Consequential Losses - FGW compensate passenger for missed coach connection

[whole diary]

[thetrout]

From Consumer Action Group

A teenager was travelling from Truro - Plymouth to catch a Megabus service to London Victoria and then a train back to Bracknell from there.

The FGW service in the case point was 30 minutes late and she missed the connection. Thus returned to Truro and with the help of her accommodators contacted FGW and Megabus executive departments to seek redress.

Megabus refused to transfer a ticket to a coach the next day citing less than 24 hours notice. FGW refused initially to help citing they were not liable for consequential losses. Forum members suggested that this Term and Condition within the contractual agreement is:

The consequential loss game is a complete fob-off. Don't worry about it - even if it is in their t&Cs. It is an unfair contract term and has no validity.

Now this is incredibly interesting. I had often wondered about the fairness of consequential losses. I cannot count on 2 hands the amount of time I have lost out financially because the railway has run late due to circumstances within the control of the industry.

I am talking in this case about missing flights, hotel bookings, buses, ferries etc. I've missed them all in my lifetime because of late, cancelled and even early running trains. I think in future the next time FGW cause me a ^10 taxi fare in Southend because I've missed the last bus. FGW may very well be getting the bill and my GPS history to prove exactly how late I was.

All in all a very interesting dispute and I am also impressed with Mark Hopwood's response on a weekend to this.

[JayMac]

I see no issue with a contract term specifying that consequential loss will not be covered as long as it is explained in plain language - as it is in the National Rail Conditions of Carriage and TOC^▸ (Train Operating Company)'s Passenger Charters. I'd take with a pinch of salt random comments on a forum that have no link to legislation or case law that would prove that the NRCoC^▸ (National Rail Conditions of Carriage) are wrong in law on the point of consequential loss.

Such a term has been in the NRCoC for as long as I can remember. If it has been successfully challenged as an Unfair Term in Consumer Contracts it would have been removed by now.

That FGW^▸ (First Great Western) compensated the person in the circumstances is nothing to do with their legal position. It was just a gesture of goodwill.

[John R]

What FGW^▸ (First Great Western) did was to offer a free journey, so it didn't actually cost them anything. It would be a very dangerous precedent to set to start paying consequential loss in that sort of situation, particularly after a relatively short delay. Could cost the railway industry a fortune, and not something I would be in favour of, as I know where the cost would ultimately end up.

[LiskeardRich]

It is well known a lot of T&Cs for various companies contracts wouldn't stand up as a fair term in court, however very few people have the financial ability to challenge a big company's contract terms through courts so they get away with it.

I don't know how consequential losses stand, but know of several examples used by large companies that would be ripped apart in court.

[JayMac]

Could we have some examples of these terms used by large companies that would be ripped apart in court?

[LiskeardRich]

I can't remember specific examples at the moment.

However the most well known ones are often found in car parking contracts.

"Xxx accepts no responsibility for damage or loss to property"

Xxx as the owner/operator is responsible for certain damage or loss to property, in certain circumstances, so deemed an unfair contract term.

"Failure to comply to the terms of this car park may result in a parking charge notice of ^xx". The car park terms are a contract, however the PCN in most free car parks would be dismissed in court if challenged correctly, as a PCN value can only be for the loss caused to the car park operator which is almost certainly zero in a free car park.

There are many other examples I don't remember exact details at the moment.

[JayMac]

Ah well, if we're talking private car parks then I'm in agreement that their 'contracts' are rarely worth the signs they are written on. However, in nearly all cases it is the operator taking the consumer/customer to court, not the other way around. It can be a lottery defending against a private parking company's small claim and motorists have lost on the same points that other motorists have won on. Small claims track cases do not set legal precedence and they need only be judged on balance of probabilities, not beyond reasonable doubt. Persuasive arguments can be made by using previous cases, but equally, a judge may dismiss details of previous cases and merely judge on the evidence and statements in front of him from the claimant and defendant.

You were initially talking about consumers challenging large companies on their T&Cs in court, rather than a company taking a consumer to court for breaking T&Cs. Saying, "It is well known a lot of T&Cs for various companies contracts wouldn't stand up as a fair term in court, however very few people have the financial ability to challenge a big company's contract terms through courts so they get away with it."

If that's the case then consumers have the right to challenge what they believe to be an unfair term, if it has financially disadvantaged them, in court on the small claims track.

Conflating what large companies do with what private parking companies do isn't really comparable.

[thetrout]

So if you don't pay within 14 Days, you incur a further ^60 Penalty which is effectively a penalty increase of 300%

In addition to that, if you pay by Debit or Credit Card, you incur a further fees for the privilage. Do I pay 1.96% if I buy a McDonalds Latte on my Barclaycard?

In such cases if someone was tempted to pay the fine, I would be advising a cheque in the post. When this is rejected this can also be seen a refusing payment for a debt (albeit a speculative invoice)


Those ^12 Late Payment / Overlimit charges on credit cards are also completely unenforceable. I N1'd CapitalOne for ^300 worth including Compound (APR rate of the credit card) and Annual Interest which more than doubled what they charged originally. They settled out of court. This was after their executive office refused following a letter of complaint and a Letter Before Action.


I am in 2 minds about this and I was when I first posted it. I agree with John R that effectively this cost FGW^▸ (First Great Western) nothing. It is a good publicity stunt but could also be an own goal at the same time. Some how I don't see FGW covering for a missed flight if their train was 2 hours late! Customer should have allowed sufficient time. How long is sufficient time though? 1 Hour, 2 Hours? 6 Hours?

