Telfrid Corporation Pty Ltd v Stella Travel Services (Australia) Pty Ltd
[2013] QDC 169
DISTRICT COURT OF QUEENSLAND
CITATION:
Telfrid Corporation Pty Ltd v Stella Travel Services (Australia) Pty Ltd [2013] QDC 169
PARTIES:
Telfrid Corporation Pty Ltd (ACN 008 205 981) as trustee for the Tafri trust
(respondent/plaintiff)
v
Stella Travel Services (Australia) Pty Ltd (ACN 003 237 926) trading as Airtickets
(applicant/defendant)
FILE NO/S:
DC No 4398 of 2012
DIVISION:
Civil
PROCEEDING:
Application
ORIGINATING COURT:
District Court at Brisbane
DELIVERED ON:
26 July 2013
DELIVERED AT:
Brisbane
HEARING DATE:
22 March 2013, 3 April 2013 and 20 June 2013
JUDGE:
Devereaux SC DCJ
ORDER:
1. Pursuant to rule 293 Uniform Civil Procedure Rules 1999, judgment to the defendant on that part of the statement of claim with respect to an alleged breach of contract, being paragraphs 1 to 12 inclusive of the statement of claim.
2. The plaintiff pay the defendant’s costs of and incidental to the summary judgment application to be assessed on the standard basis.
3. The plaintiff pay the defendant’s costs of these proceedings with respect to the claim for breach of contract, to be assessed on the standard basis.
4. Pursuant to rule 171 Uniform Civil Procedure Rules 1999, paragraphs 13, 14 and 15 of the statement of claim be struck out.
5. Leave to the plaintiff to file and serve an amended statement of claim within 21 days of the date of this order which is limited to a re-pleading of the plaintiff’s claim for breach of fiduciary duty.
6. The defendant serve any request for further and better particulars of the amended statement of claim (if any) within seven days of being served with that pleading.
7. The plaintiff provide a response to the said request (if any) within seven days of being served with any such request.
8. If an amended statement of claim is served as per order 5 above, the defendant file and serve:
(a) an amended defence; or alternatively
(b) any application for summary judgment and/or to strike out the amended statement of claim
within 14 days of the date for provision of the plaintiff’s response as referred to in paragraph 7 above.
CATCHWORDS:
PROCEDURE – INFERIOR COURTS – QUEENSLAND – DISTRICT COURTS-CIVIL JURISDICTION – PRACTICE – PRACTICE BEFORE TRIAL – DISPOSITION WITHOUT TRIAL – where plaintiff commenced proceedings against defendant for breach of contract alternatively breach of fiduciary duty – where the plaintiff was a retail travel agent and the defendant was an authorised agent of various airlines – where the relationship between the plaintiff and the defendant was governed by an agreement - where plaintiff purchased tickets using the defendant’s online facility – where incorrect fares uploaded onto ticketing system – where the defendant cancelled the unused segments of the tickets sold to the plaintiff - where defendant has applied for summary judgment pursuant to rule 293 Uniform Civil Procedure Rules 1999 (Qld) or, in the alternative that the statement of claim be struck out and that the plaintiff give security for costs - whether there was a contractual agreement between the plaintiff and the defendant for the sale of airline tickets
Uniform Civil Procedure Rules 1999 (Qld), r 293
Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429
MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125
COUNSEL:
DH Katter for the respondent/plaintiff
PD Lane for the applicant/defendant
SOLICITORS:
McCarthy Durie Lawyers for the respondent/plaintiff
Barry.Nilsson. as town agents for Yeldham Price O’Brien Lusk for the applicant/defendant
The defendant, Stella Travel Services (Australia) Pty Ltd (‘Stella’), has applied for judgment, pursuant to r 293 of the Uniform Civil Procedure Rules 1999 (Qld) and alternative orders, principally that the statement of claim be struck out and that the plaintiff give security for costs.
The application first came before me on 22 March 2013. The application for judgment was adjourned to 3 April 2013 and I made orders for security for costs and as to certain costs in the application.
The plaintiff, Telfrid Corporation Pty Ltd as trustee for the Tafri Trust (‘Telfrid’), was a retail travel agent.
The claim is for damages for breach of contract to be assessed and/or ‘an order for a sum to be assessed against the defendant for equitable damages for breach of fiduciary duty’. It is necessary that I set out a substantial part of the statement of claim. Telfrid pleaded:
‘2. At all material times the Defendant
(a) …
(b) operated a business as an on-seller of airline tickets from premises at level 2, 410 Queen Street, Brisbane in the State of Queensland
3. The Defendant was the authorised agent of various airlines or air carriers (“the carrier”) as to the airline tickets it on-sold.
