Juanita Lia Bonke v Flight Centre Limited and Air New Zealand Limited [2000] ACTSC 116 (7 December 2000)

Last Updated: 18 January 2001

Juanita Lia Bonke v Flight Centre Limited and Air New Zealand Limited

[2000] ACTSC 116 (7 December 2000)

CATCHWORDS

SMALL CLAIMS COURT - application for leave to appeal - claim for refund of air fares paid for by third party - proposed trip cancelled - liability of travel agent and airline - whether passenger is party to contract.

COSTS - Small Claims Court - whether unsuccessful party caused unnecessary out-of-pocket expenses to be incurred by successful party.

Magistrates Court (Civil Jurisdiction) Act 1982, s 387A(2), s 393(b), s 456

Kelly v Apps [2000] FCA 687; (2000) 98 FCR 101

On Appeal from the ACT Small Claims Court

No SCA 41 of 2000

Judge: Miles CJ

Supreme Court of the ACT

Date: 7 December 2000

IN THE SUPREME COURT OF THE )

) No SCA 41 of 2000

AUSTRALIAN CAPITAL TERRITORY )

On Appeal from the ACT Small Claims Court

BETWEEN: JUANITA LIA BONKE

Applicant

AND: FLIGHT CENTRE LIMITED

First Respondent

AND: AIR NEW ZEALAND LIMITED

Second Respondent

ORDER

Judge: Miles CJ

Date: 7 December 2000

Place: Canberra

THE COURT ORDERS THAT:

1. Leave to appeal against the order of the Small Claims Court dismissing the claims against the first and second respondents be refused.

2. Leave to appeal against the decision of the Small Claims Court that the applicant pay the first respondent's costs being out-of-pocket expenses of $976.50 be granted. To that extent the appeal be allowed and the order for costs be set aside.

3. There be no order for costs of the proceedings in this Court.

1. This began as an application for leave to appeal from a judgment of the Small Claims Court on 3 July 2000. Both parties were legally represented in this Court. It was agreed that, in the event of leave being granted, the hearing could be treated as the hearing of the appeal.

2. The claims were contained in an originating application made by the applicant (Ms Bonke) against the respondents (Flight Centre and Air New Zealand). The grounds of the application were:

"On 7/9/95 a trip to America was booked with Manuka Flight Centre, departing 11/11/95. $6,399.00 was paid to the Manuka Flight Centre on 11/9/95. On 25/9/95 the trip was postponed.

A second trip was booked and postponed in about March 1996. On both occasions of postponing the trips Mr Graeme Phillips, the Flight Centre Manager, said to the claimant that no money had been lost in cancellation fees and that the money was held in trust.

On 30 September 1996, Flight Centre returned $3,920 to the claimant, claiming cancellation fees of $2006.50 for Air New Zealand and $472.50 for itself, which it had no right to do."

3. A response was filed by Flight Centre as follows:

"a) Flight Centre Limited deny that any such statement would have been made.

b) Standard rules apply to many international airline tickets that are not set by Flight Centre Limited.

c) The Applicant could have used the airline tickets but for personal reasons chose not too (sic). Flight Centre Limited had completed the applicants request and claims it is entitled to payment for the provision of that service."

4. A response was filed by Air New Zealand as follows:

"Air New Zealand never had any dealings or entered into any arrangement with the Applicant for the provision of air travel to the United States, and had no involvement in the arrangements for the award of a prize in connection with the radio station FM104.7 competition in August 1995.

It is Air New Zealand's position that the competition prize was won by a Roderick James Goodall who had sole and exclusive rights to the prize and has by a sworn statement dated 22 March 2000 confirmed that Flight Centre Limited has provided him and his children with fair and reasonable compensation, which has been accepted in full and final settlement of any claim he may have in respect of the prize.

The Applicant had no eligibility to enter the said competition as she had signed a document dated 1 August 1995 accepting she was ineligible to enter any competition run by FM104.7 for the following sixty days."

5. The Magistrate made an order that the claim be dismissed and also made an order that Ms Bonke pay the out-of-pocket expenses of Flight Centre of $976.50. At the hearing Ms Bonke represented herself and a Mr James Whateley, company secretary of Flight Centre Limited, represented Flight Centre and produced a letter authorising him to appear on behalf of Air New Zealand. The Magistrate ascertained from Ms Bonke that her claim was essentially that reservations were made with or through Flight Centre for travel to the United States on Air New Zealand by Ms Bonke, Mr Goodall and Mr Goodall's children, that payment for the travel was made to Flight Centre, that the trip was cancelled and that partial repayment only was made. The Magistrate suggested that the usual terms of such a contract would provide for charging a cancellation fee in certain circumstances. Ms Bonke said that the case did not fall within those circumstances. Evidence was then called.

