Recent reports of clouds of ­volcanic ash and BA cabin crew strikes have highlighted the plight of holidaymakers who are either stranded abroad or unable to take their holiday. However, even those who manage to avoid disruption are often disappointed when their holiday falls short of their expectations.

In Jackson v Horizon Holidays [1975] 3 All ER 92, Lord Denning MR said: ‘People look forward to a holiday. They expect the promises to be fulfilled. When it fails, they are generally disappointed and upset. It is difficult to assess in terms of money, but it is the task of the judges to do the best they can.’

Holiday claims have long been accepted as an exception to the rule that damages for breach of contract cannot be claimed for mental distress and disappointment, on the basis that the whole purpose of a holiday contract is to provide entertainment and enjoyment. And so it is that district judges in their small claims lists have regularly to assess damages relating to spoiled holidays. It is not often that such a case reaches the Court of Appeal, but one such case was Milner v Carnival Plc (t/a Cunard) [2010] EWCA Civ 389 (Lawtel, 20 April), where the Court of Appeal set out comprehensive and helpful guidance on the assessment of damages.

Mr and Mrs Milner had booked a 106-day cruise on the maiden voyage of the Queen Victoria, at a (discounted) price of £59,052.20. The brochure promised the experience of a lifetime. As Judge Shaun Spencer QC commented in his judgment: ‘It is the Milners’ case that that is what they got, but not in the way they had bargained for.’

Finding in their favour, he awarded ‘platinum-quality damages’ for failure to provide a platinum-quality product. Floor plates in the Milners’ cabin had produced loud banging noises in rough weather, making sleep impossible. Following unsuccessful attempts to agree a suitable alternative cabin, the Milners disembarked at Hawaii after 28 days, and were refunded £48,270 for the balance of the cruise. They claimed damages for the 28 days they had been on board.

In the Court of Appeal, Lord Justice Ward commenced his judgment (with which the other members of the court agreed) with the simple statement that ‘the issue, said to be of significance for the travel industry, is this: what is the correct measure of damages for a ruined holiday?’ He went on to identify the different heads of loss which could be claimed, including pecuniary loss (diminution in value of the holiday), consequential ­pecuniary loss (for example, out of pocket expenses), physical ­inconvenience and discomfort, and mental ­distress.

As the cruise had been terminated by agreement, there were no consequential losses, save for the wasted costs of Mrs Milner’s formal gowns, which the judge had allowed at £2,000 (roughly half their cost). He allowed the Milners £2,500 each for diminution in value, roughly one-third of the full cost of the 28 days of the cruise, and £7,500 each for disappointment and distress. The Court of Appeal reduced the damages for diminution in value to £3,500, about one-third of the price eventually paid, and awarded nothing for the cost of the gowns, on the basis that the cruise was ended by agreement. The judgment is of most interest for its ­analysis of the damages for distress and disappointment, which were reduced to £4,000 for Mr Milner and £4,500 for Mrs Milner.

Lord Justice Ward stressed that damages awarded under this head needed to be consistent with damages awarded in other cases. He considered that awards in other holiday claims would not be particularly good comparables, as the facts in such cases were infinitely different. However, in paragraph 37 of his judgment he went on to refer to different ‘brackets’ of awards which had been extracted from other decisions by counsel for Carnival, showing that awards were highest for holidays involving a marriage abroad (where awards had ranged from £4,360 to £4,406 after adjustment for inflation), then for honeymoons (£321 to £1,890), then for special holidays (£264 to £1,161), and finally for ‘run of the mill’ holidays (£83 to £876). He then considered other types of claim which could produce awards which may be comparable. These included general damages in personal injury claims for psychiatric injury (which would be higher, as more serious than damages for a ruined holiday), damages in claims for sexual and racial discrimination, and damages for a parent’s loss of a child (which again would be more serious, but are limited by statute). He accepted that the Milners’ holiday was a ‘holiday of a lifetime’, and therefore an exceptional case, but even on this basis the damages allowed by the judge were too high in comparison with damages allowed in the other types of case considered.

Since 1992, judges assessing general damages in personal injury cases have been greatly assisted by the Judicial Studies Board (JSB) guidelines. Although there is no suggestion that the guidelines of the Court of Appeal in Milner will have anything like the status of the JSB guidelines, they nonetheless provide a very welcome introduction to the assessment of damages in holiday cases. There are, of course, many other breaches of contract which may give rise to damages for disappointment and mental distress. In Watts v Morrow [1991] 4 All ER 937, Lord Justice Bingham observed that: ‘Where the very object of a contract is to provide pleasure, relaxation, peace of mind or freedom from molestation, damages will be awarded if the fruit of the contract is not provided for or the contrary result is procured instead.’

In Farley v Skinner [2001] UKHL 49, [2001] 4 All ER 801, the House of Lords extended this to include ‘an important object of the contract’. There is every reason why the guidance in Milner should apply to all such claims because, in the words of Lord Steyn in Farley, ‘it is important that logical and beneficial developments in this corner of the law should not contribute to the creation of a society bent on litigation’.

District Judge Graeme Smith sits at Manchester Civil Justice Centre