Decision No. 14-C-A-2005

January 12, 2005

File No. M4370/C461/03-2

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COMPLAINT

[1] On April 4, 2003, Christopher Begg filed with the Air Travel Complaints Commissioner (hereinafter the ATCC) the complaint set out in the title.

[2] On June 15, 2004, the complaint was referred to the Canadian Transportation Agency (hereinafter the Agency) for its consideration as the complaint raised a tariff issue that falls within the jurisdiction of the Agency.

[3] By letter dated July 2, 2004, Mr. Begg authorized his mother, Debbie Begg, to handle the case before the Agency on his behalf.

[4] By letter dated July 12, 2004, Agency staff explained the Agency's jurisdiction in this matter. Mr. Begg was requested to confirm that he wished to pursue this matter formally before the Agency. The parties were requested to advise if their comments filed with the ATCC could be considered as pleadings before the Agency.

[5] On July 16, 2004, Mrs. Begg advised the Agency that her son, Christopher, wished to pursue the matter formally before the Agency and advised that the Agency should consider the comments he filed with the ATCC as pleadings before the Agency.

[6] On July 26, 2004, Cubana De Aviacion S.A. (hereinafter Cubana) advised the Agency that it should consider the comments filed by Cubana with the ATCC as pleadings before the Agency.

[7] Pursuant to subsection 29(1) of the Canada Transportation Act (hereinafter the CTA), the Agency is required to make its decision no later than 120 days after the application is received unless the parties agree to an extension. In this case, the parties have agreed to an extension of the deadline until January 12, 2005.

ISSUE

[8] The issue to be addressed is whether Cubana applied the terms and conditions related to the limitations of liability for checked baggage specified in its International Charter Tariff CTA (A) No. 9 (hereinafter Cubana's tariff), as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR).

FACTS

[9] Mr. Begg and three family members travelled on Cubana Flight No. CU181 from Toronto to Varadero on March 7, 2003. They checked five pieces of baggage weighing 42 kilograms in total. When Mr. Begg arrived in Varadero, he discovered that one bag was missing and he filed a Property Irregularity Report at the Varadero airport. Mr. Begg submitted a list of the items contained in the missing bag to Cubana. He estimated that the combined value of the bag and its contents was CAD$1,434.05. Cubana compensated Mr. Begg and his family in the amount of CAD$594 for the missing bag based on the estimated combined weight of the items lost as calculated using the Table of Weights established by the International Air Transport Association (hereinafter IATA) under its Recommended Practice No. 1751.

POSITIONS OF THE PARTIES

[10] Mr. Begg indicates that on March 7, 2003, when he discovered that his bag was missing, he filed a Property Irregularity Report with Cubana at the Varadero airport and that he submitted to the carrier a list of the items contained in the missing bag totalling CAD$1,434.05. Mr. Begg states that he received no reply from Cubana.

[11] Cubana advises that the delay in replying to Mr. Begg was caused by baggage recovery procedures and by a delay in communication between the baggage-handling companies at the airports in Toronto and Varadero, Cubana headquarters in Havana, and its customer service in Canada.

[12] Cubana submits that it calculated the weight of Mr. Begg's bag using a list of contents provided by him, that it estimated that the missing bag weighed 12 kilograms based on IATA's Table of Weights, and that the reimbursement of USD$240 was calculated at the rate of USD$20 per kilogram which, according to Cubana, is its maximum liability pursuant to the Convention for the Unification of Certain Rules Relating to International Carriage by Air, as amended (hereinafter the Warsaw Convention). The carrier advises that its policy is to offer an amount of USD$50 per passenger when baggage remains missing 24 hours after the passenger arrives at his destination. Cubana also compensated Mr. Begg and his family members in an amount of USD$200. Cubana submits that it estimated the compensation payable to Mr. Begg and his family totalled USD$440. This amount was converted to CAD$594 at the rate of USD$1=CAD$1.35, the exchange rate in effect on the day that Cubana's cheque was drafted.

[13] Mr. Begg argues that weight is not an accurate measure of the worth of an item contained in a checked bag and states that the amount of compensation offered by Cubana for the lost bag is not a reasonable settlement.

