Licence Tribunal

Appeal d'appel en

Tribunal matière de permis

DATE:

2012-11-07

FILE:

7485/TIA

CASE NAME:

7485 v. Registrar, Travel Industry Act, 2002

An Appeal from a Decision of the Board under the Travel Industry Act, 2002, S.O. 2002, c. 30, Sch. D - to Refuse a Claim for Compensation

Applicant

Applicant

-and-

Travel Industry Council of Ontario

Respondent

REASONS FOR DECISION AND ORDER

ADJUDICATOR:

Mary Ann Spencer, Member

APPEARANCES:

For the Applicant:

Self-represented

For the Respondent:

Soussanna Karas, Counsel

Heard in Toronto:

October 18, 2012

REASONS FOR DECISION AND ORDER

BACKGROUND

This is an appeal by the Applicant to the Licence Appeal Tribunal (the “Tribunal”) from a decision dated June 8, 2012 of the Board of Directors of the Travel Industry Council of Ontario (“TICO”) under the Travel Industry Act, 2002 (the “Act”) to refuse a claim for compensation from the Travel Compensation Fund (the “Fund”) pursuant to section 57 of O. Reg. 26/05 (the “Regulation”).

FACTS AND EVIDENCE

In its June 8, 2012 decision letter (Exhibit 1), TICO denied the Applicant’s November 1, 2011 claim for compensation for the cost of four return air tickets on the basis that in accordance with Section 57 (3) 3 of the Regulation, travel services were available but were not received because of an act or a failure to act on the part of the Applicant. The decision letter also cites Section 61 (1) of the Regulation which states that the claimant shall provide documents and information required to prove the claim.

Applicant’s Evidence

The Applicant’s evidence consisted of her testimony and reference to the Registrar’s book of documents (Exhibit 3).

The Applicant testified that in August, 2010 she purchased four Pakistan International Airlines (“PIA”) air tickets from Minfare Travel for use by herself and her three children. The tickets for the Applicant and two of her children were for travel on November 9, 2010, returning on February 15, 2011. The ticket for her third child was for travel on November 30, 2010, returning on January 4, 2011. On cross examination, the Applicant explained that her third child was travelling later and returning earlier than the others because he was in a special school program and was only able to take a limited amount of time away from it. She also stated that her husband had just started a business and did not know when he would be able to take vacation and therefore his ticket had not been purchased.

In September, 2010, the Applicant’s husband was diagnosed with cancer. The Applicant testified that she informed Minfare Travel about his illness and the expected course of treatment and was told that the tickets were open for one year and could be used on any airline. The Applicant stated that in December, 2010 she contacted the travel agency again and said she could not travel and the agency owner suggested that rather than cancel the tickets, she travel on the school break in March, 2011 or at Easter, 2011. The Applicant again called Minfare Travel in March to advise that her husband was scheduled for surgery and it was suggested she travel in the summer. The Applicant stated that she asked for a refund but was told that while the agency would be prepared to waive its own cancellation fee, the airline would charge a fee of $200.00 per ticket. The Applicant decided not to cancel the tickets because the total cancellation fee of $800.00 for four tickets represented almost the cost of one ticket. The Applicant contacted the agency again in the summer.

The Applicant testified that because of her husband’s illness and his inability to work, money was becoming an issue and she decided to request a refund. However, she was unable to contact the travel agency. While the agency’s telephone line was operating and the Applicant left numerous messages, these went unanswered. Finally, sometime in May or June 2011, she contacted PIA and learned that two of the four tickets she had purchased were invalid. The airline advised that these tickets had not been issued in her family’s name and one of the children’s tickets and the Applicant’s ticket had in fact been used on August 18, 2010 and August 22, 2010 respectively with the first of these used by someone with the same name as the travel agency owner. PIA advised her that they could not help her and to contact the agency which issued the tickets.

The Tribunal member asked the Applicant if she could be more specific as to the timing and sequence of her contacts with Minfare Travel and PIA. The Applicant stated that she had not kept a record of dates.

