In this blog Max Archer of 12 King’s Bench Walk analyses the recent decision of the Court of Appeal in X v Kuoni Travel Ltd  EWCA Civ 938 which assesses the boundaries of tour operator contractual liability where the Package Travel Regulations apply.
On 8th July 2010 the Appellant and her husband arrived in Sri lanka for a 15 day package holiday booked through the Respondent. They stayed at the Club Bentota Hotel. In the early hours of 18th July the Appellant was on her way to the hotel’s reception when a uniformed employee indicated that there was a shortcut she could take. He led her to an engineering room where he physically assaulted and raped her. Though initially she maintained that he was a security guard, she subsequently accepted that he was an electrician employed by the hotel.
The Appellant sued the Respondent for improper performance of the contract she made with them as the organizer of the holiday under the Package Travel Regulations 1992.
The Appellant’s case at first instance was that the Respondent agreed that services provided pursuant to the package holiday contract were to be performed with reasonable care and skill. This was irrespective of whether the services were to be rendered by the Respondent or other suppliers of services. The employee was providing a service pursuant to the holiday contract in guiding the Appellant to reception, a service which he did not provide with reasonable care and skill. Further, the employee as the supplier of that service could easily foresee that his sexual attack was not a proper performance of his services.
The Appellant’s case was dismissed by His Honour Judge McKenna, sitting in Birmingham, who held that there was no improper performance or breach of contract. He also held that the Respondent had a defence under reg. 15 of the PTR 1992 as the sexual assault was an event that the hotel could not ‘with all due care foresee or forestall’. Further, he held that if the Hotel had been sued in negligence, it would not have been vicariously liable for the sexual assaults committed by its employee.
The appeal was dismissed. The Master of the Rolls and Lady Justice Asplin gave the majority judgment with Lord Justice Longmore dissenting.
“ Holiday Arrangements”
The Appellant’s case as was that when the employee of the hotel assaulted her, he was undertaking a service under the holiday contract in guiding her through the grounds and that the assault constituted a failure to provide that service to a reasonable standard. Her case was that it was irrelevant how and by whom the services were actually provided, so long as the service in question was one which was to be provided with reasonable care and skill under the contract. Her case was that the fundamental error of the judge below was to focus on whether the employee was or was not the Respondent’s supplier.
The majority held that the judge had been correct, the contract imposed an obligation for the provision by itself, its agents and suppliers of the “holiday arrangements” booked by the Appellant to a reasonable standard: cf. Wong Mee Wan v Kwan Kin Travel Services Ltd  1 WLR 38. The expression “holiday arrangements” must be interpreted objectively, having regard to the terms of the contract as a whole.
The majority agreed with the conclusion of the judge below that, on its proper interpretation, the expression “holiday arrangements” did not include a member of the hotel’s maintenance team, who was known to be such to the hotel guest, conducting the guest to the hotel’s reception. This was no part of the functions for which the employee was employed. The Judge had found as a fact that she was aware at the material time that the employee was a member of the maintenance team. They agreed that reasonable people would not conclude at the time of the contract that the Respondent was promising that the activity being carried out would be carried out to a particular standard.
They held that there was nothing in the regulations which might allow a differing interpretation of “holiday arrangements”. They were of the view that the purpose of the regulations was not to facilitate a claim against a package tour operator for wrongful conduct by an employee of a supplier.
Dissenting, Lord Justice Longmore disagreed with the implication behind the judge’s view that it was no part of the contract between the parties that any electrician employed by the Hotel for that particular purpose would also provide her with general assistance such as showing her a short cut to reception. Though the Judge was correct to hold that there was no express term to that effect, the Respondent accepted that the holiday arrangements at the four star hotel which they have selected are to be of a reasonable standard. For such a holiday to be a reasonable standard, hotel staff must be helpful to guests when asked for assistance. Further, a member of staff who offers assistance must give this in a reasonable way. The employee did not assist the Appellant in a reasonable way on the facts.
Whether or not the Employee was a Supplier
The majority found that the judge was correct to hold that the Respondent was not liable under either the express or implied terms of the contract as the employee was not a supplier within the meaning of the regulations. The Hotel was the supplier of services that the employee performed. The Respondent had no relationship with the employee, its contractual relationship was with the hotel.
The regulations did not suggest that a wider interpretation of the word ‘supplier’ was permissible. They were of the view that where one contracting party assumes primary and personal liability for the provision of services by agents or suppliers to a reasonable standard to the other contacting party, the natural meaning of supplier is the person who assumes a direct contractual or promissory obligation to provide such services and not an employee of such a person. A wider interpretation would nullify the meaning of the exclusions of liability in 15(2)(c)(ii) of the PTR.
The Appellant had pleaded allegations of fault as against the Respondent in failing to supervise the employee, in failing to ensure his proper training and in employing a violent member of staff. At trial the Appellant did not pursue these allegations and it was accepted by the appellant at the trial that Kuoni did not have any supervisory control over the hotel’s employees; that the recruitment of N did not breach any local laws or practice; and that there was no basis for suggesting that he should have been identified as a risk prior to the incident in question.
Lord Justice Longmore was for allowing the appeal on this point. He felt that a person who undertakes a contractual liability will often perform his side of the bargain through other persons. In spite of this, the liability remains that of the person assuming the contractual obligation. He was of the view that the ‘whole point of the Directive and the regulation which implemented the Directive is that the holiday-maker whose holiday has been ruined should have a remedy against his contractual opposite and that it should be left to the tour operator to sort out the consequences of the ruined holiday with those with whom it has itself contracted who can then sort things out further down the line whether with their own employees or their independent contractor.’ The concept of who was to be regarded as a supplier was a matter of degree.
The court found that it was not necessary to decide whether the hotel was vicariously liable for the employee’s wrongdoing. The Respondent’s liability was excluded by contract, that in turn reflected reg.15(2)(c)(i) and (ii).
The Appellant asked the court for permission to appeal and was refused orally. It remains to be seen whether an application to appeal to the Supreme Court will proceed.