Judgment on pre-departure cancellation charges confirms the position with regards to proximity to departure under regulation 12(7) and fairness of such charges

Pre-departure Cancellation Charges

Following on from our earlier article on the right of a traveller to cancel pre-departure without payment of cancellation charges https://www.mb-law.co.uk/travel-articles/the-right-of-the-traveller-to-cancel-pre-departure-without-payment-of-cancellation-charges/ we have recently received Judgment in the unreported small claims court case of Patel & Others -v- P & R Travel Agency Limited heard by DJ Pickup at Northampton County Court.

Facts

In September 2019 Mr Patel booked a bespoke, tailor made package holiday with P&R Travel Agency Limited due to depart in July 2020, the package included return flights from London to Tanzania via Uganda and accommodation.  A deposit was paid. The balance was never received.  The holiday was cancelled.

The Claimants’ case was that they cancelled in April 2020 due to the pandemic and the deposit payment should have been refunded in the circumstances.

The Defendant’s case was that the holiday was cancelled for non-payment of the outstanding balance by the Claimants and that they were consequently not entitled to a refund.

The booking conditions contained a clause to the effect that deposits and tickets were non-refundable and non-transferable in the event of cancellation pre-departure.

Cancellation under regulation 12(7) of the Package Travel and Linked Travel Arrangements Regulations 2018 (PTR)

Under regulation 12(7) a traveller can cancel without paying cancellation charges where there are unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity and these circumstances significantly affect the performance of the package or the carriage of passengers to the destination.

In this case DJ Pickup was not satisfied that in April 2020 there was then an event of unavoidable and extraordinary circumstances which significantly affected the performance of the package, or the carriage of passengers to the destination which justified the termination. The judge’s view was that the cancellation was too early and regulation 12(7) was not engaged.

In reaching his conclusion he considered the fact that the UK was still in Covid lock down, the UK governments advice on foreign travel to Uganda as at that date confirmed that all international flights to and from Uganda had been suspended since 22 March 2020 and land borders and lake ports were closed. He noted that the position was under continual review and that the Defendant had pointed this out to the Claimants in April 2020 in refusing their request for a refund of the deposit.

Justification for, and fairness of the cancellation charges

Having found that regulation 12(7) of the PTR was not engaged the Judge went on to consider whether the cancellation charges corresponded with regulations 12(3)-(6).

In the absence of standardised termination charges, the amount charged must correspond with the price of the package minus the cost savings and income from alternative deployment of the travel services. Further, if the customer requests it, justification of the charges must be provided.

Bearing in mind the bespoke, tailored, nature of the package the Judge was satisfied there could be no cost savings or income from alternative deployment of the services in the circumstances of this case.

It was also argued by the Claimants that the cancellation charges were unfair and contrary to the Consumer Rights Act 2015 (CRA).

The Judge did not agree that the charges were unfair and contrary to the CRA.  It was clear that in making arrangements a travel agent (organiser) incurs cost, particularly when arranging a bespoke, tailored, package such as the Claimants in this case required. It was far from identifying and confirming a simple booking from a brochure advertised holiday. The Claimants were aware of the cancellation charges from the outset, Mr Patel was a professional and understood the significance of non-refundable deposits. He concluded that considered as a whole the charges were fair and reasonable and did not create a significant imbalance in the parties’ rights.

Conclusions

The judgment is not binding on other courts but the conclusions are helpful to organisers of package holidays.

1. It is noteworthy that the Judge considered that the cancellation was too soon for regulation 12(7) to be engaged, reinforcing the view that there must, in general terms, be a proximity between cancellation and travel.
2. In ruling that cancellation was too soon, the Judge noted matters were under continual review with reviews due to take place before travel. If there had been no review before travel it does seem that the Judge might have reached a different conclusion.
3. The nature of this holiday, a bespoke, tailor-made package meant that the cancellation charges were more readily justifiable because those resources could not be deployed elsewhere and significant work had gone into making the arrangements.

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The Defendant was represented by Kwadwo Boadu at mb LAW, counsel for the Defendant was James Gale at 3 Hare Court. The Claimant was represented by Hassan Shah at SP Law, counsel for the Claimant was Emma Kiver at 1 Essex Court.

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If you have any queries about anything in this article please contact Claire Ingleby (claire.ingleby@mb-law.co.uk).

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