Supplementary memorandum by Professor
Geraint Howells and Dr Christian Twigg-Flesner
In the context of the review of the consumer acquis,
are there any specific changes to the sales away from business
premises (doorstep selling) directive which you could envisage
as being of relevance to the marketing of timeshare and holiday
clubs, including in relation to the premises used at resorts for
sales presentations?
The current review of the Doorstep-Selling Directive
states
"When considering the appropriateness of
Article 1, it is also important to consider whether its wording
is clear. For instance, the exact meaning of `excursion' may need
clarifying, as would suggest the Travel Vac case in which the
European Court of Justice ruled that an invitation from a trader
to a tourist complex away from the town where the consumer is
staying, and different from the town where the trader had his
registered office, amounted to an excursion under Article 1(1)".
Further . . .
"3.1 Immovable property contracts—Article
3(2)(a)
The exemption at Article 3(2)(a) provides that contracts
for the construction, sale and rental of immovable property and
rights in immovable property are exempted from the scope of the
Directive. In the Travel Vac case, the European Court of
Justice was asked to clarify whether this exemption applied to
timeshare. The Court ruled that the exemption did not apply and
therefore both the Timeshare Directive and the Doorstep Selling
Directive could apply to a single transaction. It also ruled that
the Directive applied to the provision of a set of tourist services
whose value is higher than that of the right to use the immovable
property".
This is not, in fact, an accurate statement
of the decision in the Travel Vac case (C-432/97 Travel
Vac SL v Sanchís [1999] ECR I-2195. The contract
in that case was not merely one for the acquisition of a timeshare
right; rather, the contract covered both the timeshare itself
and additional services:
"[9] According to the order for reference,
under the terms of their contract concluded on 14 September 1996
in Denia (Spain), Travel Vac sold to Mr Antelm Sanchís
a 1/51 undivided share of a furnished apartment in the Parque
Denia residential development, entitling him to the exclusive
use of that apartment during the 19th week of the calendar year
under a `time-share' scheme.
[10] Under the contract, Travel Vac was also
obliged to provide Mr Antelm Sanchís with certain services
such as maintenance of the building, management and administration
of the time-share scheme, use of the common services of the residential
estate and membership of Resort Condominium International, an
international club allowing the purchaser to exchange his holidays
in accordance with the rules of the club.
[11] Under the contract the purchaser had
to pay the sum of ESP 1 090 000, of which ESP 285 000 was the
cost of the undivided share, the balance of the price being made
up of value added tax, joint ownership of the furniture as inventoried,
the abovementioned services and membership of Resort Condominium
International".
Clearly, drawing a dividing line between "pure"
timeshare contracts and those which are "timeshare+services"
may be a difficult one to draw. The ECJ took the respective value
of the timeshare right itself and of the services as the main
criterion. To the extent that many timeshares are sold as such
packages then the distant selling regulations might apply to them.
But whatever decision is taken with regard to
the scope of the doorstep selling directive in the present review,
we reiterate the point made during our oral evidence: the doorstep
selling directive and the (revised) timeshare directive both provide
a right of withdrawal and information duties. We are unable to
perceive any additional benefit to consumers if the doorstep selling
directive were to extend to timeshare contracts in whatever shape,
because the timeshare directive provides essentially identical
rights. Of course there would always be the advantage that if
consumers were only aware of rights under the distance selling
regulations that their claim could not be dismissed. Against this
is the regulatory burden on businesses having to check formal
compliance with additional sets of regulations.
Rather, thought should be given to the scope
of the timeshare directive, to ensure that timeshare+services
contracts are clearly covered.
The problem giving rise to the need to invoke
the distance selling rules in Travel Vac was that the national
rules implementing the Timeshare directive could not apply—either
because the contract was entered into before the directive had
to be implemented, or because the Spanish government had not implemented
on time (as a general principle, directives are not directly applicable
as between the parties to a consumer contract and can only take
effect through national law).
In addition, you offered during the evidence
session with the Committee to look at any specific examples that
the Citizens Advice Bureau might have given us to support their
view that various aspects of the acquis could work better together.
The CAP did indeed cite a particular example relating to the distance
selling Directive. We would welcome your view. They note: "A
Hampshire CAB client from the South East received an unsolicited
phone call offering a free holiday in Spain for £149 flights
provided they attended a 60-minute exhibition. He had just come
out of hospital after an operation and was not thinking clearly,
and agreed to pay by credit card. As they already had a timeshare
his wife tried to cancel and was refused. The card company said
they could not refund unless the company agreed. The CAB advised
that this is in breach of the Distance Selling Regulations and
the client should cancel in writing." The CAB adds as a commentary:
"These clients should have been able to exercise the cancellation
rights available under distance selling law. The exclusion of
timeshare from Directive 97/7/EC on Distance Selling, at article
2, appears to have been misinterpreted by businesses who make
unsolicited calls to consumers to include timeshare-like, travel
discount club and re-sale of timeshare. As the Timeshare Directive
does not currently cover these sales the exemption will not apply".
The problem here seems not to be about the timeshare
but the flights. These are exempted from many of the provisions
because of art 3(2) of the Distance Selling Directive, which states
that the Directive does not apply "to contracts for the provision
of accommodation, transport, catering or leisure services, where
the supplier undertakes, when the contract is concluded, to provide
these services on a specific date or within a specific period".
The contract here was not for a timeshare, but
for the flights and holiday. It raises altogether different questions
about cold-calling, and the exclusion from the scope of the distance
selling directive of such contracts. This question is better addressed
in the review of the distance selling directive.
Note that the UCPD might be utilised in this
context, once it enters into force, but only to seek an injunction
against such practices and will not as yet give rise to individual
rights.
You discussed with the Committee issues arising
in relation to multi-annual reservations for hotel accommodation.
If multi-annual reservations for hotel accommodation were to be
excluded from the scope of the directive, would you see this as
a potential loophole in the legislation and if so what could be
done to address it?
It could be a potential loophole. Equally, one
would not want hotels unwittingly to be caught by the directive.
From the explanatory memorandum, it clearly seems to be the case
that the Commission intends to exclude these contracts from the
scope of the directive. The best solution may be to include something
to this effect in the preamble to the directive which would allow
the courts to interpret cases in the light of this guidance.
It seems to us that hotel reservations might
be more appropriately regulated in another measure. The review
of the Package Travel directive may lead to a broader approach
to regulating tourism across the EU, and that might be a more
appropriate context.
Once again, we need to bear in mind that the
Timeshare Directive primarily focuses on information and withdrawal
rights. But what, if any, are the problems with multi-annual reservations?
If they relate to issues such as price-increases, lack of availability
of the right category of rooms, and transfers to other hotels,
then regulation may be needed to deal with this—but the
Timeshare revision would be the wrong place to do so. The Committee
may feel that it wishes to encourage the government to press for
consideration of this issue by the EU in a different context.
2 November 2007
|
