Crawford & Company

07/16/2020 | News release | Distributed by Public on 07/15/2020 22:05

A trip of a lifetime

Victoria Edwards, head of travel and casualty at Crawford Legal Services, looks at the potential impact of COVID-19 on the travel industry

The UK travel industry has been hit extremely hard by COVID-19. Until recently all flights had been grounded severely impacting holidaymakers and businesses alike, with the situation further exacerbated by the lack of government guidance on cancellations and refunds, and demands on holidaymakers to pay the balance of holidays or risk losing their deposit. Litigation is inevitable and with many providers also offering vouchers and reductions on future bookings, there is a clear standoff developing.

A case in point

While there is little guidance or litigation history relating to pandemic-related losses of this nature, some past cases can provide direction on potential claimant awards. One such case is Milner v Carnival Plc (t/a Cunard) {2010} EWCA civ 389.

Mr and Mrs Milner booked a 106-day cruise on the maiden voyage of the Queen Victoria at a discounted price of £59,052.20. The holiday providers promised an experience of a lifetime.

During the trip, stormy weather caused the ship to pitch. The resulting flex in the amidships caused the floor plates in the Milner's cabin to vibrate creating loud banging noises. The Milner's were moved to an alternative cabin but chose to disembark 28 days into their trip at Hawaii, alleging they had suffered stress, anxiety, distress, disappointment and loss of enjoyment. They pursued a full refund, and claiming damages for the period they were on board.

The couple were refunded £48,270 for the balance of the cruise, recovered damages of £8,500 for distress and disappointment alone and £3,500 for diminution in value.

The court of appeal judge went on to consider different 'brackets' of awards for holidays, the highest being for marriage abroad - £4,360-£4,406, honeymoons (£321-£1,890, special holidays £264-£1,161 and standard holidays £83-£876. The judge accepted that the Milner's holiday was a once in a lifetime event. What this case provided is essentially an introduction to the assessment of damages in holiday claims.

Could this apply now?

If we apply the Milner decision to the current situation, it may give rise to claims for those special trips abandoned half way through, or where a decision has not yet been made to cancel but the situation is causing distress and anxiety for the holidaymakers.

Whilst most defences will likely claim they were faced with unavoidable and extraordinary circumstances and plead regulation 13 of The Package Travel and Linked Travel Arrangements Regulations 2018 (PTR), we believe this will depend on when the holiday was terminated, whether a full refund was provided, and whether the balance of the holiday had to be paid in advance, knowing that it was already unlikely to go ahead.

Whilst the tour operators will potentially have a defence under the PTR if the 'standoff' continues, it is likely those once in a life time holidaymakers will pursue a claim.

The need for guidance

Article 12 of PTR states that: 'the traveller shall be entitled to a full refund of any payments made for the package but shall not be entitled to additional compensation'.

Under Article 12, the traveller is entitled to a refund within 14 days, but given current circumstances and the lack of government guidance, this will be almost impossible for most tour operators to comply with and will in effect create a breach of contract for those seeking a refund. Therefore, will this give rise to additional compensation for figures for damages in line with those in the Milner's case?

The UK government is facing increasing pressure to change the regulations, but until this is addressed there could be several claims under Article 12 pursued with tour operators facing the very real risk that the breach of contract will be upheld.