Jackson v Horizon Holidays Ltd

COURT OF APPEAL, CIVIL DIVISION

LORD DENNING MR, ORR AND JAMES LJJ

4, 5 FEBRUARY 1974

Contract - Breach - Damages - Third party - Contract made by plaintiff for benefit of himself and third party - Loss suffered by third party in consequence of breach of contract - Plaintiff not a trustee for third party - Whether plaintiff entitled to recover damages in respect of loss suffered by third party.

The plaintiff, a married man with two young children, agreed with the defendants, a travel agency, that in consideration of the sum of £1,200, to include air fares, the defendants would provide for the plaintiff, his wife and children a four week family holiday at an hotel in Ceylon.

The plaintiff told the defendants that he wanted everything at the hotel to be of the highest standard, and requested that there should be a communicating door between the children's room and that of the plaintiff and his wife. A brochure issued by the defendants described the hotel as having all facilities for an enjoyable holiday, including mini-golf, excellent restaurant, swimming pool, beauty and hairdressing salons; and described the bedrooms as being well furnished, each having a private bath, shower and wc.

The plaintiff and his family were greatly disappointed with the hotel. There was no connecting door with the children's room and in any event the room was unusable because of mildew and fungus on the walls; there was no private bath, and the shower and wc were dirty; the food was distasteful; there was no mini-golf, no swimming pool and no beauty or hairdressing salons. After a fortnight at the hotel the plaintiff and his family moved to another hotel which was somewhat better but building work was still taking place there.

The plaintiff brought an action against the defendants for breach of contract claiming damages in respect of the loss of the holiday for himself, his wife and the children. The defendants admitted liability. The judge awarded total damages of £1,100. The defendants appealed against the award.

Held - Where a person had entered into a contract for the benefit of himself and others who were not parties to the contract, he could sue on the contract for damages for the loss suffered not only by himself but also by the others in consequence of a breach of the contract even though he was not a trustee for the others. It followed therefore that the plaintiff was entitled to damages not only for the diminution in the value of the holiday and the discomfort, vexation and disappointment which he himself had suffered by reason of the defendants' breach of contract, but also for the discomfort, vexation and disappointment suffered by his wife and children. On that basis the damages awarded by the judge were not excessive and the appeal would be dismissed (see p 95 h to p 96 e and g, post).

Dictum of Lush LJ in Lloyd's v Harper (1880) 16 Ch D at 321 and Jarvis v Swans Tours Ltd [1973] 1 All ER 71 applied.

Notes

For damages for breach of contract affecting convenience or enjoyment, see 12 Halsbury's Laws (4th Edn) 471, 472, para 1188.

For the doctrine of privity of contract and contracts conferring benefits on strangers, see 9 Halsbury's Laws (4th Edn) 202-205, paras 329, 330.

Cases referred to in judgments

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, [1967] 3 WLR 932, HL, 12 Digest (Reissue) 49, 256.

Jarvis v Swans Tours Ltd [1973] 1 All ER 71, [1973] QB 233, [1972] 3 WLR 954, CA, 17 Digest (Reissue) 111, 166.

Lloyd's v Harper (1880) 16 Ch D 290, 50 LJCh 140, 43 LT 481, CA, 47 Digest (Repl) 277, 2393.

Cases also cited

Green v Russell (McCarthy third party) [1959] 2 All ER 525, [1959] 2 QB 226, CA.

Lockett v A M Charles Ltd [1938] 4 All ER 170.

Stedman v Swan's Tours (1951) 95 Sol Jo 727, CA.

Appeal

This was an appeal by the defendants, Horizon Holidays Ltd, against the judgment of his Honour Judge Fay QC, sitting as a deputy High Court judge of the Queen's Bench Division, given on 15 June 1973, on the trial of an action by the plaintiff, Julian Anthony Jackson, whereby Mr Jackson was awarded damages of £1,100 as damages for the breach by Horizon Holidays Ltd of a contract to provide Mr Jackson, his wife and children with a holiday in Ceylon. Horizon Holidays Ltd admitted liability and the appeal was against the amount of damages awarded. The facts are set out in the judgment of Lord Denning MR.

G W Cheyne for Horizon Holidays Ltd.

JJ Davies for Mr Jackson.

5 February 1974. The following judgments were delivered.

LORD DENNING MR.

