The Civil Aviation Authority v Travel Republic Ltd
| Jurisdiction | England & Wales |
| Judge | Lord Justice Elias,Mr Justice Keith |
| Judgment Date | 20 May 2010 |
| Neutral Citation | [2010] EWHC 1151 (Admin) |
| Docket Number | Case No: CO/2032/2010 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 20 May 2010 |
[2010] EWHC 1151 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
Before: Lord Justice Elias
and
Mr Justice Keith
Case No: CO/2032/2010
Mr Ian Croxford QC and Mr Geoffrey Stephenson (instructed by the Legal Adviser to the Civil Aviation Authority) for the Appellant
Mr Nicholas Purnell QC and Mr Hugo Keith QC (instructed by Field Fisher Waterhouse LLP) for the Respondent
Hearing dates: 7 May 2010
Lord Justice Elias:
This is an appeal by way of case stated against the decision of District Judge Evans sitting in the City of Westminster Magistrates’ Court when he acquitted the respondent, Travel Republic Limited (“TRL”), of certain offences under regulations 3(1A) and 15(2) of the Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995 (as amended) (“the Regulations”).
In total some 20 informations were laid against TRL by the appellant, the Civil Aviation Authority (“the CAA”). There were also 20 informations against one of its directors, Mr Pirie. The CAA is not appealing against the acquittals in his case. However, it is pursuing the appeal against TRL because the CAA sees it as a test case which will clarify an important issue that has arisen with respect to the scope of the Regulations.
The legislation.
Regulation 3(1A) has its origins in the European Council Directive 90/314/EC of 13 June 1990 (“the Directive”) which is a Directive on “package travel, package holidays and package tours”. The Directive seeks to establish a common legal framework throughout the EU with respect to the provision of package holidays and tours so as to ensure proper competition, and also to provide consumer protection to those buying package holidays.
The Package Travel, Package Holidays and Package Tours Regulations 1992 were made so as to give effect to the Directive. For example they stipulate what information has to be made available to consumers; they prohibit upward price revision unless certain conditions are met; and they confer certain rights on the consumer if the holiday organiser cancels the package for any reason other than the fault of the consumer.
The Civil Aviation (Air Travel Organisers’ Licensing) Regulations 1995 (as amended) (“the Regulations”) have since 2003 addressed a particular aspect of the protection intended to be afforded by the Directive in respect of package holidays which have an air travel element. The aim is to provide financial protection to consumers who purchase in the United Kingdom flight inclusive holidays in circumstances where for one reason or another, such as a supplier becoming insolvent, they are not provided with the holiday offered.
Regulation 3(1) provides that only restricted categories of persons may make available “flight accommodation” in the United Kingdom. These persons include the holders of a licence, known as an air travel organiser's licence or “ATOL”, authorising them to make available flight accommodation, as well as any person who is an agent of an ATOL licence holder.
Licences are given by the CAA to those who are considered fit to hold them. In order to be considered a fit licensee, the licence holder must have sufficient financial resources to meet its actual and potential financial obligations.
The significance of holding an ATOL licence is that the CAA operates a protection scheme for customers who deal with ATOL licence holders or their agents to indemnify the customers from losses which result when, for reasons for which the customer is not responsible, the holiday cannot be taken or for other reasons falls short of expectations. These losses are not limited to cancellations of flights but extend to all the services which when combined constitute the holiday.
Regulation 3(1A) is designed to achieve that objective. It does so by seeking to ensure that whenever a package holiday is provided, all the elements come from someone who is an ATOL licence holder. That is achieved by requiring that all the services are provided by the single ATOL supplier who provides the flight:
“A person shall not make available flight accommodation which constitutes a component of a package in the capacity of an agent for a licence holder except where all the components of the package are made available under a single contract between the licence holder and the customer.”
By regulation 15(2), a breach of regulation 3(1A) is a criminal offence.
The effect of regulation 3(1A) is that where the sale of a package is concerned, it is not lawful to provide different elements of the package under different contracts with different suppliers. The ATOL licence holder must provide all the relevant services in a single contract and is accordingly liable for any failing with respect to any of the services provided.
