Thomas Cook consequential loss.

Terry_Towelling

blueste wrote: »

Thank you for all your replies. As of now I have only had a brief verbal confirmation as to why my consequential losses claim(s) have been refused from a complaints manager, I am assured the letter will be with me in a day or two. From what I was told they have refused the claim on the basis that TC terms state that I would not be covered for other losses if TC themselves were still operating but had not provided the service.

Since they have not asked for or seen my terms of booking with TC it is hard for me to understand where they have found the t+c's for a company no longer operating. I will be taking out a complaint and if necessary escalate to the Ombudsman.

I don't understand their view here (emboldened text above). Why would an issuer refer to a loss limitation clause that applied specifically to a situation that doesn't apply? TC are not still operating.

It is true that a contract can limit liability for losses (although those limitations may be seen as unfair contract terms and are not necessarily enforceable in law).

It seems the stumbling block in many of these cases is the type of loss. Is the loss a direct loss or a consequential loss. The card companies seem to be declining payment on the basis that consequential losses cannot be paid out for non-relatives/dependents travelling as part of a 'party'.

My argument would be that these are not consequential losses but direct losses, so the card companies' limitations should not be applied. I have seen it reported that a consequential loss is one that could not reasonably have been foreseen by the paying-party when the contract was taken out. To my mind, anyone could reasonably predict that non-performance of the contract might result in a replacement service having to be purchased - most likely at a different cost. That makes the sort of loss we are talking about here a direct loss and so no limitations applicable to consequential losses should ever be applied.

I suspect the banks will stick to their line, (knowing they are probably in the wrong) in the hope that cardholders will either accept the position, or only go to FOS and not to court. FOS will most likely make them pay up, but, in that event, the bank will have limited their losses to only those cases that go to FOS. If cases actually went to court, the consequences for the banks would be much worse, because that would lead to a definitive ruling that the whole industry would then be obliged to adhere to going forward.

All just my opinion, I'm afraid, but I have worked for a card company whose legal department said they'd prefer to pay out (on a minority of cases) either voluntarily or following an FOS ruling because a court ruling could blow a hole in everything.

eco_warrior

Lpool21 wrote: »

Hi guys
I booked some flights with Thomas Cook for a party of 6 including me,my daughter,my parents and 2 friends on my Barclaycard for this Dec.The approx cost was £3500 and the flights were economy on way out and premium on the return.
When I heard that Thomas Cook had gone bust I booked the cheapest replacement flights I could find at a total cost of £5500.These flights are economy both ways so less than like for like.
I applied to Barclaycard under section 75 for the initial £3500 and for £2000 consequential loss for the replacement flights.
I received a reply today stating that they would refund the full £3500,subject to investigation,but would only refund consequential loss for me and my daughters flight as she is my dependent.
I don’t think this is correct as I solely paid the full amount for both the Thomas Cook flights and the replacement flights.I am the one that has fully suffered the consequential loss and no one else.
Any help/advice would be very much appreciated

I’m afraid I would agree with this decision. Or should I say it would be the outcome I would expect based on my own experiences with S75.

As others have said, some banks have different approaches, especially when it comes to large scale events (Airlines) or sensitive issues (breast implants being a good example as it was health related). It’s likely to be a commercial decision to be more generous with s75 claims rather than stick to a more rigid approach.

Terry_Towelling

eco_warrior wrote: »

Would you get a contract with all 4 names on it for radiators? You’ve missed the point a bit Terry.

Quite possibly I've missed the point and maybe, even the plot!

The point I was trying to illustrate (if I can remember that far back) was that if I used my own CC to part-fund central heating for a house that I owned jointly with a bunch of non-related people, that heating system would benefit me (the debtor) and the other non-related house owners. It is akin to me buying flight tickets for me and some other unrelated individuals with a part payment on my CC.

