MATTHEW HOWDEN v TRAVEL COMPENSATION FUND

I doubt it is necessary for regulations to follow the format suggested in para (b) of subs (2); the word "may" is significant. However, it is not necessary to determine that matter as his Honour held the situation is covered by s 30(1) of the Interpretation Act 1987 (NSW). That subsection reads: "(1) The amendment or repeal of an Act or statutory rule does not: (a) revive anything not in force or existing at the time at which the amendment or repeal takes effect, or (b) affect the previous operation of the Act or statutory rule or anything duly suffered, done or commenced under the Act or statutory rule, or (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule, or (d) affect any penalty incurred in respect of any offence arising under the Act or statutory rule, or (e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability or penalty; and any such penalty may be imposed and enforced, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, as if the Act or statutory rule had not been amended or repealed." It seems to me that, on 1 September 1995, Travel Compensation Fund had an accrued right within the meaning of par (c). By that day, everything had happened that was necessary to entitle the Fund, under cl 20 of the 1987 regulations and s 52 of the Act, to recover its outlay to the claimants from Mr Howden and, indeed, the two companies. In support of his submission on this point, Mr Mura referred to Yrttiaho v Public Curator (Qld) (1971) 125 CLR 228 and Rodway v The Queen (1990) 169 CLR 515. However, they were both cases involving changes in procedural law; the present case involves an accrued substantive right. Although the 1995 regulations repealed the 1987 regulations, they specifically stated in reg 21 that the "compensation scheme for compensating persons" is the compensation scheme established by the trust deed made on 12 December 1986 by the four State Ministers - the deed in Schedule 2 to the original regulations. The "compensation scheme" therefore remains the same. The "compensation scheme trustees" remain, as does their s 52 right to sue under the name Travel Compensation Fund. Mr Mura's second argument is that s 40(4) of the Travel Agents Act does not apply to this case because there was no "act or omission" by the travel agents within the meaning of s 40(3) of the Act. In order to put that submission into context, it is necessary to set out both subsections: "40(3) Where a payment is made to a claimant under the compensation scheme by reason of an act or omission by a person carrying on business as a travel agent, the compensation scheme trustees are subrogated to the rights of the claimant in relation to the act or omission. (4) Where the rights conferred by subsection (3) on the compensation scheme trustees are exercisable against a body corporate, those rights are enforceable jointly against the body corporate and the persons who were its directors at the time of the act or omission and severally against the body corporate and each of those directors." Mr Mura says the right conferred under subs (4) applies only where the fund can point to "an act or omission" by a person carrying on business as a travel agent, a proposition that is obviously correct. He then says there is no evidence in this case of any act or omission; it is not sufficient that the fund has alleged and proved that each of the two travel agents failed to ensure that it would be able to meet its obligation to provide the travel services when the need arose. In relation to this matter Lehane J said: "it is possible to conceive of circumstances consistent with the evidence in which it might be held that there was no relevant act or omission of the first or sixth respondent: an example I suggested in the course of argument was a case where all the agent's money, sufficient to enable it to meet its commitments, is in an account with a bank which unexpectedly fails. But to say (truly) that the applicant must establish the essential elements of its claim is not to say that the applicant is required by evidence to eliminate bank failures, earthquakes or other remotely possible, but highly unlikely, explanations of what has occurred. In the absence of any evidence on behalf of the third (or any other) respondent, it is open to me, and proper, to infer that the actual explanation is what experience teaches to be the probable one: that is that at the time the money was received by the first and sixth respondents they were in a parlous financial situation and that they did not - for example, but only for example, by establishing a trust account for receipt of the money - take steps which would ensure that obligations to provide travel services could be met or, at least, that money received could be refunded. The failure to take such steps is the omission to be attributed to the first and sixth respondents, leading to their failure to account." I agree with his Honour. The third matter raised by Mr Mura is that Lehane J erred in finding that Air Australia carried on business, or at least held itself out as carrying on business, as a travel agent. His Honour dealt with this matter in a lengthy paragraph at pages 22 to 23 of his reasons for judgment. Despite several invitations, Mr Mura failed to suggest any error in that paragraph. In my view the appeal should be dismissed with costs. I ask Sackville J to deliver the next judgment. SACKVILLE J: I agree with the judgment of Wilcox J. I wish, however, to say something further about an argument put by Mr Mura on behalf of the appellant. Mr Mura submitted that the proceedings, which were commenced on 5 September 1995, could not validly be instituted in the name of the Travel Compensation Fund ("the Fund"). He submitted that the respondent's reliance on s 52 of the Travel Agents Act 1986 (NSW) ("Travel Agents Act") was misplaced. Section 52 provides as follows "52 The compensation scheme trustees may sue and be sued in the name of the 'Travel Compensation Fund' and, in any action brought by them it shall be presumed, unless the contrary is proved, that any condition precedent to the bringing of