Analysis: High Court ruling brings some relief on refunds

A landmark High Court ruling at the end of October confirmed the legal right of package organisers to obtain refunds from airlines and other travel suppliers for cancellations during the Covid-19 pandemic.

The ruling against Ryanair and in favour of On the Beach confirmed the right of tour organisers “to seek redress” from providers under the Package Travel Regulations (PTRs).

Until now it had been unclear whether the PTRs conferred such a right despite stating, in Regulation 29, that: “Where an organiser pays compensation, the organiser . . . may seek redress from any third parties which contributed to the event triggering compensation.”

MoreOn the Beach wins £2m in Ryanair refunds court case

The lack of clarity left package organisers liable to refund customers in full for cancelled holidays with no guarantee of receiving refunds from airlines for flight bookings, leaving many out of pocket.

But in the first ruling of its kind, the High Court issued a summary judgment in favour of On the Beach, awarding the company more than £2 million in refunds from Ryanair the flight portion of 4,191 package bookings cancelled during the first months of the pandemic.

The claim, lodged in October 2021, forms just part of extensive litigation between On the Beach and Ryanair, with On the Beach also submitting a complaint to the UK Competition and Markets Authority (CMA). The judge made clear the ruling related solely to the interpretation of Regulation 29 of the PTRs and not the wider legal dispute.

But the judgment sets a precedent. High Court judge Mr Nigel Cooper ruled: “On balance I am satisfied that Regulation 29 . . . is intending to confer a right of redress on an organiser.”

He decided this “right of redress” applies regardless of whether a package organiser has a contract with the supplier.

The case hinged, as Judge Cooper explained, on whether Regulation 29 of the PTRs “creates a free-standing right of redress or whether, as Ryanair alleges, it merely preserves the organiser’s rights to seek recovery from travel service providers under a relevant contract”.

“The issue is whether Regulation 29 creates a right of redress or is simply permissive, confirming an organiser may exercise any existing rights of redress it has.”

The second of these options is how the regulation was widely interpreted until now, with the Judge noting: “This is a question which has not been decided before by the courts.”

Ryanair challenged the claim on multiple grounds and argued it should go to a full trial. The Judge rejected that, ruling: “I am satisfied it is appropriate for me to decide the issue.”

The airline argued the effect of its website terms of use was “to prohibit On the Beach from selling Ryanair flights” and the purchase and sale of its flights was therefore a breach of these terms.

But the Court accepted On the Beach acted as both a package organiser and agent for the traveller when booking Ryanair flights because Ryanair “does not enter into flight supply agreements with online travel agents [OTAs]”.

The Judge noted: “Ryanair says it has no contractual obligation to refund travellers who purchased flights using an OTA but will provide refunds . . . [provided it is] not at risk of being required to refund a traveller twice for the same flights.”

Crucially, Judge Cooper argued: “I do not accept that the words ‘may seek’ can only be permissive. They are equally capable of conferring on an organiser a right of redress”, including “where there may be no contractual relationship between the organiser and a third party”.

He ruled: “Regulation 29 provides a right of redress against third parties generally. There is no limitation to the right of redress solely to suppliers who might be in a contractual relationship with the organiser. Regulation 29 does, as a matter of principle, provide . . . a right of redress.”

He awarded On the Beach £2,056,745, reducing the amount claimed by almost £18,000 for 35 bookings “for which Ryanair may have given a cash refund prior to OTB Group doing so”.

On the Beach gave notice it would seek payment of its legal costs, with the Judge noting the company estimated these at £1.65 million, which combined with Ryanair’s would amount to “considerably greater than the amount in dispute”.

MoreOn the Beach wins £2m in Ryanair refunds court case

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