Somerville v Club Méditerranée Australia Pty Ltd

Background and the Reasons for Decision of the Tribunal

Background

1. The appellant wished to book a holiday for 18 people at Club Med in Bali. The arrangements for that holiday were made for him through his travel agent and included booking return airline flights for 16 people.
2. On 17 February 2020 the appellant paid $28,222 to his travel agent, which was paid to the respondent.
3. Between 19 and 22 February 2020, the respondent paid an amount to Virgin Australia in respect of flights for the appellant's party.
4. On 27 February 2020 the appellant paid a further $42,651 to his travel agent, which was paid to the respondent.
5. On 28 February 2020 the respondent sent a series of emails to the appellant's travel agent. Those emails included ticket details and attached a document titled "terms and conditions" ("Respondent's Terms and Conditions"). The emails were provided by the appellant's travel agent to the appellant.
6. On 29 May 2020, the respondent sent an email to the appellant's travel agent indicating that its Bali resort had closed due to Covid-19 and that under the Respondent's Terms and Conditions no refund was available; but offering the appellant a credit which may be used once the pandemic and travel restrictions end. On 1 June 2020, the appellant's travel agent passed that email on to the appellant.
7. There followed correspondence between the appellant and the respondent, the outcome of which was that the respondent refunded $45,051 to the appellant's travel agent. The respondent refused to refund the balance of the amounts paid to it by the appellant (being $25,822, calculated as $28,222 plus $42,651 less $45,051) on the basis that that balance related to the flights booked with Virgin Australia.
8. On 13 October 2020, the appellant lodged an application with the Tribunal, in which he sought an order that the respondent pay to him the sum of $25,822, being the difference.

The Reasons for Decision

1. The Tribunal's essential reasoning is set out at [52] to [59] of the Tribunal's Reasons For Decision ("Reasons") and it is convenient to reproduce those paragraphs below: 52. The evidence does not enable the Tribunal to make findings as to what happened to the $3,154.20 difference between the amount of $25,822 which the applicant paid to his travel agent in respect of airline services and the amount of $22,667.80 which the respondent paid to Virgin Australia in respect of those airline services. Noting that about 88% of what was paid by the applicant was paid to Virgin Australia, it is likely that the difference was commission which the applicant's travel agent and/or the respondent were entitled to deduct from the amount paid by the applicant before the balance was remitted to Virgin Australia. The applicant could have but did not prove what amount of the $25,822 was retained by his travel agent and what amount was remitted by his travel agent to the respondent. 53. Consistent with the decision in Flight Centre Travel Group Limited t/a Aunt Betty v Goel [2021] NSWCATAP 44 at [61], the Tribunal finds that the contract made by the travel agent on behalf of the applicant with the respondent was never for the supply of air transport by the respondent and that, as the provision of services which the respondent was to supply was limited to making the reservations in a competent manner, the provisions of section 60 (which provides a guarantee of due care and skill) and section 61 (which provides a guarantee of fitness for purpose) were not breached by the respondent. 54. It is clear that the position of the respondent was the same as that of a travel agent who sells airline tickets as an agent for the airline and not in its owner (sic) right: ACCC v Flight Centre Travel Group Limited (2016) 261 CLR 203. The fact that the respondent was not an airline was an obvious fact and is a matter which is important in determining both the factual circumstances and the legal consequences: Clark v Electrical Home Aids Pty Ltd [2017] NSWCATAP 63 at [84, 90]. 55. As it was clear and as it was well-known, to both the applicant and his travel agent, that the respondent was not providing air transport for the applicant, it follows that the respondent was the agent of Virgin Australia in relation to that aspect of the applicant's holiday. In other words, the respondent was the agent of Virgin Australia in the same manner as the travel agent was the agent of the applicant. Consequently, although the travel agent and the respondent communicated with each other, the contract in relation to the air transportation component of the holiday, was between the applicant and Virgin Australia. 56. Accordingly, even if it can be said that the terms conditions (sic) provided to the applicant on or shortly after 28 February 2020 were provided after a contract was formed, clause 7 did no more than state the then existing position of the applicant: "The passenger ticket in use by a carrier providing transport for a guest on a Club Med holiday will, when issued, constitute the sole contract between the guest and the carrier for that transportation". Since that clause did no more than state the nature of the then existing legal relationship, it cannot be said to be an unfair term that is caught by section 23 of the ACL. 57. Since Virgin Australia is not a party to these proceedings, contract-based claims in relation to the failure to refund the amount paid by the applicant in relation to the air transportation component of the holiday do not require consideration. For the same reason, it is not necessary to consider the application of either the ACL or the Frustrated Contracts Act 1978. 58. It is noted that the current Virgin Australia policy, as included in the respondent's evidence (3/63) suggests that the applicant is entitled to a credit with Virgin Australia, meaning that he can, in future, avail of flight to the value of $25,822 without paying any further amount. That policy appears to stand in the way of a claim that, as between there has been a total failure of consideration as between the applicant and Virgin Australia. However, it is not necessary to resolve that issue in these proceedings. 59. The applicant's claim relates solely to the air fare component of his intended holiday, being an amount of $25,822 which has not been refunded. That aspect was the subject of a contract between the applicant and Virgin Australia. There has been no basis established for the applicant's claim against the respondent. Accordingly, the proceedings are dismissed. (Emphasis in original.)

