FOS case: Contract interpretation in Section 75 refund claim for cancelled holiday

[CuriousM]

I have just had an FOS investigator's decision on a dispute case I raised regarding the claim of a refund from my bank under Section 75 rules for a family package holiday which was never provided, and I would appreciate any advice on its validity and how I can argue against it.

A summary of my situation and actions to date:
In 2019 my wife and I organised an expensive package holiday for 7 family members including ourselves, to be taken in 2020. The deposit payment was made with my credit card and the flights portion with her debit card. She was named as Lead Traveller as only one traveller can be named as such.
Due to the covid outbreak the travel agency requested that we postpone to a later date, which we agreed to. We then agreed to a second postponement. On request by the agency for a third postponement to an unknown future date we refused and requested a full refund as per our entitlement under the Package Travel and Linked Travel Arrangements Regulations 2018. The agency refused to provide a refund, citing that our only option was postponement.
I then submitted a Section 75 claim to my bank / credit card issuer for a full refund as I had partly funded the purchase with my credit card and all of the Section 75 criteria (item purchase price between £100 and £30,000, etc.) were valid. The bank denied my claim, stating the following two arguments:
1. The package holiday agreement is in my wife's name and I have only funded the agreement which therefore makes me the financing party only.
2. Only immediate family members are counted as part of a claim and therefore the bank is not liable for additional travellers that are non-related.
I then raised a dispute claim against the bank with the Financial Ombudsman Service.

The FOS investigator decided that the bank has acted unfairly toward my claim and I should be compensated. However, they have interpreted a certain clause in the Terms and Conditions of our package holiday agreement to mean that each traveller has their own individual contract therefore the bank is only liable to repay me for my individual portion of the holiday which is one-seventh of the total amount we paid to the travel agency.

The paragraph in the agreement T&Cs is as follows and I have highlighted in bold the part which I believe is relevant:

Lead Name:
The lead name on any booking with us accepts the full responsibility of collecting the full
balance payable for the booking and indemnifies <the travel agency> against any loss from
any individual failing to pay within your group. The lead name of the group is also responsible
for ensuring that all group members are aware they are bound by our terms and conditions. The
lead name is also responsible for the completion of the online guest list on behalf of all persons
on the booking. It is understood that those booking via email or telephone agree to, and accept
our terms and conditions.

I appreciate that the contractual T&Cs must be applied to all members of the group but I fail to see how this clause can be interpreted as each traveller having an individual contract in terms of financial liability and therefore the bank is only liable to compensate me as an individual traveller, especially if the FOS decision should be based on what is fair and reasonable.
Furthermore, I feel that the debtor-creditor-supplier agreement was for the entire single purchase transaction of the package holiday, thus the Section 75 claim should apply to the entire amount.

Can you please advise on the interpretation of this clause from a legal and/or a "fair and reasonable" standpoint, and offer any other arguments which I can present to the FOS? I will soon need to make a decision on whether to accept the investigator's decision (which I strongly object to) or to disagree with it and have the case taken by an Ombudsman -- with a risk that their decision will be for either less compensation or none at all.

Also, from a legal standpoint is there any legal precedence for the Package Travel and Linked Travel Arrangements Regulations 2018 (or any other regulation) to override the T&Cs of a contract in terms of my situation with the Section 75 refund claim? It would be nice if there is something I can use which negates the need for the above clause to be interpreted in the first place!

If you need any further details please let me know.

[atticus]

That has to be wrong. If nothing else, surely you contracted to buy a holiday for all members of your party.

[CuriousM]

Indeed, it seems perfectly logical and I had argued this point with both the bank and the FOS investigator, but in both cases it was disregarded. Their interpretation of that one highlighted clause in the contract is that each member of the travelling party effectively has their own contract and therefore the bank is only liable to compensate my portion under Section 75.

This is why I am hoping for some advice on how I can state my argument more strongly from a legal perspective, as their interpretation seems neither logical, fair nor reasonable.

One point which I forgot to mention in my original posting is that the one official booking document we received from the travel agency which contains the travel details, itinerary, terms and conditions, etc., does not actually list the names of the members of our party (aside from my wife as the Lead traveller) - it simply states "Number of travellers: 7" in the relevant places.