On cross-examination, the Applicant testified that she did not purchase travel insurance because she had been buying tickets from Minfare Travel since 2001 without any issues. She also indicated that the agency did not offer her insurance. Counsel for TICO pointed out to the Applicant that the itineraries/invoices the Applicant submitted to TICO to support her claim (Exhibit 3, Tab 6) set out in two places the agency’s recommendation that customers purchase insurance. The Applicant had no reply.

In response to Counsel for TICO’s question regarding when the Applicant received the travel itineraries/invoices from Minfare dated August 17, 2010, the Applicant stated that she paid for the tickets on August 17, 2010 and received four e-tickets that day. She said she received the itineraries/invoices later; her husband was concerned that there was no receipt and picked up the itineraries a “couple of days later”.

Counsel for TICO asked the Applicant to explain how the tickets were paid for and referred to the Applicant’s summary of events sent to TICO (Exhibit 4, Tab 2) which indicates that the tickets were purchased with two cheques in the amounts of $1,275.00 and $1,365.00 and cash of $3,178.00. The Applicant explained that the cheque for $1,275.00 dated June 29, 2010 payable to Minfare Travel was written on an account she shares with her brother. The cheque for $1,365.00 dated August 18, 2010 was issued from her husband’s business account and was made payable to an individual at the travel agency with the same last name as the Applicant. The Applicant stated that this individual was not related to her and that her surname is a very common one. When asked why this cheque was issued on a business account to the individual, the Applicant stated that her husband was at the agency and was told that the tickets would be cancelled unless payment was received by 5 p.m. that day and the individual said that a cheque issued to him could be cashed immediately. A business cheque was used because that was all her husband had with him. The Applicant then explained that her husband did not certify this cheque but that the individual took it to the bank and had it certified the following day. In terms of the cash payment made to the agency and referring to the bank statement at Tab 5 in Exhibit 3, the Applicant testified that it was difficult to remember but she believed the $2,000.00 withdrawal on August 20, 2010 was used and the balance was produced from cash on hand. The Applicant could not recall who delivered the cash to the travel agency.

The Applicant was referred to the claim form she delivered to TICO on November 8, 2011 which originally indicated she had paid for the tickets with the $1275.00 cheque dated June 29, 2010 and, in August 2010, $4,000.00 cash. The initial claim totalled $5,275.00. The Applicant explained that after submitting the claim she discovered the second cheque for $1365.00 and the cash amount was then amended to $2,560.00.

When asked if she received a confirmation when she booked the tickets or a receipt for the cash payment, the Applicant stated that she booked the tickets in June because by booking early, they were a better price. She understood that the last day to travel at the lower rates was the November 9, 2010 date she booked for three of the tickets and fares would increase if for later flights. She stated that she received no confirmation when she booked, but she trusted the agency, having used them for almost ten years.

Counsel for TICO asked the Applicant to confirm that her husband had loaned Minfare $60,000.00 and asked why she would have paid for the airline tickets given the amount the agency owed her family. The Applicant confirmed the loan and stated it was unrelated to the request for compensation from the Fund.

Finally, Counsel for TICO asked the Applicant if she had had any contact with Minfare and she stated she had not since leaving voice messages in the summer of 2010.

TICO’s Evidence

Lori Furlan is a claims co-ordinator with TICO which is responsible for monitoring the compliance of registrants and administering the Travel Compensation Fund. Decisions on compensation claims are made by a Compensation Committee and then presented to the Board of Directors for ratification.

Ms Furlan testified that the Applicant’s claim was denied because the travel services she purchased were available in November 2010 and were not taken. Further, there were issues identified with the documentation submitted by the Applicant in support of her claim.

