Decision No. 105-C-A-2017

SUMMARY

[1] Jeremy Cooperstock filed an application with the Canadian Transportation Agency (Agency) pursuant to paragraph 18(b) of the Air Transportation Regulations, SOR/88-58, as amended (ATR) alleging that an Air Canada Baggage Claims Specialist (Air Canada representative) made a misleading statement to a passenger in stating that Air Canada’s International Passenger Rules and Fares Tariff, NTA(A) No. 458 (Tariff) precludes liability for consequential claims for delayed baggage.

[2] Mr. Cooperstock is seeking the following remedies:

1. A determination that Air Canada has misled a passenger regarding her rights to seek consequential claims for delayed baggage;
2. An order that Air Canada refrain from communicating similar misinformation to other passengers in the future;
3. An order that all future communications by Air Canada representatives denying a passenger’s claim for compensation include within a reference to and/or the actual text of the relevant article of Air Canada’s Tariff or the Convention for the Unification of Certain Rules for International Carriage by Air – Montreal Convention (Montreal Convention) justifying such a denial;
4. An order that Air Canada include a written statement on its website, in a suitably visible location, such as the start of the claim/complaint submission process (https://help‑aircanada.com/aircanada-help/createIssue.do), of the airline’s obligation to provide passengers with reference to and/or the actual text of the relevant article of Air Canada’s Tariff or the Montreal Convention justifying a denial of a claim for compensation; and,
5. An order that Air Canada revise its tariff Rule 105(C)(12) to be consistent with Article 29 of the Montreal Convention, specifically that the carrier shall not be liable for “punitive, exemplary or any other non-compensatory damages”.

[3] The issue before the Agency is whether Air Canada made a false or misleading statement with respect to its liability for delayed baggage, thereby contravening paragraph 18(b) of the ATR.

[4] For the reasons set out below, the Agency finds that Air Canada made a false statement therefore contravening paragraph 18(b) of the ATR.

BACKGROUND

[5] A passenger filed a complaint with Air Canada regarding the delay in the delivery of her checked baggage while traveling from Canada to Costa Rica.

[6] In response to the passenger’s complaint, an Air Canada representative issued a letter, dated January 28, 2016, to the passenger which stated the following:

[…]

We recognize the inconvenience which may result from delayed baggage and every effort is made to ensure that our passengers’ baggage travels with them. Unfortunately, this cannot be guaranteed as there are too many variables involved. Airline Tariff regulations therefore preclude liability for consequential claims if baggage is delayed.

As a gesture of goodwill, if a passenger is away from home and his or her baggage is delayed more than 24 hours, Air Canada will contribute towards the cost of interim clothing and toiletry purchases, when substantiated with original purchase receipts. A cheque in the amount of $129.00 CAD has been authorized and will be sent to you under separate cover.

We would be grateful for an opportunity to regain your confidence and as a measure of goodwill, we are pleased to provide you with an Air Canada Gift Card in the amount of $400.00 CAD.

[…]

[7] Mr. Cooperstock contacted Air Canada’s Legal Department regarding the following statement contained in its letter to the passenger: “Airline Tariff regulations therefore preclude liability for consequential claims”, and argues that the response he received from the Legal Department “failed to offer any such explanation, nor to acknowledge that the correspondence sent by Air Canada to one of its passengers contained misinformation”.

[8] Air Canada’s Tariff Rule 105 incorporates by reference the Montreal Convention. Article 19 of the Montreal Convention addresses a carrier’s liability with respect to damages associated with the delay of baggage.

PRELIMINARY MATTER

[9] In his application, Mr. Cooperstock makes reference to Air Canada’s Tariff Rule 105(C)(12), and contends that it contains similar language previously disallowed by the Agency in Decision No. 323-C-A-2014 (Shannon v. Air Canada). In response to Mr. Cooperstock’s contention, Air Canada modified Rule 105(C)(12) to clarify its liability provision.

[10] Mr. Cooperstock states that the amendments made by Air Canada to its Tariff Rule 105(C)(12) “resolves his concerns”, and that the fifth remedy he sought, as noted in the Summary, “is now moot”.

