This is an appeal from a decision of the Tribunal in its Consumer and Commercial Division. 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 government interventions directed at controlling the spread of that illness.
[2]
Background
The appellant at all relevant times carried on business as a travel agent in Sydney. The respondents, Mr and Mrs Lai, used it to arrange and book a 22-day holiday in South America which was due to depart on 26 March 2020, a date which happened to fall within the period during which governments, both in Australia and elsewhere, first imposed severe restrictions on international travel in response to the pandemic.
The detail of their respective efforts to resolve the consequential issues is set out in the Tribunal's reasons for its decision of 17 September 2020, but they were unsuccessful.
In consequence, the respondents on 14 April 2020 made an application to the Tribunal for an order under section 79N(a) of the Fair Trading Act 1987 (the FTA) that would require the appellant to pay them $15,540.00, being a refund of the balance of the price they paid to the appellant for the holiday after allowing for the refund of $11,256.00 which the appellant paid to the respondents.
The appellant responded to this claim that it was unable to refund the amount requested, because:
1. it was entitled to a cancellation fee, and
2. much of the amount in question related to payments made to service providers for components of the tour that were not refundable but rather had been converted by the third-party suppliers into a credit redeemable by the respondents for future travel, subject to certain conditions.
The Tribunal found for the respondents, for the reasons discussed in more detail below.
On 14 October 2020, the Tribunal received a Notice of Appeal from the appellant in respect of that decision, within the time limit of 28 days for the making of an appeal provided for in Rule 25(4)(c) of the Civil and Administrative Tribunal Rules 2014.
[3]
Common ground
There was no dispute that:
1. the respondents were "consumers" within the meaning of section 79D of the FTA,
2. their claim was a "consumer claim" for purposes of section 79E of that Act, or
3. Tribunal had jurisdiction to hear the claim under section 79K of that Act.
Equally, there was no controversy that:
1. the provisions of the Australian Consumer Law (NSW) (the ACLN), as applied by section 28 of the FTA in New South Wales, were capable of applying to the relationship between the appellant and the respondents;
2. the provisions of sections 60 and 61 of the ACLN, providing for certain statutory guarantees in relation to the supply of services to consumers, were capable of application to the relationship between the appellant and the respondents, or
3. the provisions of sections 267 to 269 of the ACLN apply to claims by the respondents against the appellant under those guarantees.
Moreover, there was no controversy that, as the Tribunal found at [11] of its reasons:
1. the contractual relationship between the appellant and the respondent was governed by the appellant's "Terms and Conditions", and
2. a copy of these Terms and Conditions had been supplied to the respondents at the time at which they agreed to purchase their travel packages.
[4]
The Tribunal's findings at first instance
The Tribunal made seven relevant findings at first instance. References to "the trader" are to the appellant, and to the "consumer" are to the respondents.
The first was, at [36] of the Tribunal's reasons, that:
"... the "services" the Trader provided to the consumer were recreational, involving the organisation and conduct of a tour to various destinations in South America and associated benefits and facilities: cf Moore v Scenic Tours Pty Ltd [2018] NSWCA 238, at [186] to [187]".
The second, at paragraph [52] of the reasons, was that the respondents:
"... engaged the [appellant] to supply a South America Tour travel package for a 22 day tour commencing on 26 March 2020 and ending on 16 April 2020. That particular purpose and result was express in the consumer's acceptance of the trader's offer of that travel package for sale in September 2019. There can be no issue that the consumers relied upon the [appellant]'s skill and judgment as a travel agency in seeking to realise that purpose and result".
The third was that the respondents did not cancel their participation in the tour, whether:
1. some 20 days prior to 16 March 2020, as the Tribunal states in paragraph [47] of its reasons, or
2. at some point on or between 16 March 2020 and 25 March 2020, as the Tribunal sets out in paragraphs [48] and [49] of its reasons.
