Will X v Kuoni change the organiser’s liability, Michael Wukoschitz

www.tourismlaw.pt AWicked Deed’s Curse Will X v Kuoni change the organiser’s liability? Michael Wukoschitz President Emeritus of International Forum of Travel and Tourism Advocates International Journal of Tourism, Travel and Hospitality Law PRE-PRINT

A Wicked Deed’s Curse Will X v Kuoni change the organiser’s liability? Michael Wukoschitz 1) Introduction The rape of a traveller during a package holiday in Sri Lanka and the claims brought against the package organiser were hotly debated in the UK and beyond, leading to an ECJ judgment on the interpretation of the term 'supplier' and the scope of the organiser's defence under the PTD 1990 of a failure due to an event which the organiser or the supplier of services, even with all due care, could not foresee or forestall. The article aims to provide an overview of the facts of the case and the judgements of the various court instances and to provide an analysis of the impact of the ECJ judgement and the resulting UK Supreme Court judgement - not from the national perspective of UK law, but from the broader perspective of EU law. 2) The case facts In April 2010, Mr and Mrs X booked a package holiday in Sri Lanka with the tour organiser KUONI. The package included return flights from the United Kingdom and 15 nights’ allinclusive accommodation at the Club Bentota hotel between 8 and 23 July 2010. In the early hours of 17 July 2010, following a disagreement with her husband, Mrs X left the room with the intention of requesting a change of room because of noise from a nearby room, and to make a phone call to the United Kingdom. On her way she encountered a hotel employee (“N”), who was known to her as employed by the hotel as an electrician. N was on duty and wearing the uniform of a member of the maintenance staff. He offered Mrs X to show her a shortcut to reception, which she accepted. However, instead of leading Mrs X to the reception N lured her into the engineering room where he raped and assaulted her. Mrs X and N then left the engineering room together and shortly afterwards bumped into Mr X, who had been looking for his wife. N then left the scene and Mrs X reported to her husband what had happened which he in turn reported to the management of the hotel. The attack was reported to the local police and a criminal investigation was commenced, but the outcome is unknown. Mrs X claimed damages against KUONI for breach of contract and/or under the Package Travel, Package Holidays and Package Tours Regulations 1992 (“the 1992 Regulations”)1 which in the United Kingdom implemented the PTD 1990.2 KUONI denied that the rape and assault by N constituted a breach of any of its obligations under the contract or the 1992 Regulations. In particular, KUONI denied that the rape and assault constituted improper performance of the package contract. 3) The judgements of the High Court and the Court of Appeal By judgement of November 30, 2016,3 the High Court at first instance dismissed the claim and considered that the actions of N did not form any part of the contractual services which 1 SI 1992/3288, https://www.legislation.gov.uk/uksi/1992/3288/contents/made. 2 Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours. 3 X v Kuoni Travel Ltd [2016] EWHC 3090 (QB).

