General Damages in Holiday Claims: A Recap

23rd July 2020 by Henk Soede

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It has now been ten years since the Court of Appeal’s seminal decision in the case of Milner & Milner v Carnival Plc [2010] EWCA Civ 389 and still the assessment of general damages in holiday claims poses difficulties for those acting in this area. Although much of this difficulty is no doubt inherent in the necessarily imprecise nature of this assessment, it is
thought that even these difficulties can be mitigated by a clear understanding of the basic principles that apply. Now is as good a time as any at which to remind ourselves of these basic principles, and it is hoped this article will assist those acting in this area as they prepare for the moment British tourists are once more unleashed into the wider world.

This article is divided into three parts. In the first part I provide a brief summary of the development of the law pre-Milner. In the second part I look at the decision in Milner and the extent to which this decision addressed the ambiguities in the case law. Then, in the final section, I turn to the issues that subsist in holiday claims involving personal injury.

1. The legal backdrop

An appropriate starting point for surveying the judicial approach to damages in holiday claims is the case of Jarvis v Swans Tours Ltd [1972] QB 233. The claimant in Jarvis booked himself a 15 day Christmas winter sports holiday with the defendant tour operator at a cost of £63.45. Put shortly, the holiday was a massive disappointment and fell well short of what was described in the “lavishly illustrated brochure with its ecstatic text”. The trial judge found that for the first week the claimant got a holiday which was to some extent inferior than what was described and, for the second week, a holiday which was largely inferior. The claimant was awarded £31.72, with this amount representing the difference between the holiday that was contracted for and the holiday that was received. The claimant appealed on the ground he was also entitled to compensation for the disappointment and distress (i.e., the loss of enjoyment) caused by the inadequate holiday and sought damages of £125.

Lord Denning MR first considered the cases that militated against such damages being recoverable in a contractual claim. In Hobbs v London & South Western Railway Co. (1875) L.R. 10 Q.B. 111, for example, Mellor J held that a claimant could not recover damages for the mental distress or disappointment arising from a breach of contract, except where that inconvenience was ‘physical’. On the other hand, there were also cases in which a loss of enjoyment had seemingly been granted, albeit not as a separate head of loss. One such example is Feldman v Allways Travel Service (1957) CLY 934, where the trial judge held that the correct measure of damages was the difference between the price paid and the value of the holiday in fact furnished, “taking into account the plaintiff’s feelings of annoyance and frustration”. Having considered this body of law, Lord Denning MR held that the limitations arrived at in cases like Hobbs were “out of date”. Given that the purpose of a holiday contract was to provide entertainment and enjoyment, the Court found that it was entirely appropriate for damages to be awarded for the disappointment and distress consequent upon that contract being breached. On the facts, it was clear that there had been a significant loss of enjoyment as a result of the deficient holiday and a global award of £125 in general damages was considered justified. Particular weight was given to the fact the claimant only had a fortnight’s holiday per year, with this apparently justifying a higher loss of enjoyment award than would otherwise be the case. As will be seen, this notion of a ‘special occasion’ (although not phrased in these terms in Jarvis) is a recurrent feature in judicial assessments of loss of enjoyment awards.

Jarvis is now considered authority for the basic principle that claimants in holiday claims are entitled to a sum representing both the diminution of value of the holiday and the loss of enjoyment occasioned by the breach. Unfortunately, the decision was (extremely!) light on detail as to how the loss of enjoyment award was arrived at and the Court did little other than emphasise the difficulties involved in undertaking this assessment. One would expect that the absence of such guidance combined with the relative size of the award provoked a fair amount of ire in the various tour operators trading in the 1970s.

The basic principle set out in Jarvis was applied in a number of subsequent Court of Appeal decisions. In terms of legal principle, two cases of particular note are Jackson v Horizon Holidays [1975] 1 WLR 1468 and Adcock v Blue Sky Holidays Ltd [1980] 5 WLUK 115.

In Jackson, the claimant booked a 28-day holiday with the defendant tour company at a cost of £1,432. Prior to contracting, the claimant informed the defendant’s representative of the specifications that he and his family required and he was assured these would be met. Just before the holiday, the claimant was told that the original hotel was unavailable but that an alternative had been found that would meet his specifications. The claimant was offered a discounted price of £1,200. Unfortunately, the alternative hotel came nowhere close to meeting the claimant’s requirements: the children’s room was mildewed; there was no connecting door to the children’s room; there was no bath, no swimming pool and no mini-golf course; and the food was on all accounts awful. After a fortnight they were rehoused in the original hotel despite on-going building work, and the subsequent fortnight was much improved. At first instance, the claimant was awarded £1,100 for the diminution in value and loss of enjoyment. The defendant appealed on the basis this amount was excessive.

