Decision No. 449-C-A-2004

August 13, 2004

File No. M4370/R177/03-10

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COMPLAINT

[1] On January 31, 2003, Marjorie Button filed with the Air Travel Complaints Commissioner (hereinafter the ATCC) the complaint set out in the title.

[2] On January 21, 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 January 21, 2004, the Agency advised the parties of the Agency's jurisdiction in this matter. The Agency also sought Mrs. Button's confirmation that she wished to pursue this matter formally before the Agency. As the comments regarding Mrs. Button's complaint were filed by both parties with the ATCC, the Agency also sought the parties' agreement to have the comments filed with the ATCC considered as pleadings before the Agency.

[4] On January 22, 2004, Mrs. Button advised the Agency that she wished to pursue the matter formally before the Agency, and accepted that the Agency consider the comments she filed with the ATCC as pleadings before the Agency.

[5] On February 6, 2004, Skyservice Airlines Inc. carrying on business as Skyservice (hereinafter Skyservice) advised the Agency that it accepted that the Agency consider the comments it filed with the ATCC as pleadings before the Agency.

[6] By Decision Nos. LET-C-A-124-2004 and LET-C-A-125-2004 both dated April 29, 2004, the Agency, pursuant to section 18 of the National Transportation Agency General Rules, SOR/88-23, requested that Skyservice and Mrs. Button provide additional information with respect to the complaint. The information requested was filed by Mrs. Button on May 13, 2004 and by Skyservice on May 14, 2004.

[7] Pursuant to subsection 29(1) of the Canada Transportation Act, S.C., 1996, c. 10 (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 August 19, 2004.

ISSUE

[8] The issue to be addressed is whether Skyservice applied the terms and conditions relating to the limitations of liability for checked baggage specified in its International Charter Tariff (hereinafter the tariff), as required by subsection 110(4) of the Air Transportation Regulations, SOR/88-58, as amended (hereinafter the ATR) in respect of this matter.

FACTS

[9] Mrs. Button and three family members travelled on Skyservice Flight No. 5G356 from Ottawa to Cancun on December 23, 2002. On their arrival in Cancun, they discovered that their four suitcases were missing. The baggage was delivered two days later; however, some of the bags had been damaged and some items were missing. Mrs. Button subsequently submitted to Skyservice a list of the missing items and receipts for interim items purchased. Skyservice reimbursed Mrs. Button CAD$484.20 for the interim items and CAD$449.63 for the missing items based on the estimated combined weight of the items lost as calculated using an International Air Transport Association (hereinafter IATA) Table of Weights.

POSITIONS OF THE PARTIES

[10] Mrs. Button claims that four suitcases did not arrive in Cancun because a Skyservice agent at the MacDonald Cartier International airport in Ottawa (hereinafter the Ottawa airport) had tagged them for Varadero instead of Cancun. Mrs. Button states that she reported her missing suitcases to Skyservice personnel in Cancun and was informed that she was allowed to spend US$100 per suitcase for the immediate purchase of interim items. Mrs. Button advises that when the checked suitcases were received two days later in the presence of a Signature Vacations agent, it was clear that they had been ransacked, that two suitcases were somewhat damaged and that many items were missing. After returning to Canada, Mrs. Button submitted receipts to Skyservice for interim expenditures amounting to US$317 and provided a list of the missing items with a total value of CAD$2,550.

[11] Skyservice offered Mrs. Button CAD$484.20 for her interim expenses and CAD$449.63 for the missing items. Skyservice explained that its reimbursement for the missing items was based on the IATA Table of Weights, that it determined that they weighed 12.68 kilograms in total and that the reimbursement was calculated at the rate of CAD$36.46 per kilogram. Skyservice submits that while Mrs. Button did not provide any proof of ownership/receipt for the missing items, it reimbursed her for them according to its limit of liability for "stolen" items solely as a customer service gesture. Skyservice adds that Rule 10 of its tariff provides that the carrier's liability for lost baggage is CAD$33 per kilogram and that the weight to be taken into consideration to determine the carrier's liability is the weight of the property lost. Skyservice argues that its reimbursement was based on the weight of the missing items rather than the weight of the entire bag because Mrs. Button reported in her claim that only parts of the contents of her suitcases were missing.

