England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEICESTER COUNTY COURT
(HIS HONOUR JUDGE HAMPTON)

		Royal Courts of Justice Strand, London, WC2A 2LL
		23rd July 2012

Lord Justice Toulson:

1. On 6 April 2010 Ms Graham booked a return flight with Thomas Cook as carrier from Manchester to Jamaica. She was to travel out on Sunday 18 April 2010 for 14 nights. The cost of the flight was £291.50 and it was paid by her father. Unfortunately on 14 April 2010 a volcano in Iceland erupted. The volcanic ash led to the closure of UK air space from 15 to 20 April 2010. Ms Graham was one of many thousands of passengers throughout Europe whose travel plans were disrupted. Her flight was cancelled.

2. On 19 April 2010 Mr Graham received a refund through his travel agent. A few days later he said that his request for a refund had been based on misinformation. He asked instead that his daughter's flight should be rescheduled under EC Regulation 261/2004 for the earliest possible date in June. The carrier at that stage declined to do so and on 4 June 2010 Ms Graham pursued a claim against it in the county court. Subsequently her father was added, unnecessarily, as a second claimant. On 9 June 2010 Ms Graham was provided with complementary tickets for travel to Jamaica by her travel agent and rebooked onto a flight on 14 June 2010. The provision of these tickets was a goodwill gesture from the agent, and Mr Graham has made it plain that it was accepted on the understanding that he did not thereby intend to give up any rights which he and his daughter might have against the carrier. So the action continued.

3. It has now reached this court on a second appeal from a decision striking it out. Although the facts could not be simpler, some of the legal arguments advanced during the course of the action have been rather complex. Ms Graham and her father are litigants in person. He has presented the appeal before us with great clarity. Her claim was based, at least primarily, on breach by the carrier of its obligations under Article 8 of regulation 261. She claimed a declaration that the carrier was required to re-route her to Jamaica at the earliest opportunity, but that claim became irrelevant for practical purposes after she was rebooked without charge.

4. The continuing part of her claim was for damages. She claimed damages under three heads: 1) general damages for distress, anxiety, inconvenience and disappointment; 2) £2,300 for wasted expenditure allegedly incurred by a third party who had agreed to join her in Jamaica and whose financial losses she had promised to reimburse; and 3) punitive or exemplary damages.

5. The carrier's defence was amended or replaced by a fresh version on a number of occasions. In summary, its case was that the cancellation had been caused by extraordinary circumstances and that in those circumstances it owed no obligation to pay compensation under Regulation 261, but that in any event a breach of the regulation would not give rise to a civil action for damages. Further, it contended that the claim for compensation was excluded under the terms of the Montreal Convention, which was brought into English law by the Carriage by Air Acts (Implementation of the Montreal Convention 1999) Order 2002. In cases which fall within the Convention it is established law that a passenger can have no alternative claim for damages of common law: Sidhu v British Airways Plc [1997] AC 430 (concerning the Warsaw Convention, which the Montreal Convention replaced). The damages were also denied.

6. I turn to the regulation on which the claim is based or principally based. Its full title is "Regulation EC No. 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights".

7. Its preamble includes the following paragraphs:

"Whereas:

2. Denied boarding and cancellation or long delay of flights cause serious trouble and inconvenience to passengers.

...

10. Passengers denied boarding against their will should be able either to cancel their flights, with reimbursement of their tickets, or to continue them under satisfactory conditions, and should be adequately cared for while awaiting a later flight.

...

14. As under the Montreal Convention, obligations on operating air carriers should be limited or excluded in cases where an event has been caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken. Such circumstances may, in particular, occur in cases of political instability, meteorological conditions incompatible with the operation of the flight concerned, security risks, unexpected flight safety shortcomings and strikes that affect the operation of an operating air carrier.

....

20. Passengers should be fully informed of their rights in the event of denied boarding and of cancellation or long delay of flights, so that they can effectively exercise their rights.

...

22. Member States should ensure and supervise general compliance by their air carriers with this Regulation and designate an appropriate body to carry out such enforcement tasks. The supervision should not affect the rights of passengers and air carriers to seek legal redress from courts under procedures of national law.

Article 1.1 provides:

"This Regulation establishes, under the conditions specified herein, minimum rights for passengers when:

(a) they are denied boarding against their will;

(b) their flight is cancelled;

(c) their flight is delayed."