6. The Magistrate gave brief ex tempore reasons for dismissing the claims. They were essentially as follows:

"1. Mr Goodall booked and paid for the trip.

2. The parties to the contract in respect of which the booking and payment was made were Mr Goodall and Flight Centre. There was a separate contract between Flight Centre, acting as Mr Goodall's agent, and Air New Zealand. In the event of money being returned by Air New Zealand, it belonged to Mr Goodall.

3. A letter from Mr Goodall to Flight Centre dated 19 September 1996 authorising payment of $6,399 from a trust account did not entitle Ms Bonke to sue on the original contract between Mr Goodall and Flight Centre.

4. There was no evidence as to the involvement of Air New Zealand and the claim against Air New Zealand had to be dismissed for that reason.

5. An Air New Zealand brochure received by Ms Bonke from Air New Zealand was received by her after the two contracts were made and was irrelevant; in any event, Ms Bonke was not a party to either agreement.

6. The evidence did not permit of a conclusion about when the trip was cancelled and in the absence of such a conclusion, the Magistrate could not be satisfied that Flight Centre and Air New Zealand were not entitled to charge cancellation fees.

7. If any money had been owing, the debt was satisfied by a second trip undertaken by Mr Goodall and in respect of which Mr Goodall made arrangements with Flight Centre and/or Air New Zealand."

7. The orders sought in this Court are:

"To set aside the decision that the applicant wasn't a party to the first trip in September 1995 and that the matter be remitted to decide the issue of cancellation fees.

That the order for out of pocket expenses be quashed."

8. The Supreme Court shall not grant leave for the purpose of an appeal against a judgment of the Small Claims Court unless it is satisfied that either the decision of the Small Claims Court on a question of law was wrong, or the conduct of the proceedings in the Court was unfair to the applicant: Magistrates Court (Civil Jurisdiction) Act 1982 (the Magistrates Court (Civil Jurisdiction) Act), s 387A(2).

9. It was submitted on behalf of Ms Bonke on the appeal that the Magistrate had made several errors of law and that the proceedings were unfair. However, no unfairness could be shown in relation to the dismissal of the claim apart from the alleged errors of law. I deal with these as they are set out in the notice of appeal. The order that Ms Bonke pay the out-of-pocket expenses of Flight Centre raises different issues.

The Magistrate failed to give reasons for the decision

10. This contention is plainly wrong. The Magistrate did not articulate every finding of fact or principle of law that underlay the reasons, but the reasons themselves are clear enough as they have been summarised above.

The Magistrate took into account irrelevant and extraneous factors

11. To "take into account" irrelevant matters is not necessarily an error of law. If an irrelevant matter is shown to bear upon the result reached in the Magistrate's decision, it may amount to an error of law. However, it is not shown that any irrelevant matter affected the Magistrate's decision.

12. The Magistrate did mention the possibility that Ms Bonke had some "moral claim to some of the money or to take part in the trip", but went on to make it clear, correctly, that only issues of legal entitlement and not moral entitlement were to be decided.

13. The Magistrate also ruled that a brochure, received by Ms Bonke after the contract with Flight Centre was made, was irrelevant. In this respect what the Magistrate said was not strictly accurate because the brochure might have shed light on both the issue of the parties to the contract and the issue of the terms of the contract. The Magistrate was entitled to treat the brochure as unpersuasive but in order to reach that conclusion, the Magistrate would have had to consider its weight. On a consideration of the whole of the transcript and the terms of the brochure itself, as well as the Magistrate's reasons read in the context, I think that what was meant was that the brochure was of no probative value. The Magistrate was entitled to so consider it.

The Magistrate drew inferences and made decisions against the weight of evidence

14. This is a complaint only of an error of fact, unless what is meant is that the errors are such that no reasonable person could have drawn the inferences or made the decisions. In the light of the submissions on the application this ground is part of the next two grounds.

