Update: Sykes Holiday Cottages Refunds

On Sunday morning I wrote to Sykes Holiday Cottages to ask them several questions on behalf of all those seeking a refund for a cancelled holiday. I also set out an analysis of what I believe the legal position to be in the current circumstances. My letter is below:

Dear Sirs

I am writing on behalf of the consumer rights website ‘TheConsumerLawyer.Blog’ (“TCLB”) and the Daily Express, where I am the consumer columnist.  I have been contacted by in excess of 3000 Sykes Cottages customers, who report that they have been refused a refund in relation to holidays cancelled as a consequence of the Covid-19 pandemic.  I shall be writing an article about this, to be published in the Daily Express on Thursday 9^th April 2020, and on TCLB.  In this respect, I am writing to ask you a number of questions, so as to establish precisely what Sykes’ position is in this matter, and to provide you with the opportunity to respond to a number of points that will feature in the articles:

1. Are these the only terms and conditions which apply when a consumer makes a booking via your site? https://www.sykescottages.co.uk/terms/booking

2. At 1.2 of the terms (cited above), there is reference to ‘Terms of Use’. However, no such terms appear on your website (unless I have overlooked these) and, having reviewed the contractual journey the consumer goes through, I cannot see any reference made to these Terms of Use; Please can you clarify.

3. Where the consumer cancels the booking: Is it Sykes’ position that Sykes/the property owners have no obligation to refund consumers in relation to holidays booked for pre-June? If so, what contractual term in the booking conditions is Sykes/the property owners relying upon?

4. Where the consumer cancels the booking: In relation to question 3 above, what is the position in relation to holidays booked for post-June?

5. What is Sykes’ position in relation to questions 3 and 4 above, where Sykes or the property owners cancel the booking?

6. Is Sykes encouraging the property owners to provide consumers with a full refund or a credit? If the latter, please can you explain why this is your policy, and confirm what the terms between Sykes and the property owners say on the subject?

7. I have been informed by some of your customers that the property owners have informed them that they have been told by Sykes that if they agree to a cancellation and refund, they will be charged a cancellation fee by Sykes. This appears to be contrary to the statement below, which appears in your FAQs. Are you able to confirm that if the property owner agrees a full refund, that they will not be charged any fees by Sykes?

Are you charging cancellation fees to property owners?

No, if an owner decides to cancel a booking due to take place before 4th June 2020, we are not charging cancellation fees. We are advising that they help us to facilitate a credit to those customers whose holidays have been cancelled.

8. I understand that consumers are never provided with details of the identity of the property owner, potentially making the property owner an ‘undisclosed principal’. Is this correct?

9. In relation to paragraph 11.1.1 of your terms (cited below), Sykes has clearly become aware of a health and safety issue, namely Covid-19. In these circumstances, why have you not taken steps to cancel all holidays booked for the foreseeable future?

11.1 We may cancel your Booking on an Owner’s behalf if:

11.1.1 we become aware of any health and safety or quality-related issue with the applicable Rental Services or Property or its immediate surroundings (for example contamination to the Property’s water supply);

10. As cited above, paragraph 11.1.1 of your terms affords Sykes the right to cancel the contract if it becomes aware of a health and safety issue. 11.2 provides that the property owner has the right to cancel the contract due to circumstances or events outside of their reasonable control. The consumer is not afforded either of these rights to cancel, which is contrary to Section 62(4) of the Consumer Rights Act 2015, which states:

62(4) A term is unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations under the contract to the detriment of the consumer.

Schedule 2 of the act provides a list of what would be deemed to be unfair and, in this respect, I draw your attention to item 7 in the list, as follows:

7. A term which has the object or effect of authorising the trader to dissolve the contract on a discretionary basis where the same facility is not granted to the consumer, or permitting the trader to retain the sums paid for services not yet supplied by the trader where it is the trader who dissolves the contract.

On the basis of the above, do you accept that the contract is ‘unfair’ and it should therefore be cancelled, and a full refund provided?

11. Continuing with the theme in 10 above, I also draw your attention to item 15 in the list at Schedule 2, as follows:

15. A term which has the object or effect of permitting a trader to increase the price of goods, digital content or services without giving the consumer the right to cancel the contract if the final price is too high in relation to the price agreed when the contract was concluded.

         Is this not precisely what is happening here when you inform a consumer that they      can rebook for a later date, but the price may be greater (which I understand is the case for many consumers)? On this basis, do you agree that the contract is void, and full refund should be given?

12. Given the Covid-19 pandemic, the parties clearly cannot perform under any contract where the booking is for pre-June (it is uncertain what the position will be beyond this date) as it is unsafe and against Government advice/direction ‘not to travel unless essential’. In the circumstances, do you agree that such contract has been ‘frustrated’, and therefore should be brought to an end and the consumers refunded in full, in accordance with section 1(2) of The Law Reform (Frustrated Contracts) Act 1943?

