Background

Looking at the stats, there are over 90 million passengers every year flying between the EU and Asia (by Asia I mean the Far East, Gulf states and the Indian Sub-Continent). Almost all of these journeys cover a distance which exceeds 3,500 km. When these flights are delayed, the delays can run into many hours and it can be difficult for the flight crew to make up time over such long distances.

Typically, these routes are flown using large wide-bodies such as B777’s and A380’s which can hold 350 – 500 passengers respectively. Load factors are also generally strong on these routes. It doesn’t take a mathematician to work out that at 600 Euros per delayed passenger, there is a lot of money swilling around to be claimed in the event of a flight delay.

European Law

A passenger travelling on a European flight to, or from Asia which was cancelled or delayed may have the right to compensation under European law. The law still applies even if the passenger resides in Asia. Regulation EU 261 covers European airspace, so the passenger doesn’t have to be an EU citizen to make a claim. The regulation says that affected passengers can claim compensation from an airline when a flight lands at its destination more than three hours late. With a cancelled flight, the passenger has the right to take an alternative flight with the same airline to the destination, or cancel the flight and receive a full refund. Airlines don’t always pay out however, and may try to avoid doing so if the delay is caused by a so-called ‘extraordinary circumstance’ such as bad weather or crew strikes – see below.

Previously, airlines refused to pay out for delays caused by technical faults claiming they counted as extraordinary events. But, in 2014 two English Court rulings declared that airlines should pay out when a delay was caused by a technical fault.

How much a passenger is entitled for a delay or cancellation depends on the flight that they booked, and the amount of time they were delayed. The flight must have departed from an EU airport and can either be operated by any airline (so this includes all European, Asian and Gulf carriers), or it must have arrived into an EU airport and have been operated by an EU airline. The ‘EU airport’ definition also includes any airport in Iceland, Liechtenstein, Norway and Switzerland.

Airline’s duty

Airlines have a duty to look after stranded passengers, even if cancellations are because of extraordinary circumstances beyond their control. Passengers should keep a record of what they spent (including receipts) in order to try to reclaim from the airline using the EU 261 rule. Airlines should compensate passengers if their flight is cancelled or badly delayed. They should also offer meals, refreshments and hotel accommodation whilst passengers wait for a rearranged flight.  

When making a claim, passengers will need to confirm the airline and flight number, the names of other passengers if travelling as a group, and the reason given by the airline for the delay. A four hours (or more) delay on a journey which exceeds 3,500km between an EU and non-EU airport (in Asia) gives a compensatory award of 600 Euros. It is always a good idea for passengers to keep hold of boarding cards as proof of travel.

If a flight is cancelled, passengers should be offered an alternative flight with the same airline to their destination either on the day or the following day if there is space, or a full refund for the flight. If this is not possible then they should be given the option of a flight with a different airline, if there’s room. If the passengers end up paying for this on top of the cost of the original ticket, they should be able to claim any extra money back – if they can prove that no other suitable option was given by the original airline. If passengers were given more than 14 days’ notice about the cancellation, they will only be entitled to a new flight or a refund for the original flight. But, if they were given 14 or less days’ notice they might be able to claim compensation on top of a refund, or alternative flight. The amount of compensation differs depending on when passengers were told about the cancellation, the length of the flight, and how long they had to wait for a new flight. The cancellation also needs to have been something which could have been avoided by the airline, so again passengers won’t be able to claim for reasons such as extreme weather conditions or a crew strike.

Extraordinary circumstances

Airlines don’t have to accept every claim, and can refuse to pay if ‘extraordinary circumstances’ apply. If the airline turns down the claim because of extraordinary circumstances, passengers can challenge this if they do not believe it to be true. They can take the matter up with the local Civil Aviation Authority if it is not settled properly. Many airlines still try to wriggle out of such claims, and a good example of this is an airline claiming technical faults as extraordinary circumstances. This is because the regulation gives no definition of exactly what extraordinary circumstances are, but does give some examples. Typically, they would include acts of terrorism, security risks, extreme weather e.g. volcanic ash, political unrest, industrial action strikes not relating to the airline, and hidden manufacturing defects in an aircraft. If the airline tries to claim extraordinary circumstances, challenge them to explain exactly what they were, and why they could not have been reasonably avoided. The onus is on the airline to prove this.

How far back can I claim?

Regulation EU 261 does not set a time limit on how far back claims can go, instead stating that this should be determined by the laws in respective countries. In Hong Kong for example, the statute of limitations law is six years, so by this logic an airline should consider claims for delays dating back six years from the time the claim is submitted. Again though, it is important though that passengers have kept their flight documents as proof of travel.

