Kenny v Trip a Deal Pty Ltd

[2021] NSWCATCD 59

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Kenny v Trip A Deal Pty Ltd [2021] NSWCATCD 59

Hearing dates:

27 January 2021

Date of orders:

16 March 2021

Decision date:

04 March 2021

Jurisdiction:

Consumer and Commercial Division

Before:

W Priestley, General Member

Decision:

1. Phillip Houghton is removed as an applicant.

2. The application is dismissed.

Catchwords:

CONSUMER LAW – Australian Consumer Law (NSW) – Consumer claim – Refund – Force majeure – Unfair terms

Legislation Cited:

Fair Trading Act 1987 (NSW)

Australian Consumer Law (NSW)

NSW Civil and Administrative Tribunal Act 2013 (NSW)

Cases Cited:

Flight Centre Travel Group Limited T/A Aunt Betty v Goel [2021] NSWCATAP 44

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Seamus Kenny - First Applicant
Steven Smethurst – Second Applicant
Trip A Deal Pty Ltd – Respondent

Representation:

Applicant (in person)
Respondent (in person)

File Number(s):

GEN 20/35292

Publication restriction:

Nil

REASONS FOR DECISION

Background

1. On 19 January 2019 Seamus Kenny, Philip Houghton and Stephen Smethurst booked tours for themselves, and their partners, through the respondent. The tours were of Canada and Alaska, and included flights on Air Canada, and cruises. The total cost of the tours, including cabin upgrades for the cruise component, was $33,626, which was subsequently paid for in five transactions. There is no dispute that before purchase, the applicants agreed to be bound by the respondent’s terms and conditions. The departure date for the tours was 3 June 2020. Due to the Covid 19 pandemic, the tours were cancelled by the respondent. There then followed a dispute between the parties as to what the respondent was required to reimburse the applicants.

2. Messrs Kenny, Houghton and Smethurst jointly lodged an application with the Tribunal on 16 August 2020, seeking an amount of $37,118.51. By the time of hearing, Mr Houghton had resolved his dispute with the respondent, and accordingly was removed as an applicant.

3. The respondent has reimbursed in cash, Mr Kenny and Mr Smethurst, all the monies they paid it, except the cost of three Air Canada tickets, two of which were bought by Mr Kenny, and one by Mr Smethurst. The cost of those fares was $1049.50 each. Instead of reimbursing cash, the respondent has offered a credit in that amount, which can be used by the applicants on a range of its products or on tours to the USA or Canada, with varying terms and conditions, depending on what products or packages are chosen by the applicants.

4. The respondent has also retained administration fees, including $100 for each of the three Air Canada tickets, it has charged for dealing with the cruise operator and Air Canada to obtain the cash refunds and credits form those suppliers. The total of the charges retained by the respondent is approximately $300 for each applicant.

The dispute

5. The applicants assert they are entitled to full cash refunds of all the amounts they have paid, and reimbursement of the transaction costs imposed by their financial institutions on the purchases. They also seek their out of pocket expenses associated with the application, such as photocopying costs.

6. The respondent relies on the terms of the contract, and contends its liability is limited in accordance with the contract, to making its best commercial endeavours, to obtain the optimal outcome it can for the applicants from the suppliers, which it says it has done.

Evidence and findings

7. The applicants lodged and served two large folders of documents, the second being a consolidation of those in the first folder with additional documents. It is impracticable to set out all the documents, and those of particular importance will be referred to.

8. The respondent lodged and served the relevant terms and conditions of the contract between the parties, a summary of the price paid, dates of payment and expected departure, and an extract from an email from the respondent to the applicants about the credit for the Air Canada flights.

9. The facts set out under the above heading “Background” are not disputed. Critical terms of the contract between the parties are replicated below.

