Are COVID-19 Supplier Defaults Covered By Provincial Compensation Funds?

Today, we’re pleased to launch TraveLaw Online with travel law experts, Doug Crozier and Tim Law of Heifetz, Crozier, Law.

Readers of Canadian Travel Press will certainly recognize the work of Crozier and Law, who have been regular contributes to Canada’s most trusted travel trade publication for many years.

At a time when the Canadian travel industry probably has more questions than answers, we’re giving readers an opportunity to ask their legal questions and get some answers.

So, if you have a question, you can contact Crozier or Law at [email protected] or connect with Bob Mowat at Canadian Travel Press/Baxter Media at [email protected].

This week, our readers were asking: 

Q: If a supplier of travel services goes into default because of COVID-19, would customers who reside in Quebec, Ontario and British Columbia be covered under their provincial plans (OPC, TICO or the BC Travel Compensation Fund) so long as the defaulting supplier had paid into the applicable Fund and the customer had booked with a travel agency/professional also associated with these compensation Funds?

And Doug Crozier and Tim Law responded:

A: The province of residence of the customer who purchased the travel services is irrelevant. What matters is whether the customer purchased travel services through a business licensed in one of the three provinces.

If the travel services were purchased through a travel agency — or wholesaler in BC — licensed in one of the three provinces, the customer is qualified to make a claim, subject to the requirements of the Fund in each province.

When applying for reimbursement from one of the Funds, the customer will be required to prove that he or she has tried to obtain the reimbursement from any credit card used to buy the travel services, any available insurance and “other available sources.”

Not all suppliers of travel services — and no end suppliers — pay into the Funds in the three provinces and consequently not all defaults/failures of travel suppliers are covered by these Funds.

For example, even if the claim for reimbursement is made for travel services purchased from a licensed Ontario travel agency it will not succeed if the “default” was a bankruptcy or cessation of business of an end supplier that was not a cruise line or airline.

The fact that the default/failure of all other end suppliers is not covered is consistent with the obligation of the travel agent to exercise care when choosing end suppliers whose travel services are to be sold to customers.

Heifetz, Crozier, Law is a Toronto law firm that has for years represented all aspects of the Canadian travel industry. The lawyers at HCL also maintain a non-travel practice, covering litigation, real estate, Wills, corporate/commercial matters, etc. To contact HCL, e-mail [email protected].