The Magistrate's decision about Ms Bonke not being a party was contradictory to the evidence of Mr Goodall and Ms Bonke

15. A decision about the identity of parties to a contract is a matter of mixed fact and law. The Magistrate on the facts found expressly that Mr Goodall engaged Flight Centre and paid Flight Centre for the trip proposed to be taken with Air New Zealand, that Flight Centre, as Mr Goodall's agent, then made the appropriate arrangements with Air New Zealand, that the trip was cancelled, that Mr Goodall wrote to Fight Centre authorising it to repay the monies to Ms Bonke and that "cancellation fees" were charged by Flight Centre and Air New Zealand. The Magistrate also impliedly found that Flight Centre, or Air New Zealand, or both, retained some of the monies paid. The Magistrate, applying the law of privity of contract, concluded that Ms Bonke was not entitled to any of the monies retained by Flight Centre. The Magistrate also impliedly found that Mr Goodall's letter to Flight Centre of 19 September 1996 did not constitute any admission by him that any monies retained belonged to Ms Bonke or constituted any assignment of any debt owing by Mr Goodall to Ms Bonke.

16. The letter written by Mr Goodall to Flight Centre on 19 September 1996 was in the following terms:

"Re: Disneyland Holiday

I understand from Grant at Infinity Holidays that the money for the Disneyland Holiday held by Infinity in a trust account has been returned to your office. I believe the amount was $6399.

A cheque for this amount is to be given to Ms Juanita Bonke, the co-winner of the FM104.7 prize. She will call you to make arrangements.

I am aware that the "saga" of the Goodall Disneyland holiday has greatly inconvenienced both you and your office. I apologise sincerely for this. I wish that events had turned out differently.

I am presently working in Brisbane and can be contacted on 07/3224 8343. Should there be any problems with the above arrangements please let me know."

17. In my view, the Magistrate was correct in law in concluding that the letter was simply an instruction from Mr Goodall to Flight Centre to pay to Ms Bonke whatever monies (if any) that had been returned to Flight Centre in respect of the cancelled trip. It was not an assignment of a debt. Furthermore, there was no evidence that, once Flight Centre paid Ms Bonke $3,920 by cheque dated 30 September 1996, it retained any monies returned to it in respect of the cancelled trip, whether in a trust account or otherwise. Mr Goodall's expressed belief that Flight Centre held $6,399 is completely unprobative.

18. Having read the evidence, I think that the findings of fact were open to the Magistrate and that the correct law was applied.

The Magistrate erred in law by not accepting the evidence that the trip was cancelled on 25 September 1995 and thus failed to find that the first and second respondents were not entitled to cancellation fees and that Air New Zealand was involved

19. The issue of whether a contract is or is not terminated is a question of mixed fact and law. The issue of the date on which a contract is terminated is always a question of fact, but if it is inextricably bound up with the issue of whether or not the contract was terminated, it may involve a question of law also.

20. The Magistrate said that the evidence of when the trip was cancelled was unsatisfactory, that there was no direct evidence at all of when the trip was cancelled, and that no conclusion could be drawn from the correspondence in evidence on that issue. The Magistrate further said that without evidence about when the trip was cancelled there could be no conclusion that Flight Centre and Air New Zealand were not entitled to charge cancellation fees. If the Magistrate had said that there was no evidence at all about when the trip was cancelled that would have been an error. If the Magistrate had said that the correspondence provided no evidence of the date on which the trip was cancelled that also would have been an error. However, the Magistrate really appears to be saying that there was no persuasive evidence or no evidence sufficient to arrive at a conclusion on the civil onus of the balance of probabilities as to the date of cancellation of the trip.

21. In this respect it is difficult to understand how the Magistrate was not able to draw any conclusion from the correspondence in evidence.

22. First and foremost there is a letter (undated, but written well after the event) from Flight Centre to Ms Bonke stating, inter alia:

"1. The date your tickets were issued would only be known by Air New Zealand as they issued your tickets on behalf of Infinity Holidays but were never despatched to our Flight Centre.

2. Booking cancelled 25/9/95 with Infinity Holidays.

3. Cancellation fees were AUD2006.50 retained by Air New Zealand and AUD472.50 by Flight Centre."

23. Furthermore, an invoice issued by Flight Centre to Mr Rod Goodall shows that the flight was to be taken by two adults and three children on 9 November 1995.

24. Another letter from Flight Centre to Ms Bonke (again undated but obviously well after the event) attaches "a copy of the conditions I have referred to in my recent correspondence to you regarding your cancellation fees". The attachment appears to be a brochure issued by Infinity Holidays of North Sydney. Mr Whateley gave evidence that Infinity Holidays is a subsidiary company of Flight Centre and engages in "wholesale" travel marketing.

25. The brochure (Ex/8 Mag Ct) which was before the Magistrate includes the following:

"IMPORTANT INFORMATION - PLEASE READ

...

