Scottish Sheriff Court Decisions

 

 

2014SCAYR35

 

AYR SHERIFF COURT
Sheriff Principal B A Lockhart	CASE NO:SA636/13 JUDGMENT OF SHERIFF PRINCIPAL B A LOCKHART   In causa   Murial Vergara and Murial Vergara as legal representative of her son Brodie-Gael Vergara Morrison   Pursuer and Appellant   Against   Ryanair Limited Defender and Respondent

 

Act: Mr W Morrison, lay representative for the pursuers and appellants

Alt:  Ms Goldie for defenders and respondents

________________________________________________________________________

AYR: 18 July 2014

The Sheriff Principal, having resumed consideration of the cause, holds that the action is not time barred and as a result answers the remaining questions of law (the question in relation to unfair terms having been withdrawn) in the affirmative; allows the appeal and recalls the sheriff’s interlocutor of 23 January 2014 complained of; remits the cause to the sheriff to proceed as accords. Reserves the question of expenses in respect of the appeal and appoints parties to lodge written submissions thereon with his secretary, Mrs May Roberts, Airdrie Sheriff Court, Graham Street, Airdrie ML6 6EE by 8 August 2014.

 

 

Note:

Background to the Appeal

[1]       This is a claim for the sum of €500 brought under the Small Claims procedure by the pursuer on her own behalf and on behalf of her son against Ryanair Limited for compensation following on the cancellation of a flight operated by Ryanair from Gothenburg, Sweden to Glasgow Airport, Prestwick, Scotland on 21 February 2010. 

 

[2]       The claim is brought under the right afforded to passengers by article 5 of EU Regulation 261/2004.  This provides that:

“[a passenger] shall….  (c) have the right to compensation by the operating air carrier in accordance with Article 7 of the EU Regulation 261/2004.”

 

Article 7(1) of the Regulation provides that:

“where reference is made to this Article passengers shall receive compensation amounting to:

 

a) €250 for all flights of 1500 kilometres or under.”

 

Article 5(3) of the Regulation states that:

“an operating air carrier shall not be obliged to pay compensation in accordance with Article 7 [of the Regulations] 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”

 

[3]       The defender raised a preliminary plea that the pursuer’s claim is time barred as it was raised out with the two year prescriptive period which, the defender claims, is a material clause in the pursuer’s contract with the defender.  Article 15.2 of the defender’s General Conditions of Carriage for Passengers and Baggage provides:

“Any right to damages shall be extinguished if an action is not brought within two years of the date of arrival at destination, or the date on which the aircraft was scheduled to arrive or the date on which the carriage stopped. The method of calculating the period of limitation shall be determined by the court of law where the case is heard.” 

 

Article 2.3.1. provides:

“These Conditions of Carriage are applicable unless they are inconsistent with applicable law in which event such law shall prevail.”

 

[4]       In his Note the sheriff states:-

“The action was warranted on 26^th August 2013.  The Defender submitted that the Pursuers rights for compensation had therefore prescribed.  If the court upheld the Defender’s submission that the action was time barred then no further consideration need be given to Article 5.3 of the Regulations. Esto the action was time barred the Pursuer argued that a claim for damages had to be considered distinct from a claim for compensation and that as the claim for compensation was brought under EU Reg 261/2004 it was not limited by Art 15.2 the Defender’s General  Conditions of Carriage for passengers and baggage.  Should the Pursuer fail on that argument also then I was asked by the Pursuer to find that Article 15.2 of the Defender’s General Conditions of Carriage for Passengers and Baggage was in breach of the Unfair Contract Terms Act 1977 and the Unfair Terms in Consumer Contracts Regulations 1999.

 

I dealt with the Defender’s submission on the question of the action being time barred, with concurrence of the Pursuer, as a preliminary plea at the diet of trial. 

 

FINDINGS IN FACT

 

I found the following facts to be proved or admitted.

 

1) The Pursuer Muriel Vergara and her son Brodie-Gael Vergara Morrison each had a ticket to fly from Gothenburg Airport Sweden to Glasgow Prestwick Airport Scotland scheduled to depart from Gothenburg on 21^st February 2010.

 

2) The carrier was Ryanair Limited which has a place of business at Glasgow Prestwick Airport Scotland which is the final destination of the flight departing from Gothenburg. 

