The Big Read: Echo Festival refund puzzle

The Flaming Lips were one of a number of international acts scheduled to perform at Echo Festival. Photo / Getty Images

• Up to $36,000 in Echo Festival ticket refunds claimed so far
• Hundreds of thousands of dollars also owed to Kiwibank
• Festival promotion company in liquidation
• Questions raised by those in the industry about how the ticket money was handled
• Liquidator confirms money was transferred from ticket agency Eventopia to the festival promotion company prior to the event
• Most, if not all, of ticket refund claimants bought tickets from Eventopia
• Ticketmaster say all tickets bought through its site have been refunded
• Consumer NZ has advice for ticketholders trying to recover the money

Out-of-pocket Echo Festival ticketholders have claimed up to $36,000 in just three days but where that refund money will come from is still unclear with the music festival's promotion company in liquidation.

It has also been revealed that the promotor owes hundreds of thousands of dollars to Kiwibank.

Meanwhile, leaders in the live entertainment industry in New Zealand have started to question how the ticket money was handled and whether, against normal practice, it was given back to the promoter before the event took place.

McLaren Falls Festival Limited, the promotion company behind Echo Festival, announced that it had been placed into liquidation on Tuesday.

Paxton Talbot, the promoter of failed Echo Festival.

The two-day music event was set to take place at Vector Arena in Auckland in January.

Matt Kemp, one of the appointed liquidators and a partner at Gerry Rea Partners, told the Herald today there had been around 100 claims from ticketholders since Tuesday and more claims were still coming in.

"Of the total claims that we think are out there, the average seems to be about $360 per person," he said.

Mr Kemp said Kiwibank is also owed money by the festival promotion company.

He said while the liquidators had not confirmed the total amount with the bank yet, it was thought to be hundreds of thousands of dollars.

Kiwibank spokesman Bruce Thompson confirmed the exposure but could not reveal how much was owed to the bank by McLaren Falls Festival Limited.

He said Kiwibank held security over the debts owed and it was working very closely with the liquidator.

The Echo Festival was to feature headliners Disclosure and The Flaming Lips and was initially based at McLaren Falls in the Bay of Plenty.

But issues with consents forced the move to Auckland and a name change in October. It was then cancelled due to poor ticket sales late last month.

On December 2, Echo Festival boss Paxton Talbot told the Herald refunds would be paid by today, December 17.

"Everyone's going to get their money back," he said. "Everyone needs to be reassured that they are going to get their money within the next two weeks. That's going to give us time to get everything organised."

But Tuesday's liquidation notice, published on the festival's website and Facebook page, made no mention of that deadline.

Full refunds were originally offered to Echo Festival ticketholders, but many people have taken to Facebook to complain that they were having trouble getting them.

Eventopia, one of the ticketing agencies responsible for the event, has previously called the situation "completely unacceptable" and said it was waiting for the festival to "return the funds" so it could return them to ticketholders.

"We deeply apologise for such an inconvenient situation and the lack of communication. The reason for this is we have been waiting for the promoter of the festival to return the funds to us so we can complete all refunds," it wrote in emailed messages to ticketholders.

But chief executive of online event discovery and ticketing service Eventfinda, James McGlinn, has questioned why Eventopia transferred the money to the promoter before the event had even taken place.

"All legitimate Australasian ticketing companies, Eventfinda included, claim to subscribe to the rules of Live Performance Australia's Ticketing Code of Practice," Mr McGlinn said.

"The industry Code of Practice says all ticketing funds must be held in a separate bank account 'in trust' for the benefit of the purchaser, so they can be refunded in a timely fashion if the event is cancelled. For this reason funds aren't paid to event promoters until the event has taken place."

He said it was "really disappointing" to hear that some ticketholders had not been refunded.

Mr McGlinn said had Eventopia adhered to the rules of the Code of Practice, they would have had the funds on hand ready to refund to all purchasers immediately.

"Customers' money appears to be at risk because Eventopia broke the Code of Practice and transferred the money to Echo Festival to provide working capital for the event."

Mr Kemp, the liquidator from Gerry Rea Partners, confirmed to the Herald that money had indeed been transferred from Eventopia to the promotion company.

"Certainly some money has come from Eventopia to the company, so we'll be tracking how much has been received.

"But as to why Eventopia releases money to the company, I'm not sure what the contractual arrangement was there."