CANCELLATIONS/REFUNDS - Should you cancel up to 30 days prior to your departure, a maximum fee of $30 per person will be charged. Loss of deposit will apply for cancellations made with less than 30 days prior to your departure in addition to any other fees levied by suppliers or airlines ... After ticketing and vouchering a free (sic) of 50% of the full tour price per person will apply on cancellation of booking."

26. The brochure (Ex/8 Mag Ct) also includes this:

"BROCHURE VALIDITY - 1 Apr'95 thru 31 March'96 unless otherwise specified or superseded."

27. A similar brochure which was part of the documents at the hearing of the application in this Court includes the following:

"IMPORTANT INFORMATION - PLEASE READ

...

CANCELLATION/REFUNDS - Should you or any member of your party be forced to cancel, you must advise your agent in writing. The cancellation charges are as follows:

More than 45 days prior to departure: $100 per adult. Less than 45 days prior to departure: $100 per adult plus any additional fees levied by suppliers and your travel agent, up to 100% of the tour cost.

..."

28. The brochure also includes this:

"BROCHURE VALIDITY - 1 Apr '97 thru 31 Mar '98 unless otherwise specified or superseded."

29. This brochure, therefore, does not on the face of it apply to the contract in question which subsisted from 7 to 25 September 1995. Nothing turns on this. However, assuming that the terms and conditions set out in either brochure applied to the contract, Infinity Holidays were not entitled to a cancellation charge beyond $100 per adult.

30. Another attachment, apparently to the same letter, is a printed copy of the booking conditions of Flight Centre. It includes:

"Deposits and Cancellation Fees.

* Company policy requires us to charge a non-refundable airfare deposit of $100 per person.

* Certain Airlines, tours and accommodation may require additional tour operator deposits, and may be subject to tour operator cancellation/amendment fees."

31. For the sake of completeness, there is a letter from Air New Zealand to Ms Bonke dated 21 November 1996 which states:

"With regards to the cancellation fees raised in your original letter - whenever an airline fare is booked - rules and conditions apply. These rules and conditions should be explained by the booking agent. The airfares booked by Mr Goodall had a rule stating that when a cancellation or re-booking was made within 21 days of travel, a 50 percent cancellation fee would apply. Unfortunately we are now unable to refund the sum taken in cancellation fees."

32. The first of the extracts from the documentary evidence, as set out above, shows clearly that Flight Centre, for its part, had admitted the cancellation of the booking on 25 September 1995, and that it was therefore incorrect for the Magistrate to say that there was no evidence as to the date of cancellation.

33. It also follows from the other extracts from the documents that the cancellation on 25 September 1995 for a proposed departure on 9 November 1995 was made well before the date on which, according to the Infinity Holidays brochure and the letter from Air New Zealand, cancellation fees would have been incurred. The booking conditions of Flight Centre, on the other hand, stated clearly that there would be a non-refundable air fare deposit of $100 per person in the event of cancellation and that certain airlines and tours may also require cancellation fees. Flight Centre itself imposed a cancellation fee on Mr Goodall of $472.50, which does not appear to be arithmetically explicable, but does not appear either to be much outside the booking conditions of Flight Centre. On the other hand, there is nothing to show that those booking conditions were drawn to the attention of Mr Goodall, and there is similar lack of evidence of the conditions imposed by Air New Zealand or Infinity Holidays being drawn to the attention of Mr Goodall prior to the contract being entered into.

34. All this goes to show, however, only that there may have been a faintly arguable case that, upon cancellation of the trip on 25 September 1995, Mr Goodall was entitled to a refund of some or all of what he had paid. But it goes nowhere to show that Ms Bonke had any entitlement to a refund of anything.

35. The above extracts also indicate that the Magistrate was in error in stating that there was "no evidence as to the involvement of Air New Zealand". However, for reasons which have already been explained, the evidence as to the involvement of Air New Zealand was clearly insufficient to establish that Air New Zealand was under any obligation to pay or repay any monies to Ms Bonke.

36. Furthermore, it should be stated, again for the sake of completeness, that the Magistrate found that any indebtedness to Mr Goodall was discharged by the arrangements made for the "second" trip, that is to say a trip undertaken the following year by Mr Goodall and Ms Bonke as well as by other persons which was paid for by Mr Goodall at a "wholesale" price. The arrangements in respect of the later trip were made between Mr Goodall and Air New Zealand.

