Airlines run into Wall – Supreme Court Says No

At the beginning of September I published a piece on Huzar v Jet2.com about making claims against airlines for delays, under the EU Regulations (here) and reported that the airlines who had lost in the CA has applied to the Supreme Court for permission to appeal. The substance of the argument was whether a technical defect which caused a delay could amount to “extraordinary circumstances” and hence provide a defence to a claim by a passenger delayed by more than 3 hours.

Well the SC has decided the matter in double-quick time, by deciding NOT to decide the matter at all. They rejected the application for permission to appeal, saying in their rather terse way that

the application does not raise a point of law of general importance and, in relation to the point of European Union law said to be raised by or in response to the application, it is not necessary to request the Court of Justice to give any ruling, because the court’s existing jurisprudence already provides sufficient answer.

The SC also decided an appeal on another airline case – Thomson Airways v Dawson – which was about  whether the limitation period for bringing claims was the normal 6 years or the restricted 2 years imposed on most airline cases by the Montreal Convention. The CA said, not without some hesitation, that it was 6 years. The SC had a lot less difficulty – it refused permission and said merely that

the application does not raise an arguable point of law

So that is that.

The outcome is presumed to be an avalanche of claims against airlines as any delays that are not caused by (in effect) external forces (such as volcanoes, air traffic control problems, wars etc) and which result in a delay of more than 3 hours in arrival can net the passengers up to €800 each.

They are still of course pretty small claims, and so uneconomic for lawyers to bring unless they can do so in real volume, such as Bott & Co do. But hopefully this now means that more passengers will be able to bring them on their own, without having to face the airlines’ arguments that the CA and SC have now comprehensively demolished. Although the airlines may well continue to be difficult and inventive as they have been since the regulations were introduced 10 years ago in 2004.

Some commentators say that the total claims will amount to £10bn (or even £20bn). Who knows, with estimates so far apart?

The downside of course is a possible end to really cheap air fares. Because there is no such thing as a free lunch.

PS

It now seems that the additional cost may be between €1 and €3 per one-way ticket according to a report by the EU Commission mentioned on the Bott & Co website here . So possibly not as bad as it seems.

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Extra, Extra – Updates on Recent Posts

You never finish this blogging lark, because as soon as you’ve put out your finished and lovingly crafted article somebody comes along and changes things, so it’s out of date. And that’s why I’m here to update three of my recent posts rather than watching TV. The stresses of journalism!

Huzar v Jet2

I mentioned this case of flight delays on 4.9.14 and said that the airline had applied for permission to appeal to the Supreme Court. Well, there is now a note about this application on the SC website (here) and the application for leave will be considered on the papers together with a similar application in the case of Dawson v Thomson Airways (which is on the limitation period applicable for these claims) and a decision is expected in early November 2014. If successful the appeals will be heard probably some time in the first half of 2015. So we have to wait a bit longer for a final decision.

Robertson v Swift

This is about The Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and I commented on them on 3.6.14. You will remember that there is a new regime of information to give to consumers who enter into contracts on-premises, off-premises or by distant selling with effect from 13.6.14. Well, there has been a decision in the SC about the interpretation of the earlier regulations and in particular what happens if the trader fails to supply the cancellation information that he should have, as the cancellation period is defined in those regs as running for 7 days from the giving of the information. And not without some hesitation the SC ruled that, despite the argument that if there was no information the period never started, the better interpretation was that the period never ended, and so the consumer won.

No doubt important to the parties, although the argument was about a claim for about £3,750 and a counter-claim for £1,000, so there must be more to it than meets the eye. But irrelevant to the rest of us as the new regulations provide expressly that the right to cancel runs from the making of the contract until 14 days after the cancellation information is provided. Perhaps the draftsman had the Robertson case in view.

Best v Chief Land Registrar

Mr Best was the enterprising builder who rescued a derelict house and tried to claim it by prescription. I dealt with it on 14.5.14, when I reported that Mr Best had been allowed to take the first step in registering title at HM Land Registry. The absent owners still seem to be absent, but the Land Registry have been granted leave to appeal to the CA, presumably with a view to sorting this matter out once and for all. These appeals usually take getting on for 12 months, so again watch this space. My only worry is that with all the publicity involved the owners will come out of the woodwork in time to thwart his claim. Which may be Mr Best’s worry as well.

As soon as there is any news on these three I’ll be tapping away to let you know. Now let’s go and feed the cats, and also see if Scotland has floated off into the North Sea while I’ve been at this.

PS – For the result of the Best case in the CA see here.

Charges in the Air – Compensation for Delays

Today, at the end of the holiday season, I’m going to talk about what happens if your plane was late, or indeed was cancelled, and how you can get compensation for your inconvenience. And I’m doing this as I’ve just done an interesting claim of this sort for a couple of clients, so I have done the research already and want to have an opportunity of using it again, while it’s still relevant, and I can read my notes. Because it is an amazingly complicated and frustrating experience.