Ms Furlan reviewed the chronology of the processing and review of the Applicant’s claim referring to the “Claims Activity Report” (Exhibit 3, Tab 1) which Ms Furlan prepared. The registration of Minfare Travel was revoked on May 25, 2011. The Applicant’s claim was filed in person by the Applicant on November 8, 2011, within the required time frame. When she delivered her claim, the Applicant advised Ms Furlan she had paid $5,275.00 for the tickets, and not the $5,817.80 amount that the itineraries/invoices (Exhibit 3, Tab 6) she submitted with her claim indicate was paid. With regard to the method of payment, the affidavit the Applicant signed November 7, 2011 and delivered with her claim states she paid a deposit of $1,275.00 by cheque on June 29, 2010 and the balance of $4,000.00 in cash. On November 29, 2011, TICO received a copy of a second cheque from the Applicant in the amount of $1,365.00 which is payable to an individual rather than Minfare Travel. Ms Furlan then amended the method of payment on the Applicant’s claim form to include this cheque and to reduce the cash payment to $2,560.00.

Ms Furlan referred to e-mail correspondence with the Applicant in March, 2012 (Exhibit 3, Tab 3) sent to clarify the amount the Applicant actually paid. The Applicant’s e-mail dated March 15, 2012 confirms that the itineraries/invoices show the correct amount and states:

The invoices from Minfare show the correct amounts that we paid to them. Initially while filing the claim, we couldn’t find the original invoices and we just had 2 chqs showing payment. The cash amount we tried to figure out from our bank statements. Then we found the invoices in an e mail receipt and that’s what the exact amounts are.

Ms Furlan testified that instalments to travel agencies are, in her experience, normally paid in equal amounts.

On November 8, 2011, when filing her claim, the Applicant also advised Ms Furlan that she and her husband had invested $60,000.00 in Minfare Travel, as its owner was an acquaintance. Ms Furlan testified that this investment is important because of the potential for false claims to be submitted to the Fund as a means of recovering unpaid loans.

Ms Furlan further testified that she contacted PIA for information regarding the Applicants tickets and referred to e-mail correspondence with PIA filed at Exhibit 3, Tab 5. PIA advised Ms Furlan that two of the four tickets were purchased with a fraudulently used credit card, and two were paid for through cash billing and settlement. The two tickets purchased with the fraudulently used credit card were charged back to the agency and PIA was unable to confirm in whose name they had been issued. PIA did confirm that none of the passengers named on the four tickets, that is, the Applicant and her three children, travelled on the November 2010 dates. The tickets were issued on August 17, 2010 and were refundable within twelve months of the date of issue. No refund had been made on the two tickets validly purchased.

On cross-examination, the Applicant challenged Ms Furlan stating that she had not submitted the itineraries/invoices with her claim but rather had submitted copies of e-tickets (Exhibit 3, Tab 5) and only submitted the itineraries/invoices when she found them later.

THE LAW

The Act states, in part, as follows:

41. (1) The Travel Industry Compensation Fund established under the Travel Industry Act is continued. 2002, c. 30, Sched. D, s. 41 (1).

(2) The Fund shall be administered and managed in accordance with the regulations. 2002, c. 30, Sched. D, s. 41 (2).

The entitlement to claims on the compensation fund and exclusions are set out in

section 57 of O. Reg 26/05:

57. (1) A customer is entitled to be reimbursed for travel services paid for but not provided if,

(a) the customer paid for the travel services and the payment or any part of it was made to or through a registered travel agent;

(b) the customer has made a demand for payment from,

(i) the registered travel agent and the appropriate registered wholesaler,

(ii) any other person who has received the customer’s money, and

(iii) any other person who may be legally obliged to reimburse or compensate the customer, including a person obliged under a contract for insurance; and

(c) the customer has not been reimbursed by,

(i) those of the registered travel agent and the appropriate registered wholesaler, who under section 25 of the Act are liable to make the reimbursement, because they,

(A) are unable to pay by reason of bankruptcy or insolvency,

(B) have ceased carrying on business and are unwilling to pay, or

(C) have ceased carrying on business and cannot be located,

(ii) any other person who has received the customer’s money, or

(iii) any other person who may be legally obliged to reimburse or compensate the customer, including a person obliged under a contract for insurance. O. Reg. 26/05, s. 57 (1); O. Reg. 161/10, s. 10.

