X v Kuoni – What next?

In 2010, Mr and Mrs X took a holiday in Sri Lanka which 9 years later has manifested in a claim being heard before the Supreme Court. This is the first case to consider the proper interpretation of the organiser’s liability for the improper performance of its contractual obligations under the Package Travel, Package Holidays and Package Tours Regulations 1992 (1992 Regulations) to make it this far. It is somewhat ironic that it should do so after this legislation has been repealed and the UK is at the point of leaving the EU. However, the ultimate conclusion will still be of importance given the replacement Package Travel and Linked Travel Arrangements Regulations 2018 are set to remain part of UK law for the foreseeable future.

In short summary, the facts which lead to the claim against Kuoni are these. During the early hours of 17 July 2010, Mrs X was making her way from her room to the hotel reception through the grounds. The reasons behind her solitary expedition at this time of night are somewhat opaque. However, what is clear is that she came across a hotel employee who is referred to in the proceedings as “N”. N was on duty and wearing his uniform. Mrs X says she believed he was a security guard on the basis he had previously told her so. He was in fact an electrician. Their paths had crossed earlier that evening. He offered to show her a short cut to reception. In the course of doing so, it was accepted by the defendant that he took her into a plant room and there raped her.

Subsequent to the assault, the hotel manager conducted an impromptu, somewhat bizarre identity parade in the claimant’s hotel room during which she picked out N as her assailant. However, when the police later conducted their own parade, Mrs X was unable to do so. It appears that no criminal proceedings were brought against N.

On her return from holiday, Mrs X brought a claim against Kuoni for breach of contract and under the 1992 Regulations. The damages sought were initially put at £450,000. She sued on the basis that the sexual assault on her by N, the hotel’s employee who was on duty at the time, amounted to improper performance of Kuoni’s contractual obligations.

In defence of the claim, Kuoni adduced evidence that all Sri Lankan procedures, as a matter of custom and practice as demonstrated by expert evidence, had been complied with, that N was a man of previous good character and that he was employed as an electrician and not a security guard as originally alleged. They also sought to rely on the defence in section 15(2)(c)(ii) of the 1992 Regulations that the assault was an event which neither Kuoni nor the hotel, as the supplier of the services, could foresee or forestall even with all due care (referred to here as “force majeure”).

In the light of Kuoni’s defence, Mrs X conceded that N was an electrician, Kuoni had no control over the hotel’s employees, N’s recruitment had complied with local law, custom and practice and there was no reason for Kuoni or the hotel to have identified N as a risk. She also accepted that Kuoni had not breached its duty of care to her and was not itself vicariously liable for N. Accordingly, she pursued her claim on the basis that the assault by N while on night duty was improper performance of the contractual services which Kuoni had agreed to provide. These services included those of all employees connected with the hotel who had to discharge their duties with reasonable skill and care.

The claim was heard firstly in the High Court where it was dismissed. In essence, the judge found that N’s actions were not part of the contracted services and in any event, the assault was not one which Kuoni or the hotel could have foreseen or forestalled even with all due care. Mrs X appealed. The Court of Appeal reached the same conclusion as the High Court. On a majority decision, they held that the expression “holiday arrangements” in Kuoni’s booking conditions did not include a member of the hotel’s maintenance team assisting a guest to reception which was no part of the duties for which he was employed. In addition, they found that the hotel and not N was the supplier of the services and Kuoni could accordingly rely on the force majeure defence. The absence of any proven fault on the part of Kuoni or the hotel was also noted.

Mrs X has appealed again, this time to the Supreme Court. Recognising the potential impact of this case for the travel industry generally, ABTA was given permission to intervene so as to enable it to make submissions on the wider context. The issues before the court are whether the sexual assault constituted improper performance of Kuoni’s contractual obligations and, if so, whether they are able to rely on the force majeure defence in the 1992 Regulations.

Interim judgment was given in July this year. However, there is as yet no conclusion. Given the 1992 Regulations gave effect to an EU directive, the Supreme Court has referred two questions to the European Court of Justice. These are in summary whether there is scope for reliance on the force majeure defence where there has been improper performance by a hotel employee, if there is, by what criteria a national court should assess if it is available on the facts and whether, for the purposes of the defence, an employee of the hotel can himself be considered a “supplier of services”.

The specific questions referred to the ECJ may indicate that the Supreme Court is of the view the assault by N is capable of being improper performance of Kuoni’s contractual obligations notwithstanding the fact he was an electrician and they would in all probability not have been found liable had he been their direct employee. If this is the case, the battle is over the extent to which the force majeure defence can save Kuoni from liability. Organisers and their insurers should pay close attention as the final judgment may have far reaching and expensive consequences.

Claire Ingleby is a director of mb LAW, the firm which has represented Kuoni and its insurers throughout this case. She has specialised in regulatory work and commercial contracts for the travel industry for the last 29 years. Her wide experience includes advising on all aspects of the legislation which impacts travel businesses.

This article was written by Claire Ingleby. Contact Claire on Claire.Ingleby@mb-law.co.uk for further specific Commercial and Employment Law advice.

Please note this information is for general guidance only and is not intended to be a substitute for specific legal advice.

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