37. In any event, the Magistrate was entitled to find that the evidence was insufficient to establish liability to Ms Bonke on the part of either Flight Centre or Air New Zealand. Accordingly, there was no error in law in dismissing Ms Bonke's claim. I add here that this was not a case about the rights of an airline ticket holder against the airline or against a travel agent, since, on the evidence, no ticket was ever issued to Ms Bonke for the trip that was cancelled.

Costs (out-of-pocket expenses)

38. A further matter in respect of which leave to appeal was sought was that the proceedings were unfair in that the Magistrate ordered Ms Bonke to pay costs without considering the law and without making proper inquiry.

39. Section 456 of the Magistrates Court (Civil Jurisdiction) Act provides as follows:

"456. Costs

(1) The Small Claims Court shall not make any order in relation to the costs of proceedings, except where expressly provided by this or any other Act.

(2) A judgment in favour of an applicant shall include an order that the respondent pay to the applicant -

(a) the amount of any fee paid by the applicant for the commencement of the proceedings; and

(b) any charges and out-of-pocket expenses in respect of the proceedings (excluding the costs of representation by a legal practitioner or any other person).

(3) The Small Claims Court may make an order for costs (except costs for representation by a legal practitioner or anyone else) to compensate a party in proceedings who has incurred out-of-pocket expenses in the proceedings unnecessarily due to the action of another party."

40. Clearly the power of the Small Claims Court to make the order that the applicant pay the out-of-pocket expenses incurred by Flight Centre depended upon the application of s 456(3). The order could not be made unless out-of-pocket expenses in the proceedings were incurred unnecessarily due to the action of Ms Bonke. It is somewhat unreal to say that the Magistrate made the decision on the out-of-pocket expenses without inquiry, because the matter is covered by some four pages of transcript. It commences with the Magistrate stating to Mr Whateley that he was entitled to make an application for out-of-pocket expenses. Mr Whateley responded by telling the Magistrate of the costs of coming from Queensland on two occasions. There was a substantial amount of discussion about what rate was paid, whether there was a GST component and so on, but nowhere does the Magistrate address the question whether the costs were unnecessarily incurred due to some act or omission on the part of Ms Bonke (I assume that the word "action" in s 456(3) includes "omission" as well as "act"). It is not enough to say that the question must have been addressed and that the answer to it is implicit in the order that was made, since the order is entirely consistent with the practice in courts which have an open discretion as to costs, and that is that costs follow the event. The passing of the remark by the Magistrate to Ms Bonke that "because when you engage in litigation you risk the factors" suggests that it may have been that the Magistrate was under the impression that costs did follow the event.

41. The fact that Ms Bonke lost the case does not mean that the expenses incurred by Flight Centre were incurred unnecessarily as a result of something Ms Bonke did or failed to do. As indicated above, there may have been a case that Air New Zealand was under an obligation to refund more monies than it was prepared to refund, but it was not an obligation that was owed to Ms Bonke. Again, there may have been a dispute between Ms Bonke and Mr Goodall, but that was not before the Small Claims Court.

42. In my view, the Magistrate has been shown to be in error in making the order for out-of-pocket expenses without coming to a conclusion that those expenses were incurred unnecessarily due to the action of Ms Bonke. On the material before the Magistrate I find that Flight Centre has not discharged the onus of showing that the expenses were so incurred. Whether the error is categorised as an error of law (on a relatively important matter of statutory interpretation) or a denial of fairness, it is sufficiently clear to justify the granting of leave and allowing the appeal against the order for out-of-pocket expenses.

43. I note that counsel for the parties did not address the issue of the jurisdiction of this Court as formulated by the Federal Court in Kelly v Apps [2000] FCA 687; (2000) 98 FCR 101, nor the issue whether the out-of-pocket expenses were "costs for representation by ... anyone else" under s 456(3).

Outcome

44. The order of the Court is that leave to appeal against the order of the Small Claims Court dismissing the claims against the first and second respondents be refused. Leave to appeal against the decision of the Small Claims Court that the applicant pay the first respondent's costs, being out-of-pocket expenses of $976.50 is granted. To that extent the appeal is allowed and the order for costs is set aside. In accordance with s 393(b) of the Magistrates Court (Civil Jurisdiction) Act, there is no order for costs of the proceedings in this Court.

I certify that the preceding forty-four (44) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Chief Justice Miles.

Associate:

Date: 7 December 2000

Counsel for the applicant: Mr J Silk

Solicitor for the applicant: Jeffrey Silk

Counsel for the first respondent: Mr A Williams

Solicitor for the first respondent: Ken Cush & Associates

Date of hearing: 8 September 2000

Date of judgment: 7 December 2000