Cruising To Victory

On 17 October 2011, All Leisure Holidays Limited (represented by Victoria Brackett, Katie Papworth and Sophie Davies of Thomas Eggar LLP and James Cuttress of Fountain Court Chambers) was awarded damages of £2 million plus costs against Europäische Reiseversicherung AG, Groupama Insurance Company Limited, Novae Syndicates Limited and Sagicor Corporate Capital Limited (represented by Clyde & Co) in respect of an indemnity under a financial failure insurance policy.

This case addresses three interesting points of law: whether there was a "cancellation" within the meaning of the policy, whether "net ascertained loss" had been suffered in the context of the policy and what steps are required to prove a claim under the policy.

Background

The Hebridean Princess (the "Princess") is a cruise ship which was owned and operated by Hebridean International Cruises ("HICL"). HICL went into administration on 8 April 2009. On 22 April 2009 the Administrator sold various assets, including the Princess, to All Leisure.

As a tour operator within the EU and pursuant to the Package Travel, Package Holidays and Package Tours Regulations 1992 HICL was required to provide its passengers with insurance to protect them in the event of HICL's financial failure. HICL purchased such a policy through International Passenger Protection Limited ('IPP'). The policy was underwritten by Europäische Reiseversicherung AG, Groupama Insurance Company Limited, Novae Syndicates Limited and Sagicor Corporate Capital Limited (together referred to as the "Insurers").

The policy was designed to indemnify passengers in respect of any net ascertained financial loss sustained from cancellation / curtailment of their travel arrangements as a result of HICL's insolvency (the "Policy").

At the point of HICL going into administration, the passengers for the 2009 summer cruise season had paid to HICL deposits or the full costs of their cruise. This money was lost as at the point of administration.

As a gesture of goodwill, All Leisure decided to offer a replacement cruise programme to HICL's 2009 passengers with the same itinerary as the HICL cruises. As a condition of booking the replacement cruise, the passengers were required to make a claim under the Policy and pay to All Leisure any monies they recovered in respect of their lost payments.

The Insurers refused to pay out under the Policy. In September 2009, the passengers formally assigned their claims against the Insurers to All Leisure...