13. Further, in relation to question 12 above, and for the sake of completeness, I am of the firm view that the force majeure clause at paragraph 25.6 of your terms (cited below for convenience), has no effect in the current situation as i) it is not descriptive enough; and, in any event ii) it fails to detail what happens with the contract in the event of a force majeure event.

25.6 Events or circumstances beyond our or an Owner’s reasonable control. If we or an Owner is prevented or delayed from complying with any obligations under these Booking Conditions by anything you (or anyone acting on your behalf) does or fails to do or due to events or circumstances beyond our or an Owner’s reasonable control, the inability or delay in performing those obligations will not be treated as a breach of the terms of these Booking Conditions. Examples of such events or circumstances include fire, flood and other acts of God, strikes, trade disputes, lock outs, restrictions of imports or exports, riot, accident, disruption to energy supplies, civil commotion, acts of terrorism or war.

14. Finally, given all the above, will Sykes now agree to give its customers peace of mind by confirming that full refunds will be provided, or at least to confirm that it will i) ask property owners to provide full refunds and advocate that this is the course of action that should be taken and ii) not levy any charges on property owners who agree to provide full refunds?

Please can you provide your response by 5pm Tuesday 7^th April 2020.

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I then sent Sykes Holiday Cottages a further letter yesterday, as follows:

I write further to my email of yesterday (timed at 10:24).

I have today seen evidence of property owners confirming that they have refunded the holiday cost to Sykes, but to date you have not passed this to the consumer. Can you confirm:

1. That you will pass all refunds you receive from Property owners to the consumer; and 

2. How long it takes for you to process refunds, from the point you receive cleared funds from the property owner?

I look forward to hearing from you.  

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From what I have heard today, these letters clearly had an effect, as many people have reported that they have today received a refund (in some cases a partial refund). I also note that they updated their Covid-19 policy and FAQs at 17:56 this evening.

At 6pm this evening, I received a response from the CEO of Sykes Holiday Cottages. Whilst I am grateful for him taking the time to write to me, you will see that his response goes nowhere near in responding to the questions and points I raised. His response is below:

SUMMING UP OF THE CURRENT POSITION

1. It is true that Sykes acts as ‘agent’ for the property owners, and that those who have booked holidays via its website have contracted with the property owner, in relation to the accommodation.

2. The effect of the above is that it is the property owner who is ‘technically’ liable for the refunds.

3. Notwithstanding the above, Sykes chooses not to disclose the identity of the property owner (in law we call this an ‘undisclosed principal’). In addition, it is alleged by some that Sykes has taken steps to make refunds difficult – such as threatening to charge the property owner if they agree to provide a refund. We cannot say for certain if this is true, although you will note that I asked this specific question, and it went unanswered. In the circumstances, it is possible that Sykes would also be liable in this situation.

4. Sykes/the property owners appear to believe that they do not need to provide refunds, and instead could simply agree new holiday dates, or provide credits. I am of the firm view that they are wrong, and that consumers are entitled to a refund if their holiday was, or is due to commence, pre-June. For those with holidays booked after this period, you will need to wait a while longer to see what the state of affairs is. My reasons for this are set out within my first letter above, and I stand firm on this.

5. Many people have told me that they received the communication below today and it has clearly caused confusion:

Here’s what it means: Sykes obviously charges the property owners a fee for its service; This is perfectly understandable. However, whilst telling me that they are ‘encouraging’ property owners to provide refunds, they are clearly not standing behind this themselves. Instead, they are not agreeing to refund such fees to the property owners, who in turn are not refunding this proportion of the amount paid by consumers, so they are not out of pocket. To effectively make up for this shortfall, Sykes is providing a credit to consumers, to the same value, as this is obviously far better from a ‘cashflow’ basis.

So the question you now ask is ‘can they do this’? The answer lies in who is ‘they’?  Sykes can do this as consumers contracted with the property owner. However, the property owner cannot do this, and must refund you 100% of the monies paid and thereafter take up the issue of ‘commissions paid to Sykes’ with Sykes directly.

NEXT STEPS

1. As I said above, my view is that everyone who has booked a holiday to commence pre-June is entitled to a 100% refund.

2. Anyone who has booked a holiday to commence post-June should chase for a refund, but if the request for a refund is rejected, there would be no legal grounds at this stage to pursue this further. This is because it is unclear whether we will still be in lockdown and whether it will be safe to travel. You will therefore need to wait and see what transpires.

3. I will draft two ‘letter before action’ templates tomorrow, as follows: i) for use when no refund has been agreed; and ii) where a refund has been agreed, minus the commission.

4. I suggest that those affected download the appropriate template and send it to Sykes. The letters will be addressed to Sykes and the undisclosed property owner.

5. I am confident that ‘most’ property owners will provide a full refund following receipt of the letter before action. However, if you receive a rejection, please contact me and I will assist you in lodging a claim in the small claims court.

6. It may take a bit more time, but I am hopeful that everyone will receive a full refund and please do let me know when you receive yours.

Dean