(2) A reimbursement under subsection (1) is limited to the amount paid to or through any registrant for the travel services that were not provided. O. Reg. 26/05, s. 57 (2).

(3) Despite subsection (1), a customer is not entitled to be reimbursed for:

1. Travel services that were not provided because an end supplier, other than a cruise line or airline, became bankrupt or insolvent or ceased to carry on business.

2. A payment to or through a registrant for any travel services that were provided or for which alternate travel services were provided or made available.

3. A payment for travel services that were available, but were not received because of an act or a failure to act on the part of the customer or of another person for whom the travel services were purchased.

4. Counselling fees paid to a travel agent.

5. Travel services that were to be received as a prize, award or goodwill gesture.

6. Travel services that the customer obtained with a voucher, certificate, coupon or similar document that the customer did not pay for.

7. Travel services that the customer did not pay for with cash or by a cheque, credit card or other similar payment method.

8. Insurance premiums.

9. A claim that is based on the cost, value or quality of the travel services or alternate travel services.

10. A claim in connection with which travel services were provided under section 68 or 69.

11. Consequential or indirect damages incurred as a result of the failure to provide the travel services. O. Reg. 26/05, s. 57 (3).

Section 61 of the Regulation sets out the requirement to submit documentation to the Board:

61. (1) The claimant shall provide such documents and other information to the board of directors as the board requires to prove the claim. O. Reg. 26/05, s. 61 (1).

(2) The board of directors may request that the claimant provide additional documents or other information. O. Reg. 26/05, s. 61 (2).

(3) If the claimant does not provide the additional documents or other information within 12 months after receiving the request, the claim shall be treated as abandoned, unless the board of directors is satisfied that it would not be fair to do so. O. Reg. 26/05, s. 61 (3).

ISSUES

The issue to be addressed is whether or not the Applicant is entitled to receive compensation from the Travel Compensation Fund and if so, in what amount.

APPLICATION OF LAW TO FACTS

O. Reg. 26/05 provides that a customer is entitled to be reimbursed for travel services paid for but not provided, if the customer paid for the travel services and the payment or any part of it was made to or through a registered travel agent unless any of the exceptions in Section 57 (3) 3 applies. In this case, TICO denied the Applicant’s claim, stating in its June 8, 2012 decision letter:

Section 57 (3) 3 of the Regulation states, in part, that a customer is not entitled to be reimbursed for a payment for travel services that were available, but were not received because of an act or a failure to act on the part of the customer or of another person for whom the travel services were purchased. On November 9, 2010 and November 30, 2010, the travel services were available to have been received and you chose not to use them. In addition, you chose to leave the funds on acct with Minfare Travel for future travel.

Section 61 (1) of the Regulation states that the claimant shall provide such documents and other information to the board of Directors as the Board requires to prove the claim. Section 61 (2) of the Regulation states that the Board of Directors may request that the claimant provide additional documents or other information.

The Applicant argued that she misplaced her trust in the travel agency which had advised her not to seek a refund for the four air tickets she had purchased when she and her children were unable to travel on the scheduled dates in November, 2010. She relied on the agency’s advice that the tickets were valid for a year. Further, she argued that two of the four tickets were subsequently discovered to be invalid and therefore the services were not in fact available to her.

Counsel for TICO argued that the travel services were not received because of the act of the Applicant in choosing not to travel in November 2010 and to leave the tickets open rather than seek a refund. Counsel noted that the Fund is not intended to be an alternative to the purchase of travel insurance by consumers. She further argued that there were issues with the claim itself in determining the actual amount paid and noted that partial payment was made to an individual with the same surname as the Applicant with a cheque drawn on the Applicant’s husband’s business account. Counsel for TICO noted that there was also a relationship with Minfare Travel due to the loan of $60,000.00 by the Applicant’s husband. With respect to the fraudulently issued tickets, Counsel noted that the unavailability of services at the time of travel was hypothetical given the Applicant did not know what would have happened had she either attempted to travel or to obtain a refund while Minfare Travel was operating.

