Gem Ezy Flights Pty Ltd v Gribble

NCAT Appeal Panel|2021-03-18|Before: Blake AM

Introduction

This is an appeal from a decision of the Tribunal in its Consumer and Commercial Division made on 23 December 2020. The decision under appeal is one of several in which the Tribunal has recently been called upon to allocate, as between traders and their customers, financial losses consequent upon the disruption to commercial arrangements caused by the COVID-19 pandemic, and more particularly government interventions directed at controlling the spread of that illness.

Procedural matters

The Notice of Appeal was received by the Tribunal on 11 January 2021. This was clearly within the 28-day period for doing so provided for in rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014 (NSW).
At a directions hearing on 2 February 2021, the Appeal Panel made certain directions in relation to the conduct of the appeal. These were, in summary, as follows: 1. Leave for the Respondent to be legally represented, on condition that no legal costs may be recovered by that party. 2. The Respondent to lodge her Reply to Appeal by 9 February 2021. 3. The Appellant to lodge by 16 February 2021 (a) all evidence given to the Tribunal below on which it is intended to relay, (b) any evidence not so given, on which it is intended to seek leave to rely, (c) its written submissions, and (d) if what happened at the hearing is relied upon, a sound recording of the hearing and a typed copy of the relevant parts. 4. The Respondent to lodge by 2 March 2021 (a) all evidence given to the Tribunal below on which it is intended to relay, (b) any evidence not so given, on which it is intended to seek leave to rely, (c) her written submissions, and (d) if what happened at the hearing is relied upon, a sound recording of the hearing and a typed copy of the relevant parts. 5. The Appellant is to provide any written submissions in reply by 9 March 2021. 6. By consent, the operation of the orders made on 23 December 2020 was stayed until further order.

Background

The Appellant carries on business in Sydney as a travel agent. Between November 2019 and late January 2020, the Respondent paid the Appellant $5,665 for her daughter, a student at a school in Sydney, to undertake a school trip to France and Italy in April 2020 when she would be in Year 11.
The terms of this arrangement (the Contract) incorporated, relevantly, a document which was issued under the name and emblem of the school and headed "PROPOSED REFUND PROCEDURES - BOOKING CONDITIONS". This provided relevantly as follows: 1. In condition 1.3, that a non-refundable deposit of $800 is payable on booking the tour. 2. In condition 1.4, that the outstanding balance of the tour price is to be paid no later than 60 days prior to the scheduled departure date. 3. Condition 3 sets out an elaborate regime concerning cancellation of the tour by a client. In particular: 1. Condition 3.1 provides that any cancellation by a participant must be in writing, and that a fee will be charged to cover costs incurred if a student's participation in the tour is cancelled before the departure date. The amount of the fee will vary according to the length of notice of cancellation which is provided. 2. Condition 3.2 provides that the deposit is not refundable if a participant cancels her participation in the tour before full payment is made. 3. Condition 3.3 sets out some detail as to the sliding scale referred to in condition 3.1: if the participant cancels her participation between 60 and 30 days before departure, 50% of the total tour price is to be forfeited, while if she cancels 30 days or less before departure, 75% of the price is to be forfeited. 4. Condition 3.4 provides for cancellation charges made by individual service providers for the tour to be charged to a participant who cancels. 1. Condition 5 is headed "LIABILITY" and provides as follows: "5.1 Exchange Me [which all parties agreed was the trading name under which the Appellant provided its services in connection with the tour] and its employees, agents and suppliers do not accept liability for nay injury, death, damage, loss, delay, additional expense, or inconvenience caused directly, or indirectly by force majeure or other events beyond our control, or which are not preventable by reasonable diligence on its part including, but not limited to, war, civil disturbance, fire, flood, unusually severe weather, acts of God, acts of Government or other authorities, accident to or failure of machinery or equipment, or industrial action".
The COVID-19 pandemic intervened and brought with it restrictions on overseas travel. The school decided not to go ahead with the trip, which did not proceed.
The Appellant refunded $3,617.50 to the Respondent, who commenced proceedings before the Tribunal seeking the refund of the balance of $2,047.50.
There was no controversy concerning the Tribunal's jurisdiction to hear and determine the Respondent's claim, as a "consumer claim" arising from the supply of goods and services by a supplier (the Appellant) to a consumer (the Respondent) under a contract made in New South Wales (the Contract).
The Tribunal below found that: 1. The Contract was frustrated by reason of the government interventions directed at restricting travel made in response to the COVID-19 pandemic. 2. In consequence, the Contract was terminated and future obligations under it automatically discharged. 3. Moreover, the Appellant is required to refund to the Respondent under section 12 of the Frustrated Contracts Act 1987 (NSW) (FC Act) the sum of $1,247.50, balance of the tour price paid by the Respondent after deducting the refund referred to above, but less the non-refundable deposit of $800. 4. No other adjustment was required by the FC Act. 5. Clause 5 of the Contract did not alter this outcome, since none of the circumstances in respect of which it provided that the Appellant accepted no liability included those on the basis of which the tour was cancelled.