KUONI agreed to provide with reasonable care and skill. N had not been a supplier of KUONI. Furthermore, N had not been discharging any of the duties he was employed to do. It had not been a term of the contract between Mrs X and KUONI that an electrician would be employed by the Hotel. Much less was there an obligation for such an electrician to provide Mrs X with general assistance such as showing her a shortcut to the reception. The sexual assault had not been an activity forming part of the holiday arrangements. Quoting an earlier judgment of the Court of Appeal,4 the High Court explicitly rejected the idea of an absolute obligation that the package organiser warrants the safety of all its clients at all times. As the employment of N had been done with reasonable care, he was a man of good character and there had been no previous reports or complaints of a similar nature, the sexual assault had to be regarded an event which could not have been foreseen or forestalled even with all due care.5 Even for an employer to be vicariously liable for the employee the wrongful conduct had to be so closely connected with acts the employee was authorised to do that for the purposes of the liability of the employer to third parties, the wrongful act may fairly and properly be regarded as being done while acting in the ordinary course of an employee's employment. N’s offer to show Mrs X a shortcut to the reception had no connection to his duties as an electrician neither was there any such connection between his duties and the attack. As therefore the hotel would not be vicariously liable the same had to apply to the package organiser. The Court of Appeal, by a majority, dismissed the claimant’s appeal6: While Lord Justice Longmore in his dissenting opinion held that the “reasonable standard” of the holiday arrangement which KUONI had accepted responsibility for in the contract included the requirement of the hotel staff to be helpful when asked for assistance by a guest whereas N had in no way assisted Mrs X in a reasonable way which therefore constituted improper performance of the holiday arrangements, in their joint judgement the Master of the Rolls and Lady Justice Asplin agreed that reasonable people in the position of KUONI and Mrs X would not have understood at the time the contract was made that KUONI was promising that such activity would be carried out to a particular standard. Due to the fact findings, Mrs X, at the material time, had been aware that N was not a member of the hotel’s security team but a member of the maintenance team only. They also agreed with the High Court that the hotel, and not N, was the supplier of the services performed by N as KUONI had no direct relationship with N. The majority argued that regarding an employee, such as N, as supplier, would “nullify” the exclusion of liability according to regulation 15(2)(c)(ii) in any case of a deliberate wrongful conduct of such employee. Moreover, a package holiday operator, such as KUONI, could not protect itself by obtaining an indemnity as the culpable employee could not be identified in advance of the wrongdoing. 4 Hone v Going Places Leisure Travel Ltd [2001] EWCA Civ 947. 5 See Article 5 (2) of PTD 1990: „With regard to the damage resulting for the consumer from the failure to perform or the improper performance of the contract, […] the organizer and/or retailer is/are liable unless such failure to perform or improper performance is attributable neither to any fault of theirs nor to that of another supplier of services, because […] such failures are due […] to an event which the organizer and/or retailer or the supplier of services, even with all due care, could not foresee or forestall.” 6 X v Kuoni Travel Ltd [2018] EWCA Civ 938.

The majority considered it unnecessary to decide the question of vicarious liability on the part of the hotel for N’s conduct because even if the hotel were vicariously liable KUONI could nevertheless rely on the statutory defence incorporated into its booking conditions. 4) The Supreme Court’s reference for preliminary ruling Having identified the two main issues: • Did the rape and assault of Mrs X constitute improper performance of the obligations of KUONI under the contract? • If so, is any liability of Kuoni in respect of N’s conduct excluded by clause 5.10(b) of the contract7 and/or regulation 15(2)(c) of the 1992 Regulations? the Supreme Court referred the following questions to the CJEU8: (1) Where there has been a failure to perform or an improper performance of the obligations arising under the contract of an organizer or retailer with a consumer to provide a package holiday to which Council Directive 90/314/EEC of 13 June 1990 on package travel, package holidays and package tours applies, and that failure to perform or improper performance is the result of the actions of an employee of a hotel company which is a provider of services to which that contract relates: a) is there scope for the application of the defence set out in the second part of the third alinea to article 5(2); and, if so, b) by which criteria is the national court to assess whether that defence applies? (2) Where an organizer or retailer enters into a contract with a consumer to provide a package holiday to which Council Directive 90/314/EEC applies, and where a hotel company provides services to which that contract relates, is an employee of that hotel company himself to be considered a “supplier of services” for the purposes of the defence under article 5(2), third alinea of the Directive? and asked the CJEU, for the purpose of the reference, to assume that guidance by a member of the hotel’s staff of Mrs X to the reception was a service within the “holiday arrangements” which Kuoni had contracted to provide and that the rape and assault constituted improper performance of the contract. 5) The judgement of the CJEU In accordance with the Opinion of the Advocate General9, the CJEU10 clarified that, in the event of non-performance or improper performance of those obligations, which is the result of the actions of an employee of a supplier of services performing that contract 7 Clause 5.10.(b) of the contract provided as follows: "Subject to (d) 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, 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… 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." 8 X v Kuoni Travel Ltd [2019] UKSC 37. 9 Opinion of Advocate General Szpunar delivered on 10 November 2020 in Case C-578/19. 10 Judgement of 18 March 2012 in Case C-578/19 – X/Kuoni.

