Around the Courts With Jules Verne
In August 1994 I booked a holiday to Victoria Falls with Voyages Jules Verne for the 1994/1995 New Year period. Little did I realise that the trip was to end 3½ years later in the Court of Appeal.
The itinerary included a flight to Livingstone, Zambia, transferring across to a hotel in the town of Victoria Falls in Zimbabwe, with 7 days in Victoria Falls and the opportunity to take excursions. The return home was scheduled for Day 10, crossing the border in the morning to reach Livingstone Airport.
However, 9 days before departure I received a letter from VJV stating that “in order to avoid the early morning transfer”, I was to be moved to the Zambian side in the afternoon of Day 9 to spend the last night at the InterContinental Hotel. It was claimed that VJV had been unable to secure rooms for all the group so they had “made a priority” for those who had booked an excursion to Livingstone. VJV claimed that we should “enjoy this unique opportunity of experiencing the Falls from the Zambia side” – a very strange claim, as the Livingstone tour included a chance “to view the Falls from the Zambian side” opposite the InterContinental Hotel!
In the afternoon of 3 January 1995 VJV transferred about half the party to the InterContinental Hotel. The drawbacks of this move (besides the obvious inconvenience of changing hotels, which wasted 2 hours of our final day) was not apparent until our arrival. Although the InterContinental Hotel was undergoing renovation at the time, the real problem was the location of that hotel. There was little to do on the Zambian side – certainly nothing that we had not already done on the Livingstone tour. It was not possible to spend the evening in Victoria Falls, as the border closed in the evening. Thus those moved lost half a day of the tour and the final night was ‘a ‘damp squib’.
16 of the 18 adults affected signed a petition of protest, which I forwarded to VJV on our return home. I also remarked that the change of hotels had been made on the ‘overlap’ night when VJV’s next group arrived; and I pointed out that none of those on the Livingstone tour who were staying at the Victoria Falls Hotel, rather than the Sprayview Hotel, were moved. However, their Ms Kennedy insisted
“By transfering you the Intercontinental Hotel would have left rooms free of occupants – but bears no relation to your move” (spelling and grammar original)
As VJV refused to apologise, in October 1995 I issued County Court proceedings against VJV, seeking £148.20, plus interest and costs (totalling £201.95). VJV lodged a Defence in which they relied on an exclusion clause and, denying even that the move had caused any inconvenience, added insult to injury by asserting that the change had “enhanced” the itinerary.
The exclusion clause which VJV relied on stated that sometimes changes might be necessary: in the case of ‘significant’ changes compensation would be due, but not in the case of ‘minor’ changes. Yet the only changes which counted as ‘significant’ were a change of departure date, a flight delay of more than 12 hours, or a change to a lower standard of accommodation. This which would mean that a complete change of destination could still count as ‘minor’ and not be compensated! VJV claimed that as I had been moved from a 2-star hotel to a 5-star hotel (although their brochure listed the InterContinental Hotel as 4-star), the change was ‘minor’ and so they had complied with their Booking Conditions.
Later VJV pleaded – and served a witness statement of the relevant Tour Organiser claiming – that the move was made because they “had found by experience gained from earlier tours that it was preferable”. They were not prepared to say in what way it was deemed “preferable” (and, as Lord Justice Schiemann later observed, preferable for whom?).
In giving this reason for the change VJV were bound to lose. For there was a crucial part of the exclusion clause:
“Due to demand for .. hotels and accommodation, over which even [VJV] has no control, it is not always possible to guarantee particular .. hotels featured .. or the precise itinerary. We therefore have to reserve the right to change .. any hotel listed, or if necessary, even to modify the itinerary itself ..”
Thus the exclusion clause very clearly limited the right to make changes to hotels only where the original hotel was overbooked – provided that the overbooking was not VJV’s fault – and only to change the itinerary when the rendered necessary by the change of hotels. This construction was supported by the claim in the exclusion clause that
“In practice only a few departures are likely to be affected ..”
(Although Holiday Which? surveys in 1995 and 1997 suggested that VJV changed more than half their tours – which determined me to pursue the case to the bitter end.)
Equally, I thought the exclusion clause unreasonable – particularly as there was no geographical limit on the extent of the change which could count as ‘minor’. I was sure that it would fall foul of section 3 of the Unfair Contract Terms Act 1977 (“UCTA”), which includes provision that a party who deals with a consumer
“(2) .. cannot by reference to any contract term –
(b) claim to be entitled –
(i) to render a performance substantially different from what was reasonably expected of him; ..”
I also thought that there was a good argument that the exclusion clause was void under Regulation 15 of the Package Travel, Package Holiday and Package Tour Regulations (the “PTRs”). Paragraphs 1 and 2 provide that tour operators, subject to limited exceptions, are strictly liable for proper performance of their obligations, even when performed by third party suppliers. Paragraph 5 provides that (with limited exceptions)
“ .. liability under paragraphs (1) and (2) above cannot be excluded by any contractual term”.