Grounds of appeal

1. The Notice of Appeal contains four grounds of appeal and an application for leave to appeal on the basis that the decision was not fair and equitable. At the hearing of the appeal, the appellant withdrew his reliance upon the fourth ground and the application for leave to appeal. Thus, the matters requiring consideration by the Appeal Panel are the remaining three grounds of appeal, all of which raise questions of law for which no leave to appeal is required: s 80(2)(b), Civil and Administrative Tribunal Act 2013 (NSW).

First ground of appeal

1. The first ground of appeal is that the Senior Member failed to consider the appellant's submission that the appellant was entitled to a refund of money paid to the respondent under cl 5 of the Respondent's Terms and Conditions, which included: "It is unlikely that we will have to cancel your Club Med holiday after booking but we reserve the right to do so if required or deemed necessary by us. In this event, we will inform you or your travel agent as soon as practicable and you will have the choice of having a refund of monies paid to us for your Club Med holiday or accepting an offer of an alternative date or alternative Club Med..."
2. In Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 77 ALJR 1088, Gummow and Callinan JJ (Hayne J agreeing) said at [24] that a failure to respond "to a substantial, clearly articulated argument relying upon established facts was at least" a failure to accord an applicant natural justice. A failure of that kind has also been described as a constructive failure to exercise jurisdiction (see, for example, MZAES v Minister for Immigration and Border Protection [2015] FCA 1133 at [66]). Such a failure will constitute an error of law. If an error of law were to be established it would also be necessary for the Appeal Panel to consider whether the matter should be reconsidered. It would not be appropriate to do so if it would inevitably result in the making of the same order as that made by the Tribunal: see Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54.
3. The submissions made by the appellant below in chief clearly relied upon cl 5 of the Respondent's Terms and Conditions. That clause was also referred to in the appellant's application to the Tribunal.
4. However, the appellant's submissions in reply contained a change in direction in the appellant's case. In those submissions (and in particular paragraphs 29‑34, 47, 52 and 54 thereof), the appellant submitted that the Respondent's Terms and Conditions did not form part of the contract between the appellant and the respondent as they were not provided to the appellant prior to the formation of that contract. The appellant also qualified his submission concerning the application of cl 5 ‑ paragraph 9 of his submissions in reply suggested that he had a clear entitlement to a refund under cl 5 "if the terms and conditions of Club Med are applicable" (emphasis added).
5. In circumstances where the appellant's primary submission was that the Respondent's Terms and Conditions did not form part of the contract between the appellant and the respondent, the Appeal Panel is not persuaded that the Tribunal erred in failing to consider the effect of cl 5 of those terms and conditions. This is particularly so when the Tribunal appears to have approached its task on a basis consistent with the appellant's case that the Respondent's Terms and Conditions did not form part of the contract between the appellant and the respondent. In particular: 1. the Tribunal found that full payment for the tickets had been made by 27 February 2020, and the tickets had been issued, prior to the respondent sending the Respondent's Terms and Conditions on 28 February 2020 (Reasons 51, (6), (14), (15)‑(18)); 2. at [38] of the Reasons the Tribunal noted that the appellant in his submissions in reply had "suggested that the documents issued to the applicant on 28 February 2020 were issued after payment had been made with the result that the terms and conditions upon which the respondent relies were issue [sic] after the contract had been formed"; and 3. the Tribunal considered the contractual position absent the Respondent's Terms and Conditions.
6. When asked by the Appeal Panel during the course of argument (at a time prior to the Appeal Panel having a copy of his written submissions before the Tribunal) whether he had argued before the Tribunal that the Respondent's Terms and Conditions were inapplicable, the appellant indicated that he had not made such an argument and that it was something that the Tribunal had produced of its own volition. However, as noted above, an examination of the appellant's submissions in reply indicates that such an argument was not only made but was central to the appellant's case below. The appellant has not placed the recording or transcript of the hearing before us (as he was directed to do if he relied on what was said) such that we could be satisfied that his ultimate position was other than that contained in his submissions in reply.
7. For all of the above reasons, the first ground of appeal is not made out.

Second and third grounds of appeal

1. As the first ground of appeal fails, the result is that the appellant is not entitled to the refund he seeks. Thus is it not necessary to consider the second and third grounds of appeal (which relate to the quantum of the refund).

Conclusion and Orders

1. For the reasons set out above the appeal should be dismissed.
2. During the course of the hearing there was some discussion of a potential costs application. Both parties consented to any such application for costs being dealt with on the papers. In the event that the Appeal Panel is satisfied that the question of costs can be adequately determined in the absence of the parties on the basis of written submissions, which we will make directions for, and the materials already before it, a hearing on that issue will be dispensed with.
3. The Orders of the Appeal Panel are: 1. The appeal is dismissed; 2. Any application in respect of the costs of the appeal is to be made by written submissions filed and served within 14 days of the date of publication of this decision, such submissions to be of no more than 5 pages; 3. If either party files submissions in accordance with order (2) above the other party may file and serve submissions in response within a further 14 days, such submissions to be of no more than 5 pages; 4. Submissions in reply to any submissions filed in accordance with order (3) above may be filed and served within a further 7 days, such submissions to be of no more than 5 pages;

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: 30 June 2021