Youth travel specialist STA Travel (NZ) Ltd collapsed into liquidation in September 2020 after its Swiss holding company shut up shop in the face of covid-19 international travel restrictions. Ticket refunds received by STA Travel do not belong to the company but are held in trust for individual passengers, the High Court ruled.
STA Travel liquidators are holding about $428,800 refunded by airlines compensating passengers for cancelled flights. Liquidators expect more cash to dribble in over time. Further expected refunds will be delayed where airlines like Virgin Australia are themselves insolvent.
Liquidators sought High Court directions on the status of refunds. Justice Robinson ruled the refunds are held in trust by STA Travel. Passengers’ travel contracts were with individual airlines. As a travel agency, STA acted as a conduit processing the paperwork. Similarly, in receiving refunds STA was acting only as a conduit, Justice Robinson said.
Liquidators told the court they can identify which customers are entitled to a specific refund from the $428,800 currently held. There are 1560 STA Travel customers who have made claims for refunds totalling $5.55 million. Before liquidation, STA Travel management used some refunds then received to pay company debts.
The court was told about $19,100 of the refunds STA liquidators currently hold relate to customers who had already been compensated through a credit card ‘charge-back.’ It is the credit card company which is out of pocket. Customers are not to be compensated twice over, Justice Robinson ruled. This money belongs to the appropriate credit card company.
STA Travel (NZ) Ltd was not a member of Travel Agent’s Association of New Zealand which provides financial compensation for customers where a member agency fails.
Re STA Travel (NZ) Ltd – High Court (30.05.22 & 14.06.22)
22.095