On appeal, Lord Denning MR deduced that the trial judge’s award of £1,100 was most likely made up of £600 for the diminution in value of the holiday (calculated as half the total cost) and £500 for the loss of enjoyment. The trial judge did not consider that the claimant was entitled to claim for the loss suffered by his wife. This was, on Lord Denning MR’s analysis, the determinative issue: if the claimant could claim for the loss of his family members, the award of £1,100 would be justified; if not, the award would be excessive. After considering various decisions on this issue, it was held that the case fell squarely within the principle of law articulated by Lush LJ in Lloyds v Harper (1880) 16 Ch.D. 290 at 321 – namely, “where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B, and recover all that B could have recovered if the contract had been made with B himself.” It followed that the claimant was entitled to sue for the loss suffered by the other members of his holiday party. Lord Denning MR accordingly upheld the trial judge’s award and apportioned the loss between the claimant’s family members.

A few years later the Court of Appeal heard the case of Adcock v Blue Skys Holidays Limited [1980] 5 WLUK 115. In short, the claimant in Adcock purchased a 7 day skiing holiday from the Defendant for himself and five others (ultimately, however, the claimant’s daughter was unable to go) at a cost of £98 per person, plus some £43 for insurance. The accommodation fell short of what was contracted for: the hot water supply was extremely limited; the central heating did not work properly for the first four days; the blankets on the bedding were inadequate; the beds themselves were extremely uncomfortable; there was “no warm and friendly atmosphere” in the place; and despite what was said in the brochure breakfast was not available at the hotel. The accommodation was also dirty and had inadequate lighting, both of which, despite being ignored by the trial judge, were considered relevant factors by the Court of Appeal. At first instance, the trial judge considered how these issues affected each of the holiday-makers individually and granted awards ranging from £75 to £10 per person, with the lowest of these awards being allocated to the two young boys who were felt to have been less affected by the issues. The total award for diminution in value and loss of enjoyment amounted to £200. Notably, the trial judge appeared to consider that a higher award was justified but felt he was unable to grant a higher level of damages in light of the decisions in Jarvis and Jackson.

On appeal, the Court held that the trial judge had erred in his treatment of those cases. There was nothing in Jackson or Jarvis that prevented the trial judge from awarding the higher scale of damages which he had said he was minded to award. On this point, Cummings-Bruce LJ held that “contracts for holidays vary on their facts greatly” and that it would accordingly “be a grave mistake to look at the facts in, for example, the Jackson case or the Jarvis case and to compare those facts with the facts in another case as a means of establishing the measure of damages”. Moreover, the Court considered that the trial judge ought to have considered the inadequate lighting and dirtiness of the premises and it followed from this and the above that a higher award was justified. In calculating this award, the Court did not, as the trial judge did, look at the effects of the inadequate accommodation on each individual and instead looked at the matter in the round: “What is the kind of holiday they were entitled to expect, what is the kind of holiday they got, and what do I think that that is worth in damages?” Having considered these questions, Everleigh LJ arrived at a global figure of £500, which was to be apportioned between the holiday-makers as they saw fit. It is noted that it is not altogether clear why Everleigh LJ considered it inappropriate to assess the effects of the inadequate accommodation on each individual in turn. One would expect that such an approach, particularly in the context of calculating loss of enjoyment, would yield a more accurate level of damages than would be achieved by the ‘broader’ approach advocated by the Court.

Following this line of cases, the position in standard holiday claims was as follows:

What was not clear was how best to approach the assessment of such damages and the factors that ought, or ought not, to be considered. Particularly divisive issues related to whether the loss of enjoyment award should be proportionate to the cost of the holiday and how to protect against double recovery given the apparent overlap between the two heads of loss. It is certainly arguable that the higher courts had failed to strike an appropriate balance between allowing trial judges sufficient discretion to deal with the factually varied nature of holiday claims and providing broadly applicable guidance to protect against haphazard assessments.