[12] Mrs. Button notes that while she is satisfied with the amount of the compensation offered by Skyservice for her interim expenses, she is not satisfied with the compensation offered for the missing items and is seeking compensation of approximately CAD$2,550 for these goods in the belief that it will cost her that much to replace them.

[13] By Decision No. LET-C-A-124-2004 dated April 29, 2004, the Agency requested that Skyservice confirm the actual weight of each of the delayed checked suitcases. In its response dated May 14, 2004, Skyservice confirms that Mrs. Button and her three family members checked in together and that their four pieces of checked baggage weighed 59 kilograms in total. Skyservice submits that it recorded the total weight of all the baggage checked by the group and suggests that Mrs. Button confirm the weight of each suitcase. Skyservice refers to Rule 10 (b) of its tariff which defines the carrier's liability for lost, damaged or delayed property and to the exception to this Rule. Skyservice states that Mrs. Button's complaint is subject to Article 22(1)(b) of the Warsaw Convention, as amended by the Hague Protocol, which limits the carrier's responsibility only to the weight of the packages concerned. Skyservice notes that an exception is made for those cases where a baggage check covers more than one package and where the loss of an object affects the value of the other packages covered by the same baggage check. Skyservice points out that Mrs. Button does not allege that her complaint falls within the parameters of the exception and maintains that in determining the amount of the reimbursement to Mrs. Button, only the weight of the property lost must be taken into consideration in accordance with the terms and conditions of its tariff and the Warsaw Convention.

[14] By Decision No. LET-C-A-125-2004 dated April 29, 2004, the Agency requested that Mrs. Button confirm whether the items in question were missing from just one of the checked suitcases or from more than one suitcase and, in the event that it was the latter situation, to advise as to which items were missing from which suitcase. In her response dated May 13, 2004, Mrs. Button submitted a list of the missing items indicating which item was missing from which suitcase and states that all four suitcases were ransacked and had items missing.

ANALYSIS AND FINDINGS

[15] In making its findings, the Agency has considered all of the evidence submitted by the parties during the pleadings. The Agency has also examined Skyservice'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 Mrs. Button's 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:

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] Subsection 113.1 of the ATR states:

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.

[19] Also, the Carriage by Air Act, R.S.C., 1985, c. C-26, in effect at the time of the incident gives force of law in Canada to the Warsaw Convention of 1929, as amended, and governs the liability limitations for loss, damage, or delay of baggage applicable to international carriage by air. More particularly, Articles 22(2)(a), 22(2)(c) and 23(1) of the Carriage by Air Act provide, in part, as follows:

22(2)(a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of two hundred and fifty francs per kilogramme, unless the passenger or consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the passenger's or consignor's actual interest in delivery at destination.

22(2)(c) In the case of loss, damage or delay of part of registered baggage or cargo, or of any object contained therein, the weight to be taken into consideration in determining the amount to which the carrier's liability is limited shall be only the total weight of the package or packages concerned. Nevertheless, when the loss, damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects the value of other packages covered by the same baggage check or the same air waybill, the total weight of such package or packages shall also be taken into consideration in determining the limit of liability.

23(1) Any contractual provision tending to relieve the contracting carrier or the actual carrier of liability under this Convention or to fix a lower limit than that which is applicable according to this Convention shall be null and void, but the nullity of any such provision does not involve the nullity of the whole agreement, which shall remain subject to the provision of this Convention.

Application of the tariff

[20] The facts leading to Mrs. Button's application are, for the most part, uncontested. Mrs. Button and three family members travelled on Skyservice Flight No. 5G356 from Ottawa to Cancun on December 23, 2002. Upon the family's arrival in Cancun, they determined that their four suitcases that were checked in Ottawa were missing. When the four suitcases were ultimately delivered two days later, they were damaged and certain items were missing.

[21] Although Mrs. Button and her family members incurred expenses as a result of the delay in the delivery of the four missing suitcases, compensation for the interim expenses resulting from the delay in delivering the missing suitcases is not at dispute in this case as an amount of CAD$484.20 has been provided to Mrs. Button and her family members to cover such expenses.