[echat11]

Just because they have Terms and Conditions doesn't mean their T's and C's are 'fair', they may well be 'unfair'. So the 'Terms and Conditions' are there to be 'challenged'.

https://assets.publishing.service.go..._Explained.pdf

[CuriousM]

Thank you echat11 for the link to this document, it contains some very helpful information.

I read through this and also did a brief browse through the full (144 page!) Guidance document. All of the points I read seem to apply to a contract between a consumer and trader, which leads me to the question:

In the case of my claim for a refund from my bank under Section 75 rules, does the the bank effectively become the "trader" (i.e., provider of the package holiday purchase) and is bound to the purchase contract exactly as though they are the trader? Or does the fact that it is a Section 75 claim restrict their liability somehow (in terms of responsibility or scope) and therefore offer them leeway?

I ask this question because I feel that if this was a claim against the travel agency themselves they would be both liable and expected to repay the sum we paid them in full, whereas this is an S75 claim by me against my bank and both the bank and the FOS investigator are under the impression that only I as the claimant is in scope and none of the other travellers in the party is entitled to be refunded.

[echat11]

Thank you echat11 for the link to this document, it contains some very helpful information.

I read through this and also did a brief browse through the full (144 page!) Guidance document. All of the points I read seem to apply to a contract between a consumer and trader, which leads me to the question:

In the case of my claim for a refund from my bank under Section 75 rules, does the the bank effectively become the "trader" (i.e., provider of the package holiday purchase) and is bound to the purchase contract exactly as though they are the trader? Or does the fact that it is a Section 75 claim restrict their liability somehow (in terms of responsibility or scope) and therefore offer them leeway?

I ask this question because I feel that if this was a claim against the travel agency themselves they would be both liable and expected to repay the sum we paid them in full, whereas this is an S75 claim by me against my bank and both the bank and the FOS investigator are under the impression that only I as the claimant is in scope and none of the other travellers in the party is entitled to be refunded.

Section 75 is in the Consumer Credit Act 1974. This needs some 'investigating / research'.

They are definitely limiting their liability. If I buy you a piano, on my Credit Card and it doesn't work, I make a Section 75 claim, no problem, I get a refund, although the piano has been bought for you. I'm probably being too simplistic.

[CuriousM]

Section 75 is in the Consumer Credit Act 1974. This needs some 'investigating / research'.

They are definitely limiting their liability. If I buy you a piano, on my Credit Card and it doesn't work, I make a Section 75 claim, no problem, I get a refund, although the piano has been bought for you. I'm probably being too simplistic.

Simplistic perhaps but I agree it's the same basic principle.

The only potential sticking point I can see is if my wife buys the non-working piano using my credit card and I make a Section 75 claim. The only name listed on the main Itinerary / T&Cs document for the package holiday is my wife's as we listed her as the Lead Traveller. However, as I paid for part of the holiday and will enjoy the benefit of it I'm sure that is enough to warrant me as having entered into a DCS agreement.

But how to argue it is a DCS for the entire holiday purchase and not just my portion of it as per their interpretation?

[CuriousM]

Someone has pointed me in the direction "consideration" with respect to my claim:

"What is Consideration?
Put simply, consideration is something that has value in the eyes of the law. It is an essential element of forming a valid contract. In practice, this means there must be an exchange of things that have value for a legally binding contract. It is one aspect of the contract forming process and is necessary for every new contract to be enforceable in law."

So my assumption is that if I have paid (via my credit card) a good portion of the package holiday cost in exchange for the package holiday then consideration implies it is the entire package holiday purchase that is contracted and the bank should be liable for all of it and not just my single traveller portion.
1. Would you agree with this?
2. How can I best argue this from a legal standpoint for the S75 case? What legal wording, terms or references could I use?

[Pezza54]

Please read the article at https://theconsumerlawyer.blog/2020/...liday-refunds/

Item 2 under "NEXT STEPS" recommends a chargeback claim in preference to a S75 claim.
As your wife paid for the flights portion using her debit card and is named as the "Lead Name" have you considered your wife raising a chargeback claim with her bank?