He said the liquidators had sought from Eventopia further information on the contractual arrangement and details about how much money had been paid and returned.

"Because some money was returned, I understand, back to Eventopia for refunding and I believe that's happened. But ... as to Eventopia's relationship with the company, we're still waiting on details of that."

The Herald yesterday sought comment from Mr Talbot, the sole shareholder and director of the festival promotion company, and asked why money was transferred to his company before the event took place.

He responded today to say all media inquiries were being handled by the liquidators.

Mr Kemp said yesterday that he understood there were two ticket providers for the festival, one was Ticketmaster and the other one was Eventopia, based out of Australia. "I think they did things differently," he said.

He said it appeared to him that the majority of ticketholders that were out of pocket were those that bought tickets from Eventopia.

"Not the Ticketmaster guys. And we're not quite sure how Eventopia works, we've been in contact with them today [Wednesday]. We're just trying to work out exactly what their system is.

"Of the list of people we've got that we think are owed money, the bulk of them are Eventopia guys, by the look of it."

A Ticketmaster spokesperson confirmed this to the Herald and said all customers who purchased tickets for McLaren Falls Festival/Echo Festival through Ticketmaster had received a full refund.

"We won't go into specific detail about our business operations except to say it is Ticketmaster's policy to provide full refunds for any cancelled event," the spokesperson said.

Industry veteran Ian Magan, a pioneer in both commercial radio and concert promotion in New Zealand, said it is the "absolute obligation" of a promoter, when they put on a show, to either have the cash or the asset backing to repay customers -- to refund tickets -- if they have a cancellation.

Mr Magan said most of those in the industry feel that it is unfair for any member of the public to buy tickets without some assurance that they will get their money back in the event of a cancellation.

He said he has discussed this particular case with Ticketek New Zealand.

"I've discussed this very matter with them, and the CEO of Ticketek was most concerned and has told me that he was talking to his masters in Australia about it as well.

"About the fact that it seems, and it only seems to me -- I haven't seen proof yet -- that some members of the public have not got their money back from this guy."

Mr Magan said it worried those in the industry because "most of us have got a good reputation".

"If we cancel a concert for any reason, the first thing we do is to instruct a ticketing company to give the money back to the punters."

He said it was "unusual and unacceptable" within his industry to not hold back the ticket funds until after the concert.

Mr Magan is the chairman of the New Zealand Entertainment Operators Association (NEOA), an organisation of live entertainment promoters in New Zealand.

He said all the members of the association feel and think alike on this matter.

In a strongly worded statement on December 4, members of NEOA said they were "dismayed" by stories about the "justified public outcry" over the lack of ticket refunds.

"Our members are experienced professionals who abide by a code of ethics that hold the audience experience sacrosanct. None of our members condone poorly planned and executed events at the hands of a very few irresponsible people, nor work with ticketing companies who are unknown or not subject to New Zealand law."

It said legitimate New Zealand producers and promoters have in the past suffered event cancellations for various reasons.

"In such cases full refunds are made to patrons from funds that are held in a secure or trust account, usually by the ticketing company on the promoters' behalf."

Meanwhile, Consumer NZ chief executive Sue Chetwin said as with all of these festival collapses, what happens to ticketholders is not straightforward.

"Eventopia is an Aussie-registered company, so to that extent its terms and conditions are covered by Australian consumer law. Its conditions do state that Eventopia will only offer a refund or exchange of a ticket if an event is cancelled, rescheduled or significantly relocated. At least two of those things have happened.

"What would perhaps be the best course of action for ticket holders would be to seek a charge back from the bank [if they used a credit card]. In effect this would mean getting their money back if the bank accepted the claim."

When asked yesterday if there were any standout claims from the musicians that were set to perform at Echo Festival, liquidator Mr Kemp said: "No, we haven't had anything in that regard."

He said: "What we're looking at, at the moment, is just potentially some deposits paid for goods and services, which we might try and be able to recover.

"But that will depend on the terms and conditions of the contracts. So that was certain things that were booked and deposits [that] were paid for, which we are now having a look at to see whether we can recover some of those funds."

The Herald has sought comment from Eventopia and its Australian-based parent company TEG Pty Limited, which also owns Ticketek and TEG Live.

Both TEG Live and Ticketek are listed as members of Live Performance Australia. Eventopia is not.

TEG Pty Limited and Eventopia have not responded to the Herald since they were contacted yesterday.