No ‘Unforeseeable Event’ Defence for Deliberate Acts of Hotel Employees: Advocate General Delivers Opinion in X v Kuoni

14th November 2020 by Tom Collins

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Advocate General Szpunar has just delivered his much-anticipated opinion in X v Kuoni Travel Ltd (Case C-578-19, available here), following a referral to the ECJ by the UK Supreme Court in July last year.

Travel Insurance

The opinion, which is likely to be followed by the ECJ in its judgment, deals a significant blow to tour operators in limiting the circumstances in which they are able to avoid liability for the acts and omissions of employees of its suppliers.

Background

Those who have followed X v Kuoni in its long journey through the High Court, Court of Appeal and Supreme Court will be familiar with the facts:

Mrs X and her husband entered into a package holiday contract with Kuoni for return flights to Sri Lanka and two weeks’ all-inclusive accommodation at a hotel in July 2010.

The booking conditions incorporated into the contract, which were standard terms used in the industry, provided that: ‘Your contract is with [Kuoni]. We will arrange to provide you with the various services which form part of the holiday you book with us’.

Clause 5.10(b) of the contract provided that:

‘ … we will accept responsibility if due to fault on our part, or that of our agents or suppliers, any part of your holiday arrangements booked before your departure from the UK is not as described in the brochure, or not of a reasonable standard, or if you or any member of your party is killed or injured as a result of an activity forming part of those holiday arrangements. We do not accept responsibility if and to the extent that any failure of your holiday arrangements, or death or injury is not caused by any fault of ours, or our agents or suppliers; is caused by you; … or is due to unforeseen circumstances which, even with all due care, we or our agents or suppliers could not have anticipated or avoided.’

In the early hours of 17 July 2010, whilst making her way through the grounds of the hotel to the reception, X came upon N, an electrician and hotel employee, who was on duty and wearing the uniform of a member of the hotel staff. After offering to show X a shortcut to reception, N lured her into an engineering room where he raped and assaulted her.

At first instance, Judge McKenna dismissed the claim on the grounds that ‘holiday arrangements’ in clause 5.10(b) did not include a member of the maintenance staff conducting a guest to reception. He further held, obiter, that Kuoni would in any event have been able to rely on the statutory defence under regulation 15(2)(c)(ii) of the Package Travel [etc] Regulations 1992 (‘the PTR’) because the assault was an event which could not have been foreseen or forestalled (by inference by the hotel) even with all due care. The Court of Appeal (Sir Terence Etherton MR, Longmore and Asplin LJJ) dismissed the appeal by a majority (Longmore LJ dissenting).

The questions referred

On a further appeal, the Supreme Court decided that a referral to the ECJ was necessary to determine the appeal. In essence, the issues referred were as follows:

1. Where there has been a failure to perform/improper performance of a package holiday contract due to the actions of an employee of a hotel supplier, (1) is the defence under regulation 15(2)(c)(ii) of the PTR available to a tour operator in principle and if so (2) how does the defence operate? Alternatively,

2. Is an employee of the aforesaid hotel himself a ‘supplier of services’ for the purposes of regulation 15(2)(c)(ii)?

It is important to point out that the ECJ was asked to assume for the purpose of its decision that (1) a member of maintenance staff conducting a guest to reception was within the scope of the ‘holiday arrangements’ contracted for and (2) the rape and assault constituted improper performance of the contract. Neither issue has yet been determined by the Supreme Court.

The opinion of the AG

In resolving the issues referred, the AG noted that Directive 90/314 (implemented by the PTR) (‘the Directive’) intended to ‘ensure a high level of protection for consumers’ and guaranteed the right of tour operators, in appropriate circumstances, to seek an indemnity from a supplier in respect of any liability to consumers.

Concept of ‘supplier of services’

Dealing with second question first, the AG noted that the concept of a ‘supplier of services’ was not defined by the Directive and having regard to the meaning and scope had to be determined by reference to the context and objective pursued by the legislation, he considered that an employee of a supplier of services is not, themselves a ‘supplier of suppliers’, per se for the following reasons: (1) The concept of a ‘supplier of services’ appears in the context of the liability of an ‘organiser’. Unlike a hotel, which provides services to a consumer for remuneration by the organiser, an employee of a hotel is remunerated by the organiser and provides their services as part of a subordinate relationship with the hotel. (2) Whereas the Directive allows an organiser to pursue remedies against a supplier of services, there is no equivalent right against an employee of that supplier.