2. Milner

It was this balance that the Court of Appeal sought to achieve in the case of Milner & Milner v Carnival Plc [2010] EWCA Civ 389. A full exposition of the factual background is outside the scope of this short note, and I would advise those who haven’t to read this case in full to do so in order to more fully apprehend the Court’s approach. In short, the claimants in Milner paid a total of £59,052.20 (originally £65,558, but a 10% discount applied) for a round-the-world cruise covering 106 nights. The claimants had booked far in advance in order to secure a suitable cabin. As it happened, the cabin chosen by the claimants had problems with its floor plates in that they would flex loudly during stormy weather. After two sleepless night the claimants complained to the purser and they were subsequently housed and re-housed in a number of different rooms, all of which were (on the claimants’ view) in some respect inadequate. Ultimately, the claimants decided on terminating the package by agreement when the ship arrived in Hawaii 28 days into the cruise and thereafter spent 6 ‘aimless weeks’ in Hawaii at their own expense. The claimants then re-joined the cruise for the return voyage back to Southampton at a cost of £13,440. After a claim for a full refund and damages was brought, the defendant offered the claimants a refund of £48,270 on a per diem basis, so that the net cost of their ‘holiday’ was £10,812. The refund was agreed to and the claim was subsequently whittled down, so that at trial the claimants sought £8,500 for the diminution in value of the cruise, £50,000 for distress and disappointment, £4,300 for the wasted expenditure on dresses and £13,440 for the cost of the return voyage.

At first instance, the claimants were awarded £2,500 each for the diminution in the value of their cruise and £7,500 each for their distress and disappointment when the cruise did not match their expectations. In respect of this latter award, the judge appeared to be persuaded by arguments that a higher award was justified in light of the cost of the cruise, noting: “where one is advertising a platinum quality product, then there have to be platinum quality damages if there are shortcomings.” The judge also awarded Mrs Milner £2,000 for her wasted expenditure on her wardrobe of formal dining gowns. No award was granted for the return leg of the journey as on the trial judge’s view the alternative suite offered to the claimants was a suitable alternative. The total award was thus £22,000.

The defendant appealed on a number of grounds. The principal grounds of appeal were that the awards for loss of enjoyment and diminution in value were independently excessive and that, taken together, they would result in double recovery. Further grounds related to the £2,000 awarded to Mrs Milner for the wasted expenditure on the formal gowns which, the Defendant submitted, was caused by the claimants’ decision to disembark in Hawaii and was sufficiently compensated by the pre-trial agreement and/or as part of the award for loss of enjoyment. Happily, the Court of Appeal took this opportunity to offer general guidance on how best to approach the assessment of general damages in these sorts of claims.

The general approach

Ward LJ, giving the Court’s leading judgment, summarised the general approach that should be taken as follows: “in approaching the task of assessing damages, I accept that it is permissible to make the assessment under two heads, first the diminution in value and then the distress and disappointment. I do, however, stress that judges should always be alert to ensure that there is no duplication of damages and so it is always salutary to stand back and look at the sum of the two elements in the round before arriving at the figure to award.” [42].

Loss of enjoyment

Milner is particularly noteworthy for the detail in which Ward LJ considered the loss of enjoyment award and the factors relevant to that assessment. The first question that fell to be considered was the extent to which the loss of enjoyment award should be proportionate to the cost of the holiday. Ward LJ considered this factor would in most cases be irrelevant: “the level of distress is surely measured by the extent of the failure to meet reasonable expectations and a luxury holiday of a lifetime for the rich can be as spoilt for him as the more modest holiday of a lifetime for the poor, unless of course the poor man will never be able to afford another whilst the rich man can ameliorate his disappointment by immediately booking another jaunt to make up for his loss” [35]. The latter part of this extract is an important caveat in that it suggests the wealth of the holiday-goer and the ability to go on regular holidays will influence the assessment of distress. Although not considered in Milner, an example of a scenario in which this principle was applied can be seen in the case of Keppel-Palmer v Exus Travel [2003] EWHC 3529 (QB). In Keppel-Palmer, the wealthy claimant had purchased an extremely expensive holiday to Barbados that turned out to be substantially worse than what was contracted for. At [45], Gage J considered that the claimant’s ability to go on “regular holidays” justified a discount to the loss of enjoyment award, presumably on the basis that this ability would lessen the degree of distress that was experienced. It is thought that this aspect of Milner sits well with the subjective nature of the loss represented by the loss of enjoyment award.

