09
May
22
Articles, Travel & Cross Border Claims
The Weekly Roundup: The Games of Chance Edition

It’s that time of year again, when the team reflects on the role of luck in the important events in life. We refer, of course, not only to the part fortune has to play in the litigation process (in our experience, an oft-overlooked factor), but to the 1CL Eurovision Sweepstake, once more in full swing. As in life, and in litigation, initial apparent ill fortune can sometimes be a blessing in disguise, for there is a prize for the holder of the nation placed last in the competition. And the stakes could not be higher; the winner is immortalised by inclusion on the 1CL Eurovision Sweepstake Shield, a much-coveted adornment to any trophy cabinet. In other news, the courts have continued to behave somewhat like a Wheel of Fortune in considering whether or not to grant relief from sanctions, a holiday cruise affected by Ill Winds has given rise to a further judgment on cancellation and refunds, and 1CL’s probationary tenants have made their own luck.

 

The Luck of the Draw: Two Contrasting Cases on Applying for Relief from Sanctions

Never say never again

The Court of Appeal have confirmed that the court may grant relief from sanctions in the absence of a formal application and witness statement, and indeed that the court may grant relief without any application at all.

The Claimant in Chan Mok Park v Hadi and Abed [2022] EWCA Civ 581 was a litigant in person. He contended that his business worth £170,000 had been acquired for only £36,664.59. The Defendants defended the claim and brought a counterclaim, to which the Claimant put in no defence. The Claimant failed to pay a costs order made against him. The Defendant applied for summary judgment or strike-out. This was considered by Lavender J, who adjourned the application, and made an Unless order permitting the Claimant to put in evidence about his means, to amend his claim, and put in a reply and defence to counterclaim. A further costs order was made against the Claimant. The order included a recital saying that the Claimant had been informed that from now on, there would be “no further toleration of any failure on the part of the Claimant to comply with the court’s order and/or the Civil Procedure Rules, which must be fully complied with”.

The Claimant did not fully comply with the order. Shortly before the deadline, the Claimant sent most of what was required. However, witness statements did not include proper statements of truth, and the documents did not include some financial documents that had been ordered.

The matter came back to court, and the Claimant made an oral application for relief from sanctions. The judge permitted an oral application, and held the breaches were not serious or significant, and, if they had been, there was significant mitigation. The judge then dismissed the summary judgment/strike-out application, holding that the claim had a real prospect of success, which raised issues which could only properly be dealt with at trial.

The Defendant appealed.

The Court of Appeal held that applications for relief from sanctions should be made by application notice and witness statement. However, the court has a discretion to grant relief from sanctions in two situations on an informal application or indeed on the court’s own initiative. To act in accordance with the overriding objective the court should initially consider why there has been no formal application notice, or no application at all; whether the other side has been prejudiced by this; and whether the court has sufficient evidence to justify the granting of relief from sanctions. The discretion will be exercised sparingly, particularly if there is no application at all. If the initial considerations suggest relief might justly be granted, the court will follow the Denton approach.

The Court of Appeal considered the Defendant was not prejudiced by the lack of a formal application. The judge was entitled to find he had sufficient evidence before him to consider the application, and that it would be a waste of costs to adjourn for formal evidence.  The Court of Appeal held that the judge was entitled to find that the breaches were not serious or significant, meaning the remaining stages could be considered briefly. There was good reason for some of the breaches, and all the circumstances mitigated in favour of granting relief given it was a claim with a real prospect of success and where there were real issues which needed to be determined at trial.

In contrast, in Mangat v Mangat (4th May 2022) Marcus Smith J refused permission to appeal a judge’s refusal to grant relief from sanctions to a party who failed to put their costs budget in on time. There was no good reason for the error, which was a serious one. The fact there was no prejudice to the other side, and the fact that the court could still have dealt with the late budget, were highly relevant factors but were not determinative, and did not mean that the judge at first instance was required to grant relief. The judge had been entitled to find that the Denton test had not been met and permission to appeal would be refused.

Taking back control

At first blush, these cases do seem to demonstrate a very different approach by the courts towards breaches of court orders and the rules. But what they both clearly show is that (a) cases are decided on their own facts, which can be very different, and can lead to very different results, and (b) judges at first instance have a discretion, which the court on appeal will not interfere with lightly, and not just because a different court may have reached a different decision (a factor Marcus Smith J noted was irrelevant).

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 [2013] 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.

 

Bad Luck and Altered Itineraries: the ‘Flicker of Hope’ Test Revisited

In a recent case arising out of the provision of an Arctic cruise Recorder Bowes QC revisited and revised the ‘flicker of hope’ test formulated in Lambert v Travelsphere [2005] CLY 1977.