the action imposed on them by the compensation scheme has been complied with." The Travel Agents Act defines "compensation scheme" to mean a scheme prescribed under s 57, the terms of which have been set out in the judgment of Wilcox J. The expression "compensation scheme trustees" is defined to mean the trustees by whom the compensation scheme is administered. Subsections 40(3) and (4) of the Travel Agents Act provide as follows: "40(3)Where a payment is made to a claimant under the compensation scheme by reason of an act or omission by a person carrying on business as a travel agent, the compensation scheme trustees are subrogated to the rights of the claimant in relation to the act or omission. (4) Where the rights conferred by subsection (3) on the compensation scheme trustees are exercisable against a body corporate, those rights are enforceable jointly against the body corporate and the persons who were its directors at the time of the act or omission and severally against the body corporate and each of those directors." The terms of s 30(1) of the Interpretation Act 1987 (NSW) ("Interpretation Act") have been set out in the judgment of Wilcox J. Regulations 20 and 21 of the Travel Agents Regulations 1995 are in the following terms: "20(1) For the purposes of section 57(2)(a) of the Act, the compensation scheme for compensating persons who suffer a pecuniary loss by reason of an act or omission by a person who carries on, or carried on, business as a travel agent is the compensation scheme established by the trust deed made on 12 December 1986 by Deirdre Mary Grusovin, Peter Cornelis Spyker, Christopher John Sumner and Keith James Wilson, as amended from time to time. (2) A copy of the trust deed may be obtained from the Commissioner. 21(1) The Travel Agents Regulation 1987 is repealed. (2) Any act, matter or thing that was done for the purposes of the Travel Agents Regulation 1987 or, immediately before the repeal of that Regulation, had effect under that Regulation is taken to have been done for the purposes of or to have effect under this Regulation." As I understood Mr Mura's argument, it was that s 52 of the Travel Agents Act did not permit the proceedings to be instituted in the name of the Fund. He submitted that, if reg 20 of the Travel Agents Regulation 1995 was invalid (as he contended was the case), the result of reg 21 was that no compensation scheme was in force and thus there were no compensation scheme trustees for the purposes of s 52 at the time the proceedings were instituted. Thus, according to Mr Mura, the proceedings were improperly constituted and had to fail. Mr Mura's argument, of course, assumed that reg 20 of the Travel Agents Regulations 1995 was invalid. I am prepared to make this assumption for the purposes of dealing with the argument, although I agree with the comments already made by Wilcox J on the validity of reg 20. Mr Mura's argument also assumed that, although the trustees had a cause of action at the date the proceedings was instituted, the action could not be validly instituted in the name of the Fund, as opposed to their own names, and thus was bound to fail. This assumption was not explored in argument and I say nothing about it. Nor did Mr Mura address whether, if the action was not maintainable in the name of the Fund, there had been a mistake in the name or identity of a party within Federal Court Rules, Order 13, rule 2(4). I also put this issue to one side. I do not think that Mr Mura's argument is sound. Mr Mura conceded that subss 40(3) and (4) of the Travel Agents Act created rights and liabilities for the purposes of s 30(1)(c) of the Interpretation Act. He also accepted that the Travel Agents Regulations 1987, reg 20, validly established a compensation scheme, which remained in force until at least 31 August 1995. In his argument, Mr Mura distinguished between the substantive entitlements unaffected by the repeal of a statutory rule and procedural requirements, such as those contained in s 52 of the Travel Agents Act. He submitted that the repeal of a statutory rule can have an effect upon procedural entitlements. In my view, even if reg 20 of the Travel Agents Regulations 1995 is invalid, that does not mean that after 1 September 1995 there were no compensation scheme trustees for the purposes of s 52 of the Travel Agents Act. It seems to me that the clear intention of s 52 is to allow compensation scheme trustees who have an enforceable right to recover moneys from the director of a company to take proceedings in the name of the Fund, regardless of whether the provisions establishing the compensation scheme are repealed. Section 52 is a procedural provision, designed to allow trustees who have an accrued right to sue in the name of the Fund. There is no sensible reason why s 52 should not be construed to apply to proceedings instituted to enforce an accrued right, even if the provisions governing the compensation scheme are repealed. In other words, the definition of "compensation scheme trustees" should be construed to include the trustees by whom the compensation scheme was administered at the time the relevant rights and obligations accrued and who were entitled by the combined operation of subss 40(3) and (4) of the Travel Agents Act and s 30(1)(c) of the Interpretation Act to maintain the proceedings at the time they were instituted. Section 52 of the Travel Agents Act was not of course repealed on 1 September 1995, it is and has at all material times been in force. In my view it applied to the circumstances of the present case. For those additional reasons I, too, am of the opinion that the appeal should be dismissed. WHITLAM J: I agree that the appeal should be dismissed with costs. I agree with the judgments of Wilcox J and Sackville J. WILCOX J: The orders of the Court will be that the appeal be dismissed and the appellant pay the respondent's costs of the appeal. I certify that this and the preceding five (5) pages are a true copy of the Reasons for Judgment herein of the Court.

Solicitors for the Appellant: Hillman, Mura & Consultants

Solicitors for the Respondent: Minter Ellison Lawyers