4. In or about 2011 the Plaintiff purchased through the Defendant airline tickets as follows:
(a) ticket purchased – 8 June 2011
cost of ticket - $3,343.54 AUD
ticket paid by Plaintiff credit card
itinerary – HKG-FRA/CX FRA-JNB/SA JNB-LHR/AA LHR-SYD/QF SYD-SIN/QF CDG-DXB/EK DXB-KUL/EK KUL-LAX/MH
ticket reference number – VFW272
passenger name – ………….. Mr
(b) …
(c) …
(d) …
(e) …
(f) …
(g) …
(h) …
(i) …
(sub-paragraph 4a-i above together are the “tickets”.)
5. As to the tickets the Defendant issued an electronic ticket itinerary/receipt (“the e-tickets”).
6. In accordance with conditions of the e-tickets no agent, servant or representative of the carrier had authority to alter, modify or waive any provision of the contract.
7. The tickets and e-tickets itinerary/receipt/s identified consideration from the Plaintiff as to:
(a) consideration for the carrier;
(b) taxes;
(c) charges which are imposed on air transportation by government authorities; and
(d) other fees.
8. The material facts pleaded in paragraphs 3-7 above were an agreement at law between the Plaintiff and the Defendant (“the agreement”).
9. As to the agreement the Plaintiff paid good consideration as particularised in paragraph 4 above as to the tickets.
10. By reason of the matters pleaded in paragraphs 8 and 9 above, there was a contract between the Plaintiff and the Defendant as to the tickets.
11. In breach of the contract the tickets were altered or cancelled by the authorised representatives, agents and/or servants of the Defendant (“the cancellations”).
12. By reason of the cancellation of the tickets the Plaintiff has suffered loss and damage, particularised as follows:[1]
[1] I set out only one example
Mr J. Hani
HKG – LAX purchased on 10 June 11
Segments rendered unusable by the Defendant SYD/QF JNB/AA LHR/QF MELBNE/MH KUL/MH LAX which was fared at the time of cancellation at $39,310.05 for Mr J. Hani
Total: $39, 310.05 for Mr J. Hani
…
Total for all as particularised above: $248,018.09
13. Further or in the alternative to paragraphs 8-10 above the Plaintiff and the Defendant by reason of the matters pleaded in paragraphs 1-7 above were in a fiduciary relationship in that:
(a) The Plaintiff and the Defendant were bound to exercise rights and powers in good faith for the benefit of each other;
(b) The relationship was an on-going one between the Defendant and the Plaintiff;
(c) The Plaintiff and the Defendant agreed to act for and on behalf of each other in the exercise of powers or discretions which affected the interests of each other in a legal or practical sense; and
(d) The Defendant had a special opportunity to exercise the power or discretion to the detriment of the Plaintiff.
14. The matters pleaded in paragraphs 11-12 above were a breach by the Defendant of the fiduciary relationship as pleaded in paragraph 13 above.
15. By reason of the matters pleaded in paragraphs 11 - 14 above the Plaintiff has suffered loss and damage and the Defendant is liable for equitable damages for breach of the fiduciary duty pleaded at paragraph 13 above.’
Stella, in its defence, denied it and Telfrid were parties to the contract of sale of airline tickets between the passengers and airlines. Specifically, Stella pleaded:
‘3. In response to paragraph 3 of the statement of claim the defendant:
3.1 admits that it was the authorised agent of various airlines or air carriers, including American Airlines;
3.2 denies that it ‘onsold’ airline tickets on the basis of paragraphs 3.3, 3.4 and 3.5 of this defence;
3.3 says that the defendant operated an online booking engine/internet database named SmartTickets (SmartTickets Website) which allowed travel agents to purchase airline tickets from various airlines or air carriers, including American Airlines, on behalf of passengers;
3.4 says that the plaintiff purchased the airline tickets referred to in paragraph 4 of the statement of claim using the SmartTickets Website on behalf of the passengers identified in paragraph 4 of the statement of claim;
3.5 says that the SmartTickets Website provided a facility for travel agents to purchase airline tickets from various airlines or air carriers on behalf of passengers.