[22] The dispute in this case relates to the amount offered by Skyservice as compensation for the missing items contained in the four suitcases that were delayed and for the damage to two suitcases. Skyservice has offered Mrs. Button and her family members an amount of CAD$449.63 which represents the estimated weight of the stolen items (12.68 kg) times the amount per kilogram (CAD$35.46) for which the carrier is liable pursuant to its applicable tariff.

[23] The question in this case is therefore whether, in offering such an amount, Skyservice applied the terms and conditions of carriage set out in its applicable tariff pursuant to subsection 110(4) of the ATR.

[24] Subparagraphs (N)(a), (N)(b) and Note 1 of paragraph (N)(d) of Rule 10, Limitation of Liability for Baggage and/or Goods, Excess Valuation charges of Skyservice's Tariff, C.T.A. (A) No. 3 provide that:

10(N)(a) Carrier liability for the loss of, damage to or delay in the delivery of any personal property, including baggage, which are carried as checked baggage, and goods, is limited to the sum of 250 francs per kilogram, unless the passenger or charterer, at the time of presenting such baggage or goods for transportation, has declared a higher value and paid an additional charge in accordance with the provisions of this Rule. As regards objects of which the passengers takes charge himself the liability of the carrier is limited to 5,000 francs per passenger.

10(N)(b) In the case of loss, damage or delay of part of property carried as checked baggage, the weight to be taken into consideration in determining the amount to which the carrier's liability is limited shall be only the total weight of the property lost, damaged or delayed. Nevertheless, when the loss, damage or delay of a part of the property affects the value of other property covered by the same baggage check, the total weight of the property covered by the baggage check shall also be taken into consideration in determining the limit of liability.

10(N)(d) NOTE 1: At the time of filing of this tariff provision, 250 francs convert to approximately CAD$33 and 5 000 francs convert to approximately CAD$660. These converted values are provided for general reference only. Carrier's liability will be calculated for each claim individually, based on the formula set out in this Rule.

[25] In its submission to the Agency, Skyservice stated that it is the total weight of the missing items that ought to be considered when determining the limit of liability of the carrier. This, according to Skyservice, is clearly the essence and purpose of Rule 10(N)(b) that was applied in this case.

[26] While the Agency acknowledges that a carrier, through its international tariff, can limit its liability for checked baggage on an international route, the Agency also notes that the ability of a carrier to do so is circumscribed by international conventions and protocols. These international conventions and protocols have been given the force of law in Canada by virtue of the Carriage by Air Act.

[27] Article 23 of the Carriage by Air Act provides that any contractual provision (such as tariff provisions) tending to relieve the contracting carrier or the actual carrier of liability under this Convention or to fix a lower limit than that which is applicable according to this Convention shall be null and void. Pursuant to this Article, any tariff provision that fixes a lower limit of liability than that which is laid down by the international conventions is null and void and is deemed never to have been in force.

[28] In this case, while Skyservice argued that the amount offered to Mrs. Button and her family members results from the clear application of Rule 10(N)(b) of its tariff, pursuant to Article 23 of the Carriage by Air Act, such a rule could only be applied by Skyservice if it were legally valid in the first place.

[29] Skyservice argued that its policy on the limit of liability for checked baggage is in compliance with the Carriage by Air Act. According to Skyservice, the limitation of its liability in Rule 10(N)(b) to "the weight of the property lost, damaged or delayed to" is in compliance with the words "package concerned" found in Article 22(2)(c) of the Carriage by Air Act. Simply put, Skyservice advanced the position that each individual item, either contained in a box, a suitcase or any similar container registered as checked baggage, is a "package" pursuant to Article 22(2)(c) of the Carriage by Air Act. As Article 22(2)(c) of the Carriage by Air Act allows a carrier to restrict its liability to the weight of the package or packages concerned in the case of any loss, damage or delay in delivery, Skyservice submitted that its tariff provision is in accordance with the international conventions.

