X sought damages from her package tour operator after a hotel employee raped and assaulted her. In this 2019 decision, the Supreme Court referred questions about the operator’s statutory defence to the Court of Justice. Liability remained to be decided.
X had booked a package holiday with Kuoni. A hotel employee offered to guide her to reception and attacked her. The dispute concerned whether the provision of assistance by hotel staff fell within the holiday arrangements and, if so, whether Kuoni could invoke the statutory defence.
X claimed damages against Kuoni under the holiday contract and the Package Travel Regulations then in force. Kuoni disputed liability for the employee’s conduct.
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The booking condition and the legislation
Clause 5.10(b) said Kuoni would accept responsibility if, through fault on its part or that of its agents or suppliers, holiday arrangements were not as described or not of a reasonable standard, or if a guest was killed or injured as a result of an activity forming part of those arrangements. It did not accept responsibility where failure, death or injury was not caused by any such fault, was caused by the guest, or was due to unforeseen circumstances which, even with all due care, Kuoni or its agents or suppliers could not have anticipated or avoided.
Regulation 15 makes the other party to the contract liable for proper performance and for damage caused by failure or improper performance, unless that failure or improper performance is due neither to its fault nor to that of another supplier of services because it falls within specified exceptions. One exception, in regulation 15(2)(c)(ii), is an event which the other party or the supplier of services, even with all due care, could not foresee or forestall. Regulation 15(5) prevents contractual exclusion of that liability. The parties agreed that clause 5.10(b) was intended to replicate regulation 15(2)(c), which implemented article 5 of the Directive, and that the contractual and statutory defences were coextensive. Liability under the regulation could not be excluded by contract.
The courts below
Judge McKenna held that “holiday arrangements” in clause 5.10(b) did not include a member of the maintenance staff conducting a guest to reception. He also held, although it was unnecessary to his decision, that the defence in regulation 15(2)(c)(ii) would have applied because the assault could not have been foreseen or forestalled even with all due care, and that the hotel would not have been vicariously liable as a matter of Sri Lankan law, agreed to be the same as English law for this purpose.
The Court of Appeal dismissed Mrs X’s appeal by a majority. Sir Terence Etherton MR and Asplin LJ held that “holiday arrangements” did not cover a known member of the maintenance team conducting a guest to reception: that was no part of the functions for which he was employed. They also held that N was not a “supplier”; the hotel was, because “supplier” naturally meant a person assuming a direct contractual or promissory obligation to provide the services, not that person’s employee. They saw no policy reason to impose liability where neither Kuoni nor the hotel was at fault, and considered that Kuoni could rely on the statutory defence. They thought it unnecessary to decide whether the hotel was vicariously liable.
Longmore LJ dissented. He considered that, where a member of staff offered to guide a guest, that was a service for which Kuoni had accepted responsibility, and that N had not performed it to a reasonable standard. If only the hotel was the supplier, Kuoni had a defence on the judge’s findings, because neither Kuoni nor the hotel could have foreseen or forestalled the rape. If N was himself a supplier, he could foresee or forestall his own criminal activity. Longmore LJ treated the arguments about who was the supplier as finely balanced, but considered that the holidaymaker should have a remedy against the tour operator, leaving the operator to pursue those further down the contractual chain.
The issues before the Supreme Court
Lord Lloyd-Jones, with whom Lord Kerr, Lord Hodge, Lady Arden and Lord Kitchin agreed, identified two issues: whether the rape and assault constituted improper performance of Kuoni’s obligations, and, if so, whether liability was excluded by clause 5.10(b) and/or regulation 15(2)(c). The request for a preliminary ruling concerned the second issue.
Mrs X, Kuoni and ABTA Ltd, which was permitted to intervene, advanced competing readings of “supplier of services” and of the defence. Those submissions included whether an employee could be a supplier, whether the defence is unavailable wherever improper performance is fault-based, whether a hotel is at fault because services are performed through its employee, and whether a tour operator should be liable where the hotel would not be vicariously liable. The Court did not resolve those competing interpretations.
For the reference, the Court of Justice was asked to assume that guidance by a member of the hotel staff to reception was a service within the holiday arrangements Kuoni had contracted to provide, and that the rape and assault constituted improper performance. The Supreme Court then referred two questions so that it could determine the appeal.
Verdict: The Court referred two questions about the EU directive: whether the defence could cover improper performance caused by a hotel employee, and whether the employee was himself a supplier of services. The Court neither determined liability nor awarded damages in 2019. Its later judgment is [2021] UKSC 34.
Source: X v Kuoni Travel Ltd (reference to the Court of Justice) [2019] UKSC 37