The ‘small claims’ arbitration took place on 10 June 1996 in the Mayor’s & City of London Court. I submitted that VJV were outside the exclusion clause. VJV’s solicitor did not advance a case on the meaning of the exclusion clause, but only stated the alleged reason for it – because sometimes hotels overbook. He then added that I travelled “at a peak time”. The implication was that the change was made because my hotel had been overbooked. I tried to point out that this was not the case VJV had pleaded, but the District Judge shouted “shut up” at me.
After an hour of legal argument the District Judge abruptly gave judgment, without reading any of the 7 witness statements I had put in or Mr S’s witness statement, or hearing from another VJV witness, a Ms L, who attended the hearing. He declared that the change was not “significant”, but “minor” – although he had heard no evidence on the relative standards of the two hotels. He did not deal with my point that there were only limited circumstances in which VJV could make changes (whether ‘significant’ or ‘minor’). He also declared, without giving reasons, that the exclusion clause was not unreasonable. He did not deal with Regulation 15 of the PTRs.
Accordingly, I applied to the Circuit Judge to set aside the award on the grounds that the District Judge had failed to reach the correct construction of the exclusion clause and had failed to properly apply UCTA and the PTRs. (There is no appeal against findings of fact.)
They were several adjournments. Then a delay when VJV’s solicitor wrote to the Court, without informing me, claiming that Ms L could not attend Court before 17 February 1997. I therefore applied to the Court for an earlier hearing and for VJV to produce Ms L’s witness statement in advance of the hearing.
My application was heard on 23 December 1996, before His Honour Judge Simpson. I informed the Judge that the application for disclosure of Ms L’s witness statement was based an earlier decision of His Honour Judge Byrt QC that any rehearing of the arbitration was to take place after the appeal. His Honour stated that his practice was different: therefore my application was irrelevant and so dismissed: I was ordered to pay the costs of it.
The application to set aside the Award was heard before Judge Byrt QC on 17 February 1997. His Honour was sympathetic to my complaint, but dismissed my application. He stated that it had been for the District Judge to construe the use of the word “necessary” in the exclusion clause (although in fact the District Judge had not done so). He ruled the he was unable to overturn the District Judge’s decision that the change was ‘minor’ (although as the District Judge had heard no evidence, his pronouncement was not a “finding of fact”). He also held that in the light of the District Judge’s finding, it was “unarguable” that I had been provided with a “performance” which was “substantially different”, so section 3(2)(b)(i) of UCTA did not apply – which was to miss the point that that was a finding based on VJV’s, very limited, definition of what was ‘significant’. He held that Regulation 15 of the PTRs did not apply. I was ordered to pay the costs of the application and leave to appeal was refused.
I therefore had to seek leave to appeal from the Court of Appeal, an application that was much delayed (and nearly dismissed) because the tape of His Honour’s judgment was lost in the post to the transcribers. Somewhat unusually, the application was heard in open court by 2 Lords Justice on 9 July 1997. Their Lordships accepted that the appeal was on a point of law and granted leave.
I served my formal Notice of Appeal on 29 July 1997. VJV promptly offered – without admission of liability – to settle: they would pay my claim in full, my costs of the application to the Circuit Judge and of the appeal to date. As a practising solicitor I could recover costs as though I employed myself – thus I was effectively offered several thousand pounds to settle.
The ‘stick’ that went with this ‘carrot’, was that if I turned the offer down then even if I should succeed in the Court of Appeal I might be ordered to pay VJV’s costs from that date. Yet I was not inclined to accept because I had not brought the case for the money but on principle: I wished to prove that VJV could not make changes as freely as it contended that it could. It was my belief that VJV had not made the offer because they were worried about the costs of the appeal, but because they did not want a Court of Appeal judgment against them which would create a precedent binding both County Court and ABTA arbitrations: they wanted to continue to make changes.
VJV’s response, confirming my suspicions, was to lodge a Respondent’s Notice which asserted that Regulation 14 of the PTRs gave them the right to make changes (This was ridiculous, as, far from giving tour operators rights to make changes, Regulation 14 clearly imposes an obligation on tour operators to correct or mitigate the situation when something goes wrong on the tour).
This Notice, plus learning of several of the very radical ‘minor’ changes made by VJV in practice, resolved me to refuse the offer of settlement. To counter the risk, I offered that if VJV did not oppose my appeal, I would not ask the Court for my costs from that date: this would mean that they would not have to pay any more than they had offered. They declined to accept this offer.
In November 1997 VJV’s solicitors lodged VJV’s skeleton argument and so had to provide me with a copy. Yet I was under no obligation to lodge my skeleton argument – and thus provide VJV with a copy – until 14 days before the hearing. Thus I had 2 months to examine their skeleton argument before I finalised mine.