The ATOL indemnity scheme protects the consumer if the ATOL licence holder itself becomes insolvent. That scheme is industry-wide and self-financing. It is funded by a charge upon the licence holder in respect of each relevant passenger to whom the licence holder makes available a flight. The current charge is £2.50 per customer. However, it is vital that all services come from an ATOL licence holder or their agent; if parts of the package are bought from a third party, the customer will not be protected save with respect to the flight accommodation supplied by the ATOL licence holder.
The disadvantage to consumers of not having ATOL protection is demonstrated by the failure in 2008 of two companies, Pure Flights Limited and Freedom Flights Limited. All the customers named in the informations in this case, except for one, were booked onto flights provided by one of those companies. As might be expected, once the airlines failed, for many people flights were lost and holiday arrangements could not be fulfilled. Although all the customers were covered by the ATOL scheme as far as their flights were concerned, they were not entitled to a refund of the accommodation or other costs in circumstances where these had been separately supplied by a different supplier. Arrangements were made so that in fact most customers did not lose out financially from these flight failures, or only lost relatively small sums. However, their protection was not guaranteed, and also some did lose significant sums.
The definition of “package” is central to this appeal since it is only where a package as defined is provided by the agent that the duty to purchase services from a single ATOL licence holder applies. “Package” is defined in regulation 1(2) as follows:
“… the pre-arranged combination of at least two of the following components when sold or offered for sale at an inclusive price and when the service covers a period of more than twenty-four hours or includes overnight accommodation:—
(a) transport;
(b) accommodation;
(c) other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of a package, and
(i) the submission of separate accounts for different components shall not cause the arrangements to be other than a package;
(ii) the fact that a combination is arranged at the request of the consumer and in accordance with specific instructions (whether modified or not) shall not of itself cause it to be treated as other than pre-arranged.”
This definition mirrors that found in the Directive itself. The major difference lies in the addition of (c)(ii) to the domestic definition which was added in order to reflect the judgment of the ECJ in Club-Tour v Garrido [2002] ECR 1 – 4051. In that case the European Court of Justice was dealing with a situation where the applicant purchased a holiday from Club Tour consisting of air tickets and accommodation for two weeks at a holiday village in Greece. Club Tour purchased the holiday from a travel agency, Club Med. However, there was an infestation of wasps at the holiday village and Club Med was not able to place the customer elsewhere. He refused to pay the price of the holiday and Club Tour sought to enforce payment before the Portuguese courts.
The court was asked to answer two questions relating to the Directive, namely:
(1) whether the word “package” in Article 2(1) of the Directive included holidays organised by a travel agency at the request of and according to the specifications of the consumer, or a defined group of consumers; and
(2) whether the term “pre-arranged combination” in Article 2(1) of the Directive included combinations of tourist services which were put together at the time when the contract was concluded between the travel agency and the consumer.
The court answered both questions in the affirmative. As to the first question, it said this:
“There is nothing in that definition to suggest that holidays organised at the request and in accordance with the specifications of a consumer or a defined group of consumers cannot be considered as ‘package holidays’ within the meaning of the Directive.”
As to the second question, it observed that there would still be a pre-arranged combination within the meaning of Article 2(1) even where the combination of tourist services is as a result of wishes expressed by the consumer up to the moment when the parties reach an agreement and conclude the contract. The requirement that it must be pre-arranged, therefore, does not mean that it has to be a combination of services fixed by the travel agency which is made available to the consumer on a “take it or leave it” basis.
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Regulated Travel Arrangements
...to the other 43 Package Travel Regulations 1992, regulation 2(1). 44 ABTA v CAA [2006] EWCA Civ 1299. 45 CAA v Travel Republic [2010] EWHC 1151 (Admin). 46 Case C-400/00 Club Tour Viagens e Turismo v Garrido [2002] ECR I-4051. 47 Package Travel Regulations 2018, regulation 2(5)(b)(iv). 20 S......
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Table of Cases
...of Police for the Metropolis [1991] 1 WLR 1362, [1991] 4 All ER 638, (1991) 135 SJ 382, CA 9.108 CAA v Travel Republic Limited [2010] EWHC 1151 (Admin), [2010] CTLC 61, [2010] ACD 85, [2010] All ER (D) 188 (May) 1.48 Campbell v Thomas Cook Tour Operations Limited [2014] Eq LR 655, [2014] 9 ......