[Pezza54]

The time limit for making a chargeback claim is normally within 120 days of the payment. However, Visa and Mastercard have confirmed that in the case of future dated items such as airline tickets, the 120 day time limit begins when the goods or services were due to be received.

[CuriousM]

The time limit for making a chargeback claim is normally within 120 days of the payment. However, Visa and Mastercard have confirmed that in the case of future dated items such as airline tickets, the 120 day time limit begins when the goods or services were due to be received.

Sadly the 120 days since the expected travel date have long since passed, so Chargeback via her bank is no longer an option.

I declined the FOS investigator's decision and have been given 2 weeks in which to provide any further evidence and arguments, so this gives me until just into the new year. I would like to give my final arguments on 28th or 29th December.

The key point to focus on seems to be the investigator's (and bank's) interpretation of that one sentence in the T&Cs as meaning that each traveller has their own individual contract rather than all being party to a single package holiday contract, hence the bank is only liable to refund the portion calculated for me as a single traveller, i.e., one seventh of the holiday purchase amount. It would be extremely helpful if anyone can provide references to cases, legal wording or definitions to strengthen my argument that their interpretation is wrong!

[Pezza54]

Sorry I can't be more helpful.
I don't understand the defence the travel company and FOS are making.
I believe when you let your wife pay the balance of the holiday from her bank account you lost the legal right to a full refund for both yours and your wife's money via a S75 claim to your credit card company.
Had you paid the balance by cheque, cash, whatever, you would have had a valid S75 claim for the full amount.
Had another member of the party paid the balance, your credit card company is not going to refund their money. The person would have to make a separate claim.
You should be entitled to the refund of your deposit.

[CuriousM]

Sorry I can't be more helpful.
I don't understand the defence the travel company and FOS are making.
I believe when you let your wife pay the balance of the holiday from her bank account you lost the legal right to a full refund for both yours and your wife's money via a S75 claim to your credit card company.
Had you paid the balance by cheque, cash, whatever, you would have had a valid S75 claim for the full amount.
Had another member of the party paid the balance, your credit card company is not going to refund their money. The person would have to make a separate claim.
You should be entitled to the refund of your deposit.

My understanding of S75 is that if any part of a purchase of goods or services is made with a credit card and all of the qualifying criteria (item cost of between £100 and £30k, etc.) are met then there is a debtor-creditor-supplier agreement in place and the bank is liable under S75 for the entire purchase cost (or in this case the amount paid towards it), regardless of how or by whom the balance is paid.
The point I am trying to argue with the bank and the FOS is that there is just one single purchase contract in place for the package holiday, and the liability should pertain to this entire contract. There is no implication that each traveller has their own individual contract, though for some reason the FOS investigator is interpreting it this way.

[echat11]

My understanding of S75 is that if any part of a purchase of goods or services is made with a credit card and all of the qualifying criteria (item cost of between £100 and £30k, etc.) are met then there is a debtor-creditor-supplier agreement in place and the bank is liable under S75 for the entire purchase cost (or in this case the amount paid towards it), regardless of how or by whom the balance is paid.
The point I am trying to argue with the bank and the FOS is that there is just one single purchase contract in place for the package holiday, and the liability should pertain to this entire contract. There is no implication that each traveller has their own individual contract, though for some reason the FOS investigator is interpreting it this way.

The first paragraph is 100% correct.

The following might help (from 2010 - 86/5), no doubt there will be similar cases covered in more recent editions - you'll need look for them. You can get an understanding the thinking behind how they make decisions. This should help your case, you can refer to it and others you find, the argument is, essentially the same facts, but different outcomes. Maybe this is a Covid thing where they are trying to limit their liabilities simply because of the number of cases / claims.

https://www.financial-ombudsman.org....es/2921/86.pdf

The circumstance in this case are different -

https://www.financial-ombudsman.org....DRN5702509.pdf

[Pezza54]

"regardless of how or by whom the balance is paid"
Is "by whom" correct? I am unable to find this in CCA legislation. All legal articles on S75 refer to "you"
I quickly read through the sample FOS cases referred to and I couldn't see one where a person had made a S75 claim where they had paid a deposit and someone else had paid the balance.