Article 5 provides:

"1. In case of cancellation of a flight, the passengers concerned shall:

(a) be offered assistance by the operating air carrier in accordance with Article 8; and

(b) be offered assistance by the operating air carrier in accordance with Article 9(1)(a) and 9(2), as well as, in event of rerouting when the reasonably expected time of departure of the new flight is at least the day after the departure as it was planned for the cancelled flight, the assistance specified in Article 9(1)(b) and 9(1)(c); and

(c) have the right to compensation by the operating air carrier in accordance with Article 7, unless:

(i) they are informed of the cancellation at least two weeks before the scheduled time of departure; or

(ii) they are informed of the cancellation between two weeks and seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than two hours before the scheduled time of departure and to reach their final destination less than four hours after the scheduled time of arrival; or

(iii) they are informed of the cancellation less than seven days before the scheduled time of departure and are offered re-routing, allowing them to depart no more than one hour before the scheduled time of departure and to reach their final destination less than two hours after the scheduled time of arrival.

2. When passengers are informed of the cancellation, an explanation shall be given concerning possible alternative transport.

3. An operating air carrier shall not be obliged to pay compensation in accordance with Article 7, if it can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

4. The burden of proof concerning the questions as to whether and when the passenger has been informed of the cancellation of the flight shall rest with the operating air carrier."

8. Article 7 provides for standard rates of compensation to be paid to all the passengers, for example €250 for all flights of 1500 kilometres or less.

9. Article 8, which is important for the purposes of this claim, provides:

"Where reference is made to this Article, passengers shall be offered the choice between:

(a) — reimbursement within seven days, by the means provided for in Article 7(3), of the full cost of the ticket at the price at which it was bought, for the part or parts of the journey not made, and for the part or parts already made if the flight is no longer serving any purpose in relation to the passenger's original travel plan, together with, when relevant,

— a return flight to the first point of departure, at the earliest opportunity;

(b) re-routing, under comparable transport conditions, to their final destination at the earliest opportunity; or

(c) re-routing, under comparable transport conditions, to their final destination at a later date at the passenger's convenience, subject to availability of seats.

2. Paragraph 1(a) shall also apply to passengers whose flights form part of a package, except for the right to reimbursement where such right arises under Directive 90/314/EEC.

3. When, in the case where a town, city or region is served by several airports, an operating air carrier offers a passenger a flight to an airport alternative to that for which the booking was made, the operating air carrier shall bear the cost of transferring the passenger from that alternative airport either to that for which the booking was made, or to another close-by destination agreed with the passenger."

Article 12.1 provides:

" This Regulation shall apply without prejudice to a passenger's rights to further compensation. The compensation granted under this Regulation may be deducted from such compensation.

Article 16 provides:

"(1) Each Member State shall designate a body responsible for the enforcement of this Regulation as regards flights from

airports situated on its territory and flights from a third country to such airports. Where appropriate, this body shall

take the measures necessary to ensure that the rights of passengers are respected. The Member States shall inform the Commission of the body that has been designated in accordance with this paragraph....

(3) The sanctions laid down by Member States for infringements of this Regulation shall be effective, proportionate and dissuasive."

10. Effect is given to regulation 261 in English law by the Civil Aviation (Denied Boarding, Compensation and Assistance) Regulations 2005, made under section 22 of the European Communities Act 1972. Section 3 makes it a criminal offence for a carrier to fail to comply with an obligation imposed on it by Articles 4 to 6, 10, 11 or 14. That will include a failure to comply with an obligation under Article 8, because Article 8 obligations are derived from Articles 4 to 6. Paragraph 5(1) of the Civil Aviation Regulations provides that:

"The Civil Aviation Authority shall be the designated body for the purposes of Article 16(1)."

Under sections 212 to 214 of the Enterprise Act 2002, the CAA has civil enforcement powers against any carrier in the UK which fails to comply with regulation 261.

11. Both parties applied for summary judgment. On 20 April 2011 Deputy District Judge Wylie dismissed Ms Graham's application for summary judgment, except that he judged that the carrier had no real prospect of successfully defending the allegation of breach of regulation 8. There was no appeal against his ruling. On 29 March 2011 the carrier applied to strike out the whole of the claim or alternatively various parts of it including the claims for damages. One of the issues identified in the application was whether regulation 261 provides a cause of action for damages, and in the accompanying skeleton argument the point was taken that the regulation does not create a private law cause of action which can result in an award of damages.

12. On 21 June 2011 District Judge Merriman ordered that the claim be struck out. He held in summary that the claims were governed by the Montreal Convention, and that under that Convention the claims for damages were unsustainable. He also held that, even if the Convention was not applicable, there was no evidence to support the claim for financial loss and no basis in law for the other claims for damages. Mr Graham had no cause of action in any event, since he was neither a party to the contract nor a passenger for the purposes of regulation 261. The judge did not give any ruling on the question whether Regulation 261 could give rise to a cause of action sounding in damages.

