X v Kuoni Travel Ltd

Where the improper performance of a package holiday contract results from the conduct of an employee of a hotel supplying services under that contract, the scope of the organiser’s defence under article 5(2) of Council Directive 90/314/EEC raises questions of EU law. Those questions include whether the defence is available, the criteria governing it, and whether the hotel employee is himself a supplier of services. The Supreme Court referred those questions to the Court of Justice of the European Union without determining the organiser’s substantive liability.

The appellant sought damages from a tour operator after an on-duty hotel electrician offered to guide her to reception, lured her into an engineering room, and raped and assaulted her. She alleged breach of the package holiday contract and liability under regulation 15 of the Package Travel, Package Holidays and Package Tours Regulations 1992.

The High Court dismissed the claim. The Court of Appeal dismissed the appeal by a majority in [2018] EWCA Civ 938, Longmore LJ dissenting. On further appeal, the Supreme Court identified two main issues: whether the attack constituted improper performance of the tour operator’s contractual obligations and, if so, whether liability was excluded by the contractual or statutory defence. The present judgment concerned a preliminary reference on the second issue.

1. Reference to the Court of Justice of the European Union made. Lord Lloyd-Jones, with whom Lord Kerr, Lord Hodge, Lady Arden and Lord Kitchin agreed, referred two questions concerning the interpretation of article 5(2) of Council Directive 90/314/EEC. The Supreme Court did not determine the substantive appeal.

2. The contractual defence in clause 5.10(b) was intended to reproduce regulation 15(2)(c) of the Package Travel, Package Holidays and Package Tours Regulations 1992. That regulation implemented article 5 of the Directive. The parties agreed that the contractual and statutory defences were coextensive and that liability under regulation 15 could not be excluded by contract.

3. For the purposes of the reference, the Court of Justice was asked to assume that guiding the appellant to reception was a service forming part of the holiday arrangements which the tour operator had contracted to provide. It was also asked to assume that the rape and assault constituted improper performance of the contract. These were assumptions for the reference, rather than final determinations of the appeal.

4. The first referred question asked whether the defence in the second part of the third alinea of article 5(2) could apply where improper performance resulted from the actions of an employee of a hotel company providing services under the package contract. If the defence could apply, the Court of Justice was asked to identify the criteria by which a national court should assess it.

5. The second referred question asked whether an employee of a hotel company providing services under the package contract was himself a “supplier of services” for the purposes of the article 5(2) defence.

1. United Kingdom Supreme Court: On the further appeal, the court unanimously made a preliminary reference to the Court of Justice of the European Union and did not determine the substantive appeal: [2019] UKSC 37.

2. Court of Appeal: The appeal was dismissed by a majority, Longmore LJ dissenting: [2018] EWCA Civ 938.

3. High Court: Judge McKenna dismissed the claim. He held that the contractual holiday arrangements did not include the maintenance employee conducting the appellant to reception. He considered obiter that the statutory defence would in any event have applied.