Organiser’s liability for the acts/omissions of an employee of a supplier of services

The AG considered the real issue, raised by the first question, was whether, within the system of liability created by the Directive, the acts or omissions of an employee of a supplier is to be treated as acts or omissions by the supplier. His analysis can be summarised as follows:

• An organiser’s liability under the Directive stems from the performance (or improper performance) of its contractual obligations. Where a consumer suffers loss or damage as a result of an act or omission which is connected with the organiser’s obligations under the contract, it cannot escape liability because it did not personally perform those acts/omissions.
• An organiser is therefore liable for the acts or omissions of an employee of a supplier of services provided that they are in performance of either (1) the contractual obligations (namely, the provision of accommodation or transport) or (2) services ancillary to the provision of those obligations.
• The AG gave the following examples of services which may be ancillary to the provision of accommodation by a hotel under a package holiday contract: ‘porter services, catering, valet parking, concierge services, table service, room service, bicycle hire and cleaning or maintenance services’.

The AG considered that:

65. In those circumstances, it is clear to me that an employee of a hotel may, in principle, be regarded as performing the contractual obligations arising from a package travel contract where he is on duty, wearing the uniform of a member of hotel staff and thus appears to guests/consumers to be a trustworthy person, whether the obligations are performed in the hotel premises or outside its facilities, provided that the obligations in question arise from the package holiday contract or are obligations regarded as being ancillary to the services sold or offered for sale by the organiser under that contract.

66. Thus, if the porter services, the maintenance of facilities or the conducting of guests to reception are either services ancillary to the accommodation service or services directly stipulated in the contract, the organiser must be liable where the hotel porter damages or loses luggage, assaults a guest whilst performing the obligation of conducting him to his room or to reception, burns a guest by spilling soup or assaults a guest whilst providing table service.

The AG concluded that ‘In all those scenarios, it must clearly be found that the contract was improperly performed and that, therefore, the actions of the hotel employee must be attributed to the supplier of services within the context of the system of liability of the package travel organiser under Article 5 of Directive 90/314’. He considered that an organiser would however escape liability if, for instance, ‘the employee of a hotel assaults a hotel guest outside his working hours or on a day on which that employee is on leave’.

Operation of the defence under regulation 15(2)(c)(ii)

The AG considered that the defence to liability provided by regulation 15(2)(c)(ii) of the PTR (article 5(2) of the Directive) simply did not apply in the present case: The Defence applies where the failure to perform/improper performance of the contract is due to ‘an event which the organiser … or the supplier of services, even with all due care, could not foresee or forestall’. The AG considered that there would need to be an event ‘outside the organisational structure of the supplier of services or an objective factor’ and could not ‘under any circumstances include wrongful acts committed intentionally which, in themselves, constitute the failure to perform or the improper performance of the contractual obligations’.

He regarded it as ‘illogical’ even to ask whether an intentional act of a supplier could have been foreseen or forestalled.

Conclusion

The emphatic rejection of the ‘unforeseeable event’ defence where loss is caused by the deliberate act of an employee of a supplier means the focus of the enquiry will now be on whether the particular act was in performance of a contractual obligation or a service ancillary to a contractual obligation. What those obligations are and what evidence will suffice to prove that the employee was (or was purporting to) perform them will vary from case to case however it is clear that here, the AG gave far less weight than the High Court and Court of Appeal to the fact that portering was not (and was known by X not be) part of the employee’s role.

It remains to be seen of course, whether the ECJ will reach the same conclusion as the AG, let alone by the same reasoning, but on the assumption it does, this opinion is clearly good news for the protection of consumers under package holiday contracts. It reinforces the system of obligations and indemnities between the consumer, organiser and supplier and the fair allocation of risk between them.

Tom Collins is a Barrister at 1 Chancery Lane
He can be contacted at TCollins@1chancerylane.com


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