This was an action by the claimants, Mr and Mrs Lee, against the defendants, Airtours Holidays Ltd (first defendant) and Airtours Plc (second defendant), in which the claimants claimed damages for personal injury (including psychiatric damage), loss of possessions (including valuables), and loss of a holiday (including disappointment consequent upon that loss), arising from the fire onboard, and subsequent sinking of, the cruise liner Sun Vista on 20 May 1999. The claim was brought under reg 15 of the Package Travel, Package Holidays and Package Tours Regulations 1992 (UK) (the Regulations).

On boarding the Sun Vista, the claimants were given a brochure which, among other things, stated that valuables should be deposited in the safe available free of charge in every cabin. The claimants asked a member of the ship's staff whether they could put their valuables into the ship's safe, but were told that they could not, and that the safe installed in their cabin was more than adequate. The claimants used their cabin safe to store their valuables. The claimants argued that the valuables had been deposited with Sun Vista for the purpose of safekeeping generally, and that the defendants failed to provide a facility whereby valuables might be deposited with the carrier for effective safekeeping.

The first defendant acted as an agent for the second defendant tour operator. The second defendant admitted that it had failed to perform, or had improperly performed the contract, as the holiday intended to last for three weeks on board the Sun Vista ended after five nights. However, the first defendant claimed that its liability in relation to personal injury and loss of possessions was limited under arts 7 and 8 of the Athens Convention 1974, incorporated into English law by the Merchant Shipping Act 1995 (UK), and that its liability for loss of valuables was excluded under art 5 of the Athens Convention.

The claimants argued that no contract of carriage was ever issued, let alone a contract which purported to refer to compensation being limited under any international Convention. The defendants argued that the Athens Convention 1974 was not a scheme that depended upon incorporating provisions into a contract. It was a scheme that imposed its provisions mandatorily as a matter of law upon the parties.

Held: Liability is not limited or excluded by the Athens Convention 1974.

The limitation of liability provisions of the Athens Convention do not apply to the claim since the Regulations and the Athens Convention 1974 contain two different alternative liability regimes. Pursuant to the European Communities Act 1972, the Regulations prevail over UK domestic law, including the Athens Convention 1974.

The Judge then considered the defendants' entitlement to limitation or exclusion of liability if the Regulations were not applicable. In this respect, the first question was whether the defendants were 'carriers' within the meaning of the Athens Convention 1974. Articles 1 and 4.1 of the Athens Convention define the carrier and the carriage contract:

1(1)(a) 'carrier' means a person by or on behalf of whom, a contract of carriage has been concluded, whether the carriage is actually performed by him or by a performing carrier;

1(1)(b) 'performing carrier' means a person other than the carrier, being the owner, charterer or operator of a ship, who actually performs the whole or part of the carriage;

1(2) 'contract of carriage' means a contract made by or on behalf of a carrier for the carriage by sea of a passenger or of a passenger and his luggage, as the case may be; ...

1(8) 'carriage' covers the following periods: (a) with regard to the passenger and his cabin luggage, the period during which the passenger and/or his cabin luggage are on board the ship or in the course of embarkation or disembarkation, and the period during which the passenger and his cabin luggage are transported by water from land to ship or vice versa, if the cost of such transport is included in the fare or if the vessel used for this purpose of auxiliary transport has been put at the disposal of the passenger by the carrier …

4(1) Performing carrier

If the performance of the carriage or part thereof has been entrusted to a performing carrier, the carrier shall nevertheless remain liable for the entire carriage according to the provisions of this Convention …

The defendants argue that it is impossible to characterise the defendants as carriers, since the intention of the Athens Convention 1974 is to treat as 'carrier' the person (usually a shipping line) who makes a promise by way of a 'contract of carriage' to carry the passenger. However, the highest that the case could be put is that the defendants promised 'absolutely to secure that' the claimants were carried.

The Court held that the provisions of the Athens Convention do not afford any real guidance on this issue, except that art 1.8 lends some support to the claimants' case in referring to consideration as 'the fare' – language more consistent with the carriage aspect of a contract representing, if not the sole, then at any rate the dominant element. The Athens Convention 1974 is not concerned with status at all: there is nothing which confines its application to commercial concerns in the nature of shipping lines. The second defendant tour operator was a carrier in that the agreement with the claimants included obligations pertaining to carriage by sea, and to that extent, represented a contract for the carriage by sea of the claimants by the second defendant.

The second question is whether the liability of the defendants was excluded with reference to art 5 of the Athens Convention 1974:

The carrier shall not be liable for the loss of or damage to monies, negotiable securities, gold, silverware, jewellery, ornaments, works of art, or other valuables, except where such valuables had been deposited with the carrier for the agreed purpose of safe-keeping, in which case the carrier shall be liable up to the limit provided for in paragraph 3 of Article 8 unless a higher limit is agreed upon in accordance with paragraph 1 of Article 10.

Where tender of valuables to a crew member is rejected, it is impossible to say that, just because the alternative deposit in a cabin safe is within the structure of the vessel, such deposit could be said to be 'with the carrier'. It may well be that the valuables would have been lost even if they had been deposited with the carrier at some central point, rather than left in the cabin. But that cannot overcome the requirements of the express language of art 5: unless initially there is a deposit for safekeeping, liability is excluded.

However, a carrier under the Athens Convention 1974 is obliged to provide appropriate facilities for safekeeping. The defendants breached that obligation since, on the evidence, either such facilities were unavailable, or the claimant's tender of valuables was wrongfully rejected. Therefore, the defendants would be liable for loss of valuables up to the limit set out under art 8.3 of the Athens Convention 1974 if it were to apply.