Mr Jackson is a young man, in his mid-twenties. He has been very successful in his business. He is married with three small children. In November 1970 there were twin boys of three years of age; and his wife had just had her third child. He had been working very hard. They determined to have a holiday in the sun. He decided on Ceylon. He enquired of Horizon Holidays Ltd. He made arrangements with their agent, a Mrs Bremner, for a holiday at a hotel, the Pegasus Reef Hotel, Hendala Point, Ceylon. He wrote them a letter which shows that he wanted everything of the highest standard:

'With reference to our telephone conversation would you please confirm that you can arrange for my wife myself and my two twin boys aged 3 years to stay for 28 days from 23 January to stay at the HOTEL PEGASUS REEF, HENDALA POINT, CEYLON. Would you also arrange that the childrens room has an adjoining door to our room this is essential and is a condition of me booking this holiday. Would you please make sure that the balcony is facing the sea and would you also confirm the distance the hotel is from the sea. Would you confirm that the meals are four course with a choice of 3 or 4 dishes to each course. Could you confirm that there has been arrangements made that an English speaking Doctor would call on the Hotel if needed. Would you please make a clear answer to all these questions appreciating that you might have difficulties in answering some of these questions and not to send an evasive answer to any of these questions.'

He spoke on the telephone to Mrs Bremner. She led him to believe that the hotel would come up to his expectations. She wrote on the booking form: Remarks Twins Room with connecting door essential. Total charge, £1432. He sent it in and booked the holiday.

In the middle of January it was discovered that the Pegasus Reef Hotel would not be ready in time. So Horizon Holidays recommended a substitute. This was Brown's Beach Hotel. It was described in the advertisement as being--

'superbly situated right on the beach, with all facilities for an enjoyable holiday including mini-golf, excellent restaurant, cocktail lounge, swimming pool, beauty salon, hairdressers and gift shop ... The bedrooms are well furnished and equipped in modern style. All rooms have private bath, shower, w.c., sea view and air-conditioning.'

Mr Jackson had some hesitation about this other hotel. But Horizon Holidays assured him that it would be up to his expectation. So Mr Jackson accepted it. But Horizon Holidays reduced the charge. Instead of the price being the total sum of £1,434, now, because of the change of hotel, it would be £1,200. That included air travel to Ceylon and back and a holiday for four weeks. So they went there. The courier, Miss Redgrave, met them and took them to Brown's Beach Hotel. But they were greatly disappointed. Their room had not got a connecting door with the room for the children at all. The room for the children was mildewed--black with mildew, at the bottom. There was fungus growing on the walls. The toilet was stained. The shower was dirty. There was no bath. They could not let the children sleep in it. So for the first three days they had all the family in one room. The two children were put into one of the single beds and the two adults in the other single bed. After the first three days they were moved into what was said to be one of the best suites in the hotel. Even then, they had to put the children in to sleep in the sittingroom and the parents in the bedroom. There was dirty linen on the bed. There was no private bath but only a shower; no mini-golf course; no swimming pool, no beauty salon, no hairdressers' salon. Worst of all was the cooking. There was no choice of dishes. On some occasions, however, curry was served as an alternative to the main dish. They found the food very distasteful. It appeared to be cooked in coconut oil. There was a pervasive taste because of its manner of cooking. They were so uncomfortable at Brown's Hotel, that after a fortnight they moved to the Pegasus Reef Hotel. It appears that by that time it was nearing completion. But a lot of building work was still going on. At any rate, for the fortnight they were in the Pegasus Reef Hotel, where things were somewhat better than at Brown's Beach. They stayed out the four weeks and came home.

Soon after their return, Mr Jackson wrote a letter setting out all his complaints from the beginning to the end. Then Mr Jackson brought an action for damages in respect of the loss of his holiday for himself, his wife and the two small children. Horizon Holidays admitted liability. The contest was only on the amount of damages.

In Jarvis v Swans Tours Ltd it was held by this court that damages for the loss of a holiday may include not only the difference in value between what was promised and what was obtained, but also damages for mental distress, inconvenience, upset, disappointment and frustration caused by the loss of the holiday. The judge directed himself in accordance with the judgments in that case. He eventually awarded a sum of £1,100. Horizon Holidays Ltd appeal. They say it was far too much. The judge did not divide up the £1,100. Counsel has made suggestions about it. Counsel for Horizon Holidays suggests that the judge gave £100 for diminution in value and £1,000 for the mental distress. But counsel for Mr Jackson suggested that the judge gave £600 for the diminution in value and £500 for the mental distress. If I were inclined myself to speculate, I think the suggestion of counsel for Mr Jackson may well be right. The judge took the cost of the holidays at £1,200. The family only had about half the value of it. Divide it by two and you get £600. Then add £500 for the mental distress.

On this question a point of law arises. The judge said that he could only consider the mental distress to Mr Jackson himself, and that he could not consider the distress to his wife and children. He said:

'... the damages are the Plaintiff's; that I can consider the effect upon his mind of his wife's discomfort, vexation and the like, although I cannot award a sum which represents her vexation.'

Counsel for Mr Jackson disputes that proposition. He submits that damages can be given not only for the leader of the party, in this case, Mr Jackson's own distress, discomfort and vexation, but also for that of the rest of the party.