[30] The Agency does not agree with Skyservice's interpretation of Article 22(2)(c) of the Carriage by Air Act. The wording of Article 22(2)(c) was first introduced in the Carriage by Air Act through Article 22(2)(b) of the Hague Protocol. As stated in the Commentary of the Warsaw Convention entitled Warsaw Convention (Warsaw Convention, Giemulla, Schmid, Müller-Rostin and Dettling-Ott, Edited by Giemulla and Schmid, 2003, Kluwer Law International, Article 22, para. 8), Article 22(2)(b) "answered the question of how the limit of liability in the case of loss, damage or delay of or to only part of the registered baggage or cargo, or any object contained therein was to be determined." Prior to the Hague Protocol, Article 22(2) of the Warsaw Convention only provided that in the case of registered baggage, the liability of the carrier was limited to a sum of 250 francs per kilogram. Problems arose when only part of the registered baggage was lost, damaged or delayed. Under Article 22(2) of the Warsaw Convention, carriers were liable for the total weight of the registered baggage even in circumstances where only part of the registered baggage or an object contained therein was lost, damaged or delayed. Article 22(2)(c) of the Carriage by Air Act (and its predecessor, Article 22(2)(b)) makes it clear that in the case of loss, damage or delay of part of registered baggage or of any object contained therein, the carrier is only liable for the weight of the package concerned that is lost, damaged, or delayed rather than the overall weight of the registered baggage.

[31] An examination of Article 22(2)(c) shows that it refers to three distinct concepts. That is, the concepts of registered baggage, package and object. As these three concepts are found within the same provision of the same legislation, they ought to be interpreted harmoniously with each other rather than in isolation from one another. In that context, the concept of "registered baggage", interpreted harmoniously with the concepts of "package" and "object", can only refer to the group comprised of all the "packages" a passenger elects to register with a carrier for carriage. While a suitcase and a box registered for carriage by a passenger would constitute individual packages, it is the sum of these two packages that constitutes the registered baggage of the passenger. Also in this context, the concept of "object" within the registered baggage can only refer to the items (such as clothing) found in each package registered by a passenger for carriage.

[32] Applied to a concrete situation, Article 22(2)(c) means that in the event only one suitcase (package) or an item (object) contained therein is lost, damaged, or delayed by a carrier, the carrier's liability would be restricted to the weight of the suitcase concerned by the loss, damage or delay in delivery rather than the total weight of the registered baggage as recorded by the carrier.

[33] While the above is the underlying principle pursuant to which carriers are entitled to limit their liability for the loss, damage or delay in delivering registered baggage, there is an exception to that general principle. That is, the second portion of Article 22(2)(c) of the Carriage by Air Act provides, in part, that when the loss, damage or delay of a part of the registered baggage or cargo, or of an object contained therein, affects the value of the other packages covered by the same baggage check, the total weight of such packages shall also be taken into consideration in determining the limit of liability.

[34] As this portion of Article 22(2)(c) is the exception to the principle pursuant to which carriers are entitled to limit their liability for the loss, damage or delay in delivering registered baggage and as this exception only serves to broaden the carriers' liability in the event of a loss, damage or delay in delivering checked baggage, it cannot, as contended by Skyservice, be interpreted in a manner that would restrict the general principle pursuant to which carriers can limit their liability. In any event, and as all of the registered baggage of Mrs. Button and her family members are affected by the loss, damage, and delay in delivery, it is the general principle alone of Article 22(2)(c) that applies to the present case.

[35] In this respect, the Agency notes that contrary to Article 22(2)(c) of the Carriage by Air Act, Rule 10(N)(b) of Skyservice's tariff does not limit the carrier's liability to the weight of the package or packages lost, damaged, or delayed but rather to "the weight of the property lost, damaged or delayed". As the word "property" found in Rule 10(N)(b) of Skyservice's tariff is narrower in scope than the word "package" found in Article 22(2)(c) of the Carriage by Air Act, Rule 10(N)(b) fixes a lower limit of liability than that which is applicable according the Carriage by Air Act.

[36] As it fixes a limit of liability that is lower than that which is provided for in Article 22(2)(c) of the Carriage by Air Act, Rule 10(N)(b) of Skyservice's tariff is, by virtue of Article 23 of the Carriage by Air Act, null and void. As it is inherently null and void, Rule 10(N)(b) is deemed never to have been in force. By offering Mrs. Button and her family members an amount of CAD$449.63 in compensation for the damage to two suitcases and the missing items contained in their registered baggage as a result of the application of such null and void Rule, Skyservice cannot be deemed to have applied the terms and conditions of carriage provided for in its applicable tariff pursuant to subsection 110(4) of the ATR.

