Lost deposits for a holiday that ends up being cancelled

Life__Goes__On

A person cancels their holiday, loses the deposit, but later the holiday is cancelled.
My personal view is it should be refunded
My reason is that the holiday company has suffered no loss by a person cancelling.
Normally you pay a penalty for a breach of contract that can mean a loss of deposit.
But the breach must involve a financial loss, and there isn't one in this case.

If a company cancels a holiday I believe it should refund all monies taken for that holiday,  and treat it like the holiday never existed
I personal feel it would be unfair for a company to retain deposits when if you look at the contract as a whole,  both parties have breached it,it's just in this case the customer breached it first.
https://www.which.co.uk/consumer-rights/advice/can-i-claim-back-a-non-refundable-deposit

Life__Goes__On

Seems like you won't find any "legal precedent"  with regard to refunded deposits.
The reason for this is holiday companies never appeal if they lose in a small claims court to avoid setting one.

This works in the customers favour, as it won't be a long drawn out battle.

Pollycat

I've read this on a number of threads by the same 2 or 3 posters.

Lots of 'I feel', 'I believe', 'my opinion is', 'my personal view'.

It would be great (I've said this on another thread) if anyone could post with positive results about successfully challenging any tour operator and recovering all or part of the deposit they paid if they cancelled their holiday (as opposed to the tour operator cancelling).

I wonder if it might be similar to the compensation claims against tummy upsets.

Tour operators paid up until the claims became a flood and then hit back by taking the claimants to court.

I'm not in this situation so I have no axe to grind but I wouldn't like to think someone took this advice and expected to get all or part of their deposit back.

I think anyone who is thinking of cancelling their holiday should work on the principal that they have forfeited their deposit and if it turns out that there is some way they can recover all or part, that would be a bonus.

On the the thread linked to below one poster said - in direct response to your opinion that the poster should get their deposit back as Jet2 has suffered no loss because they cancelled:

They don't seem to be interested. This is last part of their latest/final response:

Our commercial arrangements are confidential, and this is not something we are able to discuss. I am sorry you remain unhappy, however, this is our final position and we will be unable to respond any further as our internal complaints procedure has now been exhausted.
Should you remain unhappy with our position, our membership with ABTA means that you have access to ABTA's dispute resolution process, which has been approved by the Chartered Trading Standards Institute. For further information, or to register your complaint with ABTA, please visit to www.abta.com.

https://forums.moneysavingexpert.com/discussion/6108502/coronavirus-travel-disruption-latest-info-and-your-rights/p35

What is your advice on this specific instance?

I think people asking for their money back should be prepared to play hardball because it seems they are not prepared to roll over at the first request for deposit refund.

Streaky_Bacon

Pollycat said:

It would be great (I've said this on another thread) if anyone could post with positive results about successfully challenging any tour operator and recovering all or part of the deposit they paid if they cancelled their holiday (as opposed to the tour operator cancelling).

As I have said before, the fact that a company cannot legally keep a deposit or cancellation charge except to cover a loss is very well established.

The Government thinks so:

https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

Don’t just accept the business can keep your deposit and advance payments or ask you to pay a cancellation charge if you cancel the contract. The business can only do this if the contract term is fair. If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their losses that directly result from your cancellation (eg costs already incurred or loss of profit).

and the Competition and Markets Authority thinks so

https://www.bbc.com/news/business-47949915

Any amount it charges should reflect its costs. If the company includes a blanket "non-refundable deposit" demand or cancellation fee in its terms and conditions then this could be an unfair contract, not legally binding, and unenforceable - even if the customer has signed it.

and I believe that LGO posted an actual case of a barrister successfully being winning back his deposit in court.

However you seem to need a poster here to have actually succeeded in winning back a deposit before you will accept what the legal position is. I don't think that is a useful way to judge the legal position in the face of clear guidance from reputable authorities.

Pollycat said: I think people asking for their money back should be prepared to play hardball because it seems they are not prepared to roll over at the first request for deposit refund.

Here I agree with you. There is a big gap between what the legal position is and actual enforcement of that legal position.

Companies will, on the whole, do whatever they can to avoid paying out on a legal liability. They will not just rollover until they realise that it is no longer in their interests to fight it.