[14] Cubana states that the checked baggage allowance per passenger for flights from Canada to Cuba is two pieces weighing a maximum of 30 kilograms each. Cubana points out that its tickets clearly state that liability for loss, delay or damage is limited unless a higher value is declared in advance and additional charges are paid. The carrier notes that Mr. Begg filed a claim and received compensation before the Warsaw Convention was amended and that Cubana does not wish to increase the amount of the compensation it paid him. Cubana maintains that it has proven that five pieces of baggage were checked weighing 42 kilograms in total and argues that the missing piece of baggage could not weigh 30 kilograms leaving the other four pieces with a combined weight of only 12 kilograms. Cubana refers to Article 22b) of the Warsaw Convention and contends that it has no obligation to compensate Mr. Begg for 30 kilograms given that the average weight of each of the checked bags was 8.4 kilograms.

ANALYSIS AND FINDINGS

[15] In making its findings, the Agency has carefully considered all of the evidence submitted by the parties during the pleadings. The Agency has also examined Cubana's limitation of liability applicable to the carriage of baggage between points in Canada and points outside of Canada as set out in its tariff in effect at the time of the incident, which is the subject of this complaint.

Applicable legislative and regulatory provisions

[16] The Agency's jurisdiction over the present complaint is set out in subsections 110(1), 110(2), 110(4) and section 113.1 of the ATR.

[17] Subsections 110(1), 110(2) and 110(4) of the ATR state that:

110(1) Except as provided in an international agreement, convention or arrangement respecting civil aviation, before commencing the operation of an international service, an air carrier or its agent shall file with the Agency a tariff for that service, including the terms and conditions of free and reduced rate transportation for that service, in the style, and containing the information, required by this Division.

110(2) Acceptance by the Agency of a tariff or an amendment to a tariff does not constitute approval of any of its provisions, unless the tariff has been filed pursuant to an order of the Agency.

110(4) Where a tariff is filed containing the date of publication and the effective date and is consistent with these Regulations and any orders of the Agency, the tolls and terms and conditions of carriage in the tariff shall, unless they are rejected, disallowed or suspended by the Agency or unless they are replaced by a new tariff, take effect on the date stated in the tariff, and the air carrier shall on and after that date charge the tolls and apply the terms and conditions of carriage specified in the tariff. [Emphasis added]

[18] Section 113.1 of the ATR states that:

113.1 Where a licensee fails to apply the fares, rates, charges, terms or conditions of carriage applicable to the international service it offers that were set out in its tariffs, the Agency may

(a) direct the licensee to take corrective measures that the Agency considers appropriate; and

(b) direct the licensee to pay compensation for any expense incurred by a person adversely affected by the licensee's failure to apply the fares, rates, charges, terms or conditions of carriage applicable to the international service it offers that were set out in its tariffs.

Application of the tariff

[19] Cubana estimated the weight of Mr. Begg's lost bag at 12 kilograms based on IATA's Table of Weights. Cubana then determined that the value of the lost bag was USD$240 (USD$20 x 12 kilograms). In addition, in accordance with its policy on delayed checked baggage, Cubana compensated Mr. Begg and his family in an amount of USD$200 - that is, USD$50 for each passenger. Cubana converted the total amount of USD$440 into CAD$594 at the exchange rate in effect on the day that the cheque was drafted.

[20] The dispute in this case is whether Cubana, by providing a compensation of CAD$594 to Mr. Begg and his family members, applied the terms and conditions of carriage set out in its applicable tariff pursuant to subsection 110(4) of the ATR.

[21] In order to make a determination on this issue, the Agency must examine the applicable provisions of Cubana's tariff.

[22] Rule No. 55 (C)(3) of Cubana's tariff provides that:

(3) Any liability of carrier is limited to 312.5 French gold Francs (approximately $25.00) per kilogram in the case of checked baggage and 6250 French Gold Francs (approximately $500.00) per passenger in the case of unchecked baggage or other property, unless a higher value is declared in advance and additional charges are paid pursuant to carrier's regulations. In that event the liability of the carrier shall be limited to such higher declared value. In no case shall the carrier's liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss. [Emphasis added]

Note 1: In Canada the French Gold Franc shall be converted into Canadian dollars in accordance with the provisions of the Carriage by Air Act Gold Franc Conversion Regulations SOR/83-79.

[23] Pursuant to the above provision, the liability of the carrier shall be determined by establishing the weight, in kilograms, of the lost bag, and multiplying this number by 312.5 French gold Francs. Furthermore, the carrier's liability cannot exceed the actual loss suffered by the passenger.

[24] In order to establish whether Cubana has properly applied this tariff provision in the present case, the Agency must make a determination on three issues: (1) the weight, in kilograms, of the lost bag, (2) the rate of compensation, per kilogram, for the lost bag, and finally (3) the actual value of the lost bag.