[11] Given that Mr. Cooperstock has indicated his satisfaction with the amendments made by Air Canada to Tariff Rule 105(C)(12), the Agency will not consider this matter.

THE LAW

[12] Paragraph 18(b) of the ATR states that the licensee shall not make publicly any statement that is false or misleading with respect to the licensee’s air service or any service incidental thereto.

[13] Tariff Rule No. 105 of Air Canada’s Tariff incorporates the Montreal Convention and states the following:

For the purpose of international carriage governed by the Montreal Convention, the Liability rules set out in the Montreal Convention are fully incorporated herein and shall supersede and prevail over any provisions of this tariff which may be inconsistent with those rules.

[14] Article 19 of the Montreal Convention sets out the carrier’s liability in case of a delay of passengers, baggage or cargo, and states the following:

The carrier is liable for damage occasioned by delay in the carriage by air of passengers, baggage or cargo. Nevertheless, the carrier shall not be liable for damage occasioned by delay if it proves that it and its servants and agents took all measures that could reasonably be required to avoid the damage or that it was impossible for it or them to take such measures.

[15] Article 29 of the Montreal Convention sets out the basis for claims and states the following:

In the carriage of passengers, baggage and cargo, any action for damages, however founded, whether under this Convention or in contract or in tort or otherwise, can only be brought subject to the conditions and such limits of liability as are set out in this Convention without prejudice to the question as to who are the persons who have the right to bring suit and what are their respective rights. In any such action, punitive, exemplary or any other non-compensatory damages shall not be recoverable.

POSITION OF THE PARTIES AND FINDINGS OF FACT

Mr. Cooperstock’s application

[16] Mr. Cooperstock states that he reviewed Air Canada’s Tariff and found that no limitation of liability exists with respect to consequential claims.

[17] Mr. Cooperstock contends that “Air Canada has a legal obligation to compensate passengers for certain types of damages”; and argues that “any communications from airline representatives that purport to deny such rights risk being taken by passengers at face value”. He further argues that such “factual inaccuracies in its communications with passengers raise the concern that Air Canada may continue to misinform passengers similarly in the future”.

[18] Mr. Cooperstock states that “such misinformation would no doubt dissuade other passengers from seeking compensation for legitimate consequential damages, as permitted under the Montreal Convention”.

[19] Mr. Cooperstock submits that “to ensure that passengers are not misinformed of their rights to compensation, it ought to be incumbent upon airline representatives to provide passengers with a reference to and/or the actual text of the relevant article of Air Canada’s Tariff or of the Montreal Convention justifying any denials of claims for compensation”.

Air Canada’s answer

[20] Air Canada submits that the statement made by its representative in its letter to the passenger was in response to the passenger’s claim for “monetary compensation for moral damages”.

[21] Air Canada states that its Tariff incorporates the Montreal Convention, and that “consequential damages for loss of enjoyment” are not allowed under the Montreal Convention.

[22] Air Canada argues “that the Montreal Convention allows compensation for bodily injury or for delay, to the exclusion of moral damages”; and further argues that this is set in Canadian law further to the Supreme Court of Canada’s decision in Thibodeau v. Air Canada, 2014 SCC 67, [2014] 3 S.C.R 340.

[23] Air Canada denies that the answer provided by its representative to the passenger was inaccurate and “an attempt to mislead”.

[24] Air Canada argues that Mr. Cooperstock’s request that the Agency order Air Canada to provide a reference to, and/or the actual text of, the relevant article of Air Canada’s Tariff or the Montreal Convention when it denies a passenger’s claim would be “excessive, impractical, unnecessary and is not founded at law”.

[25] According to Air Canada, there are multiple terms and conditions that are considered when a carrier reviews a customer’s claim, and “laying down each and every applicable terms of carriage and applicable Montreal Convention articles for all declined passenger claims would further generate important processing delays, as well as confusion”. Air Canada submits that this would also “deviate from the objective of creating an environment centered on practical resolutions, as opposed to judicialization of claims through legal memorandums”.

[26] Air Canada states that it publishes all detailed terms and conditions of carriage in its Tariff, and that “carriers are further bound to respect their Tariff and all applicable legislation before their passengers”.

