The recent decision in Lackey v (1) Mallorca Mega Resort SL and (2) GENERALI gives greater protection to consumers who are involved in an accident while on holiday.

Following the decision, handed down in May, a claimant should be able to pursue a claim for injury in their home courts against a hotel where:

  1. The hotel has directed its services to the country in which the consumer lives, for example in the case of a UK consumer by advertising on social media in the English language or selling via a UK travel agent; and
  2. The claimant is a party to a consumer contract. The claimant does not need to have placed the booking themselves, they simply need to be a named party to the contract.

In addition, where the law applicable to the claim allows for a direct right of action against the liability insurer, it is possible to join the hotel to proceedings brought against the insurer.

The decision of Master Davison (sitting in the Queen’s Bench Division of the High Court) offers welcome clarification as to what an individual must show to benefit from the consumer contract jurisdiction gateway under Articles 17 and 18 of the Brussels Recast Regulation.

It also affirms the Court of Appeal’s decision in Hoteles Pinero Canarias SL v Keefe [2015] EWCA Civ 598, permitting the joining of a hotel in a claim brought directly against its liability insurer, pursuant to Article 13.3 of the Recast Regulation.

Facts of the case

Bonnie Lackey was one of a party of 22 friends who went on holiday to Magaluf, Mallorca in May 2017.

The booking was made by one of Mrs Lackey’s friends on behalf of the group.

The BH Mallorca Hotel (the Hotel) had a pool complex which included a wave pool.

On 5 May 2017, Mrs Lackey was in the wave pool on a large doughnut-shaped inflatable ring, made available to guests by the hotel.

The wave machine was activated and Bonnie was suddenly ‘upended’ by the force of the waves in the shallow end of the pool, landing awkwardly on her head and neck and sustaining a fracture dislocation to her cervical spine. The injury has left Mrs Lackey tetraplegic.

First hurdle: relief from sanctions

Following service of proceedings in late 2018, the hotel changed legal representatives, who advised it to challenge the jurisdiction of the English courts.

As the hotel’s previous representatives had already filed an acknowledgment of service and the hotel had failed to challenge jurisdiction within the time limit required by CPR 11.4, it had to seek relief from sanctions.

This was granted, but Master Davison rejected the hotel’s challenge to jurisdiction, finding in favour of the claimant on all points.

Joinder of the insured to a direct action against the insurer: Article 13 Recast Regulation

The question of whether it is permissible to join an insured to proceedings brought directly against its liability insurer came before the English courts in 2015 in the case of Hoteles Pinero Canarias SL v Keefe.

The hotel in that case appealed to the Supreme Court, which made a reference to the Court of Justice of the European Union (CJEU) for guidance on how Article 11 of the Brussels Regulation (now Article 13 of the Recast Regulation) should be interpreted.

Mr Keefe’s case was compromised before the CJEU determined the reference.

The BH Mallorca Hotel argued that Master Davison should once again refer the issue to the CJEU, but he refused to do so, as he did not consider it would help take matters any further in this case.

In Keefe, one of the key arguments for the defendant was that an insurance policy dispute is needed for the insured to be joined to proceedings.

The Court of Appeal had previously rejected this argument, but even if that were a requirement, it was satisfied in Mrs Lackey’s case, because there was a dispute over whether a retrospective endorsement setting a lower limit of insurance for personal injury could be enforced against Mrs Lackey.

Protecting the weaker party under the consumer contract exception: Articles 17/18 Recast Regulation

Master Davison further said that a reference to the CJEU was not needed, because Mrs Lackey could rely on the consumer contract exception to bring proceedings against the Spanish-based hotel in the English courts.

The BH Mallorca Hotel agreed that it directs its services to consumers in the UK, but argued that Mrs Lackey could not rely on the consumer contract exception as she had not placed the booking herself.

As is commonplace, this was done by one of the group on behalf of the entire group of friends.

Master Davison rejected this argument, finding: ‘Plainly, the consumer bringing the claim must be a beneficiary of the consumer contract or at least within its ambit.

‘That does not mean that she personally must have concluded it… there would be no linguistic or purposive justification for such a restrictive interpretation.’

In any event, Master Davison considered that the terms and conditions of the hotel accommodation booking made plain that Mrs Lackey was another party to the contract.

The booking conditions stated that references to ‘you’ and ‘your’ include all persons on whose behalf a booking is made, and that ‘By making a booking, you agree on behalf of all persons detailed on the booking that you have read these terms and conditions and agree to be bound by them’.

Whichever way the challenge to jurisdiction was viewed, it was clear that this was a case in which the English court had the power to hear Mrs Lackey’s claim against the BH Mallorca Hotel, as well as against its liability insurer.

In addition to confirming the previous Court of Appeal authority in Keefe, which says it is possible to join an insured (here the hotel) to a claim brought directly against its insurer, the judgment in Mrs Lackey’s case goes further, by saying that she could also bring her claim in the English courts as a consumer, under the contract for accommodation she had directly with the BH Mallorca Hotel.

The consumer contract gateway of the Recast Regulation is there to protect the weaker party to a contract.

It provides a helpful jurisdictional basis for claimants who have not booked a regulated package holiday with a UK-based tour operator, or for claimants injured while enjoying other holiday services pursuant to a contract which falls outside the scope of a package holiday booking.

Master Davison’s judgment is the first from the senior courts to determine that the ‘consumer’ does not need to be the person who actually concluded the contract (by making the hotel booking), but can be a named individual on the booking.

This makes absolute sense in the context of a holiday accommodation booking made directly with the local provider.

The BH Mallorca Hotel’s argument in Mrs Lackey’s case would have undermined the clear intention of the Regulation, and denied enhanced consumer protection to many hundreds of its customers each year.

As things stand, these important protections will be lost when the UK leaves the EU, highlighting a further area where urgent action is needed to protect UK holidaymakers travelling in the EU following Brexit.

Notes

Liability for Mrs Lackey’s accident is disputed, and so she started High Court proceedings in England relying on the following provisions of the Brussels Recast Regulation (Regulation EU 1215/2012 on jurisdiction and enforcement in civil proceedings):

  • Article 13 on the basis that it is possible to join the insured (here the hotel) to proceedings brought directly against its insurer (here GENERALI). It is common ground in this case that Mrs Lackey has a direct right of action against GENERALI under Spanish law.
  • Articles 17 and 18, which give a consumer the further option of bringing proceedings against the other party to the consumer contract (the hotel) in the consumer’s home courts.

Mallorca Mega Resort SL is currently seeking permission from the High Court to appeal Master Davison’s decision.

This article first appeared in the July 2019 edition of PI Focus.