The High Court has dismissed the Commission for Aviation Regulation’s claim for €199,654 against Allied Irish Banks plc, finding that a bond issued for Portlaoise Travel Limited took effect from 1 May 2009 and ended the bank’s liability under an earlier bond.
The claim arose after Portlaoise Travel collapsed on 29 July 2009. The Commission, which licenses travel agents, had paid customers who suffered losses on overseas travel contracts. It sought to recover those payments under a €440,000 bond that covered the agency’s 2008–09 licence year. The claim included €23,040 in administrative expenses.
A second bond, for €196,000, was required for the following licence year. Although it stated that it would take effect on 1 May 2009, the bank and the agency signed it on 6 May, and the Commission received it on 11 May. The Commission issued the new licence from 11 May, leaving a ten-day gap between licence periods.
The Commission argued that the second bond could not take effect before the new licence began. On that basis, it said the earlier bond remained available to meet claims relating to the previous licence period. The bank argued that the second bond’s stated effective date meant the earlier bond ended on 1 May. The second bond had already been paid in full; its payment was not at issue in the case.
Mr Justice Noonan found that the Commission had been entitled to backdate the licence to 1 May, as it had done for other late bond submissions. He said the Commission’s decision not to do so could, on its argument, have more than tripled the bank’s liability without notice. The judge considered it highly probable that the bank intended the new bond to replace the old one, and concluded that its wording supported that interpretation.
The judge held that the second bond took effect on 1 May 2009 and that the bank’s liability under the first bond ceased when the second bond was executed. He therefore dismissed the Commission’s claim. The separate question of whether administrative expenses were recoverable did not arise for the outcome. The judge said that, if it had been necessary to decide it, he would have accepted that reasonable costs of administering payments to customers could fall within the relevant statutory provision.