But I also agree with richwarwicker that many big companies have terms and conditions that are unfair and challenge-able. Many however do not have legal knowledge, financial methods or the 'effort' to challenge them. His example of PPC's is a classic as per my photos and examples above.

Another example is your bank charging you penalty fees for going overdrawn when they caused you to go overdrawn through one of their own charges in the first place. An example being their Overdraft Charges forcing you into an Unauthorised Overdraft and then charging you even more so.

I'll see if I can find some other examples over time

[LiskeardRich]

BNM how does your bank charge example work?

Lloyds charged me ^25 for a failed DD, and then charged ^10 a day because that ^25 pushed me into unauthorised overdraft. I was out of the country and ran up 9 days worth of ^10 charges. (the DD failed for being 45p short as I transferred in from my saver account the value of all transactions whilst I was away, but my phone bill went over my expectation by 55p, my linked lloyds saver had several thousand in as we were saving for our wedding) That was about 3-4 years ago and the amounts are still outstanding as Out of principle we then put all the money into wife's santander account. They've charged a considerable amount of interest since!

[Super Guard]

BNM how does your bank charge example work?

Lloyds charged me ^25 for a failed DD, and then charged ^10 a day because that ^25 pushed me into unauthorised overdraft. I was out of the country and ran up 9 days worth of ^10 charges. (the DD failed for being 45p short as I transferred in from my saver account the value of all transactions whilst I was away, but my phone bill went over my expectation by 55p, my linked lloyds saver had several thousand in as we were saving for our wedding) That was about 3-4 years ago and the amounts are still outstanding as Out of principle we then put all the money into wife's santander account. They've charged a considerable amount of interest since!

...and hopefully not destroyed your credit report.  I would expect Lloyds would have black-marks galore over it now.

[Oxman]

I recall an incident a few years ago when working as a Duty Manager at Reading. There was serious disruption (its not a new thing), and as we packed a lot of very late people onto a train for Newbury, one businessman said to me: "I'm 40 minutes late for an appointment at which I was going to close a contract for ^10m. Are you going to compensate me?"

To which I replied "I'm sorry sir, but we don't do consequential loss. Oh, and by the way, when I was a salesman, I would always make sure I got there an hour early if I was intending to close a deal." The doors closed and I never saw him again.

But seriously, ^10m consequential loss for a 40 minute delay on a ^10 train ticket. Imagine the can of worms..............

[JayMac]

BNM how does your bank charge example work?

I haven't given any bank charge examples. 

I'd prefer it if we kept this thread on topic about consequential loss. Others have widened the debate to include private parking contracts, bank charges... different beasts.

[LiskeardRich]

BNM how does your bank charge example work?

I haven't given any bank charge examples. 

I'd prefer it if we kept this thread on topic about consequential loss. Others have widened the debate to include private parking contracts, bank charges... different beasts.

Sorry it was trout I was replying to. The others are all examples where unfair contract terms have been challenged successfully. I'd be pretty certain consequential loss could be successfully challenged in the same way if someone had the time, effort and finances to challenge it as an unfair contract term.
However I would only expect a challenge against the contract term to be successful if FGW^▸ (First Great Western) were the cause of the delay.
If an organisation causes a loss to someone through their actions, regardless of contract those losses could be claimed back. It may become too costly to be worth bothering though unless a large consortium of people join together to serve a claim.
However if a external factor (network rail, weather, a trespasser etc) was the cause then a claim for consequential losses would likely to be unsuccessful against a FGW At least.

[JayMac]

I'd be pretty certain consequential loss could be successfully challenged in the same way if someone had the time, effort and finances to challenge it as an unfair contract term.

Consequential loss has been in the NRCoC^▸ (National Rail Conditions of Carriage) for years. I find the lack of any legal cases against the term telling. Challenging an unfair term (not that I see this as being one) doesn't take massive finances. Small claims track isn't expensive.

richwarwicker, if you have had a rail journey that caused you additional cost beyond the ticket price, or should this happen to you in the future then, if it's your firm belief that the 'consequential loss' term is unfair, make that small claim to claw back the additional expense.

[John R]

The following, taken from a legal website is interesting.  The point about it being within the parties' reasonable contemplation at the time the contract was entered into is interesting, as is the presence of an exclusion clause within the contract. 

The first branch refers to direct losses ^ these are losses that are foreseeable and recoverable. The second branch refers to indirect losses, such as consequential loss. These arise from the special circumstances of each individual case, and are only recoverable if it can be said that the party in breach of contract knew of those special circumstances for the other party at the time the contract was entered into. If they only found out about the special circumstances after the contract was entered into then this would be too late. Loss of profits could fall under this branch.

Is it Recoverable?

Consequential loss may be recoverable following a breach of contract if as mentioned above, it was within the parties^ reasonable contemplation at the time the contract was entered into. However, it is important to note that if the innocent party had been made aware of an exclusion clause that limited the other party^s liability for breach of contract, they would not be able to recover that consequential loss (providing the clause was valid, reasonable and covered the breach/liability in question).

Passenger Focus' stance on the issue is as follows:-

Can I claim consequential loss accrued as a result of a delay (e.g. missed flights, social/business meetings)?
If you suffer loss due to delay, such as a missed air flight, theatre performance or a business meeting, the train company is not liable.

In times of delay you can ask station staff for help as they may be able to arrange alternative transport provided you have left a reasonable amount of time for this. If you choose to arrange your own transport you may well not be able to claim these costs back.

Passenger Focus however does sometimes have success in getting passengers some form of compensation in these circumstances. If you have contacted the train operator and are unhappy with the response, then contact us and we will do our best to help

Note also the point about a reasonable length of time in respect of arranging alternative transport.