Whilst the youngsters amongst us were frolicking at the PEOPIL Young Lawyers Group Conference in Madrid this week, prompting the old timers to reflect bitterly on the work ethic of Young People Today, the courts were getting on with clearing some of the backlog of refund claims arising from the pandemic. The decision in Kirk v We Love Holidays provides guidance on cancellation rights where a package component is substituted, and is of wider application generally than in times of international crisis. Meanwhile, the Private Members Bill designed to bin Vnuk passed its second reading in the House of Lords four days before judgment was handed down by the Court of Appeal in Colley v MIB  3 WLUK 290. The Court of Appeal dismissed the appeal, with the effect that the MIB must make up any shortfall between what compulsory insurance ought to have been provided by the UK government under the Motor Insurance Directives, and what was actually provided – at least, until the Bill is passed and comes into force.
Kirk v We Love Holidays, unreported, 22nd March 2022: The Holidaymakers Who Missed Out On Their Holiday
The deluge of refund claims has well and truly begun, and anecdotally it appears that the decisions of the County Courts are something of a mixed bag. In an appeal from a decision of a Deputy District Judge, Her Honour Judge Howells, sitting at Wrexham County Court, has provided guidance as to the approach to be taken in considering claims brought under Regulations 11 and 12 of the Package Travel and Linked Travel Arrangements Regulations 2018.
BC (Before Covid) Mr and Mrs Kirk had booked a package holiday to the Greek island of Kos, departing on 29th September 2020 and returning on 13th October 2020. Throughout the holiday they and their children were to be accommodated at the Grecotel Kos Imperial Thalasso hotel in Psalidi. Then – Covid struck. The Grecotel closed, and the tour operator offered the Kirks an alternative hotel, the Michaelangelo, of similar rating four minutes’ drive away. The substitute hotel was similar in all respects to the first, having all the same facilities and being located in the same resort. The Kirks, understandably concerned about the global pandemic raging through Europe, did not wish to go on holiday, and refused to accept the substitution.
In the event, at the time of the substitution and of the holiday the Foreign, Commonwealth and Development Office advised against travel to some Greek islands, but, crucially, considered it safe to travel to Kos. The Michaelangelo remained open, the flights took place as scheduled, and a jolly good time was had by all, apart from the Kirks, who were provided with a refund in respect of the accommodation but not the flight component of the holiday. The tour operator justified this partial refund on the basis that because the flights had operated, the carrier had not refunded the cost of them, and so no refund was available to pass on to the passengers, who were not entitled to one under the terms of the holiday contract.
The Kirks brought proceedings seeking the part of the holiday price not refunded to them – the cost of the flights. At first instance the Deputy District Judge found for the Kirks on the basis that their claim fell within Regulation 12(7), which reads:
“in the event of unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and which significantly affect—
(a) the performance of the package, or
(b) the carriage of passengers to the destination,
the traveller may terminate the package travel contract before the start of the package without paying any termination fee.
(8) Where the package travel contract is terminated under paragraph (7), the traveller is entitled to a full refund of any payments made for the package but is not entitled to additional compensation.”
The judge found that the closure of the Grecotel was an unavoidable and extraordinary circumstance occurring at the place of destination and that it significantly affected the performance of the package.
The Defendant appealed this finding on the grounds that:
- The holiday contract allowed for minor changes to be made to the services provided, and substitution of a like for like hotel was a minor change permissible under the terms of the contract, the ABTA Guidance, and the Regulations themselves;
- The performance of the package was therefore not affected; the flights could be taken and the accommodation supplied as contracted for;
- Even if the performance of the contract was affected, it was not significantly affected given that the hotels were of the same rating, had the same facilities and were in the same location;
- The place of destination within the meaning of the Regulations was not the hotel, as found by the judge at first instance, but the resort or country concerned (by reference to the terms of the contract and to the provisions of the Regulations).
HHJ Howells found these arguments persuasive and allowed the appeal on this basis.
The matter did not end there, however. The Kirks sought to have the decision upheld on the grounds that even if Regulation 12(7) was not engaged, Regulation 11 was. It will be recalled that Regulation 11 provides:
“(2) The organiser must not unilaterally change the terms of a package travel contract before the start of the package, other than the price in accordance with regulation 10, unless—
(a) the contract allows the organiser to make such changes;
(b) the change is insignificant; and
(c) the organiser informs the traveller of the change in a clear, comprehensible and prominent manner on a durable medium.”