[27] Air Canada contends that there are established safeguards in place to ensure that air carriers and their passengers respectively abide by applicable laws. According to Air Canada, this is the reason for the existence of common law tribunals and agencies such as the Agency, where the latter serves as a quasi-judicial tribunal and regulating administrative body.

Mr. Cooperstock’s reply

[28] Mr. Cooperstock argues that Air Canada “conflates Article 17(1) of the Montreal Convention, which is confined to bodily injury and death, and does not always permit recovery of moral damages, with Article 19, concerning delay of passengers and their baggage”.

[29] Mr. Cooperstock further submits that Air Canada misstates the findings of the Supreme Court of Canada in Thibodeau v. Air Canada, and maintains that this case was with respect to a claim made under the Canadian Human Rights Act, R.S.C., 1985, c H-6 and not under Article 19 of the Montreal Convention. He argues that the conclusions made in Thibodeau v. Air Canada do not infer that all claims for moral damages are excluded under the Montreal Convention; rather, it supports the premise that moral damages can be sought only under the Montreal Convention and not under domestic law.

[30] Mr. Cooperstock argues that in the years following the Thibodeau v. Air Canada decision, Canadian courts have repeatedly confirmed through subsequent decisions that moral damages are indeed available under Article 19 of the Montreal Convention, and that these decisions are consistent with international jurisprudence. He provides a number of examples of such past legal decisions in support of this argument.

[31] With respect to claims for consequential damages, Mr. Cooperstock argues that Air Canada’s submissions relating to consequential damages are based on what he purports to be Air Canada’s “misunderstanding of the meaning of consequential damages and a misstatement of Article 29 of the Montreal Convention”.

[32] Mr. Cooperstock is of the view that consequential damages are those that relate to monetary losses suffered “due to the actions or omissions of a defendant” and that can be quantified. He further argues that “consequential damages are compensatory damages, specific to the circumstances and may not necessarily be incurred by every claimant in the same position”. According to Mr. Cooperstock, in the case of air travel, consequential damages may include, for example, hotel or meal expenses incurred as a result of a delay. He thereby contends that the “plain and ordinary meaning of Article 29 does not exclude consequential damages”.

[33] Mr. Cooperstock states that courts in both Canada and the United States of America have consistently held that consequential damages resulting from a delay in the transportation of passengers or baggage are recoverable under the Montreal Convention or its predecessor, the Warsaw Convention.

[34] Mr. Cooperstock argues that “it is impermissible and unreasonable for Air Canada to purport to exonerate itself from consequential damages”, and in trying to do so has misled a passenger. He claims that Air Canada’s representative, in denying the passenger’s claim for compensation for the inconvenience that she suffered due to the delay of her baggage, failed to apply its Tariff. He maintains that no exclusion exists in Air Canada’s Tariff or in the Montreal Convention “precluding liability for consequential claims if baggage is delayed”. As a result, he claims that Air Canada was misleading its passenger, thereby putting it in breach of its obligations under section 18 of the ATR.

[35] With respect to Air Canada’s answer regarding the relief he seeks (i.e. requiring Air Canada to provide the passenger with a reference to, and/or the actual text of, the relevant article of Air Canada’s Tariff or the Montreal Convention that justifies its denial of the passenger’s claim), Mr. Cooperstock argues that informing passengers of the reason(s) for denying a claim cannot be considered “excessive”, given that the carrier does this already, as demonstrated in the present case, albeit incorrectly in his opinion.

[36] With respect to Air Canada’s statement that it would be “confusing for passengers” if the air carrier had to refer to its terms and conditions “in resolving a claim”, Mr. Cooperstock argues that “Air Canada has created confusion by referring to a non-existent tariff regulation” in its communications; similarly, “passengers are more likely to be confused when their claims are denied without an explanation whose veracity can be verified”. Contrary to Air Canada’s claims, Mr. Cooperstock contends that it is sufficient for Air Canada to provide the relevant article of its Tariff when explaining the reasons behind a passenger’s denied compensation claim.