13. On 19 September 2011 HHJ Hampton heard and dismissed an appeal against the District Judge's decision. She held that the Montreal Convention applied to the claim on the facts of the case and that, if she was wrong on that issue, Regulation 261 did not in any event provide a private law cause of action sounding in damages. The regulation was enforceable through a regime operated by the CAA, but there was no freestanding right to claim damages for breach.

14. In the course of argument the judge raised the question whether there might be an action of common law for damages for breach of contract if the Montreal Convention did not apply, but she concluded that the contract was frustrated and that the only remedy at common law would have been restitutionary. No such claim was pleaded. She also considered the terms of the contract and could not see that they provided any arguable basis for claiming damages of the kind sought.

15. Permission to bring a second appeal was given by Sir Richard Buxton because he considered it arguable that the Montreal Convention did not apply in a case of cancellation, as distinct merely from delay or an incident which occurred before boarding. He described this as a "general issue of some uncertainty suitable for a second appeal". However, he also sounded a note of warning. He pointed out that the terms of the contract and the difficulty of showing any actual loss might preclude recovery.

16. At the outset of the appeal Mr Graham raised a number of procedural matters. He drew attention to what he submitted was an unsatisfactory history of defaults by the carrier. In the event, it has not been necessary to hear submissions from the carrier and therefore we have not heard anything which might be said by way of explanation or excuse, but I would proceed for present purposes on the basis that the points which Mr Graham advanced were well made. He submitted that in the circumstances the court should not entertain a Respondent's Notice which had been filed. The Respondent's Notice in truth raises no fresh point and for my part I disregard it. He also submitted that because the carrier's skeleton argument had been late, the court should not hear any oral submissions from the carrier's counsel, Mr Kimbell. In the event we have not thought it appropriate to call on Mr Kimbell. However, as was pointed out to Mr Graham by Sir Robin Jacob, even if the respondents have not attended he would still have to satisfy the court that the judge was wrong in her judgment.

17. Since the claim for damages is based or principally based on breach of regulation 8, logically the first question to consider is whether a breach of that regulation gives rise to a civil action for damages. Ms Graham argued that the court should not concern itself with that point, since in the carrier's written submissions before the hearing on the appeal from the District Judge, that issue was not raised although it was an issue raised in the carrier's application for summary judgment.

18. In my judgment HHJ Hampton was entitled and right to consider the point. The court has the power to strike out a claim on its own initiative if it considers the case to be hopeless, because the court's time should not be taken up with claims which have no possibility of success. Of course it would be wrong for a court to strike out a case of this kind on an appeal in circumstances in which that would be unfair, for example if the claimant was not in a position properly to argue the point. But in this case Mr Graham has had opportunity to consider the point and indeed he dealt with it in his skeleton argument in support of the appeal and in his oral submissions.

19. I then turn to the question whether HHJ Hampton was right to hold that breach of regulation 8 does not give rise to a civil action for damages. In my judgment her conclusion was plainly correct. It is a matter for each member state to decide how the regulation is to be brought into effect under its law. In the UK it is given effect through the Civil Aviation Regulations 2005 and through the regulatory powers of the CAA under the Enterprise Act 2002. The Civil Aviation Regulations do not purport to impose on a carrier a statutory duty for breach of which an action for damages may be brought, nor on the other hand do they take away any other cause of action which a claimant may have. Rather, the Civil Aviation Regulations make it a criminal offence to fail to comply with an obligation under the relevant articles of Regulation 261 and appoint the CAA as the designated body for the purposes of Article 16 of the Regulation; ie for the purposes of enforcing the regulation. The CAA's enforcement powers are to be found in the Enterprise Act.

20. Mr Graham submitted in his skeleton argument and in his oral submissions that this overlooks Article 12 of Regulation 261, which provides that the regulation "shall apply without prejudice to a passenger's rights to further compensation".

21. But that regulation does not confer a right to compensation for breach of Regulation 8, which is what has been claimed in this case. It merely confirms that the compensation provided for under the regulation, which is intended to be of a general nature applicable to all passengers, does not exclude any other rights of compensation which an individual passenger may have from a source other than the regulation. This point arose in Sousa Rodriguez v Air France SA [2012] 1 EMLR 40. The applicants entered into contracts with Air France to carry them from France to Spain. A few minutes after take-off the aeroplane returned to the departure point because of a technical failure. The passengers then had to make alternative arrangements to travel to their destination. The applicants sought compensation under the regulation and also on an individual basis for the losses which each had suffered as a result of Air France's failure to carry them to their destination. The court in which the claims were brought asked the Court of Justice whether Article 12 of Regulation 261 "allows the national court to order the air carrier to compensate damage arising, for passengers, from breach of the contract of carriage by air on a legal basis other than Regulation No 261/2004, that is to say, in particular, in the conditions provided for by the Montreal Convention and national law." The Court of Justice held that:

