The Court of Appeal issued an important ruling on consumer refunds under the Package Travel Regulations (PTRs) with implications for travel organisers in general and cruise lines in particular.
The Appeal Court last month ruled on a High Court judgment in the case of Sherman vs Reader Offers Ltd (ROL) which hinged on when a package holiday contract is created.
Mr and Mrs Sherman booked a Hurtigruten ‘Northwest Passage’ cruise in the Canadian Arctic with Reader Offers for September 2018. They booked by phone on the recommendation of friends without seeing a brochure, paid a deposit and received an Atol Certificate, with a detailed itinerary sent two weeks later.
Sea ice prevented the cruise going ahead as planned, with most of the voyage spent around Greenland. The Shermans claimed a refund under the 1992 PTRs, not those of 2018, having booked in 2017. But a County Court judge found against them.
The couple appealed, arguing the company was bound by the itinerary issued after booking, and the High Court agreed, concluding the detailed itinerary “was a contractual term”.
Following the ruling, barrister Sarah Prager KC noted: “The implications are serious. It means the formation of contracts does not take place at the time of offer and acceptance but only after you offer all information, [and] you will be held to detailed itineraries unless you make crystal clear itineraries are subject to change.”
Reader Offers appealed, with support from Hurtigruten, and the Appeal Court overturned the High Court’s findings despite still ruling in the Shermans’ favour.
Travlaw senior counsel Stephen Mason explained: “The appeal was on the point that the booking conditions were made clear when the Shermans booked by phone. They paid a non-refundable deposit and were issued an Atol Certificate and confirmation.
“The Shermans argued there was no contract until they received the detailed itinerary two weeks later and the High Court judge concluded there wasn’t a completed contract until the itinerary was issued. But the Court of Appeal agreed there was a contract – in this case, made on the phone with payment of a deposit and issue of an Atol Certificate.”
The Appeal Court raised other grounds for ruling the Shermans were still entitled to a refund, “a technicality in ROL’s booking conditions”, according to Mason, who said: “We await a reasoned judgment.”
But he noted: “There are important legal implications. A contract is made when a booking is made. If the Court of Appeal had not found in ROL’s favour on that, a minor discrepancy in information supplied to a consumer could mean they could say at any time, ‘There was no contract’.”
Mason commended the companies “for their courage in pursuing the matter to the benefit of the whole industry”. He described media reports of the case as a victory for consumers at the expense of the industry as “rather misleading”.
A spokesperson for Reader Offers said: “We acknowledge the decisions taken by the Court of Appeal on March 21 regarding this matter, which has been ongoing since 2018.
“While we have been successful in our appeal of an earlier judgment on a key point of law, the appeal was not successful on other grounds.
“The court has not yet given any substantive reasons for its decision otherwise to uphold the appeal, and we wait for the final judgment to be passed down.
“In the meantime, we are keen to emphasise that we have worked in strong support of our cruise line partner throughout.
“We are sorry that the customer was unable to experience the cruise that they had wished for, at that time, due to challenging icy conditions.
“As a company, we strive to put the needs of our customers first and are focused on providing a positive customer experience at all times.”