Jurisdiction

10. The Tribunal finds the applicants are “consumers”, the first respondent is a “supplier”, and the application is a “consumer claim” as those terms are used in sections 79D and 79E of the Fair Trading Act 1987 NSW. Section 28 of the Fair Trading Act says the Australian Consumer Law (“the ACL”), which includes in section 60 a requirement that suppliers of services must provide those services with due care and skill, applies as a law of New South Wales, and sections 23, 24, and 25 which deal with unfair terms. The Tribunal has jurisdiction to hear and determine the application under sections 28 and 29 of the Civil and Administrative Tribunal Act 2013 NSW and Division 3 of the Fair Trading Act.

The applicants’ arguments

11. The applicants raised eight arguments in support of their claim.

12. The first two arguments relate to the applicants’ assertion the respondent is not an agent. They assert this is because of various factors they say are contrary to the basic tenents of agency, including; the respondent purchased the air fares and cruises from suppliers in bulk, then bundled them to produce packages which the applicants purchased; the respondent would not carry out instructions to do certain things; and the respondent made a profit from the services provided. The applicants then contend the respondent is the principal supplier, except in name, and it is liable to refund them the full cost of the packages, then seek whatever redress it can from the airline and tour operator. Alternatively, the applicants contend that as the respondent does not meet the conditions, or tenents, of being an agent, the contract is invalid, should be cancelled, and all monies refunded to them.

13. The relevant terms and conditions in the contract the applicants agreed to be bound by include;

“…. We act as your agent in making such limited arrangements, bookings, ticketing with Suppliers who provide the relevant travel products and services to you……………..Travel offers provided are subject to the Suppliers’ terms and conditions and limitations…….Specifically, if for any reason (excluding negligence on our part) any Supplier is unable to provide the travel products and services that you have purchased, your rights are against that Supplier and not against TripADeal. This includes where travel products and services cannot be supplied or itinerary changes occur due to force majeure or other events which are beyond our control including but not limited to severe weather, fire, floods, acts of God, acts of government…….”

“TripADeal reserves the right to vary, withdraw or cancel any products and services by written notice in the event they cannot be supplied or the itinerary is changed due to force majeure or other events which are beyond our control including but not limited to severe weather, fire, floods, acts of God, acts of government or other authorities, failure of equipment or machinery, war civil disturbance, strikes and malevolent acts.

To the maximum extent permitted by law, except where caused or contributed to by negligence on our part, TripADeal is not and does not accept any liability in contract, tort or otherwise for any … loss….arising from …the acts of Suppliers or other third parties including government authorities……or……force majeure or other events which are beyond our control including but not limited to severe weather, fire, floods, acts of God, acts of government or other authorities, failure of equipment or machinery, war, civil disturbance, strikes and malevolent acts.

……. (several paragraphs omitted)

We will make commercial reasonable efforts to avoid and mitigate the adverse effects resulting from such events beyond our control.”

14. A similar factual situation was recently dealt with by the Tribunal’s Appeal Panel in Flight Centre Travel Group Limited T/A Aunt Betty v Goel [2021] NSWCATAP 44 (26 February 2021). In that case the Appeal Panel reviewed the authorities and said

46. “An agent usually means a person employed for the purpose of placing the principal in contractual or other relations with a third party. The agent is one who by authority, performs an act for another. Where a person enters into contractual relations 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 v McKelvie & Co [1923] AC 492 per Lord Parmoor at 503-504.

47. Such principle was referred to specifically in relation to travel agents in Air Tahiti Nui Pty Ltd v McKenzie (2009) 77 NSWLR 299; [2009] NSWCA 429, where Allsop P and Handley AJA said at [21], in answer to a submission that a party who arranged flight travel was liable for injuries sustained on a flight operated by the appellant:

We reject these submissions. The phrase “as a principal” describes the capacity of the person who “makes an agreement for carriage”. An agent who “makes” such an agreement, such as a travel agent, is not a contracting carrier.

48. Further, at [22], their Honours 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 they are, even if they cannot perform the contract themselves but have to subcontract with an actual carrier.

49. It follows that, provided that the respondent had knowledge of the terms and conditions which included a term that the appellant was acting only as agent, or is deemed to have such knowledge, no personal liability is incurred by the agent.