The fourth was that it was the appellant who cancelled the tour, on 25 March 2020:
1. At [46] of its reasons, the Tribunal observes that:
"...I am comfortably satisfied that it was the trader who cancelled the tour. It notified the consumers that it had done so on 25 March 2020 in an email from Ms Cai to the consumers where Ms Cai states that the tour has been cancelled due to the ongoing coronavirus outbreak [which] is having a significant impact on travel around the world"; and
1. At [50], the Tribunal reiterates that conclusion:
"On 25 March 2020 the Australian Government imposed an exit ban at Australia's borders which prevented the tour from going ahead after that date. The tour plainly had to be cancelled by the trader on that date, and it was".
The fifth was that the cancellation of the tour by the appellant had the consequence that the appellant was obliged under the Terms and Conditions to refund to the respondents the moneys paid by them in connection with the tour. The relevant condition was that headed "Cancellation by Us", which provides that the appellant:
"... reserves the right to cancel or vary a tour prior to departure due to insufficient numbers or other unforeseen circumstances. In such an event alternative guaranteed travel dates will be offered. Should these options not be acceptable [the appellant] will refund the full price paid less visa cost".
This contrasts with the terms of the immediately following condition, headed "Cancellation by You", which sets out an elaborate regime for the financial consequences of the cancellation of a booking by the intending traveller, which provides relevantly that where the traveller cancels a booking "...[b]etween 45 days prior to departure or at the departure day, no refund will be made".
The sixth was that the cancellation of the tour meant that the appellant had failed in its provision of services to comply with the statutory guarantees imported into the commercial relationship between it and the respondents by section 61 of the ACLN and was liable to the respondents as a consequence. More particularly:
1. By engaging the appellant to supply the travel package, the respondents had made known to it both the purpose for which they acquired those services and the result which they wished those services to achieve, so as to engage the statutory guarantees provided for in section 61;
2. The cancellation of the tour had the consequence that the appellant breached guarantee in section 61(1), that "... the services, and any product resulting from them, will be reasonably fit for that purpose" made known by the respondents;
3. A further consequence of the cancellation of the tour wast that the appellant breached the guarantee in section 61(2), that "the services, and any product resulting from them, will be of such a nature, and quality, state or condition that they might reasonably be expected to achieve that result" made known by the respondents;
4. Those failures were major failures, within the meaning of section 268 of the ACLN;
5. The respondents were thus entitled to terminate their contract with the appellant for the supply of the tour, and to recover compensation for the shortfall between the amount paid by them for the services and the value of the services received; in effect, this was a full refund of the tour price since the tour had not commenced.
The seventh and final finding was that several provisions of the Terms and Conditions which purported to limit the appellant's potential liability were not effective to do so in the relevant circumstances:
1. The first of these was the condition headed "Risks Associated with Travel". It provides that "[t]here are general risks associated with travelling, which are beyond [the appellant]'s control and as such [the appellant] cannot be liable for any loss or damage you may incur as a result of these general risks. Such general risks include but are not limited to: ... Force Majeure Events; .... flight schedule changes or cancellations; ... ;epidemics or pandemics; ....changes to government visa or travel requirements".
2. The second was the condition headed "Limit of Liability". It provides as follows:
"To the extent permitted by law, [the appellant] excludes all liability for any loss or damage whatsoever (including but not limited to physical and psychological injury, and any loss or damage to property of whatever nature) that may arise in any way in connection with the offer or supply of goods or services through GWT or any third parties, or in connection with the supply of such goods or services. If the law implies a condition or warranty that cannot be excluded, [the appellant]'s liability for a breach of the condition or warranty will be limited as determined by [the appellant] to the resupplying of the relevant goods or services.
Events beyond our control: [The appellant] does not accept liability whatsoever for injury, damage, loss, delay, additional expenses or inconvenience caused directly or indirectly by any events which are beyond its control including, but not limited to, war, civil disturbance, fire, floods, acts of God, acts of Government or any other authorities, accident to or failure of machinery or equipment or industrial action".
1. The Tribunal's reading of these provisions was that as a matter of construction they applied only to consequential loss, not the performance interest itself, and were thus did not disentitle the respondent's to a refund of the price which they paid.
2. Moreover, so far as those clauses purport to limit the appellant's liability in respect of its failure to comply with the statutory guarantees under section 61(2) of the ACLN, they are void under section 64 of the ACLN.
[5]
The appellant's contentions
The appellant says that the Tribunal made several errors of law in reaching its decision.
