Lawyers divided on significance of Reader Offers court ruling

Leading industry lawyers disagree on the significance of a recent Court of Appeal ruling on a cruise passenger claim for refunds and compensation.

The judgment on Sherman vs Reader Offers Ltd (ROL) last month was “good news” for the industry although the company lost its appeal, according to Travlaw senior counsel Stephen Mason who acted for ROL and praised the company for “pursuing the matter to the benefit of the whole industry” (Travel Weekly, April 11).

However, Alan Bowen, legal advisor to the Association of Atol Companies, suggested: “ROL should have taken a pragmatic view.” He argued: “Never litigate on issues of principle – it’s too expensive.”

MoreComment: Court ruling brings some contract clarity

The case was unusual because the Shermans booked a Canadian ‘Northwest Passage’ cruise by phone without seeing any marketing material, including a disclaimer that the itinerary was subject to change. They paid a deposit and received a confirmation, Atol Certificate and booking terms, with a detailed itinerary following two weeks later.

In the event, the cruise barely took in the Northwest Passage due to sea ice. The Shermans claimed a refund and compensation under the Package Travel Regulations (PTRs), losing in the County Court, winning on appeal to the High Court and winning again at the Court of Appeal.

ROL should have taken a pragmatic view. Never litigate on issues of principle – it’s too expensive

The case hinged on whether the contract between ROL and the Shermans included the detailed itinerary. The County Court found the booking (‘contract’) was made when the Shermans received the initial documents. But the High Court ruled the contract was only completed on receipt of the itinerary because, under the PTRs, the itinerary forms part of a schedule of information customers are entitled to.

Writing in Travel Weekly, Mason describes that ruling as “bad news for the industry” since the PTRs require “a raft of information” be presented to consumers, meaning if anything is left out “the consumer could walk away and require a refund”. He hailed the Appeal Court ruling that “the PTRs don’t impact when a contract is made”, noting: “If you lose because of your booking conditions, the conditions can be rewritten.”

But Bowen noted ROL’s costs “will be in the range of £100,000” and said: “The courts spent 11 days on a holiday case that didn’t involve injury or death. What came out of the appeal was that this was a complete waste of time.”

MoreComment: Court ruling brings some contract clarity

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