Kiss v Parsons

NCAT Appeal Panel|2021-07-01

REASONS FOR DECISION

By Notice of Appeal filed on 26 April 2021 the appellant appeals a decision of the Tribunal made on 29 March 21 which made orders in relation to the refund of payments which had been paid by the respondents to the appellant, a travel agent, following cancellation of the respondents' holiday. The holiday and international air travel by Air Canada was cancelled due to COVID-19 restrictions.

Facts

In July 2019 the respondents visited the offices of the appellant to discuss booking an overseas holiday to Canada and Alaska. A quotation was issued and thereafter a draft itinerary was prepared. The respondents returned on 30 July 2019 to the office of the travel agent where Ms Parsons, on behalf of herself and her mother, signed a form entitled Booking Form. The form contained a privacy notice but did not refer to any terms and conditions of the booking.
On 6 August 2019 the respondents paid two amounts of $4,250 to the appellant (one for each respondent and totalling $8,500) for international air travel to Canada, internal air travel, hotel accommodation and various excursions ("the reservation"), as detailed in the itinerary.

Proceedings before the Tribunal

The respondents instituted proceedings in the Tribunal to recover the monies they had paid to the appellant (GEN 20/32421). By its decision dated 12 November 2020 the Tribunal found that the respondents were entitled to be paid the sum of $9,092, because the contract for the purchase and provision of travel arrangements had been (impliedly) frustrated. Pursuant to such orders, the appellant forthwith paid the sum of $9,092 to the respondents.
The appellant appealed. On 25 February 2021 the Appeal Panel upheld the appeal, finding that the appellant was only acting as agent and not as principal. The Appeal Panel set aside the above orders and ordered the respondents to refund to the appellant the amount of $7,754.68. The Appeal Panel ordered the matter should be remitted for reconsideration. It is not clear why the proceedings were remitted, except that the Appeal Panel was concerned that the original decision-maker had not specifically found frustration, although it was implied in her decision.
On 30 March 2021, in proceedings GEN 21/10270, the Tribunal, differently constituted, found that the contract had been frustrated as a result of the COVID-19 travel bans and that the parties' relationship was governed by the provisions of the Frustrated Contracts Act 1978 (NSW).
The Tribunal did not make an express finding as to who the parties to the contract were, or what the subject of the contract was, although we infer the Tribunal found that the appellant and the respondents were parties to a single contract pursuant to which the appellant was to supply the air travel, accommodation and excursions. If so, the Tribunal erred for reasons to which we will come, and such a finding is inconsistent with its finding that the appellant was an agent of the travel providers (Air Canada and Momento Travel).
The Tribunal found that the contract between the parties: "… was completely frustrated by the Covid travel bans and that the relationship became subject to the provisions of the Frustrated Contracts Act 1975 (NSW) [sic]. Pursuant to s. 12 of the FT Act the respondent is to repay the monies paid to the applicants. Pursuant to s. 13 of the FT Act 1975, as submitted by the respondent, the applicants should not be entitled to retain both the refund and any other benefits or possible benefits offered to or received by them from the respondent or from any of the subject travel providers. I do not agree with the respondent's submission as the effect of s. 13 of the FT Act 1975 but in any case fairness and equity would require such an order, as made above.
The Tribunal made the following orders in proceedings GEN 21/10270: 1. The Tribunal finds the contract for the purchase and provision of travel arrangements by the applicants from the respondent was frustrated. 2. The applicants are entitled to retain the payment of $9,092.00 made by the respondent following the decision in matter number GEN 20/32421. 3. The order made by the Internal Appeal Panel on or about 25-Feb-[2021] that the applicants pay the amount of $7,754.68, which has not been complied with, is set aside. 4. The applicants are not entitled to the benefit of any credits or further refunds or offers of alternative travel which may be made by Air Canada or other airline in relation to the original travel arrangements or alternatively to the original travel arrangements or by any credits or refunds made or offered by any travel providers or land-based providers of travel or accommodation in relation to or alternatively to the original travel arrangements. 5. The respondent is to all things reasonably necessary to ensure that any travel or accommodation provider in relation to the original travel arrangements is made aware of these orders.

