Destination Travel Pty Limited v Travel Compensation Fund [2000] NSWADT 12 (19 January 2000)

Last Updated: 29 February 2000

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL GENERAL DIVISION

CITATION: Destination Travel Pty Limited -v- Travel Compensation Fund [2000] NSWADT 12

PARTIES: APPLICANT

Destination Travel Pty Limited

RESPONDENT

Travel Compensation Fund

FILE NUMBERS: 003001

HEARING DATES: 06/01/2000

SUBMISSIONS CLOSED: 06/01/2000

DECISION DATE: 19/01/2000

BEFORE: Hennessy N (Deputy President)

LEGISLATION CITED: Travel Agents Act 1986

CASES CITED:

APPLICATION: Review of decision to terminate applicant's participation in the Travel Compensation Fund

MATTER FOR DECISION: Application for stay of decision

APPLICANT REPRESENTATIVE: APPLICANT

T Howard, barrister

RESPONDENT REPRESENTATIVE: RESPONDENT

G Dellar, solicitor

ORDERS: 1. The decision of the Travel Compensation Fund to terminate the applicant's participation in the fund is stayed pending further directions by the Tribunal.

2. A condition of the above order is that the applicant operate a trust account for teh receipt of client funds and that a monthly reconciliation of that account be provided to the Travel Compensation Fund within 7 days of the end of each calendar month while this stay decision remains in force.

3. The Travel Compensation Fund is ordered to pay the applicant's costs of this application as agreed or assessed within 28 days of that agreement or assessment.

4. This matter is set down for a Directions Hearing on 2 March 2000.

Reasons for Decision:

Introduction

1 On 4 January 2000, the applicant lodged an application for an urgent stay of a decision by the Travel Compensation Fund (TCF). The decision which was made on 9 December 1999, was to terminate the applicant's membership of the TCF with effect from 14 December 1999.

Jurisdiction

2 There was no issue as to the Tribunal's jurisdiction. Under s 22(4) of the Travel Agents Act 1986 (the Act), a person may appeal against the decision of the TCF to terminate participation in the compensation scheme. Section 22 (4) states that:

If the participation of a licensee in the compensation scheme has been terminated otherwise than by the licensee, the licensee, may apply to the Tribunal for a review of the termination.

3 The Tribunal's powers in relation to stay applications are set out in section 60 of the Administrative Decisions Tribunal Act 1997 (ADT Act). Section 60 states that:

(1) Subject to this section, an application to the Tribunal for a review of a reviewable decision does not affect the operation of the decision under review or prevent the taking of action to implement that decision.

(2) On the application of any party to proceedings for an application for a review of a reviewable decision, the Tribunal may make such orders staying or otherwise affecting the operation of the decision under review as it considers appropriate to secure the effectiveness of the determination of the application.

(3) The Tribunal may make an order under this section only if it considers that it is desirable to do so after taking into account:

(a) the interests of any persons who may be affected by the determination of the application, and

(b) any submission made by or on behalf of the administrator who made the decision to which the application relates, and

(c) the public interest.

Preliminary issue

4 A preliminary issue arose in these proceedings as to whether the Tribunal could proceed to hear the application without an internal review of the decision having been completed. Under s 55(1)(b) of the ADT Act:

A person may apply to the Tribunal for a review of a reviewable decision only if:

(b) an internal review of the decision has been, or is taken to have been, completed.

5 Under s 55(2)(c) of the ADT Act, a person is not prevented from making an application if the Tribunal is satisfied that:

(c) it is necessary for the Tribunal to deal with the application in order to protect the person's interests and the application to the Tribunal was made within a reasonable time following the decision of the administrator concerned.

6 The applicant was not advised by the TCF that it had a right to obtain an internal review of the decision. When Ms Porreca, the Managing Director of the applicant, became aware of that right she lodged a request for internal review. No response has been received. The position of the TCF is that internal review of Board decisions is not practical. All the powers of the Board of the TCF that are capable of delegation are delegated to the Management Committee. Some of the decisions made by that committee, such as the one presently under review, are subject to the internal review provisions of the ADT Act. Mr Dellar submitted that the practical difficulty is that there is no other person or body obviously available to perform the task of reviewing the Committee's decisions.

7 I suggested to Mr Dellar that if he believed internal review was not appropriate, he should consider making a submission to government for an amendment to the legislation so that the TCF is exempt from having to comply with the internal review provisions. Other bodies and individuals, such as the President of the Anti-Discrimination Board, have successfully argued that it is not practical for them to comply with the internal review provisions.

8 In the absence of any such exemption, I am satisfied, pursuant to s 55(2)(c) of the ADT Act that it is necessary to deal with the application in order to protect the applicant's interests. I also find that the application was made within a reasonable time (less than a month) of the administrator's decision.