The Court then addressed three further factors that ought to be considered when determining the appropriate loss of enjoyment award. The first relevant factor was whether the holiday was booked to mark a special occasion, such as a honeymoon or wedding. In the event such a holiday is wrecked by a breach of the holiday contract, Ward LJ considered that a higher loss of enjoyment award will in most cases be justified. Although the Court resisted the defendant’s request to provide bracketed guidelines that could be applied to each case, Ward LJ did note the range of awards that have been granted in various groups of cases:

Despite noting these brackets, Ward LJ was, much like Cummings-Bruce LJ in Adcock, at pains to emphasise that using other holiday cases as comparators for assessing damages was “not a particularly fruitful exercise because the facts of one case will be infinitely different from the facts of the next” [37].

A second relevant factor, as outlined by Ward LJ, is the nature of the breach and the manner in which it interacts with the primary purposes of the holiday. For example, the golf fanatic denied his golfing facilities will suffer more disappointment as a result of the breach than his children who are perfectly happy playing in the pool. This principle suggests that in certain circumstances (particularly where the holiday has a special purpose for some, but not all, of the holiday-goers) an individual approach to the assessment of loss of enjoyment will be necessary.

Finally, Ward LJ emphasised that the logic of the law requires a degree of consistency between loss of enjoyment awards in holiday claims and the sort of awards set out in the Judicial Studies Board Guidance relating to psychiatric injury, the Vento guidelines on awards for injury to feelings in discrimination cases, and the damages awarded in bereavement cases falling under the Fatal Accidents Act 1976. At [58], Ward LJ held that the first instance awards of £7,500 to each of the claimants were out of line with the awards granted in these sorts of cases given that distress is not a recognisable psychiatric injury and does not equate with bereavement. A downward adjustment was therefore required.

It was ultimately held that Mr and Mrs Milner were entitled to £4,000 and £4,500 for their loss of enjoyment, respectively. In arriving at this figure, Ward LJ considered that the cruise had been an extra-special holiday and that the “the indisputable fact is that the holiday of a lifetime was ruined for them” [52]. The additional £500 granted to Mrs Milner was justified by the lost enjoyment she suffered as a result of not being able to use her evening gowns. This was, on Ward LJ’s analysis, a more appropriate way of dealing with the expenditure on the gowns, particularly given the main reason Mrs Milner’s wardrobe was not enjoyed was “because the Milners terminated the voyage when they reached Hawaii” [56]. The key mitigating factor was that the claimants’ disappointment had to be measured against the month they were on board the cruise and not the lost pleasures of the rest of the cruise due to the fact the package had been terminated by agreement in Hawaii.

Diminution in value

The essential point in Ward LJ’s judgment as it relates to the diminution in value assessment is that it is essential “to exclude from this consideration how the client felt about the diminution in value in the service supplied, for therein lies the risk of a duplication of damages” [43]. The question of how the claimant feels about the diminution in value should thus only be considered as part of the loss of enjoyment award. Clearly this is an appropriate delineation given that the diminution in value award is in principle concerned only with pecuniary loss and is in that respect objective.

Each party undertook an arithmetic approach to the diminution in value award and, as is often the case, there was significant divergence as to the amounts considered recoverable. Again, in order to fully comprehend each approach I would advise Milner is read in full. So far as necessary for this note, it suffices to say the following. Ward LJ considered the total cost of the holiday following the refund was £10,812. The total number of days the claimants were on board was 28. Having held that the claimants were relatively comfortable after being upgraded to a suitable cabin on the New York to Los Angeles leg (which took 17 days), it was concluded that the claimants were entitled to roughly a third of the total cost, that is, £3500.

Summary

It is thought that Milner has solidified, so far as desirable in a factually varied area of law, the general approach to be taken when assessing general damages in standard holiday claims. It seems the Court has achieved some success in its aim of striking an appropriate balance between allowing trial judges sufficient discretion to deal with factually varied claims and providing applicable guidance in order to protect against haphazard assessments.

3. The difficulties in cases involving personal injury

In holiday claims involving a personal injury component, it is trite law that claimants will be entitled to damages for pain, suffering and loss of amenity (PSLA) in addition to damages for the diminution in value and loss of enjoyment of the holiday. The principles set out in Milner will of course apply to the latter two assessments, but Milner does not address (as there was no personal injury in that case) the question of how to manage the tricky interaction between these three awards. There are a few issues arising out of this interaction that practitioners in this area would do well to keep in mind.