The facts

The facts in Sherman v Readers Offers Limited, 3rd May 2022, unreported were unusual. The Claimants, who acted in person, had booked a North West Passage cruise holiday costing over £20,000 over the telephone, without having first seen a brochure or advertisement, and entirely on the recommendation of friends they had made on a previous Antarctic cruise. The basic itinerary provided to them when they booked was for a cruise holiday entitled ‘Northwest Passage – in the Wake of the Great Explorers’ to take place between 8th and 24th September 2018. The Claimants were subsequently provided with a detailed itinerary which set out the embarkation point and ports of call, some of which were in the North West Passage, and others in Greenland, from where they would then be transferred to Copenhagen for their return flights to the UK. There was some dispute over whether this much more detailed itinerary was a term of the contract such that any alteration to it entitled the Claimants to a full refund; the court found against them on this, since it had been provided only after the formation of the contract.

The claim centred around whether prior to the holiday departure date the Defendant’s supplier, Hurtigruten, had been constrained to alter significantly an essential term of the contract, thus entitling the Claimants to a refund pursuant to Regulation 12 of the Package Travel, Package Holidays and Package Tours Regulations 1992. The problem arose because in 2018 the break up of ice in the Arctic, and in particular in the North West Passage, occurred very much later and to a lesser extent than in previous and subsequent years, rendering it impossible for the cruise to follow the detailed itinerary and causing much of that itinerary to be abandoned as the vessel spent some time in the mouth of the Passage, before sailing to Greenland, where the rest of the itinerary was performed as described in the detailed itinerary. The Claimants asserted that Hurtigruten was aware that this would be the case before the holiday began and that this entitled them to a refund under Regulation 12; the Defendant contended that at the time of departure it was still possible for much of the itinerary to be provided as planned and that therefore no refund was payable. The Defendant relied on the flicker of hope test set out in Lambert v Travelsphere in submitting to the court that because at the time of departure there was still a flicker of hope that the important parts of the itinerary could be provided, Regulation 12 was not engaged. Furthermore, Regulation 14 (which relates to post-departure alterations) was not engaged either, and even if it was,  the tour operator had a defence under Regulation 15(2)(c)(i) – the failure to provide a cruise through the North West Passage as set out in the itinerary was due to unusual and unforeseeable circumstances outside Readers Offers’ control.

The decision

The court found as a matter of fact that the relevant itinerary was the basic one provided at the time of contract formation and not the detailed one provided subsequently. Further, at the time of departure, Hurtigruten and Readers Offers reasonably believed that it would be possible to visit the North West Passage and to provide a good cruise experience. Nevertheless, as it turned out, and due to unusual weather conditions, some of the detailed itinerary could not be provided, and this amounted to a post-departure alteration under Regulation 14, for which compensation was payable if this was appropriate. In the instant case, however, it was not appropriate. The Defendant had made out the Regulation 15(2)(c)(i) defence. The claim therefore failed.

The law

The case is of interest to practitioners dealing with both pre- and post-departure alterations in holiday components, and in particular those alterations to cruise itineraries caused by weather and other circumstances outside the control of cruise providers. It is also noteworthy in its treatment of the Lambert flicker of hope test. The judge noted that the judgment in Lambert was not binding, and referred to the decision of the Supreme Court in X v Kuoni [2021] 1WLR 3910 as informing the approach now to be taken to the Regulations. He held, at paragraphs 85 to 87 of the judgment:

85. 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.

86. “Constrained” is an ordinary English word, which is defined in the Cambridge Dictionary as meaning “forced to act or behave in a particular way”.

87. Applying the “broad view” of the PTR as set out in Kuoni, in my judgment 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 term.

It seems, therefore, that the flicker of hope test, at least arguably, has not survived the decision in X v Kuoni, and is to be replaced with a ‘reasonable possibility’ test, which appears to the author, at least, to be a significantly lower hurdle for a consumer to surmount before Regulation 12 is engaged. To this extent the judgment is a shift in favour of consumers.

However, the judgment also favours tour operators in that the court applied the Regulation 15(2)(c) defences to Regulation 14, with the effect that unexpected adverse weather will provide a defence to the requirement to pay compensation in the event of post-departure alterations and failures to meet contractual obligations.

Conclusion

There are currently a number of claims proceeding against tour operators in respect of alterations and cancellations due to the pandemic and the measures taken to contain it. This decision, although founded on very different facts, provides an early insight into the approach the courts might take to those cases following the decision of the Supreme Court in X v Kuoni. On the one hand, the flicker of hope test may not apply to them; on the other, the Regulation 15 defences may be engaged.

Sarah Prager, having acted against Matthew Chapman QC in Lambert v Travelsphere, acted for the Defendant in this case, instructed by Travlaw.

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.

…And Finally…

Chambers is delighted to announce that it has offered tenancy to Kerry Nicholson and Anirudh Mandagere, already well known to readers as regular contributors to the Weekly Roundup. Both will be undertaking travel and cross border work as part of the team at 1CL, and, after the merger takes place in the Autumn, at 5NS. We congratulate them both and wish them every success in their future careers with us.

Written by or involving: Sarah Prager, Andrew Spencer

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