Issue

9 The only basis on which the TCF opposed the stay application was that they were allegedly aware that Ms Porch had been convicted of certain dishonesty offences. Even though the respondent's submissions were confined to this issue, I must take into account all the factors listed in s 60(3) of the ADT Act in coming to a decision.

Evidence

10 Ms Porreca set out her understanding of the facts relevant to this case in an affidavit sworn on 4 January 2000. The TCF did not cross examine Ms Porreca or challenge any of the evidence contained in that affidavit and I accept that it sets out the facts as they occurred in this case.

11 Briefly, Ms Porreca is the managing director of the applicant, Destination Travel Pty Ltd (Destination Travel), a travel agency carrying on business in New South Wales. The applicant did not comply with the requirement of the TCF to provide them with an annual financial review by 30 September 1999. Despite an extension of time being granted to 31 October 1999 and then to 6 December 1999, the documents were not provided. On 9 December 1999 the TCF wrote to the applicant advising that, with effect from 14 December 1999, the applicant was no longer eligible to remain a member of the TCF. The licence to carry on business as a travel agent was automatically suspended as participation in the TCF is a condition of the licence.

12 Ms Porreca's stated that she had instructed an accountant to prepare the relevant documentation sometime in August or September 1999. Despite urging him to comply, the accountant did not prepare the necessary documentation in time to meet the extensions granted by the TCF. On 20 December 1999 two officers from the Department of Fair Trading attended the applicant's premises and advised her to close the business. The business has not operated since that date. The annual financial review together with late fees and a covering letter were sent to the TCF on 23 December 1999.

13 Under Clause 12C of the Trust Deed governing the Travel Compensation Fund, the Board may reinstate a person as a participant in the Fund if the person has ceased to be a participant for a period not exceeding two months. The applicant applied to be reinstated on 23 December 1999 without waiving its right to have the present question resolved by the Tribunal.

14 The TCF responded to the application for re-instatement by advising, among other things, that the matter would be submitted for consideration at the next Management Committee Meeting due to be held on 13 January 2000.

15 Mr Dellar advised by letter date7 January 2000, the day following the hearing, that the applicant can also lodge a fresh application for participation pursuant to Clause 8 of the Trust deed. According to Mr Dellar:

If the applicant satisfies the TCF's financial criteria (including taking any remedial action required), and has paid the applicable fees (totalling $8,100 in 1999, being $7,500 fund contribution and $600 administration fee). The application may, under the TCF's administrative arrangements, be admitted to participation immediately by an Executive Committee of TCF senior staff, action under delegation from the Board to deal with these applications.

Application of the law

16 Under s 60(3) of the ADT Act, in determining this application I must take into account the interests of any persons who may be affected by my determination, any submission made by or on behalf of the administrator and the public interest.

17 The interests of the persons affected by the determination are those of Ms Porreca and the three permanent employees of the applicant. Ms Porreca set out in her affidavit the effect on her and her employees of not being able to operate even for a short period until the Management Committee makes a decision about her participation in the Fund. None of this evidence was challenged by the TCF and I accept that the financial interests of Ms Porreca and the three employees of the applicant would suffer if the stay application is not granted.

18 Next, I must take into account any submissions made by or on behalf of the administrator. Mr Dellar, on behalf of the TCF, advised that the only basis on which the stay application was opposed was that Ms Porch allegedly had been convicted of offences involving dishonesty. Mr Dellar submitted that Clause 9.1 and 9.2 of the Trust Deed allowed the TCF to take such matters into account when making decisions about participation in the Fund. Mr Howard, for the applicant, submitted that any evidence of criminal convictions against a director of the applicant company was not a relevant considerations to be taken into account by the TCF in exercising any of its powers under the Trust Deed.

19 The purposes of the TCF as set out in Clause 3 of the Trust Deed are:

(a) to provide compensation to certain people who deal with travel agents; and

(b) to provide for the operation of the Fund; and

(c) to ensure that only persons who have sufficient financial resources to enable them to carry on business as a travel agent are participants in the Fund.

20 Clause 9 of the Trust Deed is headed "Eligibility criteria as participant" and relates to the third purpose of the TCF listed above. Mr Dellar relied on Clauses 9.1 and 9.2 to support his submission. These clauses are set out below.

9.1 A person is eligible to be a participant if the Board considers that the person has, and is likely to continue to have, sufficient financial resources to enable the person to carry on business as a travel agent and enter into travel arrangements and travel-related arrangements.

9.2 In determining whether a person is eligible to be a participant, the Board may take into account whether the person, an employee of that person or, if the person is a body corporate, an officer of that body corporate -

(a) has experience in the management of the financial affairs of a business; and

(b) has been involved in the management of a failed travel agency; and

(c) has been involved in the management of a travel agency in respect of which a claim has been made under this Deed; and

(d) is or has been a travel agent in respect of whom a claim has been made under this Deed; and

(e) has previously failed to meet a criterion in guidelines issued under clause 9.4; and

(f) has been involved in the management of another business; and

(g) has previously applied to be a participant.