[37] Mr. Cooperstock maintains that airline representatives who are knowledgeable of their carrier’s various tariff provisions can easily direct passengers to a specific rule within it, or to articles within the Montreal Convention, that constitute the basis for the denial of a claim. Mr. Cooperstock states that otherwise, “there is a risk that the stated basis for denial of a passenger’s claim may be confusing, misleading, or simply non-existent in the actual Tariff”. Mr. Cooperstock points out that if indeed there are multiple terms and conditions that may constitute the basis for denial of a claim, as argued by Air Canada, then it should not be that onerous to include a reference to, and/or the actual text of, any one such term and condition.

ANALYSIS AND DETERMINATIONS

[38] Paragraph 18(b) of the ATR states that a licensee shall not make publicly any statement that is false or misleading with respect to the licensee’s air service or any service incidental thereto.

[39] In a letter issued to the passenger on January 28, 2016, an Air Canada representative states the following:

“…Airline Tariff regulations therefore preclude liability for consequential claims if baggage is delayed”.

[40] The Agency agrees with Mr. Cooperstock’s statement that Air Canada’s Tariff does not preclude liability for consequential damages. The Agency also agrees with his statement that consequential damages are compensatory damages and may include, for instance, hotel or meal expenses incurred by delay.

[41] The Agency notes that Air Canada’s Tariff incorporates the Montreal Convention by reference, and that Article 19 of the Montreal Convention does not define the term “damage”. It is further noted that Article 29 of the Montreal Convention does not specifically preclude liability for consequential damages.

[42] In previous Agency decisions, the Agency found that compensatory damages, such as replacement clothing, meals and hotel accommodation are recoverable under the Montreal Convention. The Agency notes that such determinations are made on a case-by-case basis according to the facts of the particular situation.

[43] In the present case, the Agency recognizes that the statement made by the Air Canada representative was with respect to the specific facts of a specific passenger’s case; however, to advise the passenger that Air Canada’s Tariff precludes liability for consequential damage is incorrect.

[44] The Agency also notes that the letter goes on to state the following:

“As a gesture of goodwill, if a passenger is away from home and his or her baggage is delayed more than 24 hours, Air Canada will contribute towards the cost of interim clothing and toiletry purchases, when substantiated with original purchase receipts”.

[45] The Agency finds that compensating a passenger for the purchase of interim clothing and toiletries is not a gesture of goodwill, but constitutes amounts owing in the case of baggage delay in accordance with its Tariff. Therefore, the Agency finds that this statement is incorrect.

[46] With respect to the question of whether the Montreal Convention and its application in Canada permit consequential damages in the form of moral damages, the Agency has, in some cases, found that such damages are not provided for, but is cognizant of Mr. Cooperstock’s arguments to the contrary. The Agency notes that proposed amendments to the Canada Transportation Act, S.C., 1996, c. 10, as amended (CTA) dealing with air passenger protection and compensation are currently being considered by Parliament. The Agency will therefore not address the issue of consequential and moral damages in the present decision.

[47] The Agency notes that Mr. Cooperstock’s request that the Agency order Air Canada to take various steps to make it clear that it is liable for consequential damages. The Agency agrees with Air Canada, that to reference the applicable Tariff provisions or the relevant Articles of the Montreal Convention would deviate from “the objective of creating an environment centered on practical resolutions, as opposed to judicialization of claims through legal memorandums”. Furthermore, the Agency notes that carriers’ tariffs are posted on their respective websites, enabling passengers to verify their rights and the obligations of the carriers. If a passenger does not agree with the findings made by a carrier, they are not prohibited from seeking resolution through other means.

CONCLUSION

[48] The Agency finds that Air Canada made a false statement in accordance with paragraph 18(b) of the ATR when its agent stated that: “Airline Tariff regulations therefore preclude liability for consequential claims if baggage is delayed”, and when it offered, as a “gesture of goodwill”, compensation for interim clothing and toiletries purchased due to the delay of the passenger’s baggage.

[49] A carrier that contravenes paragraph 18(b) may be subject to an administrative monetary penalty listed under the Canadian Transportation Agency Designated Provisions Regulations, SOR/99‑244. As such, the Agency refers this matter to a Designated Enforcement Officer for any action that they may find to be appropriate in the circumstances pursuant to section 180 of the Canada Transportation Act.