Weight of the lost bag

[25] The Agency notes that, at the time of check-in, rather than weighing each individual piece of baggage, Cubana chose to weigh the five pieces of baggage checked by Mr. Begg's family as a whole. By doing so, Cubana has made it impossible to establish the exact weight of Mr. Begg's lost bag.

[26] In an attempt to establish the weight of Mr. Begg's lost bag, Cubana has applied IATA's Table of Weights. No provision is made in Cubana's tariff for such an application. As was established by the Agency in Decision No. 449-C-A-2004 (Marjorie Button v. Skyservice), the Agency finds that the application of IATA's Table of Weights by a carrier, when it is not provided for in its tariff, constitutes a breach of subsection 110(4) of the ATR. Indeed, a carrier can only apply the terms and conditions of carriage provided for in its applicable tariff.

[27] The Agency is not satisfied that Mr. Begg's lost bag weighed 12 kilograms as argued by Cubana and is of the opinion that the evidence does not allow the Agency to satisfactorily ascertain the weight of Mr. Begg's lost checked bag.

[28] As established by international jurisprudence, in cases such as this one where the exact weight of the lost bag cannot be ascertained, the maximum permissible weight per bag under the carrier's tariff shall apply (McPherson v. Qantas, 23 Avi 17,557 and 1992 ASL 315, US District Court, DNJ, and AG Düsseldorf, 1998 TranspR 473, as referred to in Warsaw Convention, Commentary, Kluwer Law International, Giemulla/Schmid, Suppl. 16 (October 2003), Article 22, p.12).

[29] The carrier already benefits from a limitation of liability under the Warsaw Convention and has the burden of proof to demonstrate that the lost bag weighed less than the maximum permissible free weight allowed under its tariff. When the evidence is not conclusive on the issue of weight, any doubt should be settled in favour of the passenger. (In this regard, see notably, KLM v. Zarha Kachour, Cour de Cassation du Liban, 1972 RFDA 190, as referred to in Warsaw Convention, Commentary, Kluwer Law International, Giemulla/Schmid, Suppl. 16 (October 2003), Article 22, p.12).

[30] If, for operational reasons, the carrier chooses not to weigh each individual checked bag, it must therefore assume the consequences of such a decision, one of them being that if a checked bag is lost during the carriage and the evidence as to the weight of the lost bag is not conclusive, any doubt will be settled in favour of the passenger.

[31] In the present case, the Agency notes that Rule No. 117 (D)(7)(B)(2) concerning baggage regulations of Cubana's tariff states that:

Economy Class Fares

The free baggage allowance, including checked and unchecked baggage of each passenger paying the adult economy class fare, will be 30 kilograms (66 pounds).

[32] In its letter dated January 12, 2004 to Agency staff, Cubana stated that the checked baggage allowance per passenger for flights from Canada to Cuba is two pieces weighing a maximum of 30 kilograms each. The Agency notes a discrepancy between the maximum free checked baggage allowance of 60 kilograms per passenger mentioned in Cubana's letter and that of 30 kilograms which is provided for in the carrier's tariff. While the maximum weight allowance mentioned in Cubana's letter appears to favour the passenger, the Agency notes that pursuant to subsection 110(4) of the ATR, the applicable maximum weight allowance to be considered is that of the 30 kilograms set out in Cubana's tariff.

[33] Therefore, the Agency is of the opinion that the compensation provided to Mr. Begg for his lost bag must be based on a total weight of 30 kilograms, as opposed to the 12 kilograms suggested by Cubana.

Rate of compensation

[34] In its letter to Mr. Begg dated May 22, 2003, Cubana stated that, "... according to the Warsaw Convention, the maximum liability of international airline is calculated on the basis of WEIGHT AND NOT THE VALUE of the missing items, at the rate of USD 20 per kilogram, unless a higher value had been declared prior to the commencement of the journey and applicable valuation paid thereon (travel insurance)". [Emphasis added]

[35] The Agency notes that the provision of the Warsaw Convention to which Cubana refers (Article 22, paragraph 1), concludes by stating that, "Nevertheless, by special contract, the carrier and the passenger may agree to a higher limit of liability." [Emphasis added]

[36] In the present case, the Agency notes that the contract of carriage between Cubana and Mr. Begg which incorporates, by reference, Cubana's tariff, establishes such a higher limit of liability. In fact, pursuant to Rule No. 55 (C)(3) on Liability of Carriers of Cubana's tariff "Any liability of carrier is limited to 312.5 French gold Francs (approximately $25.00) per kilogram in the case of checked baggage [...] In no case shall the carrier's liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss.