The first, the appellant says, is that it failed to consider whether section 267(1)(c) of the ACLN applied in determining that the respondents were entitled to take action under section 267. This section establishes three preconditions, each of which had to be satisfied before the respondents were permitted to take action under that section. These cumulative preconditions are:
1. Under section 267(1)(a), that the appellant supplied services to the respondents in trade or commerce;
2. Under section 267(1)(b), that the appellant did not comply with the relevant statutory guarantee in making the supply; and
3. Under section 267(1)(c), that ".. the failure to comply with the guarantee did not occur only because of: ......(ii) a cause independent of human control that occurred after the services were supplied".
The failure to provide the tour was the result, the appellant says, of the Government's ban on international travel, the respondents' ".. repeat [sic] and forceful requests for the cancellation of the tour due to safety concerns" and the impact of the COVID-19 pandemic.
The second, the appellant says, was that the Tribunal misconceived the nature of the legal relationship between the appellant and the respondents. It failed to recognise that the contract between the appellant and the respondents was one for it to make travel arrangements for them, which it did, and that legally the individual arrangements for the transport, accommodation and excursions of the respondents during the tour were contracts directly between them and suppliers (such as airlines, tour guides and hoteliers), entered into through the appellant as agent. In taking this approach, the Tribunal "... has extended liability on the appellant to an extremely unreasonable degree by ordering the appellant to make a full refund to the consumers, for monies already forwarded to airlines".
The third, the appellant says, is that the Tribunal was wrong in finding that it was the appellant that cancelled the tour. In view of the tripartite relationship between the appellant, the respondents and third-party suppliers, notice of a cancellation initiated by the respondents must necessarily pass through the appellant in order to be communicated to suppliers. Any cancellation in the present case was initiated by the respondents, and the appellant merely communicated to the third party suppliers (and otherwise gave effect to) their decision.
The fourth was that the Tribunal misconstrued the effect of the condition entitled "Risks Associated with Travel" by limiting its operation to consequential loss, which is not a limitation that the words of the condition support.
[6]
The relationship between the appellant and the respondents
The Appeal Panel is of the view that the Tribunal's analysis of the legal relationship between the appellant and the respondents was incorrect.
The starting point in analysing that relationship is the Terms and Conditions, of which two provisions are central to this appeal:
1. The first is the first paragraph, which provides relevantly that the appellant "…is not itself a transport, tour, event or accommodation provider. It acts only as agent for those service providers. You should obtain and read the applicable service provider's terms and conditions as they may limit or exclude liability in respect of death, personal injury, delay and loss or damage to baggage. Payment of the booking deposit or tour price represents your acceptance of these terms and conditions".
2. The second is the condition headed "Tour Operation", which provides as follows:
"Although [the appellant] will endeavour to ensure that tours are available as advertised, an express condition of making a reservation is acceptance by the client that tour itineraries and schedules, advertised accommodation, sightseeing programs and modes of transportation as outlined in this brochure and our itinerary paper and/or supplied in pre-departure information are subject to change without prior notice. Air travel, coach journeys and other forms of transport and hotel accommodation are provided by independent operators and all bookings through [the appellant] are subject to the terms, conditions and limitations of carriers, hoteliers and other service providers. The itineraries are subject to change upon local arrangement or service provider schedule change".
The conclusion which follows from these provisions is that the appellant assembled and presented to the respondents for their approval a variety of services from numerous independent providers, including air and ground transport, sightseeing and accommodation, which taken as a whole constituted the respondents' South American holiday. However, the only elements of the entire holiday package provided by the appellant itself were the organisational, coordinating and advisory services involved in identifying, organising and proposing appropriate suppliers of services to the respondents and liaising between the respondents and the third-party suppliers. The principal elements of the tour - flights, accommodation and sightseeing - were all provided by third parties, pursuant to contracts entered into with the respondents by those third-party suppliers through the agency of the appellant.
In relation to air travel, the appellant appears to have been acting as agent for a disclosed principal, namely LATAM Airlines, whose engagement as air transport provider is clear on the face of the Tour Booking Form provided by the appellant to the respondents by email on 15 January 2020, and to which the Terms and Conditions were appended. In relation to other aspects of the tour, the appellant appears to have been acting as the agent of undisclosed principals. The distinction may only be of limited significance, since the controversy between the parties relates not to accommodation and sightseeing charges, the bulk of which appear to have been refunded, but rather to the cost of air transport, in respect of which a credit against the cost of future flights, rather than a refund, has been offered by the airline.
