Package Holidays and Consumer Credit - Court of Appeal Test Case

If you suffer an accident whilst on a holiday that you have paid for with a credit card, is any claim you might have against the card issuer confined to you alone, or does it extend to others on vacation with you? The Court of Appeal considered that issue in an important test case.

A man used his credit card to pay the deposit on a package holiday in Greece. The vacation ended badly when his wife, who was travelling with him, fell and broke her leg. She initially sought recompense from the travel company through which the holiday had been booked, but that claim foundered after the company entered liquidation.

She responded by refocusing her claim against the issuer of her husband's credit card under the Consumer Credit Act 1974. Although the card was in his sole name, she argued that she was entitled to claim against the issuer as a third-party beneficiary of the credit agreement. Her application to join the issuer in the proceedings was, however, rejected by a judge and her appeal against that decision failed.

Dismissing her second appeal against that outcome, the Court found that the word 'debtor', as used in the Act, has a clear and unambiguous meaning. The wife was not a debtor in that the issuer's contractual relationship was with her husband alone. He was the only signatory to the credit agreement; it was he who owed the debt and, if he had defaulted on payment, his wife would have had no liability. The Court further rejected arguments that its interpretation of the Act conflicted with EU regulations designed to protect package holidaymakers.