The onus is on the Applicant to prove her claim. There is no dispute regarding the fact that the registration of Minfare Travel was revoked on May 25, 2011 and that the Applicant’s claim to TICO was made within the required time frame.

The evidence shows that four PIA return air tickets dated August 17, 2010 for travel on November 9, 2010 and November 30, 2010 (electronic tickets filed as Exhibit 3, Tab 5) were submitted to TICO by the Applicant in support of her claim. The itineraries/invoices for these tickets, issued to the Applicant’s husband and also dated August 17, 2010 (Exhibit 3, Tab 6) indicate the total amount paid for the tickets was $5,817.80.

The Applicant’s testimony indicates that she clearly intended to travel with two of her children on November 9, 2010. She testified that she purposefully purchased the tickets for travel on this date because this was the last date of travel for which she could purchase tickets at a lower cost. Further, she stated that the November 30, 2010 date on the fourth ticket was specifically chosen to accommodate the amount of time one of her sons could take off from his special school program. The Tribunal therefore concludes that the travel services purchased by the Applicant were three airline tickets for travel on November 9, 2010 and one airline ticket for travel on November 30, 2010. The travel services were not simply four airline tickets to be used at some yet to be determined future date.

The Applicant testified that in September, 2010, she and her family chose not to travel in November, 2010 because she learned her husband was ill. While the Applicant stated that the travel agency discouraged her from requesting a refund at that time and suggested alternate travel times on more than one occasion, she also testified that she understood the tickets to be valid until November 2011 and chose not to cancel them. She further testified that she chose not to request a refund because there was a $200.00 per ticket cancellation fee.

The Applicant argued that the fact two of the four tickets she purchased were later found to be invalid meant that the services were not in fact available to her. She testified that when she contacted PIA sometime in May or June of 2011, she was told that two of the ticket numbers issued to her had been used in August, 2010 and one of them had in fact been used by the owner of Minfare Travel. Ms Furlan testified that PIA confirmed that two of the four tickets were paid for with fraudulently used credit cards and were charged back to the agency. While the evidence clearly indicates that two of the tickets issued to the Applicant were fraudulently purchased, this does not negate the fact that the Applicant chose not to travel on the scheduled dates of November 9 and 30, 2010. Her decision was made in September, 2010 and is independent of the fact that the tickets were later found to be invalid. Had the Applicant chosen either to cancel the tickets in September or to travel in November, she would have had recourse with the travel agency which was in operation until May, 2011.

The Applicant chose neither to book alternate travel dates nor to cancel the tickets and seek a refund when she decided in September, 2010 that she would not be able to travel in November, 2010. The evidence therefore clearly indicates that the travel services, three airline tickets for travel on November 9, 2010 and one airline ticket for travel on November 30, 2010, were not received because of the Applicant’s act in deciding not to travel on the planned dates. This finding is sufficient for the Tribunal to direct TICO to deny the Applicant’s claim in accordance with section 57 (3) 3 of O. Reg. 26/05. However, the Tribunal will also address the documentation of the Applicant’s claim.

In summary, section 57 (1) of O. Reg 26/05 states, subject to the exceptions set out in subsection (3), that a customer is entitled to be reimbursed for travel services paid for but not provided if the customer made payment for the services to a registered travel agent, a demand for payment has been made and the customer has not been reimbursed.