Note 1: In Canada the French Gold Franc shall be converted into Canadian dollars in accordance with the provision of the Carriage by Air Act Gold Franc Conversion Regulations SOR/83-79."

[37] The Agency is therefore of the opinion that, pursuant to Rule No. 55 (C)(3) of Cubana's tariff, Mr. Begg shall be compensated for his lost checked bag at a rate of 312.5 French gold Francs per kilogram.

[38] Furthermore, the Agency finds that by compensating Mr. Begg at the rate of USD$20 per kilogram for his lost bag, Cubana did not apply Rule No. 55 (C)(3) of its tariff and thereby contravened subsection 110(4) of the ATR.

Value of the lost bag

[39] Rule No. 55 (C)(3) of Cubana's tariff provides that "Any liability of carrier is limited to 312.5 French gold Francs (approximately $25.00) per kilogram in the case of checked baggage [...]". However, it also establishes, that: "In no case shall the carrier's liability exceed the actual loss suffered by the passenger. All claims are subject to proof of amount of loss."

[40] In order to establish the actual loss suffered by Mr. Begg in the present case, the Agency has reviewed the list of the items in the missing bag provided by Mr. Begg in support of his application. The Agency notes that Cubana does not contest the list of items submitted by Mr. Begg. The Agency is satisfied that the list reasonably reflects the items, the quantities as well as the value of the items missing. The Agency is further satisfied that the total value of the missing bag is CAD$1,434.05.

Liability of Cubana pursuant to its tariff

[41] In light of the above findings, the Agency determines that the liability of the carrier shall be limited to 312.5 French gold Francs per kilogram, based on the maximum permissible weight of 30 kilograms. In accordance with Rule No. 55(C)(3), such liability cannot exceed the actual loss suffered by the passenger which was established by the Agency to be CAD$1,434.05.

[42] Pursuant to subsections 2(6) and (7) of the Carriage by Air Act, R.S.C., 1985, c. C-26, the franc is to be converted into Canadian dollars as follows:

2(6) Any sum in francs mentioned in Article 22 of Schedule I shall, for the purposes of any action against a carrier, be converted into Canadian dollars at the rate of exchange prevailing on the date on which the amount of any damage to be paid by the carrier is ascertained by a court.

2(7) For the purposes of subsection (6), the Canadian dollar equivalents of francs or Special Drawing Rights, as defined in Article 22 of the Convention set out in Schedule I, are determined by

(a) converting francs into Special Drawing Rights at the rate of one Special Drawing Right for 15.075 francs; and

(b) converting Special Drawing Rights (hereinafter SDR) into Canadian dollars at the rate established by the International Monetary Fund. [text added]

[43] As of January 11, 2005, the most recent information available indicates that the International Monetary Fund converted SDR to Canadian dollars (CAD$) using a rate of [1 SDR=CAD$1.852680]. Utilizing that rate, 312.5 francs equals CAD$38.405470.

[44] The Agency therefore finds that pursuant to Rule No. 55(C)(3) of its tariff, Cubana's liability in the present case should be limited to the actual loss suffered, up to a maximum of CAD$1,152.16. [30 kilograms x CAD$38.405470].

[45] However, Cubana has already compensated Mr. Begg in the amount of CAD$594. Therefore, the Agency finds that the compensation to be paid by Cubana to Mr. Begg totals CAD$558.16 [CAD$1,152.16 - CAD$594].

CONCLUSION

[46] In light of the foregoing, the Agency finds that, by applying IATA's Table of Weights which was not part of its tariff; by paying Mr. Begg a compensation based on a baggage weight of 12 kilograms; and by calculating the compensation at a rate of USD$20 per kilogram, Cubana did not apply its tariff and thereby contravened subsection 110(4) of the ATR.

[47] Section 113.1 of the ATR provides that where a licensee, contrary to subsection 110(4) of the ATR, fails to apply the fares, rates, charges, terms or conditions of carriage applicable to the international service it offers that were set out in its tariffs, the Agency may direct the licensee to pay compensation for any expense incurred by a person adversely affected by the licensee's failure to apply the fares, rates, charges, terms or conditions of carriage applicable to the international service it offers that were set out in its tariffs.

[48] In the present case, Cubana's liability to Mr. Begg is established at CAD$1,152.16. As Cubana has already compensated Mr. Begg in the amount of CAD$594, the Agency, pursuant to section 113.1 of the ATR, hereby directs Cubana to further compensate Mr. Begg and his family members in the amount of CAD$558.16 within thirty (30) days from the date of this Decision.