We have had an interesting discussion as to the legal position when one person makes a contract for the benefit of a party. In this case it was a husband making a contract for the benefit of himself, his wife and children. Other cases readily come to mind. A host makes a contract with a restaurant for a dinner for himself and his friends. The vicar makes a contract for a coach trip for the choir. In all these cases there is only one person who makes the contract. It is the husband, the host or the vicar, as the case may be. Sometimes he pays the whole price himself. Occasionally he may get a contribution from the others. But in any case it is he who makes the contract. It would be a fiction to say that the contract was made by all the family, or all the guests, or all the choir, and that he was only an agent for them. Take this very case. It would be absurd to say that the twins of three years old were parties to the contract or that the father was making the contract on their behalf as if they were principals. It would equally be a mistake to say that in any of these instances there was a trust. The transaction bears no resemblance to a trust. There was no trust fund and no trust property. No, the real truth is that in each instance, the father, the host or the vicar, was making a contract himself for the benefit of the whole party. In short, a contract by one for the benefit of third persons.

What is the position when such a contract is broken? At present the law says that the only one who can sue is the one who made the contract. None of the rest of the party can sue, even though the contract was made for their benefit. But when that one does sue, what damages can he recover? Is he limited to his own loss? Or can he recover for the others? Suppose the holiday firm puts the family into a hotel which is only half built and the visitors have to sleep on the floor? Or suppose the restaurant is fully booked and the guests have to go away, hungry and angry, having spent so much on fares to get there? Or suppose the coach leaves the choir stranded half-way and they have to hire cars to get home? None of them individually can sue. Only the father, the host or the vicar can sue. He can, of course, recover his own damages. But can he not recover for the others? I think he can. The case comes within the principle stated by Lush LJ in Lloyd's v Harper ((1880) 16 Ch D 290 at 321):

'... I consider it to be an established rule of law that 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 has been suggested that Lush LJ was thinking of a contract in which A was trustee for B. But I do not think so. He was a common lawyer speaking of the common law. His words were quoted with considerable approval by Lord Pearce in Beswick v Beswick ([1967] 2 All ER 1197 at 1212, [1968] AC 58 at 88). I have myself often quoted them. I think they should be accepted as correct, at any rate so long as the law forbids the third persons themselves to sue for damages. It is the only way in which a just result can be achieved. Take the instance I have put. The guests ought to recover from the restaurant their wasted fares. The choir ought to recover the cost of hiring the taxis home. There is no one to recover for them except the one who made the contract for their benefit. He should be able to recover the expense to which they have been put, and pay it over to them. Once recovered, it will be money had and received to their use. (They might even, if desired, be joined as plaintiffs.) If he can recover for the expense, he should also be able to recover for the discomfort, vexation and upset which the whole party have suffered by reason of the breach of contract, recompensing them accordingly out of what he recovers.

Applying the principles to this case, I think that the figure of £1,100 was about right. It would, I think, have been excessive if it had been awarded only for the damage suffered by Mr Jackson himself. But when extended to his wife and children, I do not think it is excessive. People look forward to a holiday. They expect the promises to be fulfilled. When it fails, they are greatly disappointed and upset. It is difficult to assess in terms of money; but it is the task of the judges to do the best they can. I see no reason to interfere with the total award of £1,100.

I would therefore dismiss this appeal.

ORR LJ.

I agree.

JAMES LJ.

In this case Mr Jackson, as found by the judge on the evidence, was in need of a holiday at the end of 1970. He was able to afford a holiday for himself and his family. According to the form which he completed, which was the form of Horizon Holidays Ltd, he booked what was a family holiday. The wording of that form might in certain circumstances give rise to a contract in which the person signing the form is acting as his own principal and as agent for others. In the circumstances of this case, as indicated by Lord Denning MR, it would be wholly unrealistic to regard this contract as other than one made by Mr Jackson for a family holiday. The judge found that he did not get a family holiday. The costs were some £1,200. When he came back he felt no benefit. His evidence was to the effect that, without any exaggeration, he felt terrible. He said: 'The only thing, I was pleased to be back, very pleased, but I had nothing at all from that holiday.' For my part, on the issue of damages in this matter, I am quite content to say that £1,100 awarded was the right and proper figure in those circumstances. I would dismiss the appeal.

Appeal dismissed. Leave to appeal to the House of Lords refused.

Solicitors: Margolis & Co (for Horizon Holidays Ltd); Stuart Scott & Co (for Mr Jackson).

Wendy Shockett Barrister

Tagged with: contract law, contract law cases, sales of goods act - breach of contract, case law, jackson v horizon holidays(1975), holiday jackson law case, diminution of value of holiday, contract law and holidays,

Jackson v Horizon Holidays Ltd

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