 

3) The tickets held by the Pursuer and her son were purchased on her behalf by her father Juan Carlos Toro Vergara through the Defender’s usual ticket purchase procedure on their dedicated booking website www. ryanair.com.

 

4) The Defender’s flight from Gothenburg to Glasgow Prestwick was cancelled.  The Pursuer and her son were required to make alternative arrangements to reach their destination.  The Defender reimbursed the Pursuer’s father in the sum of 1048.34SEK for the unused flights. 

 

5) The Pursuer sought additional compensation from the Defender under Article 5(c) EU Regulation 261/2004 in the sum of €500.  She and her son were each entitled to the sum of €250 in terms of Article 7 of that Regulation.  The Pursuer engaged in sundry procedure to persuade the Defender to pay compensation but the Defender insisted that the cancellation of the flights was “due to extraordinary circumstances which could not have been avoided even if all reasonable measures had been taken”.

 

6) The Pursuer raised an action at Ayr Sheriff Court seeking compensation from the Defender in terms of Article 5(c) and Article 7 of EU Regulation 261/2004 on 20^th August 2013 some 30 months after the date of their cancelled flight. 

 

7) The Defender’s General Conditions of Carriage for Passengers and Baggage at Article 15.2 provide that:

 

“Any right to damages shall be extinguished if an action is not brought within two years of the date of arrival at a destination or the date on which the aircraft is scheduled to arrive or the date on which the carriage stopped.  The method of calculating the period of limitation shall be determined by the Court of Law where the case is heard”.

 

The General Conditions of Carriage also provide at Article 2.3.1. that:

 

“these conditions of carriage are applicable unless they are inconsistent with applicable law in which event such law shall prevail”.

 

8) In order to process a flight reservation the purchaser or her agent must confirm that they have read or have accepted the Defender’s General Conditions of Carriage for Passengers and Baggage.  Failure to confirm acceptance of these terms prevents a booking being further processed on the online booking system.

 

9) Article 15.2 of the Defender’s General Conditions of Carriage for Passengers and Baggage adopts the airline industry standard as drafted by the International Air Transport Association (IATA) Recommended Practice Note 1724 which states at Article 16.2:

 

“Any right to damages shall be extinguished if an action is not brought within two years of the date of arrival at destination or the date on which the aircraft is scheduled to arrive or the date on which the carriage stopped.  The method of calculating the period of limitation shall be determined by the law of the Court where the case is heard.”

 

FINDINGS IN FACT AND LAW

 

1. The Pursuer, acting personally or through her agent, being bound by the contractual term forming Article 15.2 of the Defender’s General Conditions of Carriage for Passengers and Baggage is time barred from raising an action for damages or compensation against the Defender.

 

2) The Defender’s reference to a claim for Damages in terms of Article 15.2 of the Defender’s General Conditions of Carriage for passengers and baggage includes a claim for “compensation”.

 

3) The Defender having adopted the aviation industry standard limitation clause as recommended by IATA in Article 15.2 of the General Conditions of Carriage for passengers and baggage and having refused to issue a ticket of carriage unless such article has been accepted and acknowledged by the Pursuer has not breached either the Unfair Contract Terms Act 1977 nor the Unfair Terms in Consumer Contracts Regulations 1999.

 

4) The Defender being a party to a contract which is legal and enforceable has not entered into any agreement which is inconsistent with applicable law.”

 

[5]       In the decision section of his judgement the sheriff stated:-

“DECISION

 

16.  I will deal firstly with what, if any, distinction should be drawn between a claim for damages and a claim for compensation in the context of this case.  From the narrative provided to me it was quite clear that the focus of the Pursuer’s claim was to establish a claim for a flat rate “compensation” to which she is entitled by virtue of Articles 5 and 7 of EU Regulation 261/2004.  Her claim was based on the fact that the cancellation of the Ryanair flight from Gothenburg to Prestwick was not caused by extraordinary circumstances which could not have been avoided even if all reasonable steps had been taken by the carrier.  I am unaware as to whether the Pursuer had at any stage sought “damages” in the conventional sense for her inconvenience or out of pocket expenses.  EU Regulation 261/2004 is to provide compensation for inconvenience suffered in consequence of delay.  The Warsaw and Montreal Conventions each refer to an entitlement to “damage”. 

