In All Leisure Holidays Limited v Europaische Reiseversicherung AG & Ors the Commercial Court held that insurers were liable to indemnify the claimant under a Passenger Protection Insurance Policy (the Policy).
The Policy, taken out by Hebridean International Cruises Limited (HICL) was inter alia to indemnify the “insured persons” i.e. customers of HICL, in respect of financial loss arising from the cancellation or curtailment of the trip solely from the event of the insolvency of HICL. For the Policy to operate there had to be a cancellation of the cruises promised by HICL.
The cruise ship Hebridean Princess was owned and operated by HICL. In April 2009, HICL entered into administration and the ship was sold to the claimant, All Leisure Holidays Limited (ALHL). ALHL continued to run the same cruise programme but operated by itself instead of HICL.
ALHL required HICL’s customers to claim from the defendant insurers an indemnity under the Policy in respect of monies they had paid to HICL. The claimant submitted that the cruises to be operated by HICL were cancelled on 22 April 2009 when the Hebridean Princess was sold thus disabling HICL from providing the cruises. Counsel for the defendants submitted that the word “cancellation” had to be given its ordinary meaning and that the cruises had not been cancelled because they had been performed in every respect as promised, save that the operator was ALHL and not HICL.
Mr Justice Teare held that on a true construction of the policy, the trips were cancelled on 22 April 2009 following the sale of the Hebridean Princess.
As to a calculation of loss, it was held that the passengers were entitled to be indemnified in respect of their net ascertained financial loss arising from the cancellation of the cruises. The claimant submitted that the passengers had lost deposits or charges paid in advance to HICL and, because of HICL’s insolvency, such monies could not be repaid. The defendants submitted that the deposits and charges were not lost because the passengers received the cruise paid for and were not required to pay again. As such, the passengers were not “out of pocket” so there was no loss in respect of which the passengers required indemnification. The judge held that the passengers had suffered a loss within the policy because the travel arrangements with HICL had been cancelled following the sale of the Hebridean Princess.
In addition, the defendant claimed that a condition of the Policy implicitly required the claiming passenger to complete a claim form to prove their loss to the reasonable satisfaction of the insurers. The judge dismissed this submission stating that the condition only required the passenger to prove his loss and, in this case, loss had been proved.
The judge found in favour of the claimant notwithstanding his acknowledgement that the Policy had been used by the claimant as a means of facilitating the purchase of the Hebridean Princess and retaining the goodwill attached to the cruises operated by HICL.