Jackson v Horizon Holidays Ltd [1974] EWCA Civ 12 (05 February 1974)

Mr Jackson booked a family holiday which proved disastrous and failed to meet the promised standards. He sued for breach of contract, claiming damages for his own disappointment and for that suffered by his family. The court allowed recovery for the family's loss.

Facts

The plaintiff, Mr Geoffrey Jackson, booked a four-week holiday in Ceylon with the defendant tour operator, Horizon Holidays Ltd, for himself, his wife, and their two young children for a total cost of £1,200. The defendants’ brochure described the holiday in glowing terms, promising specific high-quality amenities at the Hotel Pegasus Reef, including air-conditioned rooms, a private bathroom, a swimming pool, and excellent food. When the family arrived, the promised hotel was not ready and lacked many of the advertised features. They were moved to a different hotel which was of a significantly lower standard, with mouldy rooms, poor service, and unsatisfactory food. The entire experience caused considerable distress, vexation, and disappointment to Mr Jackson and his family, effectively ruining their holiday.

Issues

The principal legal issue before the Court of Appeal was whether Mr Jackson, as the sole contracting party, could recover damages for the loss of enjoyment, disappointment, and distress suffered not only by himself but also by his wife and children, who were not parties to the contract. This challenged the established doctrine of privity of contract, which generally prevents a third party from enforcing a contract or suing for its breach. A secondary issue concerned the appropriate quantum of damages for a ‘ruined holiday’.

Judgment

The Court of Appeal unanimously dismissed the defendants’ appeal, upholding the trial judge’s award of £1,100. However, the judges provided different reasoning for reaching their conclusion.

Lord Denning MR

Lord Denning took a broad approach, creating a direct exception to the privity rule in this context. He held that in certain types of contracts, such as one for a family holiday, the person making the contract can sue for damages on behalf of the entire group for whom the benefit was intended. He relied on an older dictum by Lush L.J. in Lloyd’s v. Harper (1880):

…where a contract is made with A for the benefit of B, A can sue on the contract for the benefit of B and recover all that B could have recovered if the contract had been made with B himself.

He argued that Mr Jackson had made a contract for the benefit of his whole family and was therefore entitled to recover for their collective loss. He stated:

It would be a fiction to say that the father suffered damages of £1,100. He only suffered his own loss. The truth is that he is able to recover a proper sum for the whole party… I think the figure of £1,100 was about right. It was a case of a contract made for the benefit of all of them.

James LJ

James LJ (with whom Orr LJ agreed) reached the same conclusion but via a more orthodox contractual route, avoiding a direct challenge to the privity doctrine. He reasoned that the loss should be viewed as Mr Jackson’s own personal loss. The contract promised to provide a service (a quality holiday) for the benefit of four people. The failure to do so represented a breach, and the damage to Mr Jackson was the loss of the benefit he had paid for, which included the enjoyment of his family. His own distress and vexation were magnified by witnessing his family’s disappointment. He explained:

The plaintiff having contracted for the provision of the holiday for the four members of the family, the defendants’ failure to provide it, in accordance with the contract, was a breach which resulted in the plaintiff suffering damage… His damage is not confined to his own personal loss. The loss of the holiday and the disappointment and distress were suffered by all four. The plaintiff is entitled to recover damages for his own disappointment and distress and for the loss of the holiday.

Therefore, the £1,100 was awarded as damages for Mr Jackson’s own compounded loss, not as a recovery on behalf of his family.

Implications

The case is a significant authority on the recovery of damages for non-pecuniary loss (distress, disappointment, loss of enjoyment) arising from a breach of contract, particularly for consumer services like holidays. While Lord Denning’s broad reasoning creating an exception to privity was later questioned by the House of Lords in Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980], the specific outcome in Jackson concerning family holidays was approved. It established that in these specific circumstances, a contracting party can recover for losses suffered by third-party beneficiaries. The principle has since been largely superseded but also reinforced by the Contracts (Rights of Third Parties) Act 1999, which allows third parties to enforce contractual terms made for their benefit.

Verdict: The appeal was dismissed. The court upheld the trial judge’s award of £1,100 in damages to the plaintiff, Mr Jackson.

Source: Jackson v Horizon Holidays Ltd [1974] EWCA Civ 12 (05 February 1974)