 

17.  Damages, in the vast majority of cases as defined in MacGregor on Damages “are the pecuniary compensation obtainable by success in an action for a wrong which is either a tort or a breach of contract, the compensation being in the form of a lump sum awarded at one time unconditionally and in sterling”.  I refer to the Oxford English Dictionary definition of “damage” which is given as “a sum of money claimed or adjudged in compensation for loss or injury”.  “Compensation” is described in the Oxford English Dictionary as “thing given as recompense”.  By reference to each of these three definitions I find it difficult to distinguish a claim for damages from a claim for compensation and consider that any distinction to be drawn between them is too fine to be of value in the consideration of this action.  The Pursuer suggested that Article 15.2 of the Defender’s General Conditions of Carriage being their standard business terms and drafted by them should be subject to interpretation contra proferentem and were the court to apply that principle to a definition of “damages” as in Article 15.2 then I should infer that damages stands as a restricted right and defined narrowly and is not inclusive of a claim for compensation.  Further the Pursuer wanted me to consider that a claim for damages must arise from either a breach of contract or from delict and as neither of these situations applied in this case compensation had to be considered as a separate head of claim being a standalone payment dependent upon nothing other than a failure by the carrier to provide passage within a set time.  The case of Moré v KLM supra sets out the antecedents which EU Regulation 261/2004 fortified by not setting a standard limitation period.  The level of protection afforded to passengers under the Warsaw and Montreal Conventions, if anything, was improved upon by Articles 5.1 and 7.1 of EU Regulation 261/2004 but only marginally by leaving the determination of limitation of actions to the member state.   Interestingly the reference to “damage” or “damages” is dropped in EU Regulation 261/2004 in favour of a reference to “compensation”.  No distinction is drawn between the two notions and I am of the view, sharing that of District Judge Maw in Pickard at paragraph 11, that compensation is a form of damages, and that a clear import of the use of the word “compensation” in EU Regulation 261/2004 implies the antecedent references to “damage” and “damages” as referred to in the Montreal and Warsaw Conventions respectively.  It is my view that any reference to damages in Article 15.1 of the Defender’ General  Conditions of Carriage must be seen to be inclusive of the entitlement to compensation as provided by EU Regulation 261/2004.  Although the amount of compensation under the regulation is not subject to proof of loss it is nonetheless dependent upon the Defender establishing that Article 5.3 of EU Regulation 261/2004 applies in that the cancellation was caused by extraordinary circumstances which could not have been avoided even if all reasonable steps had been taken.  It follows, in my view, that should it be shown that the “extraordinary circumstances” were avoidable, even if the carrier had taken all reasonable steps, then there would be an inference of negligence on the part of the carrier which would have consequences in delict.  I am therefore satisfied that the use of the term “compensation” and the reference to “damages” (respectively in EU Reg 261/2004 and in the Defender’s General Conditions of Carriage) are synonymous; there is an argument that if “damages” for loss, inconvenience or injury is claimed against the Defender together with a quite separate award of “compensation” as fixed by EU Reg 261/2004 the latter may be applied as an offset in the quantification of any loss suffered.  I am of the view that, at least as far as this case is concerned, “compensation” as determined by Articles 5 and 7 of EU Regulation 261/2004 fall within the general definition of “damage” or “damages” as understood in the Warsaw and Montreal Conventions, by the IATA Recommended Practice Note 1724 and by the Defender’s General  Conditions of Carriage. 

 

18.  I now consider whether the Pursuers are time barred by this action being raised out with the two year period for raising a claim as agreed between the Pursuer and the Defender by her acceptance of the Defender’s General Conditions of Carriage.  Those General Conditions of Carriage are unambiguous in their terms.  They incorporate IATA Recommended Practice Note 1724 and provide certainty in relation to the period to be afforded to the Pursuer to make any claim against them.  That includes a claim under Articles 5 and 7 of EU Regulation 261/2004.  Article 15 of the EU Regulation 261/2004 provides:

 

“obligations viz-a-vis passengers pursuant to this regulation may not be limited or waived notably by a derogation or restrictive clause in the form of carriage”. 