The Appellant's arguments

These were essentially twofold.
The first was that: 1. The reason for the cancellation of the tour was government action, namely a decision by the NSW Department of Education suspending all school travel. 2. This fell within the causes listed in Condition 5, being "acts of Government or other authorities". 3. In consequence, the contractual protections afforded to the Appellant under Condition 5 applied in the present case, with the result that the Appellant was not required to refund the balance claimed by the Respondent.
The second was that the Tribunal's decision was procedurally deficient, in that that the Tribunal either: 1. Did not take sufficient account of, or 2. Address adequately the Appellant's submissions on hearing, that it should follow, an earlier decision of the Tribunal on an analogous issue, in Ryan v Gem Ezy Flights Pty Ltd [2020] NSWCATD (Ryan).

The Appeal Panel's decision

The Appeal Panel decided to dismiss the appeal.
At the outset, it noted that there was no evidence to suggest that the relationship between the Appellant and the Respondent was anything other than one in which the Appellant promised to supply a particular travel package. In this respect, the rather more complex analysis of the relationship that sometimes obtains between a travel agent and its customer, and which underlies the decisions of differently constituted Appeal Panels in Flight Centre Travel Group Limited T/A Aunt Betty v Goel [2021] NSWCATAP 44 and Great Wall Travel Services Pty Ltd v Lai [2021] NSWCATAP 64, is inapplicable in the present case. The Appellant contracted either as principal or as an undisclosed agent. In either case, there is in the Appeal Panel's view no basis to conclude that such liability as falls on the Respondent's contractual counterparty as the result of the frustration of the Contract (which is discussed further below) attaches otherwise than to the Appellant.
There is, moreover, nothing to challenge the tacit assumption on which both parties and the Tribunal proceeded at first instance, that the proper law of the Contract was that of New South Wales.
The Appeal Panel agrees with the Tribunal's finding that the Contract was frustrated. There was no evidence before the Appeal Panel as to the terms, nature or effect of the action of the Department of Education which, the Appellant submitted, was the occurrence which resulted in the cancellation of the trip. However, the Appeal Panel is in any event satisfied that the effect of the Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Overseas Travel Ban Emergency Requirements) Determination 2020 (Cth) was to frustrate the Contract. Section 5 of this order banned, with effect from midnight on 25 March 2020, the exit from Australian territory of persons as passengers on aircraft or vessels, subject to a limited range of exemptions set out in sections 6 and 7. None of the specific exemptions set out in section 6 can reasonably be read as applying to the Respondent's daughter's participation in a school trip to France and Italy, and that purpose itself does not appear to provide the "compelling reason for needing to leave Australian territory" which is required in order to enliven the Australian Border Force Commissioner's authority to issue a personal exemption to the Respondent's daughter. That is to say, even if she and her schoolmates had presented themselves at the relevant airline check-in desk at Sydney Airport after that date for their flight (assuming such a facility was in fact operating on that day), with their luggage packed and their passports in hand, they would not have been allowed to exit the country without an exemption which was unobtainable. The Contract was thus clearly frustrated.
The consequence of that frustration was, subject to one possible qualification which is discussed in [23] below, to engage the operation of sections 12 and 13 of the FC Act: 1. Section 12 provides in summary that where a party to the contract has paid money to another person (whether or not a party) as an agreed return for performance of a contract by another party, the recipient of the money must pay the same amount to the party who originally paid it if the contract is frustrated. 2. Section 13 provides in summary that where a contract is frustrated and the party who would otherwise have been obliged to perform an obligation under the contract has suffered a detriment by paying money, doing work or otherwise undertaking an act for the purpose of performing that party's obligations under the frustrated contract, that party is entitled to be paid by the party who would receive the benefit of performance an amount equal to one-half of what would be fair compensation for the detriment suffered by the performing party.