With regard to the example you gave, it is a common ploy to state that their other contracts are confidential, and so they cannot prove their loss. However, they would eventually have to provide evidence to show their loss if pushed all of the way to court. If they refused to disclose sufficient evidence to prove their loss they would lose.

However before it gets that far, the customer an also reasonably state that they have asked the merchant to prove their loss and the merchant has been unable to do so (the same argument that would be used in court). It is an argument that can also be used in a s75 claim, for example. It is not for the customer to prove that the merchant has not suffered a loss, it is for the merchant to prove they have (or at least that it is a genuine pre-estimate).

Life__Goes__On

I have also read posters claiming a refund is lost without them giving any legal rulings saying this is so.  They never seem to supply any links about deposits always being lost, from sites like CAB, Which?, legal websites etc.

I wouldn’t like think someone as already written off a lost deposit, when there is a chance to reclaim it.

Some posters have said pay the balance as it’s likely the holiday will be cancelled , but what if it isn’t

 

Posters on here do have different opinions,  and that is what it is an opinion,  if you want legal advice with  redress, then for that it needs to be paid for.

 

There are very limited cases to go on, the one I have found is “Bruce Crawcour” who reclaimed all of his money from Thomson (TUI)

Thomson (TUI) were granted leave to appeal to the High Court, but with the knowledge that the decision would have set legal precedent, but they didn’t do so. (you only stop if you think you could lose)

 

People need to make up their own mind on what’s best to do, if it’s your money ask for advice, do research, read links, follow other links (such as to the Consumer Rights Act 2015), make an informed decision.

 

 

 

With the Jet2, I will post on that thread as I missed it, that’s why I never like multiple queries on a single thread.

Thrugelmir

Life__Goes__On said:

A person cancels their holiday, loses the deposit, but later the holiday is cancelled.
My personal view is it should be refunded

Then you may have the situation which results in the "holiday" being unviable to run. If there are mass cancellations. 

Thrugelmir

Streaky_Bacon said:

Pollycat said:

It would be great (I've said this on another thread) if anyone could post with positive results about successfully challenging any tour operator and recovering all or part of the deposit they paid if they cancelled their holiday (as opposed to the tour operator cancelling).

As I have said before, the fact that a company cannot legally keep a deposit or cancellation charge except to cover a loss is very well established.

The Government thinks so:

https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

Don’t just accept the business can keep your deposit and advance payments or ask you to pay a cancellation charge if you cancel the contract. The business can only do this if the contract term is fair. If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their losses that directly result from your cancellation (eg costs already incurred or loss of profit).

and the Competition and Markets Authority thinks so

https://www.bbc.com/news/business-47949915

Any amount it charges should reflect its costs. If the company includes a blanket "non-refundable deposit" demand or cancellation fee in its terms and conditions then this could be an unfair contract, not legally binding, and unenforceable - even if the customer has signed it.

and I believe that LGO posted an actual case of a barrister successfully being winning back his deposit in court.

However you seem to need a poster here to have actually succeeded in winning back a deposit before you will accept what the legal position is. I don't think that is a useful way to judge the legal position in the face of clear guidance from reputable authorities.

Pollycat said: I think people asking for their money back should be prepared to play hardball because it seems they are not prepared to roll over at the first request for deposit refund.

Here I agree with you. There is a big gap between what the legal position is and actual enforcement of that legal position.

Companies will, on the whole, do whatever they can to avoid paying out on a legal liability. They will not just rollover until they realise that it is no longer in their interests to fight it.

With regard to the example you gave, it is a common ploy to state that their other contracts are confidential, and so they cannot prove their loss. However, they would eventually have to provide evidence to show their loss if pushed all of the way to court. If they refused to disclose sufficient evidence to prove their loss they would lose.

However before it gets that far, the customer an also reasonably state that they have asked the merchant to prove their loss and the merchant has been unable to do so (the same argument that would be used in court). It is an argument that can also be used in a s75 claim, for example. It is not for the customer to prove that the merchant has not suffered a loss, it is for the merchant to prove they have (or at least that it is a genuine pre-estimate).

The travel industry is notorious for being generally low margin/high volume. Unless you've worked in company finance of some kind. I doubt you have any understanding of the high level of base cost that needs to be covered before a penny of profit is made. Even then profit isn't the key issue. It's the cashflow required to repay loans, make capital expenditure purchases, deposit bonds etc.