The analogy which the Tribunal appeared to draw in [36] of its reasons when attempting to describe the services provided by the appellant to the respondents, between the present controversy and that in Moore v Scenic Tours Pty Ltd, is thus incorrect. It is clear from Garling J's judgment in that case that Scenic Tours Pty Ltd actually operated (either directly or through one or more associated companies) the vessels on which the, sadly disappointed, plaintiffs expected to cruise the Rhine, Main and Danube Rivers. In the present case there is no suggestion that any aircraft, tour bus or hotel proposed to be utilised in the course of the respondents' South American tour was owned, chartered, leased or operated by the appellant. To suggest therefore that the services provided by the appellant extended beyond the organisation of the tour, to include the conduct of the tour or the provision of associated benefits and facilities to the respondents, incorrectly overstates the role of the appellant.
A differently constituted Appeal Panel of the Tribunal adopted in Flight Centre Travel Group Limited T/A Aunt Betty v Goel [2021] NSWCATAP 44 a similar characterisation of the relationship between a travel agent and its customer. In that case, a customer had booked certain international airline flights using the website operated by a travel agent, and when as the result of COVID-19 related travel restrictions he was unable to take the relevant flights, he claimed compensation on the basis that the travel agent had a professional and a legal responsibility to ensure the product and allied services (that is to say, the air travel) were delivered. The terms and conditions of contract between the customer and the travel agent were rather more elaborate than those in the present case, but the essential was the same as for the appellant's Terms and Conditions: the travel agent acted as agent for third party suppliers of travel services; as agent for the suppliers entered into contracts with its customer for those suppliers to provide their services to the customer; and the customer's rights in connection with those travel services were as against the relevant providers, not the travel agent. The Appeal Panel described the relationship between the travel agent and its customer as follows: "... the services provided by the appellant were not flight services but were limited solely to booking and advisory services". If supplemented by an express exclusion of accommodation and sightseeing services from the list of services provided by the appellant, that formulation appears to us to be equally applicable to the relationship between the appellant and the respondents in this case.
Moreover, the approach which we propose to take in this case (and which was taken in Flight Centre Travel Group Limited T/A Aunt Betty v Goel is consistent with that adopted by the Court of Appeal in Air Tahiti Nui Pty Limited v McKenzie [2009] NSWCA 429.
[7]
Is there a liability under the statutory guarantees?
What follows from our analysis of the relationship between the appellant and the respondents is that the statutory guarantees under sections 61(1) and (2) of the ACLN are necessarily much narrower in their application to the appellant than the Tribunal at first instance found to be the case.
The appellant's duties were essentially to propose to the respondents a package of travel-related services - principally flights, accommodation and sightseeing - to be provided by third party suppliers which together amounted to the required South American tour, and as agent for the suppliers to enter into contracts for the supply of those services to the respondents. There was no suggestion that the appellant had failed to do so. Indeed, the evidence before the Tribunal in the form of, first, the booking form sent by the appellant on 15 January 2020 and, secondly, the tour confirmation and detailed itinerary sent by the appellant on 9 March 2020, indicates that this is precisely what the appellant did.
That being the case, we do not consider that there is any basis on the available evidence for the respondents to claim or recover against the appellant compensation for a breach of the statutory guarantees under the ACLN in respect of the unavailability to the respondents of the South American tour which they had booked.
[8]
Was there a termination of the tour?
Our conclusion in the preceding paragraph is not the end of matters. The Tribunal found, in [46], that it was the appellant who cancelled the tour so that the condition headed "Cancellation by Us" was engaged, with the consequence described in [56] that the appellant was ultimately obliged to refund to the respondents the full price they paid for the tour, less visa costs.
That any communications sent to LATAM Airlines and any other third-party suppliers informing them that the respondents would not be embarking on the tour emanated from the appellant does not appear to be controversial. Indeed, in view of the appellant's role as the intermediary between those suppliers and the respondents - at least before the latter actually embarked on the tour - it was only to be expected that the appellant would have done so.
