On 22 November 2016, Elizabeth Boulden, a pupil at 12 King’s Bench Walk, attended the hearing at the Court of Appeal of this important case concerning the package tour operator’s liability for food poisoning suffered by customers as a result of defective food and drink supplied in the course of a package holiday. The case could have significant implications for the prevailing Antcliffe and Kempson strict liability reasoning in this area and the arguments aired in the Court of Appeal should therefore be of interest to both tour operators and travel law practitioners.
Background
The facts of the case will be familiar to travel lawyers. The Claimants had purchased an all-inclusive package holiday from the Defendant tour operator. In the course of their holiday, the Claimants contracted food poisoning. They alleged negligence and breach of contract, relying on the Package Travel Regulations 1992 and the Supply of Goods and Services Act 1982 (“SGSA 82”), against the Defendant.
They succeeded on the breach of contract claim at trial, but not on the other claim. HHJ Worster – who was also the judge in Antcliffe v Thomas Cook Tour Operations Ltd (Unreported) Birmingham County Court, 4 July 2012, a case which represents the current approach favoured by the courts in package travel food poisoning cases – found that the Defendant had failed to provide food or drink of satisfactory quality, breaching the implied term under section 4(2) of the Supply of Goods and Services Act 1982 (“SGSA 82”). However, it was not found that the Defendant had failed to take reasonable care.
The Defendant appealed against the finding that the food and drink should have been of satisfactory quality pursuant to s. 4(2) SGSA 82.
The Claimants cross-appealed on the basis that, if the food did not have to have be of satisfactory quality under s. 4(2) SGSA 82, then such a term would be implied into the contract in any event under the common law.
Defendant’s Arguments
The starting point was that the Claimants had failed in their claims both in negligence and under reg. 15 Package Travel Regulations. The Regulations themselves did not impose strict liability in cases of this kind: the tour operator’s potential liability for improper performance of the package contract under reg. 15(1) was qualified by the wording of reg. 15(2) which limited the scope of that liability to failures of performance which are foreseeable and avoidable. HHJ Worster had found that there had been no fault and hence the Claimants had failed in their claims in negligence and under the Regulations.
The consumption of food in a buffet was not a transfer of goods, meaning that Part 1 of the SGSA 1982 could not apply so as to imply a term that it would be of satisfactory quality. The Defendant argued that what it was in fact offering under the package contract was a right or a licence to use the buffet (i.e. a ‘chose in action’): there was no intention to transfer any property in the food and all that occurred was consumption rather than transfer. There was no provision, for example, that the Claimants could retain the food to keep and sell. As soon as the food was consumed, it ceased to exist: unless it was suggested that there had been a split-second property transfer at the moment of consumption (which, it was submitted, had been rejected by the Supreme Court in PST Energy 7 Shipping LLC v OW Bunker Malta Ltd [2016] AC 1034), then there could not have been any transfer.
The Defendant proceeded by referring to the judgment of Longmore LJ in Hone v Going Places Leisure Travel Ltd [2001] EWCA 947 at [12], noting that ‘in the absence of express wording, there would not be an absolute obligation’ under the package contract. Holiday contracts only contained an obligation of reasonable skill and care to ensure that food was prepared reasonably (which was found at trial not to have been breached). It was inappropriate to shoehorn satisfactory quality in as a term, and would be inconsistent with the package travel regime set by Parliament.
Claimants’ Arguments
HHJ Worster had found that food fell within the meaning of ‘goods’ in the SGSA 82, and that food for consumption had been ‘transferred’ to the Claimants. The former proposition was clearly correct as a matter of interpretation and in relation to the latter proposition the Claimants argued that no ground of appeal expressly disputed this finding. However, after discussion with the bench and the Defendant, it was conceded that this was a point of law that could be determined by the Court.
The Court queried what the goods being transferred in this case would actually be – would it be the whole buffet, the food on the Claimants’ plates, or the food they had actually eaten? How would title to those goods be transferred?
The Claimants argued that no contractual term had been pleaded by the Defendant as to retention of title to the food. There was a service element to providing meals – but this was separate from when the customer took the food. At that stage, the correct analysis was that ownership of the food would pass to the customer and it did not matter from whom the goods had been transferred.
The Claimants argued that in the situation (raised by the Court) of friends eating at one’s home, there would be no intention to create legal relations and therefore no contract – only a tortious duty to them as neighbours. That scenario was to be contrasted with the instant case where a company was providing work and materials to customers in the course of a business. The SGSA 82 represented a codification of the common law and the pre-1982 authorities suggested that in situations of a mixed contract (for work and materials/goods) a term as to the quality of the materials/goods used would be implied.
The Claimant referred to authority for the proposition that, in the delivery of goods for consumption, it is normally inferred that property passes. The Defendant was wrong to suggest otherwise and the principle would apply in the instant case.
The Package Travel Regulations were intended to provide an increased minimum level of protection for the consumer: there was therefore scope for more stringent laws protecting consumers further. It was inconceivable that rights (such as those under the SGSA 82) would be watered down or extinguished in the Regulations, as it would not have been the purpose of the Package Travel Directive to strip out pre-existing rights.
Claimants’ Arguments on Common Law
If the Court were to find that Part 1 of SGSA 82 did not apply, the Claimants argued that a similar term would be implied by the common law in any event. Geys v Societe Generale [2013] 1 AC 523 suggested that terms could be implied on the basis of the specific nature of the relationship between the parties: the relationship between a consumer and a tour operator a relationship justified the imposition of an implied term. The tour operator could protect its position in relation to cases of this kind by, for example, contracting for an indemnity from the offending hotel in food poisoning cases. Consumers were not a position to protect themselves in this way. Further, even if the right to consume the food were found to be a chose in action (as suggested by the Defendant), it was argued that there would remain under the common law an implied term as to the quality of the food provided.
Defendant’s Response and Arguments on Common Law
The Defendant responded that there had been no delivery of goods in the instant case as the Claimants were not given the whole buffet and told they could eat it all. Therefore, only consumption of the food could be relied upon as constituting a transfer of property – but, it was argued, on the authorities consumption cannot entail a transfer of property.
In relation to the common law, the SGSA 82 had provided a complete codification of the position at common law and therefore one would not be able to find extra principles in the pre-1982 case law. The Claimants were therefore wrong to suggest that a term as to quality would be implied on this basis if it were found that the right to consume the food constituted a chose in action. Hone implied a term of reasonable care and skill in holiday contracts – that was the relationship-specific term here. The relationship did not and never had implied the term contended for by the Claimants: that was why such a common law term had not been pleaded in the case as originally put forward. Further, if such an implied term existed under the common law, then it would not be clear what the SGSA 82 would have added to the law as it stood.
It appears an interesting sign of the stress the tour operators are being placed under that TUI are willing to argue that their contractors food does not have to be of “sufficient quality” to be licensed for the use of their guests,