 

There is no suggestion that the introduction of a two year period within which to make a claim against the carrier limits or waives any obligation arising from the Regulation.  The carrier’s “obligations” have not been diminished by the limitation clause only the period within which an action can be raised.

 

19.  The Regulation itself does not fix a time limit for bringing actions to enforce the rights guaranteed by that Regulation.  Both the Warsaw and Montreal Conventions provide that actions should be raised within a two year period but as was determined in Moré v KLM that period is not to be considered a prescriptive period relevant to EU Regulation 261/2004.  The determination in Moré was that: “time limits for bringing actions for compensation under Articles 5 and 7 of the regulation are determined in accordance with the rules of each member state in the limitation of actions”.  That provision must apply equally to the application of common as to statute law.  It is a well-founded principle that parties can agree in any commercial transaction, subject to fairness, whatever terms they each agree as appropriate.  The Defender’s General Conditions of Carriage might have provided for a period within which to bring proceedings longer than the short prescriptive period set out within the Prescription and Limitation (Scotland) Act 1973 if that had been considered appropriate.  Had such an agreement been in place then the short prescriptive period provided for by the Act would not have applied.  Equally, then, the introduction of a shorter prescriptive period, by agreement, and subject to a test of fairness, falls within the “rules of each member state on the limitations of actions”.  This, then, is a matter of contract and, provided that what has been agreed is legally permissible at common law or under statute, that contract falls to be interpreted by application of the accepted principles of contract law.

 

20.   The Pursuer has not brought a claim within the two year period contracted between her or her agent and the Defender.  The making of such a contract has not been invalidated either by statute or by EU Regulation 261/2004 and is therefore legally valid and permissible subject only to a test of fairness.  As this action has been raised out with the two year period agreed to be contractually binding between the Pursuer, through her agent, and the Defender then I am satisfied that her claim has prescribed.”

 

[6]       The sheriff then dealt with the question of whether or not the defender’s article 15.2 of the General Conditions of Carriage breached the terms of either the Unfair Contract Terms Act 1997 or the Unfair Terms in Consumer Contracts Regulations 1999.  He found that they did not.  There is no necessity for me to record the sheriff’s decision on these issues as they are no longer the subject of appeal.

[7]       The sheriff upheld the defender’s preliminary plea that the proceedings were time barred by the pursuer’s failure to raise proceedings within the two year prescriptive period agreed between her and the defender.  The defender was awarded the expenses of the cause on the small debt scale.

 

[8]       The sheriff posed the following questions for my determination:-

“QUESTIONS FOR THE SHERIFF PRINCIPAL

 

(1) Did I err in law in equiparating the reference to “damages” in the Defender’s General Conditions of Carriage at Article 15.2 with the reference to “compensation” in Articles 5 and 7 of EU Regulation 261/2004?

 

(2) Did I err in law in holding that Article 15.2 of the Defender’s General  Conditions of Carriage was consistent with the rights afforded by EU Regulation 261/2004 as interpreted by the judgement of the Court (Third Chamber) in case C-139/11 Juan Cuadrench Moré v Koninklijke Luchtvaart Maatschappij NV?

 

(3)Did I err in holding that the Pursuer’s claim for compensation was time barred by reason of not being raised within two years as contracted by her with the Defender?”

 

[9]     I heard parties on this appeal in Ayr Sheriff Court on 6 June 2014.  The pursuers and appellants were represented by Mr W Morrison who, although a qualified solicitor was acting for the pursuers in this case on a no fee basis and therefore as an individual.  The defenders and respondents were represented by Ms Goldie, solicitor, Ayr. The issue before me at appeal was whether the sheriff was correct to find that the pursuer’s claim for compensation in terms of articles 5 and 7 of EU Regulation 261/2004 (“the Regulation”) was time barred in view of the contents of article 15.2 of the defenders general conditions of carriage. The terms of these provisions are set out in paragraphs 2 and 3 hereof.

