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Note: To assure payment of its obligations under the International Air Transportation Association Sales Agency Agreement, Ceylinco Investments, Inc. (Travel Agent/Applicant) posted a CAN$ 100,000 standby letter of credit favor of Air India (Carrier/ Beneficiary). The Travel Agent/Applicant issued a number of airline tickets but voided them without cancelling the reservations, enabling passengers to use the tickets. Because the tickets had been declared void, Travel Agent/Applicant did not pay Carrier/Beneficiary but retained fares paid by the travellers.

In 2008, Carrier/Beneficiary ran an internal audit that revealed 62 disputed tickets. Claiming that it was due CAN$ 117,791 for unpaid tickets, Carrier/Beneficiary drew on the standby and was paid. Travel Agent/Applicant then sued Carrier/Beneficiary for wrongfully drawing on the standby. Carrier/ Beneficiary counterclaimed for breach of trust, seeking the balance due on the unpaid tickets.

Concluding that the Travel Agent/Applicant had failed to pay for the tickets, the British Columbia Supreme Court, Butler, J., dismissed the claim of Travel Agent/Applicant and awarded judgment in favor of Carrier/Beneficiary on the counterclaim.

Contrary to Travel Agent/Applicant's argument, the Judge noted that the agreement made Travel Agent/Applicant and its owner a trustee for funds secured. The Judge also characterized Travel Agent/Applicant's practice and that of its owner of issuing tickets and purporting to void them without cancelling the reservations as dishonest and fraudulent.

Travel Agent/Applicant also argued that it was too late for Carrier/Beneficiary to claim that Travel Agent/Applicant owed them for the disputed tickets. However, the court found that Carrier/Beneficiary's claim was brought well within the limitation period.

[JEB/med]

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