Recent court rulings have enhanced consumers’ rights to cancel holidays well in advance of departure “due to unavoidable and extraordinary circumstances”, say industry lawyers, who warn insurers will be studying the rulings with a view to potential claims.
Travlaw partner Nick Parkinson noted major insurers have threatened an increasing number of ‘subrogated’ claims – where insurers pay out on a claim and then pursue the package organiser for payment – for cancellations due to Covid.
Speaking on a Travlaw webinar, Parkinson suggested insurers AIG and Zurich are “driving loads of claims” and said: “The big question is ‘when can customers cancel?’”
The Package Travel Regulations give consumers a right to cancel in “the event of unavoidable and extraordinary circumstances at the place of destination or its immediate vicinity” but say nothing about ‘when’.
An Appeal Court ruling in the Sherman v Reader Offers case in May – involving cancellation of a pre-pandemic cruise – determined a consumer may cancel and receive a full refund when there is “no reasonable possibility” of a holiday proceeding as advertised (Travel Weekly, May 30).
This replaced the previous understanding that cancellation was justified only when there was “not a flicker of hope” a holiday could go ahead.
A more recent case involving school ski trip operator SkiTeam4 and two schools in Lancashire has extended this by ruling the schools, which cancelled trips more than two months in advance, were entitled to full refunds.
The ruling by a circuit court judge is not binding on lower courts but Parkinson noted: “It will be influential because it was made by a more senior judge.”
One school cancelled nine weeks before a trip departing in February 2021, and the second cancelled 10 weeks before a trip in March 2021. SkiTeam4 sued for payment under its cancellation terms. The schools counterclaimed and the court ruled they were jointly entitled to £20,000 in repayments.
The judge found the prospect of the trips going ahead at the dates of cancellation was “vanishingly small” and ruled: “If there comes a stage eight weeks or 10 weeks or longer before departure when a reasonably intelligent individual . . . concludes there is no reasonable prospect of the trip going ahead . . . a traveller should not be expected to wait to exercise their right to terminate.”
The judge suggested the timing “will very much depend upon the circumstances of the case and, in particular, the type of holiday and its length, the status of the travellers and the nature and severity of the unavoidable and extraordinary circumstances.
“What is reasonable in one case may not be in another . . . a school ski trip necessarily involves parents relinquishing parental responsibility for the safety and wellbeing of children.”
Parkinson noted consideration of “the status” of travellers in the judgment could be extended to other vulnerable customers.
Travel law barrister Sarah Prager suggested the ruling was “an indicator of the approach likely to be taken by judges” in other cases.
Picture: Shutterstock / No-Mad