Streaky_Bacon

Thrugelmir said:The travel industry is notorious for being generally low margin/high volume. Unless you've worked in company finance of some kind. I doubt you have any understanding of the high level of base cost that needs to be covered before a penny of profit is made. Even then profit isn't the key issue. It's the cashflow required to repay loans, make capital expenditure purchases, deposit bonds etc.

That's all well and good, but the issue is not overall profit/loss for the company. The issue is the actual loss that directly stems from the cancellation.

https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

Don’t just accept the business can keep your deposit and advance payments or ask you to pay a cancellation charge if you cancel the contract. The business can only do this if the contract term is fair. If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their losses that directly result from your cancellation (eg costs already incurred or loss of profit).

If a company has had to pay out £500 to provide a service to you, that you then cancel, and they cannot recover the £500 that will be relevant. It will be completely irrelevant if they made an actual profit/loss in that tax year, or what their cashflow is, or what their debt position is etc, etc.

Again, it is for the party claiming the loss to prove it. If it's impossible for them to prove, then they shouldn't succeed in claiming it.

If the amount is a genuine pre-estimate of loss, then they need to be able to show how they arrived at it.

Furthermore, if they argue that the their profit on a sale is wafer thin, say £100 on a £3000 sale, and that sale falls through, the lost profit is a maximum of £100. So wafer thin margins work both ways. Of course, their total claimable loss may be higher due to unrecoverable expenditure.

Life__Goes__On

Thrugelmir said:

Life__Goes__On said:

A person cancels their holiday, loses the deposit, but later the holiday is cancelled.
My personal view is it should be refunded

Then you may have the situation which results in the "holiday" being unviable to run. If there are mass cancellations.

I'm talking in the current climate in regard to Coronavirus, currently holiday have been cancelled because of this,  and not to do with any customer cancellations.
Once  holidays start up again,  I wouldn't disagree with you,  different times, different advice.

Thrugelmir

Streaky_Bacon said:

Thrugelmir said:The travel industry is notorious for being generally low margin/high volume. Unless you've worked in company finance of some kind. I doubt you have any understanding of the high level of base cost that needs to be covered before a penny of profit is made. Even then profit isn't the key issue. It's the cashflow required to repay loans, make capital expenditure purchases, deposit bonds etc.

That's all well and good, but the issue is not overall profit/loss for the company. The issue is the actual loss that directly stems from the cancellation.

https://www.gov.uk/government/publications/cancelling-goods-or-services-guide-for-consumers/cancelling-goods-or-services

Don’t just accept the business can keep your deposit and advance payments or ask you to pay a cancellation charge if you cancel the contract. The business can only do this if the contract term is fair. If you cancel the contract, the business is generally only entitled to keep or receive an amount sufficient to cover their losses that directly result from your cancellation (eg costs already incurred or loss of profit).

If a company has had to pay out £500 to provide a service to you, that you then cancel, and they cannot recover the £500 that will be relevant. It will be completely irrelevant if they made an actual profit/loss in that tax year, or what their cashflow is, or what their debt position is etc, etc.

Again, it is for the party claiming the loss to prove it. If it's impossible for them to prove, then they shouldn't succeed in claiming it.

If the amount is a genuine pre-estimate of loss, then they need to be able to show how they arrived at it.

Furthermore, if they argue that the their profit on a sale is wafer thin, say £100 on a £3000 sale, and that sale falls through, the lost profit is a maximum of £100. So wafer thin margins work both ways. Of course, their total claimable loss may be higher due to unrecoverable expenditure.

 The point I was making is that the operational costs of a travel company are extremely high. There's unlikely to be any profit element until the holiday is finally concluded. 

Life__Goes__On

and I believe that LGO posted an actual case of a barrister successfully being winning back his deposit in court.

John Cartwright is the retired barrister,  he looked at the ruling from Bruce Crawcour case, and claimed himself.

https://www.shropshirestar.com/news/2014/02/28/shropshire-pensioner-in-landmark-legal-win-over-holiday-firm/

https://www.shropshirestar.com/news/2015/08/28/ex-barrister-sues-firm-for-cancelled-holiday/
https://www.telegraph.co.uk/finance/personalfinance/insurance/travel/12026723/How-holiday-firms-profit-from-cancellations.html