The proper identification of the appellant's role is important at this point, since as the sole intermediary between the respondents and their contracting suppliers, any notification to the suppliers of cancellation of the tour must necessarily have been given by the appellant. If that alone were sufficient to engage the operation of the condition entitled "Cancellation by Us" then the next condition, "Cancellation by You", would have been entirely redundant since any the simple fact of its communication of the cancellation decisions would necessarily fall within the earlier condition. The preferable interpretation, in our view, is one which allows both conditions to operate in a harmonious and consistent way. This is an interpretation such that when those two conditions refer to cancellation of a travel arrangement by either party, they refer not to the mechanical process of effecting or notifying a cancellation (which necessarily falls to the appellant) but rather to the effective making of the decision to cancel.
Hence, for arrangements to be cancelled by the appellant (and the consequences set out in "Cancellation by Us" to apply) it must be the appellant which took the operative decision to cancel them. Conversely, for them to be cancelled by the respondents (and the consequences set out in "Cancellation by You" to apply) it must be the respondents who took the operative decision to cancel them.
Against this background, in our view the Tribunal misconstrued the effect of the appellant's acknowledgement in its email to the respondents of 25 March 2020 that "Unfortunately the ongoing coronavirus outbreak is having a significant impact on travel around the globe. The group has been cancelled due to this fact". It does not demonstrate that the appellant took any decision to cancel the travel arrangements so as to attract liability under the condition headed "Cancellation by Us". Rather, it merely demonstrates the fact of their cancellation, for which there are at least two other plausible explanations.
These are:
1. Firstly, that the cancellation recorded in the email reflects a decision taken by the respondents (and communicated, albeit in precative language, on their behalf by their son Mr David Lai in his email of 16 March 2020 to the appellant) not to undertake the tour; or
2. Secondly, that although the appellant's email of 25 March 2020 is expressed in the language of cancellation, it is in reality an acknowledgement by the appellant, as agent for the various third-party suppliers, that the contracts between the respondents and those suppliers which together constitute the arrangements for the respondents' tour have been frustrated by government actions taken in response to the spreading COVID-19 pandemic.
The most immediately relevant of these government actions was the making on 25 March 2020 of the Biosecurity (Human Biosecurity Emergency) (Human Coronavirus with Pandemic Potential) (Overseas Travel Ban Emergency Requirements) Determination 2020 section 5 of which banned, with effect from midnight on that date, the exit from Australian territory of persons as passengers on aircraft or vessels, subject to a limited range of exemptions set out in ss 6 and 7. None of the general exemptions set out in section 6 can reasonably be read as applying to a couple resident in Sydney who propose to take a 3 week holiday to South America, 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. That is to say, even if the respondents had presented themselves at the LATAM check-in desk at Sydney Airport on 26 March 2020 for their flight to Chile (assuming such a facility was in operation on that day), with their luggage packed and their passports in hand, they could not have expected to be allowed to exit the country without an exemption, which would not have been available to them.
It is not necessary to canvass these alternatives any further, in view of our finding that there was no evidence before the Tribunal which we have been referred to which indicates that the appellant took any decision to cancel the travel arrangements for the respondents' South American tour, such as to render it liable under the condition headed "Cancellation by Us". The Tribunal was thus in error in finding, as it did at [56], that as a consequence of the cancellation of the travel arrangements the appellant is obliged to refund to the respondents the full price they paid for the tour, less visa costs.
Accordingly, the appeal is allowed and the Tribunal's decision of 17 September 2020 is set aside. The application is remitted for reconsideration by the Tribunal. We will not make an order limiting any further evidence. The legal issues in this matter are complex, and the parties are self-represented. Given our findings, in the event that there is other available evidence which may impact upon the Tribunal's deliberations it would be in the interests of justice that the parties have an opportunity to rely upon it.
[9]
Orders
The Tribunal orders that:
1. The appeal is allowed; and
2. The orders of the Tribunal made on 17 September 2020 are set aside.
3. The application is remitted to the Tribunal for determination according to law.
[10]
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
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Decision last updated: 19 March 2021