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When is a supplier not a supplier? The Court of Appeal decision in X v Kuoni (2018) - Jack Harding, 1 Chancery Lane

02/07/18. In X v Kuoni Travel Limited (2018) EWCA Civ 938 the Court of Appeal concluded that, for the purposes of Regulation 15 of the Package (Travel etc) Regulations 1992, the employees of foreign suppliers (conventionally, hoteliers) are not themselves ‘suppliers’ for whom the relevant contracting party (the tour operator) is liable. In doing so the Court has driven a coach and horses through the heretofore uncontroversial consensus amongst practitioners and the courts surrounding the operation of the regulations. This article considers the implications of the judgment and argues that the reasoning of the court was both unnecessary to the disposition of the case and in equal parts confused and confusing.

The judgment

On 8th July 2010, in the early hours of the morning, Mrs X made her way to the reception of the Club Bentota Hotel in Sri Lanka. En route she met a uniformed employee of the Hotel who offered to escort her. She wrongly believed that he was a security guard. In fact, he was an electrician. He led her to an engineering room where he sexually assaulted and raped her.

Mrs X was staying at the hotel pursuant to a package contract organised by Kuoni. She brought a claim for damages against Kuoni pursuant to the terms of the contract and under Regulation 15 of the Package (Travel etc) Regulations 1992. It was alleged that Kuoni was liable because:

  1. Pursuant to its express terms and conditions, it accepted responsibility if, due to the fault of itself, its agents or suppliers, any part of the ‘holiday arrangements’ were not ‘of a reasonable standard’. The Claimant contended that in escorting her to the reception (or purporting to do so) the hotel employee was providing services as part of the holiday arrangements, which were plainly not of a reasonable standard.

  2. In the alternative, Kuoni was liable pursuant to Regulation 15 for the ‘improper performance of the obligations under the contract” irrespective of the fact that those obligations were performed by other ‘suppliers of services’ rather than by Kuoni directly.

Kuoni’s response was robust. It contended that:

  1. The acts of the hotel employee formed no part of the ‘holiday arrangements’ nor were they ‘obligations under the contract’.

  2. In any event, the employee was not a ‘supplier’ of services for whom Kuoni had any liability, whether pursuant to the terms of the contract, or within the meaning of Regulation 15.

  3. Alternatively, in the event that Kuoni had any prima facie liability, it could rely upon the statutory defence in Regulation 15(2)(c)(ii) in circumstances where the improper performance of the contract was due to an event which “the other party to the contract or the supplier of services, even with all due care, could not foresee or forestall”. It was argued that the ‘supplier’ for these purposes must mean the immediate contracting party (here the Hotel) thereby enabling Kuoni, by extension, to avoid liability where the tortious act was performed by an employee or agent of the supplier acting in a way which could not have been predicted or prevented.

The leading judgment was delivered jointly by Sir Terence Etherton MR and Asplin LJ. Longmore LJ offered a strong dissenting opinion which is considered in greater detail below. In summary, the majority held as follows...

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