X v Kuoni Travel Ltd

A package holiday contract must receive a broad, common-sense interpretation consistent with its purpose of providing an enjoyable holiday of the promised standard. Its obligations include ancillary hotel services, such as staff assisting guests with ordinary matters affecting their stay.

A tour operator is liable where an employee of a service supplier improperly performs such an obligation and thereby causes damage. The employee is not personally a “supplier of services”, but acts or omissions committed while performing contractual obligations fall within the supplier’s sphere of control. They therefore cannot constitute an unforeseeable or unpreventable event exempting the operator from liability under the package travel regime.

This contractual and statutory liability does not depend on the rules of vicarious liability.

The appellant contracted with Kuoni Travel Ltd for a package holiday at a four-star hotel in Sri Lanka. A uniformed hotel electrician, while on duty, offered to guide her to reception. He instead lured her into an engineering room, where he raped and assaulted her.

She claimed damages for breach of contract and under the Package Travel, Package Holidays and Package Tours Regulations 1992. The High Court dismissed the claim: [2016] EWHC 3090 (QB). The Court of Appeal dismissed her appeal by a majority, Longmore LJ dissenting: [2018] EWCA Civ 938; [2018] 1 WLR 3777.

Following a preliminary reference to the Court of Justice of the European Union, the Supreme Court considered whether the attack constituted improper performance of the package travel contract and, if so, whether Kuoni could rely on the contractual or statutory exemption for events which could not, even with all due care, be foreseen or forestalled.

1. Appeal allowed unanimously. Lord Lloyd-Jones, with whom Lord Hodge, Lady Arden and Lord Kitchin agreed, held that the rape and assault constituted improper performance of the package travel contract. Kuoni was liable both for breach of contract and under the Package Travel, Package Holidays and Package Tours Regulations 1992.

2. A package holiday contract must be construed in light of its purpose: providing a pleasant and enjoyable holiday of the promised standard. The operator’s obligations are not confined to transport, accommodation and meals. They include ancillary services necessary to provide a holiday of a reasonable standard, including courteous assistance by hotel staff with ordinary matters affecting guests. Guidance between parts of the hotel therefore fell within Kuoni’s “holiday arrangements”. The scope of Kuoni’s obligations depended on its contract with the consumers, not on the particular functions assigned to the employee by his employment contract.

3. The employee purported to provide the contractual service of guiding the appellant and could commit the assault only by doing so. His criminal purpose and the extreme nature of his conduct did not prevent the attack from being a failure to provide that service with care and skill.

4. An employee of a supplier is not personally a “supplier of services” under article 5 of the Council Directive 90/314/EEC or regulation 15. Nevertheless, acts or omissions of such an employee while performing obligations arising from the package travel contract are treated, for this contractual liability scheme, as falling within the sphere of control of the employing supplier. Improper performance by the employee accordingly renders the organiser liable where it causes the consumer damage.

5. The exemption in the third indent of article 5(2), implemented by regulation 15(2)(c)(ii), derogates from the organiser’s liability and must be interpreted strictly. An act or omission of an employee performing the supplier’s contractual obligations is within the supplier’s sphere of control. It therefore cannot be an event which the organiser or supplier, even with all due care, could not foresee or forestall. Kuoni could not rely on the statutory defence, and its coextensive contractual defence also failed.

6. Vicarious liability was irrelevant. Liability arose because services undertaken by Kuoni were improperly performed by an employee of its supplier. Importing foreign-law questions of vicarious liability would undermine the package travel scheme by making consumer claims unnecessarily complex and expensive.

1. United Kingdom Supreme Court: Allowed the appellant’s appeal unanimously: [2021] UKSC 34. It held Kuoni liable for breach of contract and under the Package Travel, Package Holidays and Package Tours Regulations 1992.

2. Court of Appeal: Dismissed the appeal by a majority, Longmore LJ dissenting: [2018] EWCA Civ 938; [2018] 1 WLR 3777.

3. High Court: Judge McKenna dismissed the claim, holding that the relevant “holiday arrangements” did not include a maintenance employee conducting a guest to reception: [2016] EWHC 3090 (QB).