The Court of Appeal increased the price reduction to 40 % and also awarded compensation because the plaintiffs had been denied the chance to enjoy their holiday. In terms of the percentage price reduction awarded, it stated that the Frankfurt Table could also be used in Austria for assessing the price reduction required to offset particular deficiencies in the holiday. However, the table could only act as a guide, meaning that the courts were not bound by it. Furthermore, the court stated that minor defects are generally not covered under warranty law. However, where such defects have a cumulative effect – as in this case with the formation of mould, missing door hinges etc – the traveller may have a warranty claim, meaning that a further 10% reduction in trip costs seemed an appropriate level of compensation.
As regards the defendant’s objection that the plaintiffs had failed to fulfil their duty to report defects under §31e para 2 KSchG, the court ruled that this did not mean that the plaintiffs had completely forfeited any right to a price reduction. Rather, they had simply failed to fulfil their obligations, which could count against their claim on the grounds that they were also at fault. With regard to the services offered as compensation by the defendant to the plaintiffs, the Court of Appeal ruled that travellers are under no obligation to accept these where the services are not equivalent to the missing services or where they would unreasonably disrupt the travel schedule.
With regard to compensation where the traveller has been denied the chance to enjoy his holiday, the Court of Appeal stated that this had been laid down in § 31e para 3 KSchG as part of the Act Amending the Civil Code (BGBl I 2003/91) for cases in which the tour operator can be held liable. However, in this case, § 31e para 3 KSchG did not apply, because it had not yet come into force at the time. Consequently, the question arose as to whether, in spite of any clear provisions in law, compensation could still be awarded with reference to Package Travel Directive 90/314/EEC. While, with just a few exceptions, Austrian compensation law did not award compensation for non-material damages, the European Court of Justice (ECJ) had ruled on 12th March 2002 that in principle the Directive did give the customer the right to claim compensation for non-material damages. However, it should be noted that Directives regulating legal relationships between private individuals cannot be applied to the direct detriment of a private individual where they have not been fully and properly transposed. However, once all provisions in Austrian law have been fully explored, it is permissible to interpret the case in line with the Directive. Here, §§ 1293, 1295 and 1323 ABGB were a point of reference for interpreting the facts of this case in line with the Directive. Under clauses §§ 1323 and 1324 ABGB, compensation for non-material damage can only be awarded where there is evidence of gross negligence. It should, however, be noted that, in the case of non-material damage based on breach of contract, § 1321 should be applied, under which compensation for non-material damage can only be awarded in certain cases where one party is clearly at fault (malicious intent or malicious joy). In the case of contracts promoting ideal interests – as travel contracts indubitably do – compensation should be more comprehensive. Accordingly, compensation for non-material damage should also be awarded under §1323 ABGB. However, as § 31e para 3 KSchG demonstrates, a prerequisite for awarding compensation in this case is severe disruption to the services offered. Given the many clear instances of noise and smell disturbances in this case, compensation should be awarded on the basis that the plaintiffs had been denied the chance to enjoy their holiday.