If there were a breach of contract with my heating system and I submitted a S75 claim, my card company would evaluate it, but wouldn't quibble over the non-card payment part of my claim, despite their own (incorrect) view being that this is a consequential loss which benefits people who aren't related to me.

If they were to apply the same scrutiny they do to travel claims, they'd refuse to pay out on the portion of my claim that covered the heating in my co-owners rooms.

I said it was a contrived example, but I couldn't think of another way to illustrate why the card companies are being a) inconsistent in their approach, and b) incorrectly viewing direct losses as consequential losses in order to invoke some odd limitation on their liabilities to non-family members.

Terry_Towelling

eco_warrior wrote: »

I’m afraid I would agree with this decision. Or should I say it would be the outcome I would expect based on my own experiences with S75.

As others have said, some banks have different approaches, especially when it comes to large scale events (Airlines) or sensitive issues (breast implants being a good example as it was health related). It’s likely to be a commercial decision to be more generous with s75 claims rather than stick to a more rigid approach.

The trouble is that Barclaycard seem to be interpreting the loss here as a consequential loss and saying that such losses will not be reimbursed unless the party members are dependents of the cardholder.

FOS case 86 (referred to way back in this thread) clearly rules that this stance is not acceptable to FOS. That case involved the parents of the cardholder (family members, but clearly not dependents) and the issuer was told to pay out.

It is also debateable that a card issuer should treat the extra cost involved in buying replacement flights as a consequential loss, when other legal resources seem to imply they are direct losses, as they are an easily foreseeable result of a breach of contract.

Like I said earlier, I suspect the banks are happy to be told by FOS to pay up in the minority of cases that get that far because that is better than (potentially) having their official stance blown out of the water by a court ruling, thereby opening the floodgates to widespread increased pay-outs.

born_again

blueste wrote: »

Since they have not asked for or seen my terms of booking with TC it is hard for me to understand where they have found the t+c's for a company no longer operating. I will be taking out a complaint and if necessary escalate to the Ombudsman.

Odd that they did not ask for the T/C as that is pretty standard stuff required. But it could be that given the pre-warning that this was coming. That some for sighted person took a copy. Or like us. One of our team got caught in the Closure and had a copy for reference.

blueste

So I have had the letter from Halifax, the exact wording they used to refuse my claim is
"Thomas Cook's terms and conditions state that for single component bookings, such as flight-only purchases, there is no liability for consequential losses in relation to any arrangement which you book to coincide with that single component"

My argument will be that my losses are a direct loss due to the collapse, had TC provided the flight(s) I would not have incurred the additional costs.

Terry_Towelling

I agree with you that your additional costs are a direct loss and not consequential - but that is just my opinion.

I also suspect Halifax will stick to their line in the hope that you will just give up and accept what they say, whilst, at the same time, secure in the knowledge that if you complain to FOS, they will probably insist you be reimbursed (I'm only guessing, of course) and Halifax will be only too happy to do so at that point, knowing that this is just a one-off and not the result of a court judgement that would open the floodgates.

Lpool21

I have been doing some research and again agree with Terry Towelling that rebooking a flight is a direct loss and not consequential.
The difference between the two does seem to cause confusion in contract law.
I still cannot find anything regarding consequential loss being limited to dependant relatives anyway.
i’m sure the card companies are probably implying that the creditor-debtor-supplier relationship doesn’t exist with the other passengers.
I think that in these grey area cases where people have already suffered stress etc due to the situation the credit card companies should rule more sympathetically but I guess that I’m being naive!!

Terry_Towelling

It is possible that the banks have decided anything purchased for someone else is a gift (another potential grey area) and therefore not eligible for S75 cover - but, they have adopted a voluntary policy (which will vary from bank to bank) whereby they will pay out when the beneficiaries of those 'gifts' are family members/dependents. Such a voluntary arrangement should limit their exposure and reduce the possibility that a case will go to court and be ruled against them. (All just guesswork on my part, though).

Lpool21

maybe.
It’s all guesswork on all our parts!! lol