The loss of enjoyment award and the loss of amenity aspect of the PSLA award

One such issue is the apparent conceptual overlap between the loss of amenity component of the PSLA award and the award for loss of enjoyment. This overlap will be particularly prominent in cases where the injury only subsists for the duration of the holiday. In dealing with this overlap, it is important to keep in mind the (admittedly subtle) conceptual differences between these heads of loss. The loss of amenity recovered as a part of the PSLA award relates to the general inability to (for example) walk or undertake social activities and hobbies, whereas the loss of enjoyment award focuses exclusively on the wider enjoyment that would have been obtained from the holiday but for the injury. Given these differences, it is undoubtedly best practice to plead each head separately, but one might expect (depending, of course, on the facts) a reduction to be made to the overall award at trial given the prospect of double recovery.

An illustrative post-Milner case in which this overlap was considered is Antcliffe v Thomas Cook Tour Operations Ltd [2012] 7 WLUK 97. In Antcliffe, the claimants had booked an all-inclusive two-week package holiday to the Dominican Republic with the defendant tour operator at a cost of £3,309. All five of the claimants suffered food poisoning (of varying degrees of severity) and brought claims for the diminution in value and loss of enjoyment of the holiday. Strangely, claims for personal injury were only made by Mrs Antcliffe (the 1st claimant) and the youngest child (the 5th claimant). Mrs Antcliffe suffered a head injury in addition to the digestive injury after collapsing following a period of vomiting. HHJ Worster did not consider there had been a complete loss of bargain as a result of the food poisoning: “the first week of the holiday passed enjoyably although the disruption to the second week afflicted the whole family to some extent” [123]. In an attempt to minimise the total award, counsel for the defendant sought to emphasise the overlap between the two awards and the potential for further overlap with awards for personal injury which include a sum for loss of amenity. Though it is not exactly clear how this submission factored into HHJ Worster’s calculation, the judge clearly considered the submission to be reasonable (see [124]). Having apparently heeded this point, HHJ Worster granted a global award of £3,000 for the diminution in value and loss of enjoyment, with 2/7ths of this amount being apportioned to Mrs Antcliffe, 2/7th to the youngest child, and 1/7th to each of the three remaining claimants. This award was then added to the damages awarded to Mrs Antcliffe (£18,000) and the youngest child (£1,500) for the pain, suffering and loss of amenity arising from their personal injury claims.

Looking at Antcliffe, it is clear that it will be prudent for defendants to take points regarding the overlap between the loss of amenity component of the PSLA award and the loss of enjoyment award. In many cases a downward adjustment will be justified. As to the extent of this adjustment, much will depend on the facts and this will in practice be a fertile ground for argument.

Diminution in value in addition to PSLA and loss of enjoyment

In cases where the holiday services are adequate save for the event and/or aspect of those services that caused the injury, there will be a further question of whether a diminution in value award should be awarded in addition to the loss of enjoyment and PSLA awards. This does not always occur. In Doree v First Choice Holidays & Flights Limited (Redditch County Court, 12 January 2005, as reported in Kemp & Kemp), for example, there is no indication in the case report that an award was granted for the diminution in value of the holiday suffered as a result of the food poisoning. The same is true in the more recent county court decision of York v TUI UK Ltd [2018] 7 WLUK 498, another food poisoning case. Even in cases such as these there will often be a loss of bargain as the relevant injury will in all likelihood prevent the claimant from enjoying parts of the holiday services that they otherwise would have made use of. In food poisoning cases, the claimant may be bound to the toilet in their room and thus unable to make use of the facilities provided at the hotel. In cases involving other injuries, the injury may prevent the claimant from being able to use (for example) the pool or tennis court. Practitioners should be wary that these factors will often justify not only a loss of enjoyment award but also an award for diminution in value insofar as these facilities may as well have been unavailable to the injured claimant(s).

Henk Soede is a pupil at 1 Chancery Lane.
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About the Author

Henk Soede was called in 2019 and is currently a pupil at 1 Chancery Lane. His pupillage under the supervision of Andrew Spencer, Ian Clarke and Francesca O’Neill has given him experience in all areas of chambers’ practice, and although the Covid-19 lockdown has disrupted his pupillage year, he remains willing and able to undertake remote court work and paperwork of all kinds.

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