Denied boarding

EU 261 also applies to denied boarding claims. Passengers should not volunteer to surrender their seat if asked to do so by the airline. In cases where they volunteer to give up on a seat in exchange for a travel voucher, airline miles or other form of compensation they will be no longer eligible to claim under the EU Regulation. Passengers won’t be entitled to compensation either if they failed to check-in on time, were not at the gate on time, did not have the required travel documents (boarding pass, passport, visas etc.), or they created/represented a health, safety or security concern. In other words, passengers are only covered when they have been denied boarding against their will. This often happens in cases of overbooking i.e. the airline (over) sold more tickets than there are seats on the plane. They do this to compensate for passenger “no-shows”, i.e. passengers who booked a ticket but then do not show up for a flight. If passengers are denied boarding because of an overbooked flight, they are also entitled to compensation.

Need any help?

It seems, thus far, that the Asian travelling public have overlooked, or were simply unaware of their air passenger rights under EU law.

Not to worry, that is all about to change. Watch this space………

Come on Asia, it’s time to claim!

Contact

To discuss any issues raised by this article then please contact me – gdoldham@oln-law.com

I often provide independent legal advice (“ILA”) to people living in HK who wish to obtain financing from financial institutions in Canada, sometimes for investment purposes and other times, to obtaining financing for their beloved family members studying or working in Canada. Since the documents are governed by Canadian law, they usually require a Canadian solicitor to provide ILA.

Clients often wonder why the meeting takes such a long time and why I ask so many questions. Here is why.

Purpose of ILA and who is the client

In most jurisdictions in Canada such as Ontario and British Columbia (as in Hong Kong and other common law jurisdictions), the purpose of the ILA is to give protection to financial institutions that fear challenges to the validity of the agreement based on the borrower’s or guarantor’s subsequent claims of undue influence, duress or lack of understanding. Financial institutions generally do not sign off on the financing documents until ILA has been properly given. Given the many potential ways to challenge the validity of the agreement, a solicitor needs to ask the right questions and based on answers to those questions, provide legal advice. Although the obtaining of ILA is the financial institution’s requirement, the solicitor only owes a duty to the client, not to the bank.

Wide areas that must be explored

In giving ILA, the solicitor’s obligation goes beyond explaining the legal aspects of the matter and assessing whether the client appears to understand the advice. The duty also requires an understanding of the individual’s personal circumstances, financial (current and future) prospects, health and family circumstances to ascertain if he/she is entering into the transaction with informed voluntary consent without pressure from anyone else and with the requisite mental capacity. Digging into the reasons for the transaction, the individual’s financial situation and relevant family dynamics or the characteristics of the parties involved may uncover critical information. Extra care also needs to be given to those who appear to be vulnerable (e.g. some elderly individuals) or who lack fluency in the English language. In Ontario, the Supreme Court has even identified “the client’s expectations arising from life in general” as a relevant factor in deciding whether the person entered into the transaction under undue influence (Brandon v. Brandon [2007] O.J. No. 2986 (Ont. S.C.J.) affirmed on appeal)

When rendering ILA in the context of a mortgage, I generally cover the following areas (at a minimum):

• the nature and consequences of a mortgage
• the nature and consequences of a guarantee
• the effect of power and sale/judicial sale and foreclosure
• the effect of an action on the covenant and the liability for any insufficiency
• the consequences of his or her spouse’s default
• the possible consequences of failure to honour the financial obligations (loss of her or his house, business and all other property)
• the possibility of obtaining security for the financial obligations (loss of his/her house, business and all other property)
• that an indemnity will be worthless if the spouse declares bankruptcy
• the risks to the client if there is a breakdown of the marriage
• the availability of qualified advisors in other fields who might advise the client from a business/accounting/tax point of view

If you reside in HK and wish to have a confidential discussion about independent legal advice in the context of financing a Canadian investment or a loan, please feel free to contact our partner, Ms Eunice Chiu at eunice.chiu@oln-law.com, +852 2186 1885. Ms Chiu is an experienced disputes and private client solicitor, qualified to practise in Hong Kong and British Columbia, Canada. 

As life expectancy rises, we see an increasing number of family patriarchs/matriarchs living longer, sometimes with decreased mental capacity. To protect family assets, younger family members may then wish to take over the management of family assets, but how do we ensure that this is done properly without being challenged in court in the future? 

The Enduring Power of Attorney (“EPOA”) regime under the Enduring Powers of Attorney Ordinance, Cap. 501 provides a great tool that allows a person to arrange, BEFORE mental capacity occurs, for someone else to step into his shoes to deal with property and financial decisions (but not decisions relating to medical or personal care) in the unfortunate event that he becomes mentally incapable. 

As explained below:

• This tool can be effective even if there has already been an onset of mental incapacity.
• The regime is far more convenient and cost-effective than using Part 2 of the Mental Health Ordinance, Cap. 136 to apply to the court to have a committee appointed to manage and administer the property and affairs of a mentally-incapable person AFTER the person’s condition renders him completely unable to make a voluntary and informed decision.  Under Part 2, the test for mental incapacity is stricter (harder to prove that someone is mentally incapable) whilst the costs and time involved in making the application and running the committee on a year-to-year basis are much higher.