The Law – Part One

As you might expect, this is EU legislation, and so nothing is quite as it seems. The current Regulation is 261/2004 and Arts 5,6 & 7 provide for compensation of varying amounts if passengers with tickets for  flights that start  in the EU, or end in the EU and are by an EU carrier, are denied boarding, either because the flight is cancelled or because it is overbooked. The amount of compensation is a modest €250 or €400 or €600 each, depending on the length of flight. But the compensation is not payable

If [the operating air carrier] can prove that the cancellation is caused by extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

In addition the carrier has to provide reasonable refreshment and accommodation for the passenger and put them on a suitable replacement flight at no additional cost. And all these rights can’t be waived, or taken away by the small print.

Now, this being the EU “cancellation” doesn’t just mean cancellation. The ECJ decided in the  Sturgeon (2012) decisions  that this included a delay of more than three hours. If your flight arrives more than three hours after the scheduled time you have a claim. The reasons are basically irrelevant, and so is the amount of actual inconvenience that you suffer.

This is important. Not many flights are actually cancelled, and there is a lot less overbooking than there used to be, and airlines realise they are messing you about if they stop you boarding, so are prepared to offer deals. But lots of flights are late, for a variety of reasons, and if you have a flight from say Tenerife to Manchester with 250 people on it that is more than three hours late this adds up to total compensation of €100,000. Which hurts, especially of you are a budget airline and are only charging a £120 return fare. So as you might imagine the airlines have been making claiming less than simple, or convenient.

How to Claim

The Regulations mention payment “immediately”, but of course this is unusual. And most people do nothing, so get nothing either. But if you do want to make a claim then normally you have to write in to a claims department and wait. In due course the claim will be refused. So what do you do then? Well another chunk of passengers give up at this stage too. But you are a more determined lot, surely.

The Regulations expect enforcement to be by national enforcement authorities – in the UK’s case this is the CAA, but you can apply to the body for the other end of the flight if you wish. They can fine airlines that regularly fail to comply with their obligations. This doesn’t help the passengers much. And they operate various non-binding forms of dispute resolution – AESA, the Spanish authority, operates a written arbitration procedure, in English and Spanish  (and possibly other languages if you want to be difficult) that seems to be fairly quick and effective. But the airline doesn’t have to pay up if it doesn’t want to. And it doesn’t. So what then?

Well, you can go to court in either the departing or arriving EU country and make what in England will be a (very) small claim. In fact you can go to court without bothering with the CAA or AESA at all, and this is probably the best course, after a protocol letter demanding payment and enclosing the appropriate proof.

The airlines tried to argue that there was no right to go to court, and almost succeeded in the CA case of Graham v Thomas Cook (2012) but fortunately the ECJ held in McDonagh v Ryanair (2013) that this was nonsense and that there was a clear right for a passenger to make a claim before a national court for this compensation.

So you might think it was easy – write to the airline making a claim, and if they don’t pay pop in a Money Claims Online to the court with your fee, and a few months later turn up before a puzzled DDJ in your local court for a Small Claims Trial. Not so fast – there is more law to deal with first.

The Law – Part Two

If you look back to the top of this piece you will see a reference to

extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken

There are some examples given in the Preamble to the Regulations, and they cover things like coups and insurrections, bad weather, security risks, air traffic control problems and strikes. These are all external causes and clearly you can’t hold the airlines liable for this sort of thing. The Iceland Volcano a few years ago is a particularly good example of this. Do note however that the obligations to provide refreshment and accommodation etc isn’t affected by this exception, and the airline still has to provide it – the Ryanair case above was on this very point.

Now airlines thought about this and decided that they only had to pay compensation if they were in some way to blame. For example if they forgot to book a pilot then it was fair enough, but not if the booked pilot fell ill. Or if some part of the (extremely complicated) aircraft broke because it hadn’t been serviced properly they would pay up, but not if it just broke for no predictable reason. And given the paper-thin servicing teams and the lean operation that some airlines use this could happen quite frequently. And they could always say it, and who would know? Certainly not the passenger.

Fortunately the ECJ wasn’t having this and in the Wallentin-Hermann  (2008) decision they held that

Article 5(3) of Regulation (EC) No 261/2004…..must be interpreted as meaning that a technical problem in an aircraft which leads to the cancellation of a flight is not covered by the concept of ‘extraordinary circumstances’ within the meaning of that provision, unless that problem stems from events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its actual control.

They said it was a matter for the courts to determine in each case, but gave an example of something that couldn’t be an “extraordinary circumstance” – a failure caused by inadequate maintenance – and of something that could be – a manufacturer’s recall of multiple aircraft because of some safety problem.