15. This analysis shows that the relationship between the applicants and Trip A Deal is one of agency. Trip A Deal is not the supplier of the airline flights and cruises. It is instead merely the agent through whom the applicants purchased those products. Accordingly these arguments must fail.

16. The third argument is that the respondent did not directly provide its terms and conditions to the applicant, but rather provided a link to a page that has since been altered. There is no dispute from the respondent that its terms and conditions have been altered since the applicants purchased the tours. However the terms relied on are those that were current at the time of purchase, and the applicants do not dispute they agreed to be bound by them. Any suggestion by the applicants that the respondent has sought to rely on terms that were not agreed by the applicants is unsupported by any evidence and is rejected, and this argument must fail.

17. The fourth argument put forward by the applicants is that as they were not given the terms and conditions of the airline and cruise operator’s terms and conditions, at the time of purchase and after they had agreed to be bound by them, they could not be bound by them. This argument is also rejected, as it was open to the applicants to refuse to enter into the contract until they had seen the terms of the suppliers of the flights and cruises, but they chose not to. There is no probation against a party to a contract agreeing to be bound by terms it has not seen.

18. The fifth argument relies on a term of the contract that provides the respondent may provide refund where “prior to travel the provider of the travel offer ceases trading or ceases to provide the goods or services that are the subject of the travel offer”. It is not disputed the tour did not proceed because of covid-19, and the travel restrictions imposed by the Australian government in response to it. The applicants acknowledge the “force majeure” clause set out above, conflicts with their potential entitlement to be refunded under this clause. However they contend the conflict between the two clauses should be resolved in their favour. Essentially the applicants are raising the “contra-preferentem” rule of contract construction. That rule operates where a clause in a contract is ambiguous. That is, where there are two equally available interpretations of a clause, the rule dictates the interpretation that is against the interests of the party who drafted the contract should be preferred. In my view, neither of the terms is ambiguous and they do not conflict with each other. The term about “force majeure” is specific to the frustration of the contract by an event that comes within the meaning of that term, some of which are specifically set out, and of which a pandemic such as covid-19 is one, even though not specifically mentioned. The other clause dealing with a failure of the travel provider ceasing to trade, or provide the services, relates to such failures not caused by the force majeure clause. Accordingly this argument fails.

19. The sixth argument seems to be a combination of an allegation there has been a major failure by the respondent to comply with a guarantee in the ACL, and an allegation that the contract has been frustrated and consequently there should be a full refund. Presumably the guarantee the applicants allege the respondent has failed to comply with, is that contained in section 60 ACL that services must be provided with due care and skill. No details about such a failure are provided and there is no evidence to support such an allegation. On the evidence, the respondent cancelled the tour because it could not proceed due to government restrictions imposed in response to the covid-19 pandemic. That is the only thing it could have done, and does not constitute a breach of the guarantee.

The applicants’ assertion the contract was frustrated is correct. Where that occurs and the parties have not made provision in their contract, for the consequences that flow from such frustration, the general law provides that losses are borne as they lie at the time of frustration. In NSW that position has been modified by the Frustrated Contracts Act, which attempts to apportion the losses in an equitable manner. However, here the parties have provided in their contract what will occur if their contract is frustrated by a “force majeure” event. In accordance with that provision, the respondent has made commercial reasonable efforts to avoid and mitigate the adverse effects resulting from such an event. It has recovered, on the applicants’ behalf the vast majority of the money paid by the applicants, and obtained credits for the balance, less $300 in administration fees. These arguments fail.

20. The seventh and eight arguments are, with respect to the applicants who are not legally trained or represented, difficult to understand. They appear to be asserting the cancellation and refund terms of the contract are unfair, and should therefore be set aside, and will be considered on that basis. If successful that would lead to considerations of the NSW Frustrated Contracts Act.

The relevant provisions of the ACL concerning unfair terms of contracts are contained in sections 23, 24 and 25 and are as follows;

23 Unfair terms of consumer contracts and small business contracts

(1)  A term of a consumer contract or small business contract is void if:

(a)  the term is unfair; and 


(b)  the contract is a standard form contract. 


