Offered vouchers or a credit note for services impacted by Covid restrictions?

21 March 2023

You may have seen in the News that a British Airways (BA) passenger has recently won a court case against the airline over a flight refund following the cancellation of her flights in March 2020 due to Covid restrictions. Backhouse Jones have explored what this may mean for operators, in particular those that contract with members of the public, that may have offered vouchers, or a delayed service, in place of cash refunds for services that could not take place due to Covid-19 restrictions.

In this case, the passenger had booked two return flights to Japan which should have departed in May 2020 but were cancelled due to Covid-19 restrictions. In March 2020, the passenger accepted travel vouchers to the value of her flights however Japan did not open its borders as quickly as other countries and in December 2020, with Japan’s borders still closed, she requested a cash refund from BA however they refused stating that they were only liable to provide the vouchers.

Despite spending around 12 months trying to reason with BA, they continued to reject the refund request.  The passenger, representing herself, therefore commenced a court claim against BA in February 2022, which was heard in January 2023.

The passenger relied upon the Law Reform (Frustrated Contracts) Act 1943 to successfully argue that she should be provided with a cash refund given that the vouchers were rendered useless to her as she could not travel to where she had originally intended, despite the vouchers being valid until September 2023. BA were therefore ordered to pay a full refund, plus interest and the court fees.

As the judgment was given by a first instance court, i.e. not an appeal court, it does not necessarily set a binding precedent but it does give an idea of how the judges will likely approach similar claims by consumers.

For operators, this means that if you have previously provided or offered vouchers or a credit note to a consumer for a service that was impacted by Covid restrictions, they may instead be entitled to a cash refund if they request one and have not yet used the voucher/credit note. Whether or not this is the position will depend on the circumstances of each case. Operators may also be able to retain some of the payment made to cover their expenses, provided these were incurred before the contract became impossible to perform.

If you are in a situation where you are unsure as to whether you are liable to provide a refund to a consumer, please contact one of our Dispute Resolution team on 01254 828 300 or disputeresolution@backhouses.co.uk.