21 Mr Dellar's submission on behalf of the respondent was that a person's criminal record for dishonesty offences could be relevant when assessing whether a person has sufficient financial resources. In particular he quoted Clause 9.2(f) which allows the Board to take into account whether the person has been involved in the management of another business.

22 Mr Howard's submission on behalf of the applicant was that the criminal record of any officer of a body corporate making an application to be a participant in the Fund is irrelevant to an assessment as to whether they have "sufficient financial resources" to carry on business as a travel agent.

23 In my view the Act and the Trust Deed make it clear that it is not the function of the TCF to determine whether a person is a fit and proper person to conduct a travel agency business or to inquire into their reputation or character. That responsibility has been given to the Commissioner for Consumer Affairs who is responsible for licensing travel agents under the Act.

24 Under s 10(1) of the Act, in order to be granted a travel agent's licence, a person must be a participant in the Travel Compensation Fund. In addition, under s 10(4)(h), the Commissioner of Consumer Affairs shall refuse an application for a licence made by a body corporate if it appears to the Commissioner that "a director of, or a person concerned in the management of, the body corporate is not of good reputation or character or in any other way would not be a fit and proper person to be a licensee if the director or person were to apply for the license personally." Under s10(5)(a) in determining such a matter the Commissioner may have regard to the fact that a person "has, during the period of 10 years that last preceded the making of the application, been convicted of, or served any part of a term of imprisonment for, an offence in New South Wales or elsewhere involving fraud or dishonesty."

25 The functions and powers of the TCF as they relate to participation in the Fund, are restricted to ensuring that only persons who have sufficient financial resources to enable them to carry on business as a travel agent are participants in the Fund. Whether or not a person has been convicted of dishonesty offences is not relevant to the question of whether they have sufficient financial resources. The function of determining whether a person associated with a travel agency is a fit and proper person to be a licensee or is likely to carry on such a business honestly and fairly, is the role of the Commissioner of Consumer Affairs.

26 For these reasons I do not accept Mr Dellar's submission that the stay should not be granted because the applicant's criminal convictions are a factor which could influence a decision about participation in the fund.

27 The third factor I must take into account under s 60(3) of the ADT Act is the public interest. No evidence or submissions was put by either party on this point. There is clearly a public interest in ensuring that only persons who have sufficient financial resources to enable them to carry on business as travel agents participate in the Fund. The TCF has not yet had the opportunity to fully assess the applicant's financial documents to determine whether or not this is the case. However, given that the relevant documents have now been provided, this issue is likely to be resolved within a few weeks. In these circumstances the risk that clients of the applicant will lose their money because the applicant has insufficient financial resources is slight.

28 For these reasons I have decided to make an order staying the operation of the administrator's decision. The parties agreed that the most practical course was to make such an order until further directions of the Tribunal in approximately two months time.

Orders

29 The decision of the TCF to terminate the applicant's participation in the Fund is stayed pending further directions by the Tribunal.

30 A condition of the order is that the applicant operate a trust account for the receipt of client funds and that a monthly reconciliation of that account be provided to the TCF within 7 days of the end of each calendar month while this stay decision remains in force.

31 This matter is set down for a Directions Hearing on 3 March 2000.

Costs

32 The applicant applied for a costs order under s 88 of the ADT Act. That section states that:

Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs.

33 According to the applicant, the special circumstances are that the TCF routinely consents to stay orders being made in circumstances such as those in the present case. The only basis on which the stay application is opposed is that the TCF mistakenly believed that any criminal convictions involving Ms Porreca would be relevant to their decision. Given that such a consideration is clearly irrelevant to any TCF decision, Mr Howard submitted that the applicant has been made to argue the stay application when others in an identical situation have not been put to the inconvenience and expense of doing so.

34 Mr Dellar opposed the application for costs submitting that the fact that the Tribunal had rejected the respondent's argument about criminal convictions, was not a "special circumstance" justifying such an award.

35 I am satisfied that the circumstances of this case do constitute "special circumstances" justifying an award of costs in favour of the applicant. Mr Dellar conceded that the TPC routinely does not oppose applications of this kind and that the only reason for their opposition in this case was evidence of Mr Porreca's criminal record. For the reasons outlined above, that record is not relevant to any decision the TCF can make. I believe that those administering the Fund on a daily basis should have known that it was not their role to take into account a person's criminal convictions when making decisions about participation in the Fund. This conclusion is obvious even on a cursory reading of the Act and the Trust Deed. Consequently it was unreasonable for the TCF to put the applicant to the expense of a hearing when the stay application was opposed on that basis alone.

36 The TCF is to pay to the applicant the costs of this application as agreed or assessed within 28 days of that agreement or assessment.