• that employee cannot be regarded as a supplier of services for the purposes of the application of that provision; but, nevertheless, • the organiser cannot be exempted from its liability arising from such non-performance or improper performance, pursuant to the third indent of Article 5(2) of the PTD 1990. The CJEU argued that, according to its usual meaning in everyday language, the phrase “supplier of services”, set out in Article 5 of Directive 90/314, referred to a natural or legal person who provided services for remuneration. An employee of a supplier of services could not himself or herself be classified as a supplier of services, within the meaning of Article 5 of Directive 90/314, in so far as he or she had not concluded any agreement with the package travel organiser for the purposes of providing services to the latter, but merely performed work on behalf of a supplier of services which had concluded such an agreement with that organiser, with the result that the employee’s actions, when performing that work, were, in most cases, intended to contribute to the performance of the obligations which fall to the supplier of services employing that employee. This, however, would not preclude such employee’s acts or omissions from being treated in the same way as those of the supplier of services employing him or her for the purpose of the application of the system of contractual liability established in Article 5 of the PTD 1990. The CJEU clarified that the liability of the organiser laid down in Article 5 relates solely to the obligations arising from the package travel contract, which the organiser has concluded with that consumer. In view of the objective pursued by the PTD 1990, which consisted, inter alia, in ensuring a high level of consumer protection, the obligations arising from a package travel contract, however, could not be interpreted restrictively and comprised all obligations associated with the provision of transport, accommodation and tourism services arising from the purpose of the package travel contract, irrespective of whether those obligations were to be performed by the organiser itself or by suppliers of services. The exemption from liability laid down in the third indent of Article 5(2) of the PTD 1990, which refers to situations in which the non-performance or 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, had to be interpreted strictly. Since the acts or omissions of an employee of a supplier of services, in the performance of obligations arising from a package travel contract, resulting in the non-performance or improper performance of the organiser’s obligations vis-à-vis the consumer fell within the sphere of control of the respective supplier, such acts or omissions could not be regarded as events which cannot be foreseen or forestalled within the meaning of the third indent of Article 5(2) of the PTD 1990. The CJEU explicitly pointed out that the referring court started from the premise that X being accompanied to reception by a member of the hotel staff was a service falling within the scope of the holiday arrangements which KUONI contracted to provide under the contract at issue, and that the rape committed by N constituted improper performance of that contract. However, the CJEU did not question this premise and did not make any considerations of its own as to whether the accompaniment of a hotel guest by an electrician really was to be attributed to the contractual services on the basis of the package travel contract.