Given that the judge at first instance had found as a fact that the substitution was for a like for like hotel, however, that contention was bound to fail; the alteration was permissible by reference to the terms of the contract, and it was not significant. More than that, the substitution of the hotel was not in itself an alteration of the terms of the contract, but only of the manner in which those terms were complied with; accommodation at a particular hotel formed no part of the contractual terms between the parties, therefore no alteration had taken place.
This judgment is useful for those defending refund claims; but it is also a salutary reminder that claims made under the Regulations are, first and foremost, contractual claims. The express terms of the contract were the starting point for consideration of the interpretation of the Regulations, and it was the express terms, in the event, which saved the day for the tour operator. Of course it helped presentationally that had the claim succeeded the tour operator would have been left out of pocket through no fault of its own, and where the Claimants had chosen not to take the holiday even thought they could have done so, and the evidence that the FCDO was not advising against travel to the destination in question was crucial in this respect, as was the extensive evidence of the comparability of the two hotels.
Sarah Prager conducted the oral appeal hearing in this matter, instructed by Travlaw, who settled the appeal documents.
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.
Vnuk Liability: Motorists Who Miss Out
The Government’s aim of “binning” “Vnuk liability” has come a step closer with the Motor Vehicles (Compulsory Insurance) Bill passing its second reading in the House of Lords on 18th March.
Mr Vnuk was on a ladder in a barn in Slovenia when he was knocked off by a trailer attached to a reversing tractor. No compensation was available and (unlike in the UK) the circumstances of the accident were not covered by employer’s liability insurance. Mr Vnuk contended that his accident was covered by compulsory motor vehicle insurance. He took his case to the CJEU, who held that the tractor/trailer combination was covered by Article 1 of the 2009 Motor Insurance Directive (being a motor vehicle intended for travel on land and propelled by mechanical power, not running on rails, and a trailer), and interpreted Article 3 of the Directive, which requires Member States to “ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance” such that it “covers any use of a vehicle that is consistent with the normal function of that vehicle”.
This extended compulsory insurance to a wider range of vehicles and – crucially – to private land as well as roads and other public places. It prompted headlines about insuring lawn mowers, and real concern from the motorsports industry.
UK law (the Road Traffic Act 1988) was never amended to bring it in line with the Vnuk decision. But the Directive (as interpreted by the CJEU) had direct effect against the MIB, being an emanation of the state, meaning that those injured by vehicles on private land were entitled to compensation from that body (MIB v Lewis  6 WLUK 26, Colley v MIB  3 WLUK 290).
When passed, the new Act will amend Article 3 of the Directive (which applies in the UK as “retained EU law” – i.e. domestic legislation) to state in terms that it only applies to motor vehicles on roads or other public places. The exclusion only applies to use of these vehicles in Great Britain, meaning that UK insurance policies should continue to be compliant with minimum requirements in EU countries for those taking their cars abroad. And the Bill provides that the MIB will no longer have to compensate victims of accidents in Great Britain caused other than by motor vehicles, or other than on a road or public place. Bear in mind, though, that the Bill (when passed) will not be retrospective. It will come into force two months after it receives Royal Assent. So the MIB will remain liable to compensate victims of Vnuk accidents for a while longer.
By way of post-script, it’s not just in post-Brexit UK where the Vnuk decision proved controversial. In November last year the EU actually lapped the UK, and amended the Directive, among other things clarifying that the motorsports industry is excluded (although third party insurance is required), and permitting Member States to exclude from compulsory insurance vehicles used exclusively in specific areas with limited access.
About the Author
Andrew Spencer was called to the Bar in 2004, and is listed in the Legal 500 as a Band 1 practitioner in travel law. He acted for the Claimant in the seminal case of Japp v Virgin Holidays Limited  11 WLUK 131, in which the Court of Appeal considered the time at which applicable local standards should be determined for the purposes of liability under Regulation 15(2) of the Package Travel Regulations; but he is equally comfortable acting for Claimants and Defendants in all travel related claims.
In another indication that normal service is being resumed in air travel, we hear tell of an irate passenger displaying ‘a catalogue of aggressive, abusive and dangerous behaviour, which included physical aggression towards other customers and our crew’ on board a Jet2 flight from Manchester to Antalya. It’s not so long ago that passengers were just grateful to be flying at all – no longer. The passenger, one Catherine Bush, from Bradford, shouted at cabin crew, slapped another passenger in the face, and caused the flight to be diverted to Vienna, where she was deplaned. She will now be fined £5,000 and banned for life from flying with Jet2. The team’s perplexed by her behaviour; fancy waiting all this time to go on holiday, only to behave so badly that you end up in Austria by mistake. Makes you feel even more sorry for all those well behaved people who’ve had their holidays spoilt through no fault of their own.