The net result in the present case of the combined operation of sections 12 and 13 would be: 1. to entitle the Respondent to receive, subject to one qualification discussed in [22] below, what she had paid to the Appellant under the Contract, while 2. entitling the Appellant to receive from her one half of the money which it had outlaid in order to procure various services - flights, accommodation and excursions - for the Respondent's daughter in connection with the tour.
There was, however, no evidence before the Appeal Panel as to whether the Appellant had in fact incurred any expenditure in organising the tour, or as to the amount of any such expenditure. There was thus no evidentiary basis to support any claim by the Appellant under section 13. It was in order to have an opportunity to provide such evidence that counsel for the Appellant sought the adjournment referred to earlier; in view of the directions as to the provision of evidence made by the Tribunal on 3 February 2021 the Appeal Panel declined to allow the adjournment, for the reasons set out in its oral reasons.
Turning to section 12, the Appeal Panel noted that the Contract provided that the deposit of $800 paid by the Respondent to the Appellant was not refundable in any circumstances. The Tribunal was of the view that deposit was not repayable under section 12 to the Respondent, since the particular service to which the payment of the Respondent was referrable, namely as set out in Condition 1.3 of the Contract reservation of a place on the tour, was fully performed by the time the tour was cancelled. The Respondent's daughter had her place on the tour; the frustration lay in the fact that the tour could not proceed.
There is a further dimension to this analysis: 1. The FC Act contemplates in the possibility that the application of the Act to a particular contract can be excluded by the terms of the contract. Section 6(1)(e) provides that the FC Act does not apply to a contract "... in so far as the parties thereto have agreed that this Act does not apply to the contract". 2. The Appellant suggested that clause 5 of the Contract had the effect of excluding the application of the FC Act to the Contract, since the provisions of clause 5, in particular to the extent that they provided for a different allocation of risk as between the Appellant and the Respondent in relation to the consequences of governmental acts, amounted to an agreement that the FC Act was not to apply to the Contract. 3. The Appeal Panel rejects this argument. It does so because clause 5 is an exclusion clause, to which the contra proferentem rule must be applied in accordance with normal principles of contractual interpretation. This means that in the absence of a contractual provision which clearly and unambiguously excludes the FC Act from applying to the Contract, such a proposition advanced on behalf of the Appellant cannot be accepted.
Turning now to the second strand of the Appellant's argument, the Appeal Panel dismisses this for two reasons: 1. The Appellant had not provided a transcript of proceedings in the Tribunal below. There was this no evidence that the Tribunal had failed in any respect to afford the Appellant a fair hearing. 2. Moreover, Ryan, the case to which the Appellant referred, appears to be materially different. Paragraph [21] of the reasons in that case includes a finding that the respondent had "... done work and suffered loss and therefore may be entitled to some compensation ..." under section 13 of the FC Act. In the present case, no evidence was provided to support any such claim.

Orders

The Tribunal makes the following orders:
Leave is given to the Appellant to be legally represented on condition that no legal costs may be recovered by that party in the appeal.
The appeal is dismissed.
The stay of the order made on 23 December 2020 in proceedings GEN 20/42668 is terminated.

            I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 March 2021

Frustrated Contracts Act 1987(NSW)

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