X v Kuoni – Should hotels and leisure facilities be concerned?
On 24 July, a long running case, over 10 years since the incident which led to the litigation, was finally decided in the Supreme Court.
Many were anxious about the outcome and had been awaiting this judgment with some trepidation.
Briefly the facts of this matter are that the Claimant, known as X, had bought a package holiday with Kuoni, a tour operator, for a holiday in Sri Lanka in 2010. Whilst at the hotel, X was making her way to the hotel reception when a uniformed member of the hotel staff (an electrician) offered to show her a shortcut. Sadly X was in fact taken to a room where she was assaulted and raped.
X brought a claim against Kuoni for breach of contract and/or under the Package Travel Package Holidays and Package Tours Regulations 1992 (the PTR).
ABTA were also given permission to intervene because of the significance of the decision to the travel industry.
X failed in her case at first instance and again before the Court of Appeal. However she was given permission to appeal to the Supreme Court who finally gave their decision but only after clarification and guidance had been provided by the Court of Justice of the European Union (CJEU).
Essentially whilst the Supreme Court decided that the employee was not a supplier of services directly, it was decided the hotel was a supplier and provided its services by means of employees who were within the hotel's sphere of control given that the employee performs their work in the context of a relationship of subordination with the employer. The Court found that the tour operator, in this case Kuoni, was liable for the acts and omissions of an employee of a supplier of services where they constitute improper performance of the obligation.
It is also important to note that here it was agreed between all the parties that there was no basis for suggesting that the perpetrator of the criminal act should have been identified as a risk by his employer or by the tour operator and quite simply this was a random criminal act.
Both the CJEU and the Supreme Court found that the tour operator could not use the defence – known as the exemption to liability defence under the PTR. Kuoni argued that they should not be liable where the act was one which they could not foresee or forestall, but the Supreme Court said they could not rely on that defence and were liable to pay compensation to X.
But will this decision mean that a hotel who employs or has subcontractors in place who themselves commit a criminal act which causes injury to a guest would be liable?
Certainly whether a hotel abroad would be liable is a matter which would have to be dealt with under the applicable law of the country where the hotel was based.
In England and Wales a claim against a hotel would usually be brought by way of a claim in negligence (tort) and that would involve looking at the question of vicarious liability. It certainly can be the case that employers may be liable for the criminal acts of their employees, but this will depend on the specific facts of each case.
A claim against a tour operator is not a claim brought in negligence. However vicarious liability is of course part of the background in relation to rules concerning package travel contracts within the industry as a whole. The PTR was of course in place to provide protection to consumers and was updated in 2018 to still give broad consumer protection, and amended to reflect the fact that many holiday packages can be put together on the internet.
The Supreme Court considered that vicarious liability was not relevant in the case of X v Kuoni, so has given no additional guidance as to what would be the position if a similar event happened where there is no tour operator involved.
In our view the decision will prove relevant to hotels despite the Court not giving consideration to vicarious liability –
It is the case that risk assessments will likely be reviewed and hotels may be asked to consider, for example, additional CCTV in vulnerable areas of the hotel or resort, to update their house rules and instructions to staff and there may need to be further risk assessments in respect of those individuals who may interact with guests.
Where hotels provide accommodation to tour operators then generally there will be indemnities in place within contracts between the parties and certainly it is likely that tour operators will wish to review and update agreements in respect of indemnity - because the tour operator will want to seek maximum protection and also to mitigate their losses arising from all claims in connection with the provision of services included in the package contract.
Further the case of White Lion v James also decided in 2021 may have dealt a blow to hotels and their liability to guests – that case involved the tragic accident where a hotel guest fell from a window in their room - and a reading of the judgment in that case will cause concern on the part of hotels (and their insurers) that the liability regime on hoteliers is becoming stricter than previously.
As ever each case must be reviewed on its own facts but certainly there appears to be some shifting in the legal landscape towards claimants.
For more information or advice on liability or coverage questions then do contact one of our experienced Insurance team members.