STA Travel (NZ) Limited (in liquidation)

[2022] NZHC 1229

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1759 [2022] NZHC 1229

UNDER

Part 19 of the High Court Rules 2016 and s 284 of the Companies Act 1993

IN THE MATTER

of an application pursuant to s 284 of the Companies Act 1993 for directions in

relation to the distribution of refunds paid, or due to be paid to, STA Travel

AND IN THE MATTER

of STA TRAVEL (NZ) LIMITED (in

liquidation)

IN THE MATTER

of an application by DAVID SEAN WEBB and COLIN DAVID OWENS as liquidators of STA TRAVEL (NZ) LIMITED (in

liquidation) Applicants

Hearing:	2 February 2022
Appearances:	J McMillan and N Thompson for the Applicants J Burt for Refunded Customers
Judgment:	30 May 2022

JUDGMENT OF ROBINSON J

This judgment was delivered by me on 30 May 2022 at 4.00pm pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors/Counsel:

Dentons Kensington Swan, Auckland Mr J Burt, Barrister, Auckland

RE STA TRAVEL (NZ) LTD (IN LIQ) [2022] NZHC 1229 [30 May 2022]

[1]    The applicants (Liquidators) are the Liquidators of STA Travel (NZ) Limited (in liquidation) (STA Travel). The Liquidators’ apply pursuant to s 284 of the Companies Act 1993 for directions as to the legal status and distribution of refund monies that STA Travel have received or may receive from airlines and other travel providers that have cancelled contracts for travel services they had entered into with STA Travel’s customers (Application). In particular, the Liquidators seek directions as to whether those refund monies are:

(a)held on trust by STA Travel for the particular customers to which each refund relates; or

(b)the property of STA Travel available to be distributed to STA Travel’s creditors in accordance with Schedule 7 of the Act.

[2]For reasons that will shortly follow separately, I direct that:

(a)Refund monies received or to be received by STA Travel from airlines and other travel providers in relation to cancelled contracts with STA Travel’s customers for the provision of travel services are held by STA Travel on trust for the particular customer to whom the refund monies relate.

(b)To the extent that the Liquidators’ fees and disbursements in relation to this Application and the distribution of the refund (Costs) are not met by funds from the Consumer Travel Reimbursement Scheme (if approved), the Liquidators shall be entitled to deduct the Costs, including any funding advanced to the Liquidators that is required to be reimbursed, from the refunds before distributing the refunds.

(c)Leave is also reserved for the Liquidators to apply for such further ancillary orders as are necessary.

[3]    The Liquidators also sought a direction that in circumstances where a refund has been paid to STA Travel in respect of a customer who has already been

compensated by his or her bank (or other financial institution), the Liquidators shall distribute the refund to that bank (or other financial institution) to the extent that it has not already been reimbursed. The Liquidators also sought a direction that where STA Travel has already reimbursed a customer’s bank (or other financial institution) the Liquidators shall be entitled to treat the refund as the property of STA Travel.

[4]    As a matter of general principle the Court accepts that it is unlikely that a customer would be able to retain compensation it has received from a third party in respect of cancelled travel, whilst also receiving a refund from the travel provider (via the Liquidators) in respect of that cancellation. Customers would likely have contractual obligations to the third party bank/financial institution to pass on the refund; and/or the third party bank financial institution may have rights of subrogation. However, the nature and scope of the compensating third party’s entitlement to be reimbursed by its refunded customers will depend (at least in part) on the terms of the contractual and other arrangements between each customer and the compensating bank/financial institution.

[5]    For reasons beyond the Liquidators’ control there is presently insufficient evidence of each affected customer’s particular position to enable the Court to make the direction sought. In those circumstances (and without limiting the scope of leave reserved at paragraph [2](c) above) the Court reserves leave for the Liquidators to apply further in respect of the issues raised in paragraph 1(b) of the Application, if they consider that becomes necessary.

Robinson J