4. In response to paragraph 4 of the statement of claim, the defendant:
4.1 says that the individuals identified in paragraph 4 of the statement of claim:
(a) Mr ……….;
(b) Mr ………..
(c) Mr ………..;
(d) Mrs ………….; and
(e) Mr ………….
(together the Passengers) purchased the airline tickets;
4.2 says that the plaintiff purchased the airline tickets as agent of the Passengers and not as a principal;
4.3 says that the plaintiff purchased airline tickets through the SmartTickets Website from American Airlines;
4.4 says that the defendant was the agent of American Airlines;
4.5 otherwise does not admit paragraph 4 on the basis of paragraphs 3.3, 3.4 and 3.5 of this defence.’
In essence, Stella asserts the agreement to purchase tickets was between the passengers and the carrier – and that the claim is misconceived because Telfrid was not the buyer and Stella was not the seller.
In response to a request for further and better particulars, Telfrid’s solicitors wrote, ‘[t]he agreement pleaded in paragraph 8 of the Statement of Claim is partly in writing and partly implied by conduct.’ The writing was specified as the tickets and ticket itinerary/receipts. No particulars were given of the conduct said to imply terms of the agreement.
With respect to the cancellation alleged in paragraph 11 of the statement of claim, the solicitors wrote, ‘[t]he cancellations were partly oral and partly in writing’, but no further particulars were given.
Stella’s material - primarily the affidavit of Mr Finnigan, of Stella’s solicitors, informed by employed ‘senior legal counsel’ of Stella - sets out the arrangements in greater detail.
Stella has an agreement, (made under a previous name) with the International Air Transport Agency (‘the IATA’). That agency is an association of many airlines. The agreement allows Stella to issue tickets on behalf of the airline members of the IATA.
Stella operates a website called SmartTickets. It allows retail travel agents to issue tickets to passengers. Use of the site is governed by the standard terms and conditions of use. The retail travel agent uses a login name and password and must click on the box confirming acceptance of the terms and conditions to gain access to the SmartTickets site.
The terms and conditions describe SmartTickets as ‘an internet based application allowing your organisation to process and validate travel ticketing for e-tickets using the SmartFares Confidential Information and other information provided by third parties.’ The terms and conditions include an indemnity as follows:
‘Your organisation indemnifies us and will keep us indemnified from and against all actions, claims, suits, demands, liabilities, costs or expenses arising out of or in any way connected to the use of SmartTickets by the retail travel agent.’
The terms and conditions also include the following:
‘You expressly acknowledge and agree that we are not the party providing travel services to you, or persons claiming through you, and that our role is limited to providing the SmartFares Confidential Information and the SmartTickets Confidential Information to you.’
The fares for the tickets were quoted in an internet based application called the Global Distribution System (‘the GDS’) operated by a company called Southern Cross Distribution Systems Pty Ltd (‘Southern Cross’). Both Telfrid and Stella have access to the GDS, pursuant to agreements with Southern Cross. The GDS includes the inventory of fares from airlines. Before using SmartTickets, a travel agent must complete a passenger name record (‘PNR’) in the GDS. Mr Finnigan says:
· ‘SmartTickets only gives travel agents the facility to issue tickets on behalf of airlines, based on the reference number of the PNR, which is booked through the GDS’; and
· ‘After pricing the PNRs in the GDS, [Telfrid] used SmartTickets to issue all the subject airline Tickets, on behalf of American Airlines, to the Passengers.’ [2]
[2] Affidavit of Finnigan Filed 11 March 2013, paragraph 12
With two exceptions, I understand it is common ground that the above describes the process. First, Telfrid points out that American Airlines was only one of the carriers involved in the proposed travel. Second, Mr Hani, a director of Telfrid, says the GDS, run by Southern Cross, is known as Galileo, and he refers to it so. If these are in fact differences between the parties, they seem to me to be inconsequential.