You might think that this would have ended the argument, but remember there is potentially a lot of money at stake here, so the airlines shifted their ground. How about arguing that it depends whether the failure was within the airline’s control? So if a part which has a normal life of 5,000 hours fails after 4,000 hours without warning then it is beyond their control. But if it has reached its expected life then it ought to be replaced and so it is in their control.  There is quite a lot of scope for this.

But no longer. The CA in the strangely named case of Huzar v Jet2.com (2014) has upheld a decision by HHJ Platts sitting in Manchester who pointed out that air carriers have to encounter and deal with unexpected unforeseen and unforeseeable technical problems as part of running an airline. They cannot be said to be an extraordinary circumstance. Elias LJ said:

In my judgment, a proper understanding of the inter-relationship between the two limbs should focus on the concept of “extraordinary circumstances” itself, the language used in Article 5(3). This requires that the circumstances must be out of the ordinary, as the Court noted in Sturgeon. As the CJEU recognised in paragraph 24 of Wallentin-Hermann, difficult technical problems arise as a matter of course in the ordinary operation of the carrier’s activity. Some may be foreseeable and some not but all are, in my view, properly described as inherent in the normal exercise of the carrier’s activity. They have their nature and origin in that activity; they are part of the wear and tear. In my judgment, the appellant’s submissions fail to give proper effect to the language of the exception….. It makes an event extraordinary which in common sense terms is perfectly ordinary.

He pointed out that if you exclude unforeseeable problems then the courts are going to be filled with arguments about whether such and such a problem should have been picked up during servicing, which would need experts and much study of documents and that would be most unsatisfactory.

And he blocked off another loophole:

The appellant advanced one further argument. It was suggested that an unforeseeable technical problem would constitute an unexpected flight safety shortcoming which recital 14 identifies as a potential extraordinary circumstance. I do not accept the submission; the fact that a particular technical problem may be unforeseeable does not mean that it is unexpected. Problems of this nature frequently arise.

So extraordinary circumstances should be just that – extraordinary. Volcanoes but not a defective fuel pump.

They Don’t Give Up

The airlines, supported rather strangely by the CAA, have now applied to the Supreme Court for leave to appeal. They lodged the application at the end of July and the SC will make a decision on this some time before Christmas. If they grant permission then we have another year or so of waiting beyond that for a final, final, result. Unfortunately the CA ruling could have been expressed more clearly in places, but on the face of it the ruling should stand. Subject to a possible application to the ECJ again.

And in the meantime many airlines continue to argue all these points, take as long as possible, and do all they can to discourage passengers from making claims, or pursuing claims once made.

The Law – Part Three

All this supposes that it is your flight that is delayed or cancelled because of some extraordinary operational problems. What if it is an earlier one, and you are merely caught up in the backlog. Can you claim, or will you be faced with the extraordinary circumstances defence? Well there’s an easy answer to this one  and it is a resounding “no!” The ECJ ruled in Finnair v Lassooy (2012) that extraordinary circumstances can only apply to the flights that are affected by them, and not to later flights. In that case a strike at Barcelona on 28th July (an extraordinary circumstance) prevented a Finnair flight from leaving, and Mr L was denied boarding two days later on 30th July because they gave his seat to some passenger who had been waiting since the 29th and made him fly 12 hours later. So he got his compensation.

And the Result?

It’s a mess. You can see it several ways:

From the airlines’ point of view the compensation that they are likely to have to pay from the current interpretation is going to make it very difficult if not impossible to operate on their current model of pricing, with very cheap tickets and few aircraft. Only one or two delays can wipe out the profits of several weeks of perfect operations. Surely the EC didn’t mean to do this? Clearly the EC didn’t mean to do this  – the Regulations only deal with cancellation etc, not delays, which were brought in by the court in Sturgeon. So it is worth while paying the lawyers and fighting every claim in order to discourage the others.

From the passenger’s point of view it will take for ever, it is really only peanuts, and life is too short at the end of the day to battle away at this sort of thing. It may have been meant to be dealt with as a small claim but the airline tactics make it very, very hard for a litigant in person.

From a lawyer’s point of view these claims are small claims and so unless you can show that the airline in behaving unreasonably there are no recoverable costs. A client will only pay a little in order to recover €400 even with some interest. So you need lots and lots of clients. If you get 100 on one flight your costs are hardly any greater and a small fee, or cut of the winnings, from each will give you a sensible return.  But passengers rarely exchange contact details unless they’re all in one party, so you have to do things in dribs and drabs, which doesn’t make any financial sense.

And from the court’s point of view a small claim list can be seriously messed up by even one of these surprisingly technical claims, usually with a litigant in person on one side and an airline lawyer on the other, and a very confused DDJ in the middle.

A real mess.  Almost enough to give the EU a bad name.

 

UPDATE – News of application for appeal to SC on Jet2 here