SUBMISSIONS FOR THE PURSUERS AND APPELLANTS

[10] The lay representative on behalf of the pursuers lodged very substantial written submissions which, in view of developments at the end of the appeal hearing and subsequent to the appeal hearing, I do not require to narrate in detail. It is sufficient to say that solicitor for the defenders, at the conclusion of her submissions, brought to my attention a judgement in the case of Weir and Barrie v Ryanair Limited which had been issued by Sheriff Deutsch at Glasgow Sheriff Court on 26 July 2013. At the date of the appeal hearing before me, she understood that decision was the subject of appeal to the Sheriff Principal at Glasgow. That case involved exactly the same set of circumstances as this case. Sheriff Deutsch had cause to consider the terms of articles 5 and 7 of the Regulations 261/2004 and article 15.2 of the defender’s general conditions of carriage for passengers and baggage. The pursuers’ lay representative adopted the reasoning of Sheriff Deutsch.

 

[11] I quote from the judgement of Sheriff Deutsch as follows:-

“[5]…the question here is whether a right to compensation under Regulation (EC) no 261/2004 amounts to a “right to damages”, which is the expression used in clause 15.2 to describe that which is extinguished if an action is not brought within 2 years. The starting point for consideration in this case and beyond which, as will be seen, it is unnecessary to go, is the natural and ordinary meaning of that phrase.”

The sheriff then referred to MacGregor on Damages and quoted therefrom inter alia :-

“[6]…the impossible search for a clear cut comprehensive definition is therefore abandoned. Instead the definition from earlier editions, a definition which still represents the norm is taken but it is qualified to indicate that it applies generally but not invariably, thus;

“damages in the vast majority of cases are the pecuniary compensation obtainable by success in an action, for a wrong which is either a tort or a breach of contract, the compensation being in the form of a lump sum awarded at one time, unconditionally and in sterling.”

Sheriff Deutsch continued:

“[7] There is nothing in the general conditions to suggest that the intention of the draftsman was to use the expression otherwise than in its normal sense.  If one proceeds upon an understanding of “damages” in accordance with the norm then I do not consider that compensation payable by virtue of regulation (EC) No 261/2004 can be described as compensation for a wrong which is either a tort (in Scotland the word is “delict”) or a breach of contract.  While damages are compensatory, not all claims for compensation are necessary claims for damages.

[8] MacGregor identifies four types of money claims in which pecuniary satisfaction is gained by success in an action but which are not based upon a tort or breach of contract and which do not satisfy any definition of damages because they fall outside of any definition (1-003). The fourth of these types are actions claiming money under statutes where the claim is made independently of a wrong which is a tort/delict or breach of contract (1-010). The examples given are actions in respect of benefits under the Social Security Acts, claims for unfair dismissal and for redundancy payment under the Employment Rights Act 1996. I consider that a claim under Regulation (EC) No 261/2004 has exactly this character of a claim under legislation (in this case in the form of an EC Regulation) where the claim is made independently of any wrong….

[10] The amendment which the defendant has made to clause 15.2 in the current edition of the general conditions appearing on the defendants website inserts after “any right to damages” the additional words “and/or compensation”;  an insertion which might be thought to be significant.”

 

[12]   Sheriff Deutsch then dealt with the other matters with which this appeal is not concerned, but in the event he granted decree on the basis that the sum claimed in terms of the Regulation, being a right to compensation was not struck at by the defenders clause 15.2 which related to “any right to damages”.

 

[13] The essence of Sheriff Deutsch’s opinion was to the effect that damages in accordance with the norm did not include compensation payable by virtue of the Regulation which could not be considered as compensation for a wrong which is either a delict or a breach of contract.

 

[14] The lay representative for the pursuers’ commended Sheriff Deutsch’s reasoning to me.

 

SUBMISSIONS FOR THE DEFENDERS AND RESPONDENTS

 

[15] Essentially the defenders’ position was that the sheriff properly dismissed the pursuer’s claim on the ground that, as a matter of law, it was time barred.  The solicitor for the defenders adopted the reasoning of the sheriff set out in detail in his stated case.

 

[16]   The present action was warranted and served upon the defenders on 26 August 2013, being more than three years and six months after the delay by some twenty one and a half hours of the departure of the defenders scheduled flight on 21 February 2010 which gives rise to the cause of action.  The applicable prescriptive period for the pursuer’s claim, it was argued, was two years from 21 February 2010 as a matter of contract between the parties, in terms of the defenders general conditions of carriage, article 15.2, which the pursuer had accepted when making the flight booking.  Article 15.2 provided:-

“any right to damages shall be extinguished if an action is not brought within two years of the date of arrival at a destination or the date on which the aircraft is scheduled to arrive or the date on which the carriage stopped.  The method of calculating the period of limitation shall be determined by the court of law where the case is heard”.

