO Committee for the Development of an International Code for the Protection of Tourists, and is a member of the Admiralty Court Users’ Committee. She undertakes purely domestic high value personal injury work as well as cross border work and has a wealth of experience of difficult and sensitive cases.

Diag Human SE v Volterra Fietta: Enforcing Non-Compliant CFAs

In the latest of a number of reported determinations on the subject of costs agreements, the High Court has provided a salutary (and remarkably expensive) reminder that a Conditional Fee Agreement which does not comply with ss.58-58A Courts and Legal Services Act 1990 is no true CFA, and is unenforceable.

In Diag Human SE & Anor v Volterra Fietta (A Firm) [2022] EWHC 2054 (QB)[1], the Defendant firm had sought to enforce payment of costs of $106,639.39; but under the terms of a CFA which was non-compliant with the 1990 Act in the following way:

It is common ground between the parties that the agreement did not comply with the terms of those provisions because the secondary legislation to them requires any success fee to be no more than 100% of the base fees (which in this case amount to the profit costs based on an hourly rate).  Under the terms of the side letter, there was undoubtedly the prospect of more than 100% being claimed by way of a success fee.  Indeed, the worked example produced to show the workings of the agreement apparently produced a figure of 280%.

The position taken by the court was short, brutal, and to the point, such that it frankly resembles a crude morality tale on the perils of greed:

5 Master Rowley was required to decide four preliminary issues between the parties described by him as follows:

1. Is there an enforceable retainer between the Defendant and the Claimants (and/or either Claimant)?
2. If not, can any offending provisions be severed so as to leave an enforceable retainer between the Defendant and the Claimants (and/or either Claimant)?
3. If not, is there any other basis on which the Defendant is entitled to be paid for the professional services rendered to the Claimants (and/or either Claimant)?
4. If not, should the Defendant be ordered to return the sums paid to date by the Claimants (and/or either Claimant) in respect of the work covered by the Final Statute Bill?

8…   The Master concluded (as reflected in his Order dated 19 March 2021) the answers to the preliminary issues were as follows:

1. no
2. no
3. no
4. yes, sums beyond those chargeable for the period up to [the date of the CFA] must be returned.

Ouch. So, in short:

• A non-compliant CFA is unenforceable.
• Costs will not be payable at all unless the offending term can be severed.
• Even without a counterclaim for restitution, any fees paid purportedly pursuant to the CFA must be returned to the client as of right.

Very few solicitors would be happy to be in such a situation, so a re-reading of the requirements of the 1990 Act would be in order; particulars s.58[2] for details of the form and content of the CFA; and s.58A[3] for the kinds of work which cannot be CFA funded.

About the Author

Robert Parkin was called in 2009. He has a mixed civil practice, including in the area of travel and cross-border claims. He was junior drafting counsel in Barclay-Watts & Others v Alpha Paraneti & Others [2019] HQ11X02379, a substantial cross border dispute involving mis-selling of holiday lets in Cyprus.

…And Finally…

Regular readers will know that the team has an interest in mountaineering, with our own Jack Harding never happier than when he’s hanging off a ridge, and our friend Simon Lowe of Jagged Globe providing us with specialist knowledge. We wonder how he and the rest of the mountaineering community reacted to the news that the Mayor of Saint-Gervais has said that climbers attempting Mont Blanc should be asked to pay an up-front €15,000 rescue and funeral deposit. Referring to climbers heading for the summit in the middle of a heatwave as ‘candidates for death’, the Mayor made his disdain for ‘pseudo-alpinists’ clear:

“On July 30th, a group of Romanians wanted to attempt the climb in shorts and sneakers. The loudspeaker of the PGHM helicopter had to tell them to turn back before crossing the Goûter couloir. They declared that they would return the next day.”

The Mayor has no quarrel with professional guides, who have stopped using the conventional route to the summit as a result of the heatwave; his press release is aimed squarely at those climbers who are under-prepared, under-equipped and over-optimistic about their chances of success. Nevertheless, his proposal is an innovation in the international world of tourism. We look forward to seeing a wave of similar suggestions – balcony jumping insurance for Spanish resorts, pre-booked ambulances for those undertaking skidoo excursions, and pre-arranged funeral plans for holidaymakers looking to rent jet skis and quad bikes, perhaps?

[1] https://www.bailii.org/ew/cases/EWHC/QB/2022/2054.html

[2] https://www.legislation.gov.uk/ukpga/1990/41/section/58

[3] https://www.legislation.gov.uk/ukpga/1990/41/section/58A