The High Court has confirmed that a claimant paralyzed at a holiday resort in Mallorca can sue the hotel and its insurer in England despite both companies being domiciled in Spain.
The decision will also have particular relevance for those claims involving holiday incidents outside of the UK which fall outside The Package Travel, Package Holidays and Package Tours Regulations 1992.
The Claimant was seriously injured when she sustained a fracture dislocation to her cervical spine while in a pool at a hotel in Mallorca. The Claimant's injuries left her tetraplegic. Her ongoing claim is valued in excess of £9 million.
The hotel was operated by the First Defendant ("the Hotel Operator"), and held public liability insurance with Generali, the Second Defendant. Under Spanish law, the Claimant had a direct right of action against Generali. The insurance policy in place between the Defendants allowed Generali to take conduct of the matter on behalf of itself and the Hotel Operator.
The Claimant brought a claim against both Defendants in November 2018. The Defendants' representatives filed an Acknowledgment of Service accepting the jurisdiction of the English court in December 2018.
It became apparent the cover limit (between €300,000 or €450,000) provided by the policy was significantly lower than the claim value, and therefore different representatives were instructed to defend the claim against the Hotel Operator.
Basis of the claim
The Claim Form pleaded that jurisdiction of the claim was conferred upon the English courts by the the Regulation specifically:
- Section 3 - Articles 11 and 13 - permitted a claim against Generali and the joinder of a claim against the Hotel Operator;
- Section 4 - Articles 17 and 18 - permitted a claim against the Hotel Operator in the UK in her capacity as a 'consumer'.
The new representatives of the Hotel Operator sought to challenge the jurisdiction of the English court and made an application to the Court.
Despite the application being filed a month late, the Court granted relief from sanctions on the basis that the claim is significantly valued, the change in representation and the "central, important and moderately complicated issue" of jurisdiction
The application was heard on 9 April 2019.
The Court dismissed the application, finding it was bound by the decision of the Court of Appeal in Hoteles Pinero Canarias SL v Keefe.
Application of Section 3
It should be noted that Generali did not dispute that the English courts had jurisdiction in the Claimant's claim against Generali.
Counsel for the Claimant submitted that Article 13(3) allowed for a further 'parasitic' claim against the Hotel Operator following the 'anchor' claim against Generali. The policy objective of this is to discourage multiplicity of proceedings and the possibility of conflicting judgments. The Hotel Operator argued that the wording of Article 13(3) had to be considered in the context of Section 3 overall. The claim against the Hotel Operator could not be "characterised as a matter relating to insurance."
The Court found that Keefe remained good law and that for Article 13(3) to apply there is no need for a dispute about policy coverage to exist between the insurer and the insured for the claim to relate. Nonetheless, such a dispute did exist as it was unclear which of two policies issued by Generali responded to the accident, along with the commensurate cover limits stated above. The cover limits themselves are also not accepted by the Claimant.
Application of Section 4
Articles 17 and 18 allow a 'consumer' to bring a claim against the counterparty to a consumer contract "where the consumer is domiciled, providing the counterparty had directed its commercial activities to that Member State".
Counsel for the Claimant submitted that Articles 17 and 18 were restricted to "the person who actually made the booking." This individual was not the Claimant; her friend had made the booking. The Court held that there was nothing within Articles 17 or 18 that required that a 'consumer' had to be the one who had actually concluded the contract.
The court held that a person who had contracted through an agent had still 'concluded' a contact. Therefore the Claimant, qualified as a consumer and the Court had jurisdiction over the claim under this gateway.
What can we learn?
- The representatives for the Hotel Operator were fully aware that their representations on the application of Article 17 would result in "arbitrary boundaries between members of the same group". The Court noted this would also draw similar boundaries "between holidays arranged on a 'Flight-Plus' or 'Agency' basis on hand and those arranged on a 'Package' basis on the other."
- The Court found the proposed definition of 'consumer' would be much more restrictive than that applied to claims governed by the Package Travel Regulations, and held that such a finding would "offend against common sense".