6) The final judgement of the UK Supreme Court Based on the above interpretation provided by the CJEU, the UK Supreme Court, on 30 July 2021, delivered its final judgement unanimously allowing Mrs X’s appeal11. In this judgement, the Supreme Court returns at length to the question of whether the rape and assault of Mrs X constitutes improper performance of the obligations of KUONI under the package travel contract - the question that the Supreme Court had set as a premise for the ECJ to answer in the affirmative. No surprise therefore, that legal assessment of the Supreme Court comes to exactly that conclusion. The Court starts with quoting Jarvis v Swans Tours12 and the approach that a holiday is intended to be a pleasant and enjoyable experience – an approach which encourages a broad, not a narrow, interpretation of the holiday services contracted for. In a package holiday contract, the provider of the holiday necessarily would undertake to provide not merely transport, accommodation and meals but also to provide other services ancillary thereto. Consistent with the purpose of providing the holidaymaker with an enjoyable experience, a common sense interpretation necessarily required that the services include much more than the actual mechanics of travel or the provision of a mattress and overhead cover for the night. While the precise content of the ancillary services could vary from one contract to another, the service of looking after and serving holidaymakers courteously in matters relating to their holiday experience would be inherent in every package holiday contract. KUONI had undertaken to provide a holiday of a reasonable standard which itself had to be judged against the description of the hotel as a four-star hotel offering the facilities described. It was an integral part of the services to be provided on a holiday of such a standard that hotel staff provided guests with assistance with ordinary matters affecting them at the hotel as part of their holiday experience. Guidance by a member of the hotel’s staff of Mrs X from one part of the hotel to another therefore had clearly been a service within the “holiday arrangements” which KUONI had contracted to provide. The argument that N was an electrician and that guiding a guest from one part of the hotel to another was no part of the functions for which he was employed couldn’t change anything as the scope of services which KUONI had undertaken to provide was exclusively governed by the contract between Mr and Mrs X and KUONI and not by the contract between the hotel and N. Same applied to KUONI’s argument that N had not been providing a service within the package travel contract but pursuing a criminal enterprise when he raped and assaulted Mrs X: the correct focus had to be the provision of the service of guiding a guest which fell within the “holiday arrangements” which KUONI had undertaken to provide because only as a result of purporting to act as her guide N had been able to assault Mrs X. The Supreme Court feels confirmed in this view by the CJEU, because the latter had expressly rejected a restrictive interpretation of the tour operator's liability. 11 X v Kuoni Travel Ltd [2021] UKSC 34. 12 Jarvis v Swan Tours Ltd [1973] QB 233

7) Analysis In assessing whether the ECJ judgment in X v Kuoni will change the scope of the package tour operator's liability from an EU wide perspective, and not just from a national UK perspective, it is necessary to consider that the judgment relates to the PTD 1990, which has been replaced (with effect from 1 July 2018) by the new PTD 201513. In the PTD 2015 the exception of failures “due to an event which the organizer and/or retailer or the supplier of services, even with all due care, could not foresee or forestall” which is to be distinguished from the force majeure exception14 has been dropped. This indicates that under the PTD 1990, the liability of the organiser has changed from fault-based liability with a reversed burden of proof to absolute liability with only an exhaustive list of exceptions comprising a lack of conformity attributable to the traveller, an unforeseeable or unavoidable lack of conformity attributable to a third party unconnected with the provision of the travel services included in the package travel contract and a lack of conformity due to unavoidable and extraordinary circumstances15. The issue of whether a criminal act of an employee of a supplier could, under any circumstances, be regarded as unforeseeable or unavoidable for the organiser and/or the respective supplier therefore has lost its relevance because such employee cannot be regarded as a “third party unconnected with the provision of the travel services”. Same applies to the issue of whether such employee himself is to be considered a “supplier of services”. As an interim result, it can therefore be stated that with regard to the questions submitted to the CJEU by the UK Supreme Court, it is not so much the CJEU's decision as the new PTD that has expanded the scope of liability of the package organiser. The more interesting issue therefore remains which actions or omissions of a supplier’s employee can be regarded as part of the provision of the services under the package travel contract. The Supreme Court of the United Kingdom took a very broad view in this respect, whereas the CJEU did not give any further consideration to this on the basis of the premise underlying the reference for a preliminary ruling. It cannot therefore be said, in my view, that the very general observations of the CJEU necessarily support the interpretation of the UK Supreme Court. Austrian civil law16 distinguishes in vicarious liability according to whether the vicarious agent in question (be it a supplier or an employee of a supplier) has acted in fulfilment of the debtor's contractual obligations - or merely on the occasion of these obligations. According to settled case law, the debtor is only liable for the tortious act of an agent if it falls within the area of responsibility which the debtor has appointed him to perform17. The debtor is therefore not liable for intentional tortious acts of the vicarious agent if he had only provided the vicarious agent with the actual opportunity to commit theft, fraud or bodily harm to the 13 Directive (EU) 2015/2302 of the European Parliament and of the Council of 25 November 2015 on package travel and linked travel arrangements, amending Regulation (EC) No 2006/2004 and Directive 2011/83/EU of the European Parliament and of the Council and repealing Council Directive 90/314/EEC. 14 Judgement of 18 March 2012 in Case C-578/19 – X/Kuoni, para 58. 15 Art. 14 (3) of the PTD 2015. 16 Sec. 1313a oft he Austrian Civil Code (ABGB). 17 RIS-Justiz RS0028626.