Mr Hani, a director of Telfrid and one of the passengers, deposes that Telfrid, by franchise agreements with Harvey World Travel, has access to Stella’s air ticketing services through its SmartTickets program. This enabled Telfrid to arrange tickets with IATA members. A travel consultant working for Telfrid would first log on to Galileo to see the availability of seats and fares on a particular date and airline, then generate a PNR for the fare quote, then log on to SmartTickets and retrieve ‘the Galileo booking via the PNR across to SmartTickets. The itinerary is then ticketed at the guaranteed fare issued by Galileo and the documents are provided by SmartTickets’.[3]
[3] Affidavit of Hani filed 27 March 2013 paragraph 11
Mr Finnigan, informed by Stella’s senior legal counsel, deposes that on 2 September 2011, American Airlines advised that Southern Cross had uploaded incorrect fares for tickets on the GDS. The fares shown on the GDS were substantially lower than the correct fares. American Airlines issued an Agency Debit Memo (‘ADM’) to Stella for the difference in price. Stella submitted unused segments of the tickets for refund (thereby, I infer, effectively cancelling the unused segments of the tickets) and paid the balance of the ADM to American Airlines, an amount of about $144,000. Stella and Telfrid are in dispute over Stella’s assertion that Telfrid must indemnify Stella for the loss. That dispute is the subject of litigation in the District Court of New South Wales.
It was the cancellation of the tickets which Telfrid says breached the pleaded agreement and caused its loss.
In the written outline of argument on the application, Telfrid submits that:
‘where the tickets are fixed in their consideration by the Galileo computer system operated by the Defendant, where the airlines as to the same tickets are saying that the consideration is not the appropriate consideration, the Defendant is in fact either the principal, with the airlines being the carrier/agent or is itself contractually bound at law without reference to the carriers.’[4]
[4] Respondent’s outline, paragraph 14
Telfrid’s case, as indicated by this submission, reduces to the proposition that Stella sold tickets to Telfrid, the agreement being, in effect, that in consideration for the fares paid by Telfrid to Stella, Stella would cause the airline named in the tickets, or another carrier, to carry the passengers on the routes nominated.
These terms were not pleaded in the Statement of Claim, nor supplied in the further and better particulars. In the inches of affidavit material filed Telfrid does not present evidence of such an agreement. And despite the delay in the hearing of the application, Telfrid did not propose an amended statement of claim. As the statement of claim demonstrates, Telfrid’s case is one where the court would be asked to examine the conduct of the parties and find that there was a contract in such terms.
In my opinion, Telfrid has no real prospect of success of such a claim.
Telfrid seeks to find support for its proposition in the decisions in MacRobertson Miller Airline Services v Commissioner of State Taxation (WA) (1975) 133 CLR 125 and Air Tahiti Nui Pty Ltd v McKenzie [2009] NSWCA 429.
In MacRobertson Miller, the High Court decided a completed (written) airline ticket was not chargeable with duty under the Western Australian Stamp Act because the document was not an agreement or any memorandum of an agreement. This was because ‘the issuing airline operator does not by the terms of the ticket assume or offer to assume any obligation to carry the intending passenger’[5], the entitlement of the operator to retain the prepaid fare being ‘dependent on the actual performance of carriage’[6], or because the ticket is regarded only as an offer, the acceptance of which is made by later conduct of the passenger.[7] Jacobs J noted that usually the ticket and/or accompanying documents do not contain an express promise to carry, but considered the process, where the ticket does contain an express promise to carry, comprised potentially two contracts: the ‘executory contract’ between the actual purchaser and the promisor and the contract between the passenger and the carrier which arises when the passenger ‘presents the ticket and embarks on the carriage.’[8]
[5] 133 CLR 125 at 132-3 per Barwick CJ
[6] 133 CLR 125 per Barwick CJ at 133
[7] 133 CLR 125 at 137 and 139 per Stephen J at 145-146.
[8] 133 CLR 125 at 146
In Air Tahiti Nui, the plaintiffs claimed damages against Air Hahiti Nui for injuries suffered on a flight from New York to Papeete. Air Tahiti Nui claimed it was not the carrier, its parent, Air Tahiti Societe Anonyme (‘ATSA’) was.