"The meaning of 'further compensation', used in Article 12 of Regulation No 261/2004, must be interpreted to the effect that it allows the national court to award compensation, under the conditions provided for by the Convention for the unification of certain rules for international carriage by air or national law, for damage, including non-material damage, arising from breach of a contract of carriage by air. On the other hand, that meaning of 'further compensation' may not be the legal basis for the national court to order an air carrier to reimburse to passengers whose flight has been delayed or cancelled the expenses the latter have had to incur because of the failure of that carrier to fulfil its obligations to assist and provide care under Article 8 and Article 9 of Regulation No 261/2004.

22. In other words, where there has been a breach of a contract of carriage, the national court is not prevented from awarding damages under the Montreal Convention, or its domestic law as the case may be, for breach of the contract. Article 12 confirms that the passenger's rights under Article 8 are not exhaustive. However, the passenger cannot rely on Article 12 to claim damages for failure by the carrier to comply with Article 8, as distinct from damages for breach of the underlying contract. Insofar as there is a breach of Article 8, the remedies for that breach are those set out in Article 8. The claim in this case is precisely of the kind which the Court of Justice has said is not permissible, ie a claim for additional loss caused by breach of Article 8 over and above the remedies provided under Article 8.

23. That is the end of the case subject to one matter. As I have said, the judge considered whether there might be an arguable claim for breach of the underlying contract. Mr Graham has argued that his pleadings, when properly read and understood, do in fact include such a claim and that there is a valid claim for breach of contract. I would not rule against him on a narrow pleading point in a case where an action has been struck out as disclosing no real prospect of success, if there is some potentially viable case for damages for breach of the underlying contract. HHJ Hampton considered the point and concluded that there was not.

24. This was a simple contract of carriage and not a contract by a tour operator to provide a holiday. Mr Graham does not suggest that the carrier was in breach of contract by cancelling the flight. He submits, however, that the carrier was in breach of contract because it owed a contractual obligation after cancelling the flight to make offers to Ms Graham which it failed to make. One approach would be to hold, as the judge did, that there was a frustration, and on that analysis the only remedy would be a restitutionary remedy, which would not cover damages of the kind sought. However, there is undoubtedly an argument properly to be advanced that the matter would fall to be determined by the express terms of the contract.

25. We have examined those terms. This being a simple contract of carriage, there could not be any claim for damages at common law for distress resulting from the cancellation of the flight or failure to comply with the terms of the contract as to the post-cancellation rights of the passenger. Damages for disappointment and distress are allowed in contract law only in rare instances. Breach of a contract to provide a holiday is one such case, but we are not here concerned with a contract of that kind; this is a simple contract of carriage. When contracts of carriage are brought to an end by extraneous events the result will almost always be to cause vexation, disappointment and distress to the passengers, but that does not provide them with any arguable claim for damages at common law. Nor is there any arguable basis on which damages could be awarded at common law on an exemplary or punitive basis. Mr Graham has drawn our attention to observations by the District Judge that he would have been sympathetic to the claim for exemplary or punitive damages based on the breach of regulation 8 which he described as "very bad". However, breach of regulation 8 cannot give rise to a claim for exemplary or punitive damages, nor would a simple breach of a contract of carriage at common law or failure to implement contractual post-cancellation rights give rise to any such claim under ordinary principles.

26. There remains the claim in respect of the third party's alleged wasted expenditure and loss resulting from Ms Graham's alleged responsibility for making it good. Those are not matters which would have been within the reasonable contemplation of the parties and would be too remote to be recoverable even if there were credible evidence to support the claim.

27. In summary, there is no arguable basis on which Ms Graham could have a valid claim for the damages which she seeks either under the terms of the contract of carriage or otherwise.

28. It is not therefore necessary to consider the issue which led to permission to appeal to this court being given: ie whether the provisions of the Montreal Convention applied in the circumstances. We are aware of a number of authorities and academic commentaries on the Convention which suggest that the issue may not be straightforward. I would accept for present purposes that it was not a matter on which it would have been appropriate to grant summary judgment. However, it would be inappropriate for us to explore the matter further when it is unnecessary to do so and it would be particularly inappropriate to offer guidance on a point of potential and wider application when only one party has been legally represented. By that final comment I do not wish in any way to appear to disparage the quality of the advocacy which we have received from Mr Graham. As I have already commented, his submissions have been clear, concise and articulate.

29. However, for the reasons which I have given I would dismiss this appeal.

Sir Robin Jacob :

30. I agree.

Lord Justice Laws:

31. So do I.

Order: Appeal dismissed