 

Article 2.3.1 provided:

“These conditions of carriage are applicable unless they are inconsistent with applicable law in which event such law shall prevail.”

 

 

[17]   It was pointed out that article 15.2 tracks the wording of article 16.2 of IATA recommended practice 1729 of general conditions of carriage (passenger and baggage).  It was submitted that there had as a result been no limitation or waiver of the pursuer’s rights as a passenger by reason of the defenders’ general conditions of carriage article 15.2.  The only restriction was the period within which a claim required to be made.

 

[18]   I was referred by the solicitor for the defenders to the terms of judgments in the following cases, all of which appeared not to have been reported in any of the Law Reports:-

(1) Clissold v Ryanair Limited, Colchester County Court 3 May 2012.  In that case District Judge Mitchell stated:

“The EU regulations and the Montreal Convention and Ryanair’s standard terms and conditions which incorporate those regulations contain a variation of the general law of England and Wales as far as limitation of actions are concerned, in that any right to damages is extinguished if an action is not brought within two years of the date of arrival at destination or the date on which an aircraft was scheduled to arrive.”

Reading the judgment, it does not appear that the issue of whether the payment in terms of the regulation was “compensation” or “damages” was discussed.  By implication the judge took that view that they were the same as he held that the limitation of two years applied; 

(2) Thieme v Ryanair Limited Cardiff County Court 14 March 2013.  It was held by Deputy District Judge Sherlock the contractual limitation clause applied as the proceedings to recover the compensation had not been made within two years; 

(3) Pickard v Ryanair Limited Lincoln County Court 31 July 2013.  District Judge Maw expressed the view that the claim under the regulation was time barred; 

(4) Wills v Ryanair Limited Southampton County Court 18 December 2013 District Judge Sparrow determined that the defenders standard terms and conditions were incorporated into the contract between the claimant and the defendant, including the contractual limitation clause for bringing proceedings within two years.  It was not argued again before him that “compensation” equiparated with the term “damages”, but he must have taken that view.

(5) Goel and Jaskirat v Ryanair Limited Manchester County Court 5 March 2014 Deputy District Judge Masheder was again satisfied that the defenders standard terms and conditions were incorporated into the contract, including the contractual limitation clause for bring proceedings within two years and the claim was therefore time barred; 

(6) Burke v Ryanair Limited Bury St Edmunds County Court 8 April 2014:  claim was dismissed at an oral hearing by reason that the claimant had issued proceedings after the contractually agreed time limit of two years.

It was submitted that the decision of the sheriff in this case on the issue of time bar was consistent with the reasoning of each of the judges in these six cases.

 

[19] In these circumstances I was asked to refuse the appeal and adhere to the sheriff’s interlocutor to effect this action was time barred.

 

DECISION

 

[20]   I should first of all say that it was brought to my attention, after the hearing before me in Ayr Sheriff Court on 6 June, that Sheriff Principal Scott had in fact dealt with the appeal from Sheriff Deutsch’s decision in the case of Weir and Barry v Ryanair on 22 January 2014.  I was provided with a copy of that opinion.  In his decision Sheriff Principal Scott adhered to the decision of Sheriff Deutsch and refused the appeal.  Sheriff Principal Scott stated inter alia:

“[5]        When one looks to article 15.2 (in its original form) the question which is immediately engaged is whether a “right to damges” would include a claim under regulation (EC) No 261/2004.  For any court to apply the provisions of article 15.2 it requires, firstly, to determine what the provisions mean and what their effect is.  At paragraph 5 in his judgment, the sheriff correctly identified the question in hand and also indicated that the starting point for consideration was “the natural and ordinary meaning” of the phrase “right to damages”.  I agree with the sheriff’s analysis from para 7 onwards.  In particular, as he puts it “While damages are compensatory not all claims for compensation are necessarily claims for damages.””

