The right of the traveller to cancel pre-departure without payment of cancellation charges

Regulation 12(7) cancellations

Much has been made of the right of travellers to cancel their holidays pre-departure and claim a full refund under the Package Travel and Linked Travel Arrangements Regulations 2018 (PTR) where force majeure occurs in destination. What is this right and how can tour operators defend themselves from these claims?

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Regulation 12(7) says that 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.

Cases based on this right have started to proceed through the courts and we now have some, albeit limited, guidance to consider. None of the current case law is from the higher courts so it is not binding but still has some value.

What are unavoidable and extraordinary circumstances?

“Unavoidable and extraordinary circumstances” are defined in the PTR as a situation which is beyond the control of the party who seeks to rely on such a situation, the consequences of which could not have been avoided even if all reasonable measures had been taken. The courts have held that the covid-19 pandemic, and the decisions taken by governments in relation to it, are capable of being unavoidable and extraordinary circumstances.

In the case of Nick Braithwaite -v- Loveholidays (Clerkenwell County Court), Mr Braithwaite cancelled his holiday 2 days before he was due to travel because the FCDO had advised against all but essential travel to his holiday destination. He sought a refund which was denied. Loveholidays argued that the holiday was not a package and that the contract provided that some elements were non-refundable. They also argued that a change in FCDO advice was not unavoidable and extraordinary circumstances.  At trial, the judge found that it was a package and that FCDO advice did amount to unavoidable and extraordinary circumstances that entitled Mr Braithwaite to cancel under regulation 12(7) with a full refund.

In Brynmawr Foundation School -v- Holiday World International Travel Limited (t/a Leisure World Schools), the judge found that the covid-19 pandemic and its various consequences could constitute unavoidable and extraordinary circumstances. However, other issues then needed to be considered before a decision as to the applicability of regulation 12(7) could be reached.

Where should the unavoidable and extraordinary circumstances be occurring?

For regulation 12(7) to apply, the relevant circumstances must occur at the place of destination or its immediate vicinity and not at the place of departure. It could therefore be argued that if there are no relevant restrictions or other impediments in the holiday destination, but only in the UK, there should be no entitlement to cancel with a refund. The courts have held that a requirement to quarantine on return to the UK is not unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity.

In the above case of Nick Braithwaite -v- Loveholidays, the court found that FCDO advice issued by the UK government but affecting the destination was enough for there to be such circumstances at the destination. However, they have also held that a requirement to quarantine on return to the UK is not unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity (see the case of Hannah Dennison –v- Loveholidays below).

In the case of Brynmawr Foundation School -v- Holiday World International Travel Limited (t/a Leisure World Schools) (Cardiff County Court), the school cancelled their trip to the USA on 30 March 2020. They were due to travel in early April 2020. At the date of cancellation, there was a travel ban in place for travellers from the UK and Ireland to the USA, the UK government had advised against school trips, the FCDO had issued advice against all but essential travel worldwide and there was a lockdown in place in the UK. The tour operator sought to argue, amongst other things, that the school were cancelling due to unavoidable and extraordinary circumstances in the UK and not at the place of destination (in the USA) and therefore, regulation 12 (7) did not apply.

The court found that whether there are unavoidable and extraordinary circumstances at the destination is an objective issue. The US ban on entry to UK travellers had (or would have had) a significant effect on the performance of the contract which would have given the school an entitlement to terminate under 12(7).

Does there need to be a causal link between the circumstances and cancellation by the traveller?

It has been argued that the unavoidable and extraordinary circumstances must be the cause of the cancellation and not some other unrelated factor; however, Brynmawr Foundation School -v- Holiday World International Travel Limited (t/a Leisure World Schools) considered this and dismissed it. So long as objectively there are unavoidable and extraordinary circumstances at the place of destination the traveller has the right to elect to cancel without payment of cancellation charges, the reasoning behind the cancellation is irrelevant.

Circumstances affect the traveller and not the tour operator

Where the tour operator can provide the contracted arrangements (and there is no issue travelling to the destination) but the traveller did not want to travel, because, for example, there was a requirement to quarantine on return, regulation 12(7) should not apply.

The Scottish case of Dumfries & Galloway Council -v- NST Travel Group Limited [2021] 4 WLUK 156 involved NST Travel Group Limited cancelling a school trip to London in the early days of the pandemic. NST disputed the school’s right to a refund saying that they could provide the contracted arrangements but the school were unable to travel. The Sherriff did not consider the PTR here, rather, he found that there was an express term of the contract between the parties, which, was clear; the extraordinary circumstances referred to need not relate to NST’s ability to provide the trip, but could equally well apply to any inability on the part of the school to participate in it. By its email NST had cancelled the trip, and the school had elected to receive a full refund. That was the beginning and end of the matter.

In the appeal case of Hannah Dennison -v- Loveholidays (Lincoln County Court), Miss Dennison cancelled her holiday due to the requirement to quarantine on return to the UK.  Loveholidays refunded all monies except for the flight, which operated as planned.  Miss Dennison argued that under regulation 12(7) she was entitled to a full refund. Loveholidays argued that all parts of the package were able to be performed. The court at appeal held that the performance of the package and the carriage of passengers to the destination was not significantly impacted, there was therefore, no breach of regulation 12(7).

And which significantly affect…

It is not enough for there to be unavoidable and extraordinary circumstances at the point of the destination or its immediate vicinity or regulation 12(7) to be triggered. These circumstances must also significantly affect the performance of the package or the carriage of passengers to the destination. It is a matter of continuing debate as to how close to departure the right to cancel under regulation 12(7) arises when it may not be clear at that stage whether performance of the contract or carriage to the destination will be affected by the circumstances in question.

The case of Lambert -v- Travelsphere Limited [2005] CLY 1977 (in which mb LAW acted for Travelsphere) related to the outbreak of SARS in China and Hong Kong in 2003 and was therefore decided under the Package Travel, Package Holidays and Package Tours Regulations 1992. The case may though have some relevance to the interpretation of regulation 12(7).

The Lamberts cancelled their holiday before Travelsphere decided it was unable to perform the Hong Kong element of the holiday. The Lamberts sought a refund of the cancellation charges they had been obliged to pay. The case specifically deals with the issue as to whether the tour operator was, at the time the customer cancelled their booking, “constrained before the departure to alter significantly an essential term of the contract” so that they should have offered the customer the choice of cancellation with a full refund of the holiday price.

The court at appeal found that it was permissible for the organiser not to act (and accordingly permit the customer to cancel) while there was a “flicker of hope” that the contract could be performed in accordance with the original contractual terms. It follows from this decision that when faced with a potentially constraining situation (such as the pandemic), the tour operator may be entitled to keep matters under review and only cancel, or allow the customer to do so, when it is certain that a holiday cannot operate. There will need to be further case law on this point before greater clarity over the operation of regulation 12(7) emerges.

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All cases will turn on their own facts but there are potential defences to these claims many of which will surround what was known at the date of cancellation and how likely it was that at the date of cancellation that the trip would be able to go ahead.

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