Game of chance - dynamic packaging can leave agents liable if something goes wrongMany companies believe they are complying with, or perhaps finding ways around, the Package Travel Regulations when selling component-based holidays, but lawyers have warned the courts may take a different view.

Although there has yet to be a test case, travel litigation lawyer Andrew Morton of Manchester-based solicitors Pannone, believes liability is poised to become a battleground in the courts.


Tripping up

In the event of an accident, perhaps at a resort hotel, the company that sold the trip often argues the client should sue the overseas accommodation supplier. “But the courts will take a dim view of that,” said Morton. “In the past you saw a single invoice for a package holiday. Now we see separate invoices for flights, accommodation and transfers.”

One recent case concerned an elderly client who fell on a wet path at a hotel in Lanzarote and broke her ankle.

A friend had booked the holiday through Teletext and gave a statement describing the advertisement for a seven-day all-inclusive break for £199.

Lawyers for the defendant, a small tour operator, argued the sale did not constitute a package on the grounds that the flight, accommodation and airport transfers were invoiced separately. These separate invoices, with a single booking reference, had been sent out after completion of the booking.

However, faced with a ruling on the issue, the defendant’s lawyers conceded the holiday was a package and the case will be decided solely on the issue of liability for the fall – which the operator denies.

Pannone solicitor Clare Campbell said: “In this case, it was not clear who the principals were until the invoices came in. As far as we were concerned, it was a package. Often companies don’t want a court to clarify this issue.

“Sadly, we did not get it to court.”

Other cases have involved flights, accommodation and other components provided by separate companies but listed in a single invoice and settled by a single payment.

Lawyer Stephen Jewell, also of Pannone, said: “There are hundreds of cases like this, where there is an argument about whether the sale constituted a package.

“We have seen cases where separate amounts were issued for different components of a holiday and an agent has taken separate payments for each – swiping a credit or debit card separately for each item.”


Split difference

Morton argued that even a dynamic sale concluded with separate card transactions could be a package. “It is a pretence,” he said. “The whole purpose of the Package Travel Regulations is that someone organising a holiday should be liable in the event that something happens.”

Campbell points out that consumers unable to take proceedings in the UK face near-insurmountable problems. She said: “Going to court in Spain or Thailand is a non-starter for most people

“They face a completely different legal system, translation problems and there may be no system for recovery of costs.”

For that reason, she warned: “A UK court is likely to deal favourably with a claimant if there is any ambiguity.”

Agents selling component-based holidays can make their position clear by stating unambiguously that they are not the provider of a service and naming the company that is.

They should make their role transparent at the time of a sale and invoice transactions separately, in each case naming the provider.


The law

Lawyers agree confusion about the legal status of dynamically packaged holidays was exacerbated by the Court of Appeal’s ruling last November in the case between ABTA and the Civil Aviation Authority.

The case sprang from a dispute as to whether those selling component-based holidays require ATOL-cover to provide consumer financial protection.

The Court decided holiday providers should not be considered as selling packages where a flight “is made available as one of a number of services sold or offered for sale separately”. But it added that whether services are sold in combination or separately “may not be easy to resolve”.

In the view of industry lawyer Stephen Mason: “The Court of Appeal leaves a huge area of doubt. It made it harder to argue a dynamic package is not a package.

“The burden is on the trader to make clear they are only the agent.”


Package travel regulations

The Package Travel Regulations were drawn up by the European Commission and have been enforced in the UK since the end of 1992.

They set out how the parties to a holiday contract are identified and what they should provide. Section 2 of the regulations defines a package as “the pre-arranged combination of at least two . . . components when sold or offered for sale at an inclusive price.”

It then states: “The submission of separate accounts for different components shall not cause the arrangements to be other than a package.

“The fact that a combination is arranged at the request of the consumer. . . shall not of itself cause it to be treated as other than pre-arranged.”

The EC is preparing to update the regulations, but a draft is not expected until 2009 and it will be 2011 before a new directive becomes law.