 The formal requirements of creating a valid EPOA are:

• in the form prescribed in the Enduring Powers of Attorney (Prescribed Form) Regulation, Cap. 501A
• the attorney (i.e. the person given the power to handle the donor’s property and financial affairs) must be at least 18 years old; the attorney cannot be a trust corporation
• the donor signs in front of the EPOA in front of a registered medical practitioner, a Hong Kong practising solicitor and 2 witnesses
• the doctor must certify that the donor is mentally capable
• the solicitor must certify that the donor appears to be mentally capable at the same time or within 28 days after the doctor signs
• the donor must acknowledge that he signed the document voluntarily
• the donor must specify what powers are to be given to the attorney (unlike the General Power of Attorney, the donor cannot give a general authority over all of his property and financial affairs)
• if there are 2 attorneys, the donor must specify whether their powers are joint (the consent of both attorneys is required) or joint and several (either attorney can decide)
• registration of the EPOA with the High Court Registrar (the Register is open for public inspection)

The substantive requirement: Mental capacity at the time of executing the EPOA. In HK, unlike in other common law jurisdictions, the law on the EPOA is still at a developmental stage. So far, our High Court in To Lee Wah Samuel v Yum Huin Ming [2019] HKCFI 1441 has interpreted incapacity as consisting of 2 elements:

• an inability to understand the effect of the EPOA or an inability to make a decision to grant the EPOA by reason of:

1. mental disorder, defined as mental illness, a state of arrested or incomplete development of mind which amounts to a significant impairment of intelligence and social functioning which is associated with abnormally aggressive or seriously irresponsible conduct, psychopathic disorder, or any other disorder or disability of mind which does not amount to mental handicap; OR
2. mental handicap, defined as sub-average general intellectual functioning with deficiencies in adaptive behaviour; AND

• an inability to communicate to any other person an intention or wish to grant the EPOA after someone has made a reasonable effort to understand him

The person who challenges the validity of an EPOA bears the burden of proof – see To Lee Wah Samuel, supra. 

Please note that both requirements (mental issue and inability to communicate) must be present for mental incapacity to be established.  However, a person does not necessarily lack the capacity to grant an EPOA even if he suffers from a mental handicap or disorder.  As long as he fully understands the nature and effect of the EPOA and voluntarily grants the EPOA to an attorney of his choice, the EPOA will be valid. In To Lee Wah Samuel, supra, the court cited the following passage from the UK case of Re K (Court of Protection) [1988] 1 Ch 31 at 315 with approval:

In practice it is likely that many enduring powers will be executed when symptoms of mental incapacity have begun to manifest themselves.  These symptoms may result in the donor being mentally incapable in the statutory sense that she is unable on a regular basis to manage her property and affairs.  But, as in the case of Mrs. F., she may execute the power with full understanding and with the intention of taking advantage of the Act to have her affairs managed by an attorney of her choice rather than having them put in the hands of the Court of Protection.  I can think of no reason of policy why this intention should be frustrated. 

In contrast, in order to persuade the Court that a committee should be appointed to manage and administer the property and affairs of a person under the Mental Health Ordinance, one must show an inability to actually manage his affairs (a higher threshold).  Further, there are far more steps and costs involved in a Court-appointed committeeship.  The explanation of this regime is beyond the scope of this article. It should be noted that once committeeship has been appointed, the EPOA would automatically be revoked (C v B re A: Mental Health [2018] 2 HKLDRD 1105):  

Practically-speaking, a valid EPOA can come into existence as long as the doctor and the solicitor conduct assessments that are procedurally and substantively correct and tailored to the donor’s circumstances (the widely popular MMSE test is not conclusive and other clinical tests should be considered depending on the circumstances), and both the doctor and the solicitor maintain sufficiently-detailed contemporaneous notes that would hold up during any potential cross examination. 

Finally, there are 3 additional issues that you should consider with your solicitor:

• the validity period of the EPOA (some financial institutions have a policy of asking for general power of attorney to be “refreshed” on an annual basis) and there is a presumption of validity of the EPOA of only 12 months when faced against bona fide purchasers for value (section 14)
• whether in the particular circumstances of the donor’s case, a number of assessments conducted over a period of time will increase the chances of having the validity of the EPOA upheld by a court if challenged
• whether the Will of the donor needs to be “refreshed” and whether there is a need to create other legal documents dealing with the donor’s wishes after he loses capacity but before the end of his life such that all documents relating to the donor’s financial affairs are consistent with each other

If you wish to have a confidential discussion about the EPOA, court-appointed committeeship or other aspects of estate planning, or if you wish to challenge an EPOA that has already come into existence, please feel free to contact our partner, Ms Eunice Chiu at eunice.chiu@oln-law.com, +852 2186 1885.  Ms Chiu is an experienced disputes and private client solicitor, qualified to practise in Hong Kong and British Columbia, Canada.