In view of the fact that this was a small claim I did not think it appropriate to go to the expense of a further hearing. I had heard detailed submissions from both sides on the issue involved. However both parties were aware that I was considering Sheriff Principal Scott’s decision when this case was at avizandum.

 

[21] I think it is probably fair to say that none of the cases on which the defenders relied involved a consideration of the issue which was argued in this case and which was the subject of judicial decision at first instance and on appeal in Weir and Barrie v Ryanair Supra.

 

[22] As I understand the position of the sheriff in this case, having considered the Oxford English Dictionary definitions of “damage” and “compensation”, he took the view that any distinction between a claim for damages and a claim for compensation was too fine to be of value in consideration of this action. Importantly, the sheriff does appear to accept that essential to a claim for damages is that it should have its origin in delict or breach of contract. He states at paragraph 19 of his Stated Case:-

“Although the amount of compensation under the regulation is not subject to proof of loss, it is none the less dependent upon the defender establishing that article 5.3 of EU Regulation 261/2004 applies in that the cancellation was caused by extra ordinary circumstances which could not have been avoided even if all reasonable steps had been taken. If follows, in my view, that should it be shown that the “extra ordinary circumstances” were avoidable, even if the carrier had taken all reasonable steps, then there would be an inference of negligence on the part of the carrier which would have consequences in delict.”

 

It was for that reason that he pronounced himself satisfied that the use of the term “compensation” and the reference to “damages” respectively in the Regulation and the defenders general conditions of carriage were synonymous. I do not agree with the sheriff in this conclusion. For there to be negligence on the part of the carrier, there would require to be a finding that the carrier had not taken all reasonable steps. The only way for the carrier to avoid liability to make a payment under the Regulation is to prove that the cancellation was caused by extra ordinary circumstances which could not have been avoided even if all reasonable steps had been taken. Compensation would therefore be payable even if it was proved that the carrier had taken all reasonable steps. Accordingly there is no issue of negligence in the decision of whether a payment should be made in terms of the Regulation. I conclude that a payment under the Regulation has nothing to do with delict. It follows that a claim for compensation under the Regulation is not a claim for damages. It is not contingent on proof by the passenger of negligence or breach of contract on the part of the carrier. Accordingly a payment under the regulation is not affected by article 15.2 of the defenders condition of carriage as it is not a right to damages. The right under the regulation is an entitlement to compensation, without proving loss to the passenger against the carrier regardless of whether there was any fault on the part of the carrier.

 

[23] The sheriff in his Note raises the question of whether any sum received as as compensation under the Regulation may be applied as an offset to the quantification of any loss suffered. While the matter does not require to be determined by me in this action, I have to say that I think that the sheriff is correct in reaching that conclusion. However that does not mean that a payment received under the Regulation is a claim for damages. Take an example of a passenger who makes a claim for damages involving the cost of alternative flights, the cost of subsequent hotel accommodation, loss of earnings for delay in returning to work and a sum for inconvenience. Appropriate sums may be agreed in negotiation or awarded by a court in respect of damages under each head and paid or awarded accordingly. In my opinion, the damages having been thus ascertained, it would be appropriate for any sum recovered under the Regulation to be deducted from the total damages - otherwise there would be a double payment. However, this does not mean that the sum payable under the regulation is a claim for damages. It is paid irrespective of fault on the part of the carrier.

 

[24] I understand the defenders have now amended clause 15.2 to read “any right to damages and/or compensation shall be extinguished…”. This is surely an acceptance that a right to damages arises only where there is negligence or a breach of contract. The right to compensation in this case arises irrespective of either of these issues.

 

[25] For these reasons in my opinion the time bar of two years in article 15.2 of the defenders general conditions of carriage does not apply to any sum claimed under the Regulation. This action is not time barred.

 

[26] I accordingly answer the questions posed by the sheriff in the Stated Case in the affirmative. The pursuers have departed from their argument that the contract conditions are unfair. I remit the cause to the sheriff to determine whether the cancellation of the flight was caused by extra ordinary circumstances which could not have been avoided even if all reasonable measures had been taken.

 

[27] Again to avoid expense it appears to me that the appropriate way of dealing with expenses in connection with the appeal hearing is to ask parties to lodge written submissions with my secretary by 8 August 2014. If I require to hear parties having received these submissions, a hearing on expenses will be appointed.