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4KBWs aviation law team considers the impact of the recent Court of Appeal decision in Jet2.com v Ronald Huzar

12-June-2014 10:02
in General
by Admin

Yesterday’s much anticipated judgment of the Court of Appeal in the appeal of Jet2.com v Ronald Huzar [2014] EWCA Civ 791 is likely to cause excitement to discontented passengers and dismay to air carriers in equal measure.

The appeal related to the right under EC Regulation 261/2004 (“the Regulation”) of passengers subject to lengthy delays or cancellations of qualifying flights to standardised compensation for such inconvenience.

Article 5(3) of the Regulation provides a defence for air carriers where a delay or cancellation is caused by “extraordinary circumstances” which could not have been avoided even if all reasonable measures had been taken.

The Court of Justice of the European Union (“CJEU”) went some way to clarify the meaning of extraordinary circumstances in Wallentin-Hermann v Alitalia–Linee Aeree Italiane SpA Case C-597/07, [2009] Bus LR 1016 (“Wallentin-Hermann”), where it explained that a circumstance would only be extraordinary where it was not inherent in the normal exercise of the activity of the air carrier concerned and was beyond the actual control of that carrier on account of its nature or origin.

In Jet2.com v Huzar, His Honour Judge Platts had upheld an appeal against a finding by the court below that extraordinary circumstances existed in respect of an unexpected technical problem. He considered that Wallentin-Hermann imposed a two-limb test for extraordinary circumstances and concluded that, once a technical problem is identified, it is inherent in the normal activity of the air carrier to have to resolve that technical problem.  Accordingly, the judge found that Jet2.com was not entitled to rely upon a defence of extraordinary circumstances and awarded Mr Huzar compensation under the Regulation.

On appeal to the Court of Appeal, Jet2.com submitted that the correct test was in fact a single, composite test.  It was contended that as the carrier had no actual control over the event causing the technical problem and could have done nothing about it in advance, the conclusion should be drawn that the fault was not inherent in the normal operation of the carrier’s activity.  As such, the circumstances should have been held to be extraordinary and the carrier’s defence should have succeeded in the courts below.

Mr Huzar contended that control for the purposes of the test referred to the control which a carrier has over its operations, even where problems arise which were not anticipated.  Essentially, if the event is inherent in the operation of the carrier, then it is within its control for the purposes of the test; only when the circumstances leading to the delay or cancellation were not inherent would they be deemed to be outside the carrier’s control and relieve the carrier of the obligation to compensate passengers.

Lord Justice Elias giving the judgment of the Court of Appeal (with which Laws and Gloster LLJ agreed) upheld the decision of His Honour Judge Platts but not his reasoning. He rejected the argument that the question of control determines the question of whether the circumstance is inherent in the normal activity of the carrier. Rather, he found the issue of what is inherent in the normal activity of the carrier to be determinative of the question whether extraordinary circumstances existed. As he put it at paragraph 47: “The event causing the technical problem will be within the control of the carrier if it is part of the normal everyday activity which is being carried on and will be beyond the carrier’s control if it is not”.

Elias LJ confirmed that His Honour Judge Platts was wrong to focus on the resolution of the technical problem rather than its source, stating at paragraph 21 of the judgment: “A technical problem may indeed constitute an extraordinary circumstance provided it stems from an event which is not inherent in the normal exercise of the activity of the air carrier concerned and is an event which is outside the carrier’s control”.

Elias LJ accepted Mr Huzar’s wide definition of control as “capturing the notion that the carrier can sensibly be said to be in control of its own operations, even when problems arise which it could not have anticipated” [paragraph 33].

Accordingly, in rejecting Jet2.com’s argument that the fault was outside the control of, and could not have been prevented by the carrier, so was not inherent in the ordinary operation of the carrier’s activity, Elias LJ concluded at paragraph 36:

“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.”

However, what Elias LJ failed to address was the next paragraph [25] of Wallentin-Hermann, in which the CJEU concluded that “technical problems which come to light during maintenance of aircraft or on account of failure to carry out such maintenance” could not constitute extraordinary circumstances.  The implication being that technical problems which did not, or could not have, come to light during maintenance, nor came about by the failure to carry out such maintenance, could be capable of being extraordinary circumstances “to the extent that they stem from events that are not inherent in the normal exercise of the activity of the air carrier concerned and are beyond its control” [paragraph 26].

Elias LJ’s conclusion in paragraph 36 of the judgment therefore goes further than that of the CJEU by describing “all” technical problems as being inherent in the normal exercise of the carrier’s liability.  Yet it is difficult to see how this conclusion fits both with paragraph 21 of his judgment, in which he confirms that a technical problem may constitute an extraordinary circumstance, and paragraph 26 of the Wallentin-Hermann in which the scenario of a aircraft manufacturer revealing a hidden manufacturing defect was given as an example by the CJEU of an event not being inherent in the normal exercise of the carrier’s activity.

The question for practitioners will therefore be to determine whether an event causing a particular technical problem was part of the normal everyday activity of the carrier, and therefore within its control.  The Court of Appeal’s decision unfortunately gives no indication what such an event might look like.

Where there may be narrow room for argument is in challenging, or at least distinguishing, Elias LJ’s assumption in relation to Wallentin-Hermann that all technical defects are “part of the wear and tear” and therefore are inherent in the normal exercise of the activity of the carrier (see paragraph 36).  From the CJEU’s reasoning in paragraph 26 of its judgment, it seems arguable that a manufacturing or assembling defect (if produced by a third party), that is unforeseen and unexpected, could be described as being outside the normal everyday activity of the carrier, and therefore outside its control.

Regardless of the further questions the decision throws up, it will undoubtedly have a significant impact upon the claims already brought in relation to flights delayed due to technical shortcomings, many of which have been stayed pending the Court of Appeal’s ruling, and is likely to encourage passengers to seek compensation from air carriers.  This may not be the end of Jet2.com and Mr Huzar’s journey as it has been reported that Jet2.com is seeking to appeal this decision to the Supreme Court.  This is wholly unsurprising given that the significant financial consequences to air carriers has been estimated as being in the region of £6 billion should this judgment stand.

A copy of the approved judgment may be found here.

John Ditchburn, Timothy Salisbury and Christopher Loxton