There were two notable features of the argument advanced by VJV’s barrister, Mr Saggerson. The first was that, in contrast to the Defence, it was claimed that the move had been made “in order that the Zimbabwe-Zambia border did not have to be crossed on the morning of [the] return flight”. (In Court he explained that he advanced this case on the basis of the witness statement of Ms L – the one which VJV had never disclosed.) The second was his interpretation of the exclusion clause:
“If this was a ‘minor’ change that is the end of the matter .. Provided the change was only ‘minor’ it does not have to be ‘necessary’”
In contrast, when dealing with UCTA, VJV’s position was far less extreme. It was stated that:
“it cannot be unreasonable for a tour operator to reserve the right to make minor itinerary, accommodation and/or transport alterations .. where experience shows that modest changes could help or are intended to help the consumer”.
The Court of Appeal hearing took place on 19 February 1998. The omens seemed good when Lord Justice Schiemann began by thanking me for my skeleton argument, which he said made my case very clear, and stating that it would be necessary to hear from VJV’s barrister. Their Lordships then subjected Mr Saggerson to a grilling over his submission that a ‘minor’ change did not have to necessary. Mr Saggerson’s response was to say that VJV were well aware [sic] that changes tended to upset clients, but that it was reasonable that changes could be made without the payment of compensation, because otherwise the price of holidays would go up. (In reply I pointed out that the way to keep prices down was not to cut out compensation but not to make so many changes.) Alternatively, Mr Saggerson argued, the word “necessary” was to be read as “reasonably required” – as he had put it before the Circuit Judge, it “covers a multitude of sins” [sic!]. I responded that if VJV wanted to give themselves complete discretion to make so-called ‘minor’ changes they should have chosen another form of words.
Their Lordships also heard argument on UCTA and the PTRs. VJV’s argument on the PTRs was that Regulation 15(5) did not bite, because VJV had a right to make changes, so it was not in breach of its obligations. My counter-argument was that unless the Regulation was read restrictively, distinguishing rights and obligations, the purpose of the Regulation would be frustrated. Surprisingly, the argument I was advancing, and Mr Saggerson was denying, was that set out at page 99 of Mr Saggerson’s book “Travel Law and Litigation” – that, in view of the combined effect of the PTRs and UCTA, tour operators
“are advised of the futility of defining the performance (or part of it) reasonably expected of them out of existence”.
Sir Brian Neill (with whom Lord Justice Schiemann concurred) delivered the leading judgment. Their Lordships agreed with my main submission that changes had to be necessary: further, the reference to overbooking was not merely illustrative, but conclusive of the circumstances in which VJV could change hotels. Thus they did not find it necessary to rule on the Regulation 15 of the PTRs and the UCTA points.
On costs, Mr Saggerson produced the ‘Calderbank’ letter and my rejection of it. I protested that this gave a distorted picture and produced the intervening correspondence and my offer on costs. Their Lordships’ read these and, after lengthy argument, they ordered that neither side would get the costs of the appeal or any of the applications in the court below. This left me only slightly out of pocket, but I estimate that, in resisting a claim for under £150, VJV incurred costs of over £15,000. VJV duly delivered £227.90 damages to me, in cash, on 13 March 1998. Perhaps VJV might regret the fact that they did not apologise for making the change: I should never have brought the action if they had done so.
My case reinforces the basic point that exclusion clauses will be read restrictively. It is a pity, however, that the Court of Appeal did not deal with my points on the PTRs and UCTA, as tour operators often ‘try it on’ with their booking conditions. For example, it is worrying that Thomas Cook, who use exactly the same ‘significant’/‘minor’ distinction as VJV, purport to give themselves an unqualified right to make changes.
However, all such contractual terms are probably void against a consumer by Regulation 5 of the Unfair Terms in Consumer Contracts Regulations 1994 (which came into force after I entered into my contract with VJV), particularly as the indicative list of unfair terms set out in Schedule 3 includes terms which have the object or effect of
“enabling the seller or supplier to alter unilaterally without valid reason any characteristics of the product or service to be provided” (term k).
Still, it would desirable if, rather than hundreds of consumers taking cases to County Court or ABTA arbitrations, the Director General of Fair Trading would use his powers under Regulation 8 to apply for an injunction restricting the use of such sweeping terms.
My case has made me sceptical of the ‘small claims’ process, as I had to go to the Court of Appeal on what was, essentially a very simple point of construction. I find the Government’s proposal to increase the limit from £3,000 to £5,000 alarming. I am particularly perturbed that a party can put forward a case – such as to why it made a change of itinerary – in unsworn evidence by way of witness statement of an individual who does not give evidence in person, without having to give any discovery of relevant documents. The Rules should be changed so that there is always a preliminary review by a District Judge to see if any special orders are necessary. And arbitrations should be tape-recorded –which should control abuses by District Judges and assist in case of an appeal.
Even so, County Court arbitrations are probably a much better bet for the consumer than ABTA arbitrations, where applications are dealt with on paper, and there is a big incentive not to appeal to the High Court – having to pay the costs of the appeal even if you win. One of my group took an ABTA arbitration and lost. I doubt VJV will recognise a moral obligation to pay him compensation.
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