High Court rules in favour of consumers, providing an interpretation on the Package Travel, Package Holidays and Package Tour Regulations 1992

The High Court has allowed an appeal by consumers who claimed compensation when a Northwest Passage cruise they had booked was not, because of sea ice, able to follow the planned itinerary. Applying the Package Travel, Package Holidays and Package Tour Regulations 1992, the judge found, in Sherman v Reader Offers Ltd, that the travel company was in breach of contract and could not rely on either the Regulations or the contract terms to exclude liability.

Background

Mr and Mrs Sherman booked a cruise, which was due to take travellers through the Northwest Passage. The booking was made by telephone on 9 January 2018 and the travel company (ROL) emailed a booking summary, its standard terms and conditions and an ATOL certificate the following day. On 22 January, the Shermans were sent a detailed itinerary which promised a cruise through the Northwest Passage.

A few days before the cruise was due to depart, the Shermans were informed by ROL that the embarkation point for the cruise would change due to constantly changing ice conditions. A new itinerary was drawn up by ROL but, due to an administrative error, this was not sent to the Shermans; the new itinerary retained only half of the original route and sights in a circular tour of the eastern section of the Northwest Passage. On the cruise, the sea ice closed in on the Northwest Passage, so no part could be reached.

Mr and Mrs Sherman brought a claim against ROL after ROL refused to give them their money back. At first instance, the County Court judge held that the Shermans had no right to compensation, as the detailed itinerary circulated on 22 January 2018 did not form part of the contract, and so there was no breach. Mr and Mrs Sherman appealed this decision, looking to the Regulations for consumer protection.

Decision

The High Court allowed the appeal, finding that Mr and Mrs Sherman were entitled to compensation for breach of contract. The judge held that a contract was formed on 22 January 2018, when they were sent a detailed itinerary of the cruise, which included details of visits, excursions and other services included in the total price. This itinerary was communicated to the Shermans by the travel company before the contract was made, so satisfying the requirements of Regulation 9(3).  

The revised itinerary that had not been provided to the Shermans until the night before the cruise was considered a significant alteration or a major change, as the Northwest Passage was the most distinctive aspect of the cruise, and this was replaced with a circular tour of only the eastern section of the Northwest Passage. This was contrary to Regulation 12 which requires that where an organiser is constrained before departure to alter significantly an essential term of the contract, this must be notified as quickly as possible to the consumer to enable them to take appropriate decisions and to withdraw from the contract without penalty. As no such notification was made as quickly as possible, this constituted a breach of contract.

Liability was not excluded under clause 7.3 of the contract, which stated that major changes to the cruise would be notified to travellers as soon as reasonably possible. The failure to notify as quickly as possible was not due to a force majeure; the lack of communication was due to an administrative oversight. Likewise, the sea ice closing on the Northwest Passage was not unforeseeable and was within the range of the respondent’s entirely knowable and known, omnipresent and substantial risk.

Comment

As the judge noted, the facts of this case were in some respects unusual: Mr and Mrs Sherman had not seen a brochure before booking the holiday and were not sent all pre-departure communications about changes to the cruise. The decision by the High Court to allow the appeal on the basis of breach of contract is nevertheless a reminder that the Regulations are intended to provide consumer protection and that tour operators faced with difficult decisions on changes to holiday itineraries, not least where the alterations are due to circumstances outside their control, must be mindful of the need to communicate changes promptly. Travel companies and their insurers in particular should note the interpretation of the Regulations in favour of consumers.

Further reading: Sherman v Reader Offers Ltd [2023] EWHC 524