Avoid vacation litigation nightmares.
One of my pet peeves is the way many resort owners in Mexico and the Caribbean have structured their operations to shield themselves from liability for injuries they cause to their guests through their own negligence. Canadians can, and should, take steps to avoid being left empty-handed in the event of vacation accidents.
Each winter over 3 million Canadians book vacation packages to Mexico and the Caribbean. Unfortunately, many of them will be injured while at their resort or while participating in an off-resort excursion. Their injuries will range from minor cuts and bruises to quadriplegia and everything in between. Some injuries will even prove fatal. Sadly, for these travelers and their families, when an injury is caused by the fault of another, obtaining full and fair compensation can be difficult.
Foreign resort owners have become sophisticated at structuring their business to avoid being subject to the jurisdiction of Canadian courts. Their goal is to avoid any connection between Canada and the resort which could allow a Canadian court to assume jurisdiction over the resort in a Canadian lawsuit. If Canadian courts do not accept jurisdiction over a personal injury or wrongful death lawsuit, the injured vacationer, or his or her family, are forced to sue in the country where the resort is located. This creates financial and logistical problems for the plaintiff who will have to deal with a lawyer in a foreign-language jurisdiction and with foreign laws which can be less favourable to plaintiffs. In some jurisdictions, contingency fee arrangements (no win, no fee) are banned. As well, limitation periods can be short and compensation may be limited.
Some resorts set up multiple corporations to throw the plaintiff’s lawyer off the trail: one company owns the land, another operates the resort and a third looks after marketing. Often these companies are set up in different jurisdictions in the Caribbean or Europe. In Cuba, all resorts are majority-owned by the Communist government, even those that bear the names of the largest international hotel chains. In most cases, the resorts are managed under contractual arrangements with subsidiaries of international hotel chains.
Many resorts deliberately avoid opening offices in Canada or employing staff or agents in our country. They do not advertise directly to Canadians. They don’t take bookings directly from vacationers. Instead, they contract with Canadian travel companies, like Thomas Cook Travel, agreeing to provide a block of rooms to guests of the travel company. It is the travel company that books and pays the resort for the rooms. It is the travel company that advertises the vacation packages to Canadians. When vacationers show up at the resort, they do so as guests of the vacation company.
All of this is done to avoid having any connection with a Canadian jurisdiction, which might be the case if the resort owner had an office in Canada, enticed Canadians to visit by advertising directly to us or were party to a contract formed on Canada.
These arrangements have been effective. Many injured vacationers have been denied the right to sue in Canada because of the lack of a direct contract between the vacationer and the resort.
On-line bookings have only made things more uncertain. Since the courts that handle injury and wrongful death claims are provincial, even if a plaintiff successfully argues that a Canadian court should have jurisdiction, if the vacation was booked with an agent in another province, a plaintiff may have to sue in that province rather than the province in which he or she lives. Further, jurisprudence has developed differently in each province. Alberta courts seem most willingly to see the bigger picture and have found that the “chain of contracts” leading from an Alberta travel agent back to the resort is sufficient to give Alberta jurisdiction over an injury case. A judge in Nova Scotia recently rejected the “chain of contracts” approach.
Even if a judgement from a Canadian court is obtained against a foreign resort, it must be enforced in the jurisdiction where the resort owner has assets. Many countries are not signatories to international treaties which allow reciprocal enforcement of civil judgements.
Of course most resorts have insurance coverage, but policy limits may be shockingly low. I’ve seen coverage as low as $25,000 US. Perhaps this is a sign of the confidence that the resort owners feel in being able to avoid or limit liability by taking these elaborate measures. Perhaps it corresponds with lower awards in those jurisdictions. Regardless, it can make collection uncertain for the Canadian litigant.
It may be possible to hold the Canadian travel company that sold the all-inclusive liable, but two issues arise. First, the plaintiff will have to show that the travel company was aware of the conditions that led to the injury or, at least, failed to take reasonable steps to confirm that the resort, in turn, had taken all necessary safety precautions. Second, the contract with the travel company will contain a provision limiting the liability of the travel company for injuries taking place overseas.
No wonder some plaintiffs and their lawyers throw up their hands and accept a low-ball offer from the resort or its insurer. I heard one story recently in which a vacationer accepted a $250,000 settlement for an injury that occurred in the Dominican Republic which rendered him quadriplegic. A similar injury would attract over $10 million in compensation in Ontario.
The European Union addressed this problem 27 years ago when it adopted the 1990 Package Travel Directive. This required all EU member States to pass laws making companies that arrange vacation packages liable for any deficiencies in the services provided in the all-inclusive package. Since then, in many EU countries, vacation companies can be held liable for injuries caused by negligence on the part of the resort or tour operator in the destination country. More importantly, the vacation company can be sued in the EU. Vacation companies responded by arranging sufficient insurance to cover any losses. The legislation also requires travel companies to be bonded, protecting consumers against the risk of the company going bankrupt.
While the EU adopted amendments in 2015 to improve the Package Travel Directive, unfortunately, no Canadian province has attempted to address the issue. Canadians may have to wait a long time for legislative relief, as there seems to be no political will to protect consumers in this country.
In the meantime, there are things that Canadians can do to increase their chances of being fully compensated for injuries caused by the negligence of a foreign resort or tour operator.
First, deal with Canadian-owned or controlled resorts, such as Blue Diamond Resorts and Hotels, which operates resorts under various names including Royalton, Memories and Starfish, and is a Caribbean subsidiary of Sunwing Vacations Group. Sunwing’s Canadian website boasts a “vertically integrated” dream vacation experience. There is little doubt that these Canadian-controlled resorts are connected to Canada and that Canadian courts will accept jurisdiction over injuries taking place at them.
Second, deal with a travel agent in your province. When you book a vacation package through a local agent, there is no doubt as to where the contract was formed. This helps establish that the courts in your province have jurisdiction over your injury case and avoids litigating on the other side of the country or abroad.
Third, if you, or someone you love, has been injured while on vacation, make sure you retain a lawyer familiar with vacation injury litigation. If a settlement is proposed, ask your lawyer what compensation you would be entitled to if the injuries had happened in your province. Compare this to the settlement being suggested by your lawyer and ask why the recommended settlement is lower. For serious injuries, seek a second opinion from an independent lawyer – because of solicitor-client privilege your lawyer doesn’t even need to know about it, if you don’t want him or her to.
By taking these simple steps you can increase the odds of being fully compensated if you, or a family member, are injured while on vacation.