detriment of the creditor18. Applying these principles, the Austrian Supreme Court has, for example, rejected the liability of a restaurant operator for bodily harm caused to a drunken guest by a waiter who had followed the guest into the street to collect the bill and punched him in the face and kicked him in the knee19. Also under German law20, vicarious liability does not apply to culpable acts that have no relevant connection with the obligations that the third party has been engaged to fulfil. In German literature, for example, it was explicitly argued that a vicarious agent by committing rape completely detaches himself from the tasks that the debtor has assigned to him21. Even if the cited case law naturally does not take into account the characteristic purpose of a package tour contract emphasised by the Supreme Court, i.e. to provide the traveller with recreation and pleasure, it remains to be noted that an electrician is not usually commissioned to guide hotel guests through the facility on his own initiative. The liability of the organiser pursuant to Article 14 (3) of the PTD 2015 relates to damages resulting from “lack of conformity”, defined as “a failure to perform or improper performance of the travel services included in a package”22. Any damage which is unconnected to the provision of a travel service therefore is not covered by Article 14 (3). The CJEU's very general comments on the PTD's objective of ensuring a high level of consumer protection and the resulting requirement not to interpret the organiser's liability restrictively do not necessarily mean that every act or omission by an employee of a supplier would be attributable to the provision of a travel service. It was argued that consistent with the consumer-protection objectives, expansive appoach to the extended liability povisions was clearly warranted23. However, a general sense of justice that a rape victim should not go without compensation may have contributed to the UK Supreme Court’s broad interpretation, but does not in itself form a legal basis. Since the term "travel service" is to be interpreted autonomously under EU law, only the CJEU can give a generally binding interpretation of what is to be attributed to the provision of a travel service. It is therefore regrettable that the CJEU was not also referred to this question by the UK Supreme Court, but was given a premise in this regard. 8) Conclusions Although the case in the United Kingdom has now been decided on the merits, it is difficult to draw generally valid conclusions from it regarding the liability of the package organiser. On the one hand, this is due to the fact that the PTD 2015 has come into force in the meantime, which has also partially redefined the liability of the package organiser, but on the other hand, it is also due to the fact that the relevant question of which acts or omissions of an employee of a service supplier are to be regarded as part of the provision of travel services has not been submitted to the CJEU for a preliminary ruling. The courts of the EU member states can therefore still come to different conclusions, whereby the decisions of the British 18 Austrian Supreme Court (OGH), judgement of 26 April 2000, 3 Ob 296/98w. 19 Austrian Supreme Court (OGH), judgement of 29 November 2007, 1 Ob 127/07v. 20 Sec. 278 of the German Civil Code (BGB). 21 Weimar, 1982, p. 95. 22 Art. 3 (13) of the PTD 2015. 23 Chapman et al, 2022, p. 217.

lower courts also show that this issue can certainly be judged differently from the UK Supreme Court. Ultimately, a new referral to the CJEU will therefore be necessary in order to create clarity throughout the Union.

Reference list: Weimar, W. (1982), ‘Haftet der Schuldner für Gelegenheitshandlungen seines Erfüllungsgehilfen?‘, Juristische Rundschau 1982/3, p. 95 Chapman, M., Prager, S., Harding, J., Smith, D. Yarrow, T., Soede, H. (eds), Saggerson on Travel Law and Litigation. 7th London, Wildy, Simmonds & Hill.

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