[37] Notwithstanding the fact that Rule 10(N)(b) is null and void, the Agency also notes that by offering Mrs. Button and her family members an amount of CAD$449.63 in application of such Rule, Skyservice determined the weight of the missing items from an IATA Table of Weights not provided for in its tariff. As mentioned above, subsection 110(4) of the ATR provides that a carrier can only apply the terms and conditions of carriage provided for in its applicable tariff. In the present case, the use of this Table of Weights by Skyservice, while it is absent from its tariff, is a further breach of subsection 110(4) of the ATR.

[38] In light of the foregoing, the Agency finds that by offering Mrs. Button and her family members an amount of CAD$449.63 in compensation for the damage to two suitcases and the missing items contained in their registered baggage, Skyservice, contrary to subsection 110(4) of the ATR, has not applied the terms and conditions of carriage provided for in its applicable tariff.

[39] Section 113.1 of the ATR provides that 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 contrary to subsection 110(4) of the ATR, 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.

[40] In this case, the Agency notes that items were missing from the four suitcases that were delayed. The Agency has reviewed the list of missing items provided by Mrs. Button in support of her application and is satisfied that its content accurately describes the items, the quantities as well as the value of the items missing. The Agency therefore accepts that the total value of the items missing is CAD$2,550. However, Skyservice's liability is restricted by the provisions of the Carriage by Air Act and other valid provisions of Skyservice's applicable tariff.

[41] As quoted above, Rule 10(N)(a) of Skyservice's Tariff provides that the carrier's liability for the loss of, damage to or delay in delivery of any personal property including baggage which are carried as checked baggage, and goods, is limited to the sum of 250 francs per kilogram.

[42] This Rule, read harmoniously with the Carriage by Air Act, provides that Skyservice will be liable in the case of loss, damage to or delay in the delivery checked baggage for an amount of 250 francs per kilogram up to the free baggage allowance limits provided for in Rule 7(h), Acceptance of Baggage Or Goods of its tariff. In this case, the Agency notes that Skyservice recorded the weight of the four suitcases that were delayed and from which items were missing, to be 59 kilos.

[43] The Agency therefore finds that Skyservice is responsible for reimbursing Mrs. Button and her family members an overall converted amount equal to the result of its limit of liability of 250 francs per kilogram as stated in Rule 10(N)(a), multiplied by 59 kilograms, the recorded weight of the four suitcases concerned by the loss, damage and delay in delivery. The Agency notes that Skyservice has already reimbursed Mrs. Button and her family members the amount of CAD$449.63 for the damage to the suitcases and the missing items contained therein and the amount of CAD$484.20 for the delay in delivery. Therefore the amount of CAD$933.83 will be deducted from the overall amount.

[44] Pursuant to subsections 2(6) and (7) of the Carriage by Air Act, 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 into Canadian dollars at the rate established by the International Monetary Fund.

[45] Using the formula set out in section 2 of the Carriage by Air Act, 250 francs convert to 16.58 Special Drawing Rights (hereinafter SDR).

[46] As of August 12, 2004, the most recent information available indicates that the International Monetary Fund (hereinafter the IMF) converted SDR to Canadian dollars (CAD$) using a rate of SDR 1 = CAD$1.957870. Utilizing that rate, 250 francs equalled CAD$32.46. The Agency has therefore determined that the compensation to be paid by Skyservice is CAD$981.31 (CAD$32.46 times 59 kilos minus CAD$933.83).

CONCLUSION

[47] In light of the foregoing, the Agency finds that by offering Mrs. Button and her family members an amount of CAD$449.63 in compensation for the damage to and the missing items contained in their registered baggage, Skyservice, contrary to subsection 110(4) of the ATR, has not applied the terms and conditions of carriage provided for in its applicable tariff.

[48] Pursuant to section 113.1 of the ATR, the Agency hereby directs Skyservice to, within thirty (30) days of this Decision, reimburse Mrs. Button and her family members an amount of CAD$ 981.31.