Travel Industry Legal Battle: Online Travel Agent Group Successfully Claims Refunds from Airline Under PTRs

Citation: [2023] EWHC 2694 (Comm)
Judgment on

Introduction

In the case of On The Beach Limited & Ors v Ryanair UK Limited & Anor, the court was presented with a dispute between an online travel agent group (OTB Group) and an airline company (Ryanair) regarding the legal obligation of the latter to refund the former for cancellations and significant changes to flights which were part of package holidays. This article analyses the judgment delivered by Mr Nigel Cooper KC and identifies the key legal principles applied therein.

Key Facts

OTB Group, comprising online travel agents and a portal for selling third-party travel services, claimed around £2 million from Ryanair for refunds provided to travelers whose package holiday flights were cancelled or significantly changed. This claim was made despite OTB Group’s use of Ryanair’s website contrary to its terms of use. Ryanair, while disputing a legal obligation to refund OTB Group, expressed willingness to process refunds with appropriate safeguards against dual refunds to travelers. The litigation encompassed broader conflicts between the parties concerning the booking of Ryanair flights by online travel agents.

The case’s legal analysis revolves around the following areas:

  1. Summary Judgment: The court adopted the principles from Easyair Ltd v Opal Telecom Ltd to determine whether OTB Group had a realistic chance of success. The judge avoided a mini-trial and assessed whether Ryanair had a real prospect of successfully defending OTB Group’s claim or if any further evidence foreseeable at trial would affect the case’s outcome.

  2. Striking Out: Ryanair’s application to strike out part of OTB Group’s claim based on CPR 3.4(2)(a) and (b) was rejected. The test from Standard Life Assurance Ltd v Building Design Partnership Ltd was applied, emphasizing that subsequent pleadings must not introduce new claims unless appropriately amended.

  3. Unjust Enrichment: OTB Group based their claim on unjust enrichment, arguing Ryanair was enriched by OTB’s payment of refunds for flights. Ryanair contended no claim could be successful due to lack of a breach of contract or legal basis. The principles from Dargamo Holdings v Avonwick Holdings were influential for understanding that unjust enrichment claims must consider existing contractual obligations.

  4. Package Travel and Linked Travel Arrangements Regulations (PTRs): The key point was whether Regulation 29 of the PTRs created a statutory right or was merely permissive. The judge held that it does create such a right, basing the rationale on the wording, context of PTRs, the overarching Directive, and statutory construction principles, even without clear travaux préparatoires.

  5. Causation: Relevance and materiality were central to establishing whether Ryanair’s actions (cancellations and changes) caused the loss for OTB Group, warranting refunds under the PTRs or unjust enrichment. The judge determined that Ryanair’s actions did contribute to the holidays’ cancellations, thus upholding OTB Group’s claim.

Outcomes

The Judge:

  • Dismissed Ryanair’s application to strike out parts of OTB Group’s pleadings.
  • Granted summary judgment in favor of OTB Group on the principles of unjust enrichment and under Regulation 29 of the PTRs, except where Ryanair had already refunded travelers directly before OTB Group did.
  • Found that Ryanair’s issuing of vouchers did not fulfil their refund obligation as they had no cash value to OTB Group.
  • Limited leave to Ryanair to defend against refunds paid to travelers before OTB Group’s payments, subject to further orders and potentially transferring the matter to a King’s Bench Master for resolution.

Conclusion

The judgment in On The Beach Limited & Ors v Ryanair UK Limited & Anor clarifies that OTB Group had a legal claim against Ryanair for refunds due to cancellations and significant changes to flights under the principles of unjust enrichment and statutory rights under PTRs. It reinforces the importance of summary judgment principles and properly following the Civil Procedure Rules when pleading a case. Notably, this case establishes that PTRs can provide organizers with a right to recover funds from suppliers, potentially shaping future disputes within the travel industry.