The corporate watchdog is investigating a Victorian-based travel agency amid claims its directors intentionally deregistered the business in the midst of legal disputes with former customers.
The Australian Securities and Investments Commission is taking a closer look at Sports Australia Travel Group after 12 former customers attempted to sue the company for compensation in the Victorian Civil and Administrative Tribunal in August.
According to The Australian, ASIC has written to the customers informing them complaints about the company’s deregistration will be investigated further.
The customers were left out of pocket after booking tours with the company to the football World Cup in Brazil in June 2014.
They claimed Sports Australia Travel Group breached its contracts for a “Support Australia Tour”, which was reportedly promoted as including opportunities to meet the Socceroos, as well as match-day transfer, four-star accommodation and other pre-match functions.
In separate actions against the business before VCAT, the customers claimed the business breached Australian Consumer Law as tour accommodation was poor, arrangements for the functions fell through and transport to and from the football match was cancelled. Their compensation claims ranged from $2200 to $13,544.
But VCAT senior member Stella Moraitis dismissed each of the claims at the end of August as Sports Australia Travel Group was deregistered in May.
Moraitis said the deregisteration of Sports Australia Travel Group by directors Robert Duncan Smith and James Lawrence Winton on May 27 “many months after the commencement” of the proceedings “probably does evidence an intention to avoid the consequences of any adverse findings”.
However, Moraitis ruled liability for the customers’ claims for breach of contract could not be extended to the directors as they were not personally party to the contracts.
Australian companies are prohibited under the Corporations Act from commencing a voluntary deregistration if the company is subject to any legal proceedings or has outstanding liabilities.
However, ASIC records show Sports Australia Travel Group applied for voluntary deregistration on March 31.
Sports Australia Travel Group was registered in mid-2013 and according to Creditorwatch, previously traded under the names World Cup Travel and Three Travellers.
According to The Australian, several related entities: Cricket Travel Australia, Spring Racing Travel and Tennis Travel are still registered.
Patrick Coghlan, commercial director at Creditorwatch, told SmartCompany this morning it is very easy to deregister a company in Australia, with company directors able to apply directly to ASIC to voluntarily deregister their business.
“You just have to satisfy certain requirements, including have zero assets,” Coghlan says.
However, the ease at which directors can deregister a business means it is difficult for “a consumer or even a creditor to protect against it”, Coghlan says.
In this instance, Coghlan says ASIC will likely be looking closely at the timing of when the company’s deregistration documents were lodged and whether it had already been notified by VCAT of the legal action against it.
Coghlan says the number of voluntary deregistrations is on the rise but it is “safe to say the vast majority are done for the right reasons”.
“But that doesn’t stop people doing it maliciously,” he says.
For small businesses, Coghlan’s advice is to “be wary all the time” when doing business with other operators.
“It’s something we tell our clients all the time. How do you know they will pay you, that they will do the right thing?” he says.
“You need to do as much due diligence as possible, within reason.”
SmartCompany contacted ASIC but did not receive a response prior to publication.
SmartCompany was unable to contact Smith, Winton and Sports Australia Travel Group and its related entities.
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Eloise is an experienced business journalist and editor, who has held senior editorial roles at SmartCompany since 2014. Prior to joining SmartCompany, Eloise was news editor at Books+Publishing, the trade press for the Australian book industry. Eloise has degrees in media and communications, marketing and business management, and political science. You can follow her on LinkedIn, and Twitter at @ellykeating.
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