The Applicant’s claim is for $5,817.80, the total cost of the four tickets. While the Tribunal notes that Ms Furlan and the Applicant disagree as to whether the Applicant attached itineraries/invoices or electronic tickets to the claim form she delivered in person to TICO on November 8, 2011 (Exhibit 3, Tab 6), both documents are dated August 17, 2010 and the cost of the tickets on both totals $5,817.80. However, the Applicant initially claimed only $5,275.00, indicating $1,275.00 was paid by cheque on June 29, 2010 and $4,000.00 was paid by cash on an unspecified date in August, 2010. Ms Furlan testified that the Applicant noted the discrepancy between the amount she was claiming and the amount on the accompanying documents but confirmed she only paid $5,275.00. Later, the Applicant confirmed her claim was in fact for $5,817.80.

The method of payment initially completed on the claim form was subsequently amended: on November 29, 2011, TICO received a copy of a cheque dated August 18, 2010 in the amount of $1,365.00 payable to an individual with the same surname as the Applicant. The Applicant testified that this cheque was not made payable to Minfare Travel because the individual told the Applicant’s husband the tickets would be cancelled unless payment was received by 5 p.m. that day. However, in response to a question from Counsel for TICO, the Applicant stated she paid for and received the electronic tickets on August 17, 2010. The Applicant also testified that the cash payment, revised to total $3,178.00, was partially made with $2,000.00 withdrawn from the bank on August 20, 2010, three days after the August 17, 2010 date on both the electronic tickets and the itineraries/invoices which are marked “paid”. The Applicant could not recall whether she or her husband delivered the cash to the travel agency.

It is also somewhat unclear to the Tribunal when the Applicant actually decided to pursue a refund of the tickets. The Applicant testified she contacted Minfare Travel in March, 2011 and asked for a refund but decided not to because of the cost of cancelling the tickets. She also stated she contacted the agency in the “summer” when the money she had invested in the tickets became important given her husband’s inability to work. However, she testified that she contacted the airline in May or June of 2011 after leaving unanswered telephone messages with Minfare Travel. She was unable to clarify the timing and sequence of events when asked to do so by the Tribunal member and no documentary evidence was provided to support that the Applicant did in fact ask for a refund.

The Tribunal will not speculate on the relationship of the Applicant’s claim to the investment/loan of $60,000.00 made to Minfare Travel. The Applicant testified that the claim for the tickets was unrelated. However, the Tribunal notes that the investment/loan of such a substantial amount is certainly suggestive of an ongoing relationship between the Applicant and her husband and the agency. Given their substantial investment/loan to Minfare Travel, and the Applicant’s testimony about the importance to them of the money paid for the tickets, the Tribunal is puzzled that the Applicant and her husband were not monitoring the state of affairs of Minfare Travel more actively and did not more aggressively pursue a refund before the “summer” as the Applicant testified.

The Applicant has not proven her claim. There were initial discrepancies in the Applicant’s claim between the amount claimed and the cost of the four airline tickets. The documentation of proof of payment of the subsequently amended claim consists of two cancelled cheques, one of which was not made payable to the registered travel agency. The ticket dates of August 17, 2010 are inconsistent with the Applicant’s testimony that the cheque made payable to an individual on August 18, 2010 was done because of urgency to pay for tickets and with the fact the cash withdrawal of $2,000.00 was made on August 20, 2012. This cash withdrawal is not unique: the bank statement shows a further cash withdrawal of $2,000.00 on August 30, 2010. While it is conceivable that the total of these two withdrawals is what prompted the Applicant to initially claim that the tickets were partially paid for with $4,000.00 cash, the Tribunal notes that both withdrawals occurred after the ticket dates. Further, given the large amount of cash, whether $4,000.00 or the amended amount of $3,178.00, it stretches credulity that the Applicant cannot remember who delivered the payment to the agency. No booking confirmation or receipt other than the itineraries/invoices was entered into evidence to support the Applicant’s testimony. Similarly, there was no documentary evidence to support the Applicant’s statement that she requested a refund.

ORDER

Pursuant to the authority vested in it under the provisions of the Act, the Tribunal directs TICO to deny the claim of the Applicant.

LICENCE APPEAL TRIBUNAL

________________________________

Mary Ann Spencer, Presiding Member

Released: November 7, 2012