It was common ground that contracts were formed when the tickets were issued and paid for. It was not argued that there was no contract until the passengers boarded.[9] The plaintiffs paid Flight Centre for their Air Tahiti Nui tickets and tickets were issued by “Air Tahiti Nui” for return travel to New York.[10] Flight Centre’s booking terms and conditions made plain it acted as a travel agent only.[11] Flight centre had a commercial framework agreement with Air Tahiti Nui, which was an Australian company.[12] The agreement did not mention ATSA.[13]
[9] [2009] NSWCA 429 at [27]
[10] [2009] NSWCA 429 at [34]
[11] [2009] NSWCA 429 at [35]
[12] [2009] NSWCA 429 at [38]
[13] [2009] NSWCA 429 at [42]
The claim was brought under the Civil Aviation (Carriers’ Liability) Act 1959 (Cth). According to the conventions governing the flight, there could be both a contracting carrier and an actual carrier, the first defined as:
‘a person who as a principal makes an agreement for carriage governed by the Warsaw Convention with a passenger or consignor or with a person acting on behalf of the passenger or consignor’.[14]
[14] [2009] NSWCA 429 at [11]
The question, relevant to the present application, was whether Air Tahiti Nui was the ‘carrier’ made liable pursuant to the convention and the Act. Air Tahiti Nui argued, unsuccessfully, that it did not contract as principal because its only obligation was to procure performance by ATSA as the actual carrier.[15]
[15] [2009] NSWCA 429 at [20]
The case does not support an argument that Stella was a contracting party, as principal, promising to carry or arrange carriage of the passengers on flights set out in the e-ticket. The identity of the contracting party ‘is to be determined looking at the matter objectively, examining and construing any relevant documents in the factual matrix in which they were created and ascertaining between whom the parties objectively intended to contract.’[16]
[16] [2009] NSWCA 429 at [28]
The documents Telfrid received are annexed to the affidavit of Mr Hani. It was not submitted by Telfrid that the documents contained an express promise to carry. For each transaction there appears to be:
· a covering e-mail, addressed to [email protected] and signed, ‘Your dedicated Air Tickets team’. The subject of each covering e-mail is a passenger’s name;
· documents called Ticket Image and Ticket Advice, which, it is explained in the covering letter, are for agency use only; and
· an e-ticket receipt.
The Ticket Image is described in the covering e-mail as displaying the ticket details in a similar way to that of a paper ticket. The e-mail advises the Ticket Image is not a travel document but can be used for [the travel agent’s] own records. The e-ticket receipt and itinerary (one document) is on Harvey World Travel letterhead. (Mr Hani explains that at the time of the transaction Telfrid was trading under a franchise agreement with Harvey World Travel.) The document mentions the passenger’s name and a carrier, for example, “ISSUED BY: AMERICAN AIRLINES”. It also sets out the itinerary and refers to conditions of carriage by inclusion of the carrier’s conditions and international conventions.
Having examined the ticketing documents in the context of the factual matrix which includes the agreement between Telfrid and Stella concerning the use of the SmartTickets website, I conclude Telfrid has no real prospect of succeeding in its claim for damages for breach of contract as pleaded and argued in response to this application.
To reach this conclusion does not require factual findings. There is no triable issue of fact in this regard.
It is inescapable that the arrangements between Telfrid and Stella were governed by the agreement between them, pleaded by Stella and not denied in the materials by Telfrid. The agreement comprehends the events which occurred and provides for consequences.
Although Stella sought judgment on the whole claim, its arguments have attacked only the claim in contract. Although I have a view about the claim for damages for breach of fiduciary duty, it is not appropriate in this case that I decide whether judgment should be given against Telfrid on that claim. I will hear from the parties as to the appropriate orders and costs.
_____
On 20 June 2013 I published the above reasons for concluding Telfrid had no real prospect of success in its claim for damages for breach of contract. As there was another aspect to the claim, I invited submissions from the parties, in writing by 15 July 2013, as to the appropriate form of orders.
On 15 July 2013, I received by e-mail submissions, draft order and an affidavit from solicitors for Stella.
On 16 July 2013 Telfrid’s solicitor wrote to my associate informing the court that Telfrid had entered into voluntary administration. On 17 July, the solicitors wrote informing they no longer had instructions in this proceeding and had begun the process of withdrawing as the plaintiff’s solicitor on the record. They enclosed contact details for the administrator.
I accept Stella’s submission that the application for summary judgment was, for the most part, successful and that the remaining part of the claim is ‘unattractive but yet to be finally determined’.
Stella submits, with some force, that Telfrid should pay its costs on the indemnity basis because the contractual claim was misconceived and Telfrid made no attempt to amend or recast the claim despite Stella having given clear notice of the basis for the application. I am not persuaded costs should be awarded on the indemnity basis. That my opinion – that the claim in contract was had no real prospect of success – effectively coincides with Stella’s telegraphed opinion that the claim was fundamentally flawed does not necessarily lead to a conclusion that there should be a departure from the usual rule that costs should follow the event on the standard basis.
I will make the orders based largely on Stella’s draft. They include leave to Telfrid to file and serve an amended statement of claim. But given the appointment of the administrator, I am minded not to make the guillotine order Stella seeks for judgment should no further pleading be filed.
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