The Travel Industry Council of Ontario (the “Council”) succeeded on appeal from a decision of the Licence Appeal Tribunal (the “Tribunal”) in setting aside an order awarding Maria Cordeiro reimbursement for the cost of a trip to Brazil from the Travel Industry Compensation Fund (the “Fund”), pursuant to the Travel Industry Act, 2002, S.O. 2002, c.30 (the “Act”).

Administrative law – Decisions of administrative tribunals – Travel Industry Council – Reimbursement of funds – Judicial review – Compliance with legislation – Evidence – Standard of review – Reasonableness simpliciter

Travel Industry Council of Ontario v. Cordeiro, [2011] O.J. No. 306, 2011 ONSC 80, Ontario Superior Court of Justice, Divisional Court – Toronto, Ontario, January 14, 2011, E.F. Then R.S.J., P.T. Matlow and K.E. Swinton JJ.

The Fund is administered by the Council Board. The Council administers the Act governing travel retailers and wholesalers registered in Ontario, who finance the Fund. The Fund is intended to reimburse consumers where travel services are purchased from a registered travel agent but the services are not provided.

In March 2007, Cordeiro purchased two land and air packages for herself and her husband to travel to Brazil that November. The packages were sold to Cordeiro by a registered travel agent.  Cordeiro also purchased cancellation insurance.

In October 2007, Cordeiro’s husband fell ill. Cordeiro cancelled the trip by notifying the travel agent, who advised the travel wholesaler of the cancellation. Cordeiro requested repayment of the cost of the Brazil packages from the wholesaler and the cancellation insurance company. The wholesaler refused to repay the amounts because the cancellation had been made within 90 days of the planned departure, such that the non-refundable portion of the package was $868. The wholesaler later stated that repayment would be made once the Brazilian tour operator provided funds, but the tour operator’s business closed. The wholesaler ceased operating and surrendered its registration, and then refused to repay any portion of Cordeiro`s package price. The travel insurance company denied repayment on the basis that Cordeiro`s husband had a pre-existing health condition.

Cordeiro applied for reimbursement from the Fund. The Board denied her claim on the basis that she had cancelled the trip, thereby falling within the language of s. 57(3)3 of the Regulation to the Act, which reads, in part, “…a customer is not entitled to be reimbursed for “a payment for travel services that were available, but were not received because of act or failure to act on the part of the customer or of another person for whom the travel services were purchased.”

Cordeiro appealed to the Licence Appeal Tribunal (the “Tribunal”), the Tribunal held a hearing and allowed the claim for compensation, but without giving any consideration to s. 57(3)3 of the Regulation to the Act, even though the evidence established that the trip to Brazil was unavailable only because Cordeiro decided to cancel it. A consumer is not entitled to compensation if the travel series, while available, were not received because of the consumer’s actions or failure to act.

Although most appeals from decisions of the Tribunal have been conducted on a standard review of reasonableness, here one member of the Court would have applied a standard of correctness, because the appeal involved an important question of law and the Tribunal had no expertise with respect to the issue. The remaining two members of the Court would have applied a standard of reasonableness.

However, despite the difference of opinion about the applicable standard of review, all members of the Court would have allowed the appeal on the basis that the decision of the Tribunal was either incorrect or unreasonable. The Tribunal failed to consider the application of the relevant legal provision and gave “no reasons for not applying it.”  The majority wrote the Tribunal’s failure to apply the exception to reimbursement in the circumstance took the decision “out of the range of possible, acceptable outcomes.”

The appeal was allowed and the Tribunal’s decision set aside.

To stay current with the new case law and emerging legal issues in this area, subscribe here.