(2)  The contract continues to bind the parties if it is capable of operating without the unfair term. 


(3)  A consumer contract is a contract for: 


(a)  a supply of goods or services; or 


(b)  a sale or grant of an interest in land; 


to an individual whose acquisition of the goods, services or interest is wholly or predominantly for personal, domestic or household use or consumption.

(4)  and (5) omitted. 


24 Meaning of unfair

(1)  A term of a consumer contract or small business contract is unfair if:

(a)  it would cause a significant imbalance in the parties' rights and obligations arising under the contract; and 


(b)  it is not reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term; and 


(c)  it would cause detriment (whether financial or otherwise) to a party if it were to be applied or relied on.

(2)  In determining whether a term of a contract is unfair
under subsection (1), a court may take into account such matters as it thinks relevant, but must take into account the following:

(a)  the extent to which the term is transparent; 


(b)  the contract as a whole. 


(3)  A term is transparent if the term is: 


(a)  expressed in reasonably plain language; and 


(b)  legible; and 


(c)  presented clearly; and 


(d)  readily available to any party affected by the term. 


(4) For the purposes of subsection (1)(b), a term of a contract is presumed not to be reasonably necessary in order to protect the legitimate interests of the party who would be advantaged by the term, unless that party proves otherwise.

25 Examples of unfair terms

Without limiting section 24, the following are examples of the kinds of terms of a consumer contract or small business contract that may be unfair:

(a)  a term that permits, or has the effect of permitting, one party (but not another party) to avoid or limit performance of the contract; 


(b)  a term that permits, or has the effect of permitting, one party (but not another party) to terminate the contract; 


(c)  a term that penalises, or has the effect of penalising,
one party (but not another party) for a breach or termination of the contract; 


(d)  a term that permits, or has the effect of permitting, one party (but not another party) to vary the terms of the contract; 


(e)  a term that permits, or has the effect of permitting, one party (but not another party) to renew or not renew the contract; 


(f)  a term that permits, or has the effect of permitting, one party
to vary the upfront price payable under the contract without the right of another party to terminate the contract; 


(g)  a term that permits, or has the effect of permitting,
one party unilaterally to vary the characteristics of
the goods or services to be supplied, or the interest in land to be sold or granted, under the contract; 


(h)  a term that permits, or has the effect of permitting,
one party unilaterally to determine whether the contract has been breached or to interpret its meaning; 


(i)  a term that limits, or has the effect of limiting, one party's vicarious liability for its agents; 


(j)  a term that permits, or has the effect of permitting, one party to assign the contract to the detriment of another party without that other party's consent; 


(k)  a term that limits, or has the effect of limiting, one party's right to sue another party; 


(l)  a term that limits, or has the effect of limiting, the evidence one party can adduce in proceedings relating to the contract; 


(m)  a term that imposes, or has the effect of imposing, the evidential burden on one party in proceedings relating to the contract; 


(n)  a term of a kind, or a term that has an effect of a kind, prescribed by the regulations. 


21. The evidence discloses the respondent buys flights and other travel products from suppliers as agent for consumers. If it were not a term of the contract that the consumers were bound by the terms from those suppliers, the respondent would in many cases, where the products cannot or are not supplied by the suppliers, incur a liability to the consumer beyond what it could recover from the suppliers. The cancellation, “force majeure” and commercial best endeavour clauses protect the respondent from that eventuality. In my view they cannot be said to be unfair, as they are reasonably necessary to protect the legitimate interests of the respondent, and on the evidence, the presumption in section 24 (4) is rebutted.

22. As all of the applicants arguments have been rejected, it follows the application must be dismissed.

23. In making these orders the Tribunal is satisfied they will be fair and equitable to the parties to this claim, and has taken into account the factors set out in section 79U (2) of the Fair Trading Act.

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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

Decision last updated: 31 August 2021