The media sparked interest due to the motel being owned by high-profile, multi-millionaire businesswoman Diane Foreman (pictured).
The case proved that the motel suffered damages due to the travel agency reneging on their agreement by changing booking arrangements and not paying deposit installments as agreed. The motel cancelled the reservation and retained the deposit paid. The High Court decision ordered the travel agency to reimburse the motel for the difference between the accommodation rate agreed and what the rooms where able to be sold for when the RWC didn't live-up to its hype.
Even with the extenuating circumstances of the RWC, the motel held the rooms in good faith for the exclusive occupation of the travel agency during a time when other business (that may or may not have agreed to pay the same the same price or better) would have been turned away.
Groups can be a vexing issue, especially when an agency block books allocations of rooms on the assumption that they will be able to on-sell. The importance of a motel having a robust agreement is highlighted in this case and when dealing with overseas entities it is imperative to include a clause that dictates the country where legal recourse is to be served.
How it played out:
- Under the agreement, the travel agency was to front-up with 50 per cent of the accommodation costs as a non-refundable deposit, paid in installments amounting to more than $340,000.
- $136,000 was paid, there were delays with the remainder and changes to the booking.
- By November 2010, the motel "had run out of patience" with the agency and told it the "agreement was at an end and the deposits that were paid were forfeited."
- The travel agency claimed that the motel "had no right to retain the deposits" and it would be dishonest to do so.
- In the High Court, the travel agency sued for the return of the deposit and $202,840 in damages and legal costs.
- The motel argued that the travel agency had breached its contract and filed a counterclaim for damages.
- Although the motel re-let rooms for the cup after cancelling the booking, it argued it did not get the amount it would have under the agreement.
- In his decision, Justice Murray Gilbert found in favour of the motel and ordered that the travel agency pay $58,658 in addition to the deposit already paid.