This Appeal

The respondent in those proceedings appeals the orders by its Notice of Appeal. The grounds of appeal claim that the Tribunal erred in respect of the following issues: "The Tribunal erred in [determining] that Wendy Kiss was a legal agent of third party travel providers, in doing so the Tribunal did not spell out the reasons for that decision. The Tribunal [erred] in comparing Wendy Kiss as a "travel agent" to real estate agents. The Tribunal erred in its use of comments by French CJ, in the Flight Centre High Court case. The Tribunal erred in not distinguishing between the commercial use of the terms agent and its legal meaning. The Tribunal erred in finding that Wendy Kiss was liable for the breach of contract in the failure of third party providers to provide the travel services. The Tribunal erred in stating that agents are liable for acts of the principal."
These grounds do not capture the errors made by the Tribunal (as explained later in these reasons), but those errors which are apparent to us must be considered: Cominos v Di Rico [2016] NSWCATAP 5 at [13]. These errors raise questions of law since the Tribunal erred in its application of the law in this case.

The respondents' Reply seeks to affirm the orders made by the Tribunal under review.

Recent developments

The appellant advised the Appeal Panel that it expects to receive a full refund from Air Canada of the payments made by the respondents to the appellant representing the air travel component of the reservation (being $6,051.68). The appellant has also received from Momento Travel a refund in the amount of $1,297 in respect of the deposits paid to that company. The appellant is holding this sum.
The appellant has stated that Momento Travel will provide the accommodation and excursions to the respondents in the future, provided that at least one of the two persons referred to in the reservation wishes to avail themselves of their holiday.
Pursuant to the original orders of the Tribunal, the appellant has paid the amount of $9,092 to the respondents.
Arising out of the recent information, there is now no issue concerning the airfare. Usually, where a refund is made, the agent would be expected to hold such funds in trust for the client. However, since the agent has already reimbursed the respondents for this item, the Appeal Panel will order that the appellant will be entitled to receive the refund from Air Canada for her own purposes.
The amount of $3050.32 was paid by the agent to Momento Travel on behalf of the respondents. In view of the credit of $1,297.00 which is now being held by the appellant (and which the appellant is entitled to keep for reasons to which we will come), the amount outstanding between the parties is the amount of $1,753.32 which was paid by the appellant to the respondents pursuant to earlier orders. Both parties agreed that this was the sum in practical dispute on this appeal.

Issues for determination

The Tribunal based its decision on the application of s 12 of the Frustrated Contracts Act. The principal issue for determination on this appeal is therefore whether the Tribunal erred in its application of that Act.
A subsidiary issue for determination is whether, in making the arrangements for travel for the respondents, the appellant was acting only as agent (on behalf of Air Canada and Momento Travel) and is therefore not personally liable to reimburse the respondents.

The contract

An Appeal Panel has recently determined that where a travel agent accepts payment as agent only and the booking terms and conditions make that plain when travel arrangements are made between the client and the agent, the client has no recourse to the travel agent: Flight Centre Travel Group Ltd T/A Aunt Betty v Goel [2021] NSWCATAP 44. See especially [39]-[43] and [48]-[50].
The Tribunal member accepted that the appellant was acting only as agent for the respondents, as was clearly reflected in the terms and conditions of the booking. Although the terms and conditions were not signed by the respondents prior to making payment, the respondents were informed that the airfares and accommodation were not refundable when the reservation was made, and the written Booking Terms and Conditions were provided on 23 August 2019, many months before the travel was due to take place. Further, Ms Parsons acknowledged that she was aware that the appellant would not be providing the air travel and the accommodation as that was to be provided by others. Accordingly, the Tribunal accepts that the appellant's Booking Terms and Conditions were incorporated into the contract.
The Booking Terms and Conditions make it plain that the appellant was to provide booking and advisory services only which would allow the respondents to acquire travel products from third party travel providers, and that the appellant was acting as an agent for the third party travel providers. The terms and conditions drew attention to the fact that rules and restrictions applied and that the appellant was not liable for any loss or damage suffered in connection with, inter alia, the non-delivery of a travel product. Specifically, the terms state that the appellant was not liable for breach of obligations by any third party travel provider.
In construing a contract, the task is to ascertain the intent of the parties at the time the contract was made. In Henry Kendall & Sons v William Lillico & Sons Ltd [1969] 2 AC 31, Lord Pearce said at 113: The court's task is to decide what each party to an alleged contract would reasonably conclude from the utterances, writings or conduct of the other.
A travel agent, which affects a sale, for example, of airline tickets, ordinarily does so only as agent: see Australian Competition and Consumer Commission v Flight Centre Travel Group Ltd (2016) 261 CLR 203; [2016] HCA 49.
In view of the concession made by Ms Parsons that she was aware that the appellant would not be providing the airline services personally nor the accommodation and excursions, and the fact that the Booking Terms and Conditions which, in substance, conveyed that information, were supplied to the respondents, the respondents must have been aware that the appellant was only acting as agent in making the travel reservations. The Appeal Panel therefore concurs with the finding of the Tribunal that the appellant was the agent for the respondents.
However, the Tribunal went on to hold that: "…pursuant to the usual and normal principles of agency [the agent] became one with the travel providers."
That holding is erroneous, and the authority cited in support of that holding is not authority for the proposition stated.
An agent is usually one who was employed for the purpose of placing the principal in contractual or other relations with a third party. Where a person enters into a contractual relation as agent, the agent signifies that it does not sign as principal and did not intend to incur personal liability: see Universal Steam Navigation Co Ltd v McKelvie & Co [1923) AC 492 per Lord Parmoor at 503-504. With respect to travel agents, this principle has been adopted: see Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429 at [21]. At [22] their Honours (Allsop P and Handley AJA) said: "Travel and transport intermediaries may procure a contract of carriage as a broker or agent; or may undertake a contractual obligation for carriage. In the former case they are not a principal, but in the latter case they are, even if they cannot perform the contract themselves but have to subcontract with an actual carrier. …"
As a result of the facts, and these principles, any monies received by the appellant were received as agent and were received only in this capacity. The relevant contracts were between the respondents and the travel providers, with the appellant acting as the travel providers' agent in entering into these contracts (on their behalf) with the respondents. The concept of agency was not confined only to the payment made for air travel. The costs for hotel accommodation and the Rocky Mountaineer railway and other excursions were all paid by the respondents to the appellant on the same basis, namely as agent. Accordingly, where cancellation occurred as in this instance, the agent (appellant) is not liable to meet any loss. The agent has only acted to facilitate the making of the reservations.
The Tribunal found that the contract between the appellant and the respondents had been frustrated by virtue of the fact that COVID-19 restrictions had prevented air travel. The Frustrated Contracts Act has application. Section12 has application. It provides: 12 Return of money paid Where a contract is frustrated and a party to the contract has paid money to another person (whether or not a party to the contract) as, or as part of, an agreed return for performance of the contract by another party (whether or not that other party is the person to whom the payment was made and whether or not there has been any such performance) that other party shall pay the same amount of money to the party who made the payment.
In our opinion this section means that where there are contracts between the respondents and travel providers (Air Canada and Momento Travel in this case) which are frustrated, and the respondents had paid money to an agent ("another person") as, or as part of, an agreed return for performance by the travel providers ("another party") then the travel providers ("that other party") shall pay the same amount of money to the respondents ("the party who made the payment").
It follows that the Tribunal erred in holding that s 12 of the Frustrated Contracts Act meant that the appellant was liable to the respondents.
It follows from the finding of the existence of an agency relationship that the appellant is not liable to the respondents. Their redress, if any, is against the travel provider in each case, namely Air Canada and Momento Travel. However, since the appellant has reimbursed the respondent in full when there is no liability to do so, adjustments are required to reflect our findings. The appellant is not liable for any loss.

Conclusion

Accordingly, the orders made requiring payments to be made by the appellant to the respondents must be set aside and, further, the order made preventing the respondents receiving any further credits was, in our opinion, inappropriate. However, recent events have overtaken these matters, in view of the full refund that is to be paid by the air carrier, Air Canada, to the appellant and the partial refund from Momento Travel. Usually such refunds would be held in the trust account of the appellant on behalf of the clients. However, the appellant has already fully reimbursed the respondents, that is, the appellant has paid to the respondents the amount of the airfare and the whole of the monies paid to Momento Travel.
The Appeal Panel considers that, as a practical matter, the following shall occur, and the Appeal Panel makes orders accordingly.

Orders

The Appeal Panel orders that: 1. The orders the Tribunal made on 30 March 2021 be set aside; 2. The Appellant is entitled to receive for its own use the full amount of any refund received from Air Canada in respect of the airfares (being $6,051.68); 3. The Appellant is entitled to receive for its own use the amount of the partial refund received from Momento Travel in the amount of $1,297; 4. The respondents are to pay, within 14 days of the date of these orders, the amount of $1,743.32 to the appellant, being the balance of the payment which the appellant has made to the respondents under the terms of the Tribunal's orders which are now set aside.

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: 16 July 2021

Frustrated Contracts Act 1975(NSW)

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