Class action planned against holiday clubs

Consumer protection lawyer Trudie Broekmann is planning a class action against holiday club companies to demand that they refund their clients. Broekmann says that she has been studying contracts of points-based time-share schemes, and believes that none of them are enforceable.

She has already legally cancelled 48 such contracts, primarily with Quality Vacation Club and Flexi Holiday Club, and has many more clients who have expressed an interest in instituting a class action against these and similar companies.

“The first basis for cancellation is that there has been a breach by the timeshare provider, the second is that the contracts themselves don’t comply with legislation, and third is that the contract is subsequently void or invalid,” Broekmann explained. “That is what I am intending the class action to be about.”

If a contract is void, this only needs to be drawn to the attention of the other party, and they are then obliged to return everything that has been provided under the agreement. In the case of the holiday club contracts, Broekmann argues that this means that the providers must return all money paid by their customers for points, levies or management fees since the contract was signed.

Problem contracts

Broekmann argues that a primary problem with the contracts is that the Holiday Clubs simply to do not deliver on their obligations.

“One of the standard problems that consumers face is that they pay for what they think will be a right to use accommodation every year, but, somehow, more than half of my clients have never managed to make a single booking,” she explains. “The consistent experiences of my clients creates the impression that the booking system is set up to ensure that bookings cannot be made.”

This of course benefits the holiday club, because if it is impossible to make a booking, they don’t have to supply the accommodation.

Broekmann says that the contracts she has seen also do not comply with the requirements of the Consumer Protection Act (CPA) and the Property Timesharing Control Act.

“The CPA has a whole raft of requirements, such as that contracts have to be in plain language, and that the consumer has to agree each time that there is an onerous provision that takes away their rights under common law, and these have not been complied with,” Broekmann argues. “Section four of the Property Timesharing Control Act also requires a provider to disclose all kinds of information to consumers, and these contracts don’t.”

Stonewalled

Broekmann says that she has sent letters to providers on behalf of 48 clients cancelling their contracts on the basis that they are void, but has had only one instance where a refund has been paid. In all of the other cases, she has received no response at all.

“There have been no letters coming back saying ‘no, you have misunderstood’, or ‘no, we haven’t committed any breach’, or ‘no, we have complied with the law and here’s the proof’. There’s been none of that,” says Broekmann. “Just silence. It’s sort of a stonewalling approach.”

Moneyweb also approached both Quality Vacation Club and Flexi Holiday Club through their management companies for a response to Broekmann’s claims, however neither replied to the request.

Furthermore, Broekmann says that 16 of the 48 clients whose contracts she has cancelled are still seeing monthly debit orders go off their bank accounts. They are having to ask their banks to reverse these transactions every month.

“In certain other cases, which I think are more extreme, the clients have been hounded by debt collection agencies and threatened with being blacklisted,” says Broekmann. “But you don’t owe anything under a cancelled contact. It’s a completely groundless debt collection procedure. In fact it amounts to a breach of section 68 of the CPA, which specially prohibits harassing a person if they enforce their rights.”

Class action

Broekmann says that on top of the 48 clients whose contracts she has cancelled, she has around 30 more that she is assisting.

“My intention is to go to court on behalf of these clients and anyone else who wants to join them and register as a class,” she explains. “Generally how class actions unfold – at least in the US where they are more common – is that there are very serious settlement negotiations, since most suppliers are unwilling to face court time with so many consumers complaining about them. If not, we go to court and convince a judge that these contracts are void, and that the suppliers must subsequently pay everyone out, plus interest over the years.”

Broekmann notes that she is waiting for the finalisation of an investigation into holiday clubs by the National Consumer Commission (NCC) before taking this step. She wants to give that process the opportunity to conclude.

The NCC held a first round of public hearings on holiday clubs earlier this year and is set to hold a second round starting this month. It is also expected to release a first report during November.

Broekmann says that there is also a second group of a few thousand holiday club clients who are also disgruntled. Moneyweb reported two years ago on how the Freedom Front Plus was assisting them.

“I’m hoping we could join forces,” Broekmann says. “I’ve met with their advocate on that front and it sounds positive, as their constituency’s interests and my clients